SECURITIES PURCHASE AGREEMENT
Dated as of May 5, 1999
By and Between
RCBA Strategic Partners, L.P.,
and
URS Corporation
Table of Contents
ARTICLE I
DEFINITIONS; CERTAIN REFERENCES........................................... 2
ARTICLE II
CLOSING................................................................... 5
2.1 Time and Place of Closing.......................................... 5
2.2 Transactions at the Closing........................................ 5
2.3 Use of Proceeds.................................................... 6
ARTICLE III
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.......................... 6
3.1 Material Adverse Effect............................................ 6
3.2 Minimum Utopia EBITDA.............................................. 6
3.3 Certificate of Designation......................................... 6
3.4 Closing Deliveries................................................. 7
3.5 HSR................................................................ 7
3.6 Section 203........................................................ 7
3.7 Merger Agreement................................................... 7
3.8 Credit Facility.................................................... 7
3.9 Subordinated Notes Offering........................................ 8
3.10 Simultaneous Closing............................................... 8
3.11 Accuracy of Seller's Representations and Warranties................. 8
3.12 Compliance by Seller............................................... 8
3.13 No Legal Action.................................................... 8
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER............................. 8
4.1 Closing Deliveries................................................. 8
4.2 HSR................................................................ 9
4.3 Simultaneous Closing............................................... 9
4.4 Accuracy of Purchaser's Representations and Warranties............. 9
4.5 Compliance by Purchaser............................................ 9
4.6 No Legal Action.................................................... 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER.................................. 9
5.1 Organization, Good Standing, Power, Authority, Etc................. 9
5.2 Capitalization of Seller........................................... 10
5.3 SEC Documents; Financial Statements................................ 11
5.4 Authority and Qualifications of Seller............................. 12
5.5 No Contravention, Conflict, Breach, Etc............................ 12
5.6 Consents........................................................... 12
5.7 Vote Required...................................................... 13
5.8 Certain Approvals.................................................. 13
5.9 Brokers............................................................ 13
5.10 Certain Agreements................................................. 13
5.11 No Material Adverse Change......................................... 13
5.12 Exemption from Registration........................................ 13
5.13 Opinion of Independent Investment Banking Firm..................... 14
5.14 Other Matters...................................................... 14
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER............................... 14
6.1 Organization, Good Standing, Power, Authority, Etc................. 14
6.2 Authority and Qualifications of Purchaser.......................... 14
6.3 No Contravention, Conflict, Breach, Etc............................ 15
6.4 Consents........................................................... 15
6.5 Brokers............................................................ 15
6.6 Investment Intent.................................................. 15
ARTICLE VII
CORPORATE GOVERNANCE...................................................... 16
7.1 Board of Directors................................................. 16
7.2 Observer Rights for Purchaser Designee............................. 16
ARTICLE VIII
COVENANTS OF THE PARTIES.................................................. 16
8.1 Restrictions....................................................... 16
8.2 Pre-Closing Activities............................................. 17
8.3 Filing with SEC.................................................... 17
8.4 Stockholder Meeting................................................ 17
8.5 Proxy Statement.................................................... 17
8.6 Stock Exchange Listing............................................. 17
8.7 HSR................................................................ 18
8.8 Equity Proposals................................................... 18
8.9 Publicity.......................................................... 18
8.10 Securities......................................................... 19
8.11 Access, Information and Confidentiality............................ 20
8.12 Maintenance of Business............................................ 21
8.13 Exchange........................................................... 22
8.14 Tax Matters........................................................ 23
8.15 Authorized Shares.................................................. 23
ARTICLE IX
TERMINATION............................................................... 23
9.1 General............................................................ 23
9.2 Breach by Seller................................................... 23
9.3 Breach by Purchaser................................................ 24
9.4 Specific Remedies.................................................. 24
ARTICLE X
SURVIVAL; INDEMNIFICATION................................................. 24
10.1 Survival of Representations and Warranties and Covenants.......... 24
10.2 Indemnification of Seller......................................... 24
10.3 Indemnification of Purchaser...................................... 25
ARTICLE XI
MISCELLANEOUS............................................................. 25
11.1 Successors and Assigns............................................ 25
11.2 Performance; Waiver............................................... 25
11.3 Notices........................................................... 25
11.4 Expenses.......................................................... 26
11.5 Governing Law..................................................... 27
11.6 Severablity; Interpretation....................................... 27
11.7 Headings.......................................................... 27
11.8 Entire Agreement.................................................. 27
11.9 Counterparts...................................................... 27
11.10 Absence of Third Party Beneficiary Rights......................... 27
11.11 Mutual Drafting................................................... 27
11.12 Further Representations........................................... 27
11.13 Specific Performance; Remedies.................................... 28
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of May 5, 1999, by and between RCBA Strategic Partners, L.P., a Delaware
limited partnership ("Purchaser"), and URS Corporation, a Delaware corporation
("Seller").
WHEREAS, Seller wishes to sell, and Purchaser wishes to purchase, an aggregate
of 46,082.95 newly issued shares of Series A Preferred Stock of Seller ("Series
A Preferred Stock") and 450,000 newly issued shares of Series C Preferred Stock
of Seller ("Series C Preferred Stock") (collectively, as to the Series A
Preferred Stock and Series C Preferred Stock issued on the date hereof, the
"Bridge Securities") for the consideration and upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, the Series A Preferred Stock and Series C Preferred Stock will not be
convertible into common stock of Seller and will not have voting rights because
such conversion and voting rights would require (i) prior stockholder approval
by the stockholders of Seller pursuant to New York Stock Exchange ("NYSE") Rules
and (ii) an amendment to Seller's Articles of Incorporation to increase the
number of authorized common shares; and
WHEREAS, Seller is using the funds raised by this Agreement to purchase all of
the outstanding equity of the Dames & ▇▇▇▇▇ Group, a Delaware corporation
("Utopia"), and such purchase is due to close before the approval of the
stockholders of Seller referred to above could be sought or obtained; and
WHEREAS, Seller has agreed to use its best efforts to obtain such stockholder
approval and Purchaser has agreed to vote, and to cause all affiliated entities
to vote, all voting securities they hold in the Seller in favor of such
approval; and
WHEREAS, Seller and Purchaser have agreed that upon receiving stockholder
approval for the transactions contemplated hereby the Bridge Securities so
purchased (and any additional shares of Series A Preferred Stock paid as
dividends thereon) will automatically, and without any further action of either
party, convert into shares of Series B Exchangeable Convertible Preferred Stock
of Seller (the "Series B Preferred Stock").
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, each of Purchaser and Seller (together "Parties") agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN REFERENCES
The terms defined in this Article I, whenever used in this Agreement, shall
have the following meanings for all purposes of this Agreement:
1.1 "Act" means the Securities Act of 1933, as amended.
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1.2 "Affiliate" has the meaning set forth in Rule 12b-2 under the Exchange
Act.
1.3 "Board" means the Board of Directors of Seller.
1.4 "Bridge Securities" has the meaning set forth in the second recital of
this Agreement.
1.5 "Business Day" shall have the meaning specified in Rule 14d-1(e)(6) of
the Exchange Act.
1.6 "Capital Stock" has the meaning given it in Section 5.2 of this
Agreement.
1.7 "Certificates of Designation" means the Certificate of Designation of
Seller classifying 300,000 shares as Series A Preferred Stock, the Certificate
of Designation of Seller classifying 150,000 shares as Series B Exchangeable
Convertible Preferred Stock, and the Certificate of Designation of Seller
classifying 450,000 shares as Series C Preferred Stock, each to be filed by
Seller with the Office of the Secretary of State for the State of Delaware on or
prior to the date and time of the Closing, a true and correct copy of the text
of each of which is attached as Exhibit 1.7 hereto.
1.8 "Certificate of Incorporation" means the Certificate of Incorporation of
Seller as filed with the Office of the Secretary of State for the State of
Delaware, as amended from time to time.
1.9 "Closing" has the meaning set forth in Section 2.1 of this Agreement of
this Agreement.
1.10 "Closing Date" has the meaning set forth in Section 2.1 of this
Agreement of this Agreement.
1.11 "Common Stock" means the common stock, par value $.01 per share, of
Seller.
1.12 "Conversion Shares" means the shares of Common Stock issuable or issued
upon conversion of the Series B Preferred Stock pursuant to the terms of this
Agreement and the Certificate of Designation for the Series B Preferred Stock.
1.13 "DGCL" means the Delaware General Corporation Law, as amended.
1.14 "Equity Proposal" has the meaning set forth in Section 8.8 of this
Agreement.
1.15 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.16 "Exchange Debentures" means the subordinated debentures into which the
Series B Preferred Stock is exchangeable (at the option of Seller) and which
will have substantially the same terms as the Series B Preferred Stock, the form
of which will be agreed by the parties hereto prior to Closing if either party
so requests.
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1.17 "Filed SEC Documents" has the meaning given it in Section 5.3 of this
Agreement.
1.18 "GAAP" has the meaning given it in Section 5.3 of this Agreement.
1.19 "Government Entity" means any foreign, federal, state, or local court or
tribunal or administrative, governmental or regulatory body, agency, commission,
division, department, public body or other authority.
1.20 "HSR" has the meaning given it in Section 3.5 of this Agreement.
1.21 "Indemnifiable Losses" shall mean any and all direct or indirect
demands, claims, payments, obligations, actions, or causes of action,
assessments, losses, liabilities, costs, or expenses paid or incurred, any kind
or character (whether or not known or asserted before the date of this
Agreement, fixed or unfixed, conditional or unconditional, ▇▇▇▇▇▇ or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent,
or otherwise). Indemnifiable Losses shall include penalties, interest, or any
amount payable to a third party as a result of such Indemnifiable Losses.
Indemnifiable Losses shall include legal or other expenses reasonably incurred
in connection with investigating or defending any claims or actions, whether or
not resulting in any liability, and all amounts paid in settlement of claims or
actions in accordance with Article X.
1.22 "Issuable Securities" means the Series A Preferred Stock, the Series B
Preferred Stock, the Conversion Shares, the Series C Preferred Stock, the Series
C Redemption Shares and the Exchange Debentures.
1.23 "Knowledge of Seller" means to the actual or constructive knowledge of
any executive officer or director of Seller.
1.24 "Liens" has the meaning given it in Section 5.2 of this Agreement.
1.25 "Material Adverse Effect" means any condition, event or development
having, or likely to have a material adverse effect on the business, operations,
properties, assets, liabilities, financial condition, or prospects of Seller and
the Subsidiaries, taken as a whole, or of Purchaser, taken as a whole (as
applicable).
1.26 "NYSE" has the meaning given it in the second recital of this Agreement.
1.27 "Person" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, limited liability company, an unincorporated
organization and a Government Entity.
1.28 "Preferred Stock" has the meaning given it in Section 5.2 of this
Agreement.
1.29 "Proxy Statement" means the proxy statement to be sent to the
shareholders of Seller in connection with the Stockholder Meeting of Seller with
respect to, among other matters, the Stockholder Meeting Matters.
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1.30 "Purchase Price" means, for the Bridge Securities to be purchased by
Purchaser, $100,000,000 in the aggregate.
1.31 "Purchaser" has the meaning set forth in the first recital of this
Agreement.
1.32 "Registration Rights Agreement" means the Registration Rights Agreement
to be dated as of the date of the Closing among Seller and Purchaser, in
substantially the form attached as Exhibit 1.32 hereto, as amended, supplemented
and modified from time to time in accordance with the terms thereof.
1.33 "Series C Redemption Shares" means the shares of Common Stock issuable
or that may be issued upon redemption of the Series C Preferred Stock pursuant
to the terms of this Agreement and the Certificate of Designation for the Series
C Preferred Stock.
1.34 "Schedule 14D-9" has the meaning set forth in Section 5.6 of this
Agreement.
1.35 "SEC" means the Securities and Exchange Commission.
1.36 "Significant Holder" means Purchaser and any transferee of Purchaser for
so long any such person owns Issuable Securities in the aggregate equal to at
least ten (10) percent of (a) prior to Stockholder Approval, the Issuable
Securities purchased by Purchaser and issued on the Closing Date, or (b) at any
other time, the Issuable Securities issued to Purchaser in exchange for the
Series A Preferred Stock and the Series C Preferred Stock on the effective date
of that Exchange. In determining the number of Issuable Securities held by any
person or outstanding at any time, (i) each share of Series A Preferred Stock
shall be deemed to be convertible into Common Stock (on the same terms and
conditions as the Series B Preferred Stock) and to have been converted (to the
fullest extent then determinable) and such calculation shall include the number
of Conversion Shares that then would be deliverable upon the conversion of such
stock (as if such stock were converted), and (ii) each share of Series C
Preferred Stock shall be deemed to have been redeemed in exchange for Common
Stock, and each share of Series B Preferred Stock shall be deemed to have been
converted (in either case, to the fullest extent then determinable) and such
calculation shall include the number of Series C Redemption Shares or Conversion
Shares then deliverable upon the redemption of the Series C Preferred Stock or
the conversion of the Series B Preferred Stock (to the fullest extent then
determinable), as the case may be.
1.37 "Stockholder Meeting" has the meaning set forth in Section 8.4 of this
Agreement.
1.38 "Stock Plans" has the meaning given it in Section 5.2 of this Agreement.
1.39 "Stock Purchase" means the purchase of Series A Preferred Stock and
Series C Preferred Stock by Purchaser from Seller under this Agreement.
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1.40 "Subsidiary" means, with respect to Seller, any corporation, limited or
general partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or other entity analogous to any of the foregoing
of which a majority of the equity ownership (whether voting stock or comparable
interest) is, at the time, owned, directly or indirectly by Seller.
1.41 "Transaction Documents" means this Agreement, the Certificates of
Designation, and the Registration Rights Agreement.
1.42 "Voting Debt" has the meaning given it in Section 5.2 of this Agreement.
ARTICLE II
CLOSING
2.1 Time and Place of the Closing. Seller shall as promptly as practicable
notify Purchaser, and Purchaser shall as promptly as practicable notify Seller
when the conditions, contained in Articles III and IV hereof, to such parties'
respective obligations to effect the Stock Purchase have been satisfied. The
closing of the Stock Purchase (the "Closing") shall take place at the offices of
▇▇▇▇▇▇ Godward LLP in San Francisco, California, or such other location as the
parties may mutually agree, no later than November 30, 1999, and shall be
effective as of 12:01 a.m. on the Closing Date, unless another date, effective
time, or place is agreed to in writing by Purchaser and Seller.
2.2 Transactions at the Closing. At the Closing, subject to the terms and
conditions of this Agreement, Seller shall issue and sell to Purchaser and
Purchaser shall purchase the Bridge Securities. At the Closing, Seller shall
deliver to Purchaser a certificate or certificates representing the number of
the Bridge Securities to be purchased, each registered in the name of Purchaser
or its nominee against payment of the Purchase Price with respect thereto by
wire transfer of immediately available funds to an account or accounts
previously designated by Seller.
2.3 Use of Proceeds. The proceeds from the purchase and sale of the Bridge
Securities hereunder will be used simultaneously with the Closing of the Offer
(as defined in the Merger Agreement by and among Utopia, Seller and one or more
Affiliates of either or both, dated May 5, 1999 (the "Merger Agreement")), and
shall not be used for any other purpose.
ARTICLE III
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to be discharged under this Agreement on or prior
to the Closing are subject to satisfaction of the following conditions at or
prior to the Closing (unless expressly waived in writing by Purchaser at or
prior to the Closing):
3.1 Material Adverse Effect.
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(a) There shall not have occurred and there shall not otherwise exist any
Material Adverse Effect on Seller.
(b) There shall not have occurred (i) any suspension or limit of trading in
securities generally on the NYSE (including automatic halt in trading pursuant
to market-decline triggers other than those in which solely program trading is
temporarily halted), (ii) the imposition generally of minimum or maximum prices
on such exchange or on The NASDAQ Stock Market or additional material
governmental restrictions, in either case not in force on the date of this
Agreement, by such exchange or by order of the SEC or the NASD or any court or
other governmental authority, (iii) the declaration of any general banking
moratorium by either Federal or New York State authorities, or (iv) any material
adverse change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any outbreak
or escalation of hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis, the effect of any of which is such
as to make it, in reasonable judgment of Purchaser, impracticable or inadvisable
to acquire the Bridge Securities on the terms and in the manner contemplated by
this Agreement.
3.2 Minimum Utopia EBITDA. Utopia EBITDA for the fiscal year ended March 26,
1999, before second quarter restructuring charges, as shown in the audit of
Utopia for the fiscal year ended March 26, 1999, which such audit shall be
completed prior to Closing, shall be no less than $65 million.
3.3 Certificates of Designation. The Certificates of Designation shall have
been filed for record with the Office of the Secretary of State for the State of
Delaware and shall have become effective.
3.4 Closing Deliveries. Seller shall have delivered to Purchaser on or
before the Closing the following:
(a) Opinion of ▇▇▇▇▇▇ Godward LLP, dated as of the Closing Date, in form
reasonably satisfactory to Purchaser;
(b) Registration Rights Agreement executed by Seller;
(c) Certificate of the Secretary or Assistant Secretary of Seller dated as
of the Closing Date certifying: (i) that attached thereto is a true and
complete copy of the by-laws of Seller as in effect on the date of such
certification; (ii) that attached thereto is a true and complete copy of all
resolutions adopted by the Board authorizing the execution, delivery and
performance of the Agreement, the issuance, sale and delivery of the Issuable
Securities, and that all such resolutions are in full force in effect and are
all the resolutions adopted in connection with the transactions contemplated by
this Agreement; (iii) that attached thereto is a true and complete copy of the
Certificate of Incorporation as in effect on the date of such certification; and
(iv) to the incumbency and specimen signature of certain officers of Seller;
(d) Certificate or certificates representing the number of the Bridge
Securities to be purchased, as described in the first recital and Section 2.2;
and
6
(e) Executed and conformed copies of such other certificates, letters and
documents as Purchaser may reasonably request and as are customary for
transactions such as those contemplated by this Agreement.
3.5 HSR. The waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act") shall have expired or been
terminated, if applicable.
3.6 Section 203. The issuance of (a) the Bridge Securities to Seller
hereunder, (b) additional shares of Series A Preferred Stock and Series B
Preferred Stock as dividends, (c) the Series B Preferred Stock for which the
Bridge Securities are exchangeable, (d) any securities of Seller into which such
Series B Preferred Stock is convertible or exchangeable, and (e) the Series C
Redemption Shares shall have been exempted from the provisions of Section 203 of
the DGCL.
3.7 Merger Agreement. The Merger Agreement shall not have been modified
between the date hereof and the Closing Date in any material respect (except
with the prior written consent of Purchaser).
3.8 Credit Facility. The Credit Facility between Seller and ▇▇▇▇▇ Fargo
Bank, National Association, as agent, as contemplated by the commitment letter
dated as of May 3, 1999 (the "Credit Facility"), shall not deviate from the
terms of such commitment letter in any material respect (except with the prior
written consent of Purchaser).
3.9 Subordinated Notes. Seller's issuance and sale on the date on which the
Offer is consummated, of senior subordinated increasing rate notes, for
permanent financing in replacement thereof, in an aggregate principal amount of
$200 million (the "Bridge Notes"), as contemplated by the commitment letter
between Seller and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, dated as of May 3, 1999,
shall not deviate from the terms of such commitment letter in any material
respect (except with the prior written consent of Purchaser).
3.10 Simultaneous Closing. (a) The Offer shall have been consummated and all
shares tendered accepted for purchase by Seller or one or more of its
Affiliates, (b) the Credit Facility shall have closed and (c) the Bridge Notes
shall have closed, each of the foregoing substantially simultaneously with the
Closing.
3.11 Accuracy of Seller's Representations and Warranties The representations
and warranties of Seller contained in Article V hereof which are not subject to
a qualification regarding materiality shall be true and correct in all material
respects as of the date when made and as of the Closing Date, as though made on
such date, the representations and warranties of Seller contained in Article V
hereof, which are subject to a qualification regarding materiality shall be true
and correct in all respects as of the date when made and as of the Closing Date,
as though made on such date, and Purchaser shall have received a certificate
attesting thereto signed by the Chief Executive Officer of Seller, on behalf of
Seller.
3.12 Compliance by Seller. Seller shall have performed, satisfied and
complied with, in all material respects, all covenants, agreements and
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conditions required by this Agreement to be performed, satisfied or complied
with on or prior to the Closing Date, and Purchaser shall have received a
certificate attesting thereto signed by the Chief Executive Officer of Seller.
3.13 No Legal Action. No action, suit, investigation or other proceeding
relating to the transactions contemplated hereby shall have been instituted
before or threatened by any Government Entity which presents a substantial risk
of the restraint or prohibition of the transactions contemplated hereby or the
obtaining of material damages or other material relief in connection therewith.
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to be discharged under this Agreement on or prior
to the Closing are subject to satisfaction of the following conditions at or
prior to the Closing (unless expressly waived in writing by Seller at or prior
to the Closing):
4.1 Closing Deliveries. Purchaser shall have delivered to Seller on or
before the Closing the following:
(a) Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, dated as of the Closing Date, in
form reasonably satisfactory to Seller; and
(b) Immediately available funds in the amount of the Purchase Price.
4.2 HSR. The waiting period under the HSR Act shall have expired or been
terminated, if applicable.
4.3 Simultaneous Closing. (a) The Offer shall have been consummated and all
shares tendered accepted for purchase by Seller or one or more of its
Affiliates, (b) the Credit Facility shall have closed and (c) the Bridge Notes
shall have closed, each of the foregoing substantially simultaneously with the
Closing.
4.4 Accuracy of Purchaser's Representations and Warranties. The
representations and warranties of Purchaser contained in Article VI hereof which
are not subject to a qualification regarding materiality shall be true and
correct in all material respects as of the date when made and as of the Closing
Date, as though made on such date, the representations and warranties of
Purchaser contained in Article VI hereof, which are subject to a qualification
regarding materiality shall be true and correct in all respects as of the date
when made and as of the Closing Date, as though made on such date, and Seller
shall have received a certificate attesting thereto signed by an officer of
Purchaser, on behalf of Purchaser.
4.5 Compliance by Purchaser. Purchaser shall have performed, satisfied and
complied with, in all material respects, all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with on or prior to the Closing Date, and Seller shall have received a
certificate attesting thereto signed by an officer of Purchaser.
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4.6 No Legal Action. No action, suit, investigation or other proceeding
relating to the transactions contemplated hereby shall have been instituted
before or threatened by any Government Entity which presents a substantial risk
of the restraint or prohibition of the transactions contemplated hereby or the
obtaining of material damages or other material relief in connection therewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Filed SEC Documents, Seller hereby represents and
warrants to Purchaser as follows:
5.1 Organization, Good Standing, Power, Authority, Etc. Each of Seller and
the Subsidiaries (a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, (b) has all
requisite corporate power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to enable
it to own, lease or otherwise hold and operate its properties and to carry on
its business as now being conducted and (c) is duly qualified to do business and
in good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except, in the case of clause (b) or (c) above, where the failure to have such
power or authority, to possess such franchises, licenses, permits,
authorizations or approvals or to be so qualified or in good standing,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on Seller.
5.2 Capitalization of Seller.
(a) The authorized capital stock of Seller, the number of shares of Seller
outstanding, the number of shares of Common Stock reserved for issuance upon
the exercise of outstanding Seller stock options pursuant to stock option plans,
the employee stock purchase plan and the director stock plan, each as described
in the Filed SEC Documents (collectively, the "Stock Plans"), and the number of
additional shares of Common Stock reserved for issuance pursuant to the Stock
Plans, are all substantially as set forth in Seller's proxy statement for its
annual meeting held March 23, 1999. Other than as set forth above, at the close
of business on the date of Seller's proxy statement for its annual meeting held
March 23, 1999 ("Proxy Statement Date"), there were outstanding no shares of
Capital Stock or options, warrants or other rights to acquire Capital Stock from
Seller. Since the Proxy Statement Date, there have been no issuances by Seller
of shares of Capital Stock or of options, warrants or other rights to acquire
Capital Stock from Seller, other than issuances and grants of shares of Common
Stock and rights to acquire shares of Common Stock that were reserved for
issuance as of the Proxy Statement Date and that were issued pursuant to the
terms of the Stock Plans.
(b) No bonds, debentures, notes or other indebtedness having the right to
vote (or convertible into or exchangeable for securities having the
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right to vote) on any matters on which stockholders of Seller may vote are
issued or outstanding ("Voting Debt").
(c) All outstanding shares of Common Stock are, and any shares of Common
Stock which may be issued upon the exercise of stock options when issued will
be, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. All shares of Common Stock which may be issued
upon the exercise of stock options will at the time issued by Seller be free and
clear of all liens, claims, charges, pledges, mortgages, security interests or
other encumbrances ("Liens"). Other than as set forth above, and except for
this Agreement (and the securities being issued hereunder) and the Stock Plans,
there are not any options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, commitments, contracts, arrangements or undertakings of any
kind to which Seller or any of the Subsidiaries is a party or by which any of
them is bound (i) obligating Seller or any of the Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity interests in, or any security convertible or exercisable
for or exchangeable into any capital stock of or other equity interest in,
Seller or of any of the Subsidiaries or any Voting Debt, (ii) obligating Seller
or any of the Subsidiaries to issue, grant, extend or enter into any such
option, warrant, call, right, security, commitment, contract, arrangement or
undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights of
holders of Common Stock.
(d) There are no outstanding contractual obligations of Seller or any of
the Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Seller or any of the Subsidiaries and, to the Knowledge of
Seller, there are no irrevocable proxies with respect to shares of Common Stock
or shares of capital stock of any Subsidiary of Seller.
5.3 SEC Documents; Financial Statements.
(a) Seller has filed and provided or made available to Purchaser a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement required to be filed by Seller with the SEC since January 1,
1995 (the "Filed SEC Documents"). As of their respective dates, each Filed SEC
Document complied in all material respects with the requirements of the Act or
the Exchange Act, as the case may be, applicable to such Filed SEC Document.
None of the Filed SEC Documents when filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any Filed SEC Document has been revised or
superseded by a later Filed SEC Document filed and publicly available prior to
the date of this Agreement, none of the Filed SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
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(b) All contracts or agreements, including agreements relating to
indebtedness of Seller or any of the Subsidiaries, required to be filed with the
SEC under the Exchange Act have been filed with the SEC.
(c) The financial statements of Seller included in the Filed SEC Documents
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP") during the periods
involved (except, in the case of the unaudited statements, as permitted by Form
10-Q of the SEC) and fairly present the consolidated financial position of
Seller and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal and recurring
year-end adjustments which are not material). Except as set forth in the Filed
SEC Documents, neither Seller nor any Subsidiary of Seller has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on a consolidated balance sheet of
Seller and the Subsidiaries or in the notes thereto. None of the Subsidiaries
is, or has at any time since January 1, 1995 been, subject to the reporting
requirements of Sections 13(a) or 15(d) of the Exchange Act.
5.4 Authority and Qualification of Seller. Seller has all requisite
corporate power and authority to enter into this Agreement and the Merger
Agreement, and, subject to obtaining the Stockholder Approval with respect to
the matters set forth in Section 8.4, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Merger Agreement, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
on the part of Seller subject, in the case of the Exchange, to obtaining the
stockholders' approval and adoption of certain matters described in Section 8.4
hereof. The Board, at a meeting duly called and held, duly and unanimously
adopted resolutions (a) approving this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby, (b) determining that the terms of
this Agreement, the Merger Agreement and the transactions contemplated hereby
and thereby are fair to and in the best interests of Seller and its
stockholders, (c) recommending that Seller's stockholders grant the Stockholder
Approval and (d) declaring that this Agreement and the Merger Agreement are each
advisable. Each of this Agreement and the Merger Agreement has been duly
executed and delivered by Seller and, assuming such agreement constitutes a
legal, valid and binding obligation of each of the other parties thereto,
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity.
5.5 No Contravention, Conflict, Breach, Etc. The execution and delivery of
this Agreement and the Merger Agreement do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any breach or violation of, or default (with or without notice or lapse of
time or both) under, or result in the termination of, or accelerate the
performance required by, or give rise to a right of termination, cancellation or
acceleration of any obligation under, or to increased,
11
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien on the properties or assets of
Seller or any of the Subsidiaries pursuant to, (a) any provision of the
Certificate of Incorporation or the Seller's By-laws or the comparable charter
or organizational documents of any Subsidiary, or (b) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Seller or any
Subsidiary or their respective properties or assets.
5.6 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Government Entity is required by
or with respect to Seller or any Subsidiary in connection with the execution and
delivery of this Agreement or the Merger Agreement by Seller, or the
consummation by Seller of the transactions contemplated hereby or thereby,
except for such consents, approvals, orders, authorizations, registrations,
declarations or filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on Seller, and
except for: (i) the filing with the SEC of (A) a Schedule 14D-9 of Seller to be
filed under the Exchange Act (the "Schedule 14D-9"), (B) a proxy statement
relating to the consideration of Utopia's stockholders approval at a meeting of
the stockholders of Utopia duly called and convened to consider the adoption of
the Merger Agreement, and (C) such other reports under the Exchange Act, as may
be required in connection with this Agreement or the Merger Agreement and the
transactions contemplated hereby, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which Utopia is qualified to do
business, (iii) filings required pursuant to the HSR Act, and the rules and
regulations promulgated thereunder, (iv) filings necessary to satisfy the
applicable requirements of state securities or "blue sky" laws and (v) those
filings required under the rules and regulations of the NYSE.
5.7 Vote Required. The Stockholder Approval is the only vote of the holders
of any class or series of Capital Stock necessary to adopt this Agreement and
approve the transactions contemplated hereby. No stockholder approval of any
kind is required for the issuance of the Series A Preferred Stock and the Series
C Preferred Stock.
5.8 Certain Approvals. The Board has taken any and all necessary and
appropriate action to render inapplicable to Stock Purchase, the Exchange and
the other transactions contemplated hereby the provisions of Section 203 of the
DGCL. No other state takeover statute or similar statute or regulation applies
to the Offer, the Merger Agreement or the other transactions contemplated
hereby.
5.9 Brokers. No broker, investment banker, financial advisor or other
person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, the fees and expenses of
which will be paid by Seller, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Seller.
5.10 Certain Agreements. There are no employment contracts to which Seller
or any of the Subsidiaries is a party which provides for any benefit
12
upon or resulting from a "change in control" of Seller or any of the
Subsidiaries or any similar event.
5.11 No Material Adverse Change. Since October 31, 1998, there has not been
any event, change, effect, condition or development that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect on Seller (other than any such Material Adverse Effect on Seller the
existence of which is specifically disclosed in any report filed and publicly
available on Form 10-Q or Form 8-K under the Exchange Act with the SEC by Seller
after October 31, 1998 and prior to the date hereof).
5.12 Exemption from Registration. Assuming the representations and
warranties of Purchaser set forth in Article VI hereof are true and correct in
all material respects, the offer and sale of the Series A Preferred Stock and
the Series C Preferred Stock made pursuant to this Agreement will be exempt from
the registration requirements of the Act. Neither Seller nor any Person acting
on its behalf has, in connection with the offering of the Series A Preferred
Stock or the Series C Preferred Stock, engaged in (a) any form of general
solicitation or general advertising (as those terms are used within the meaning
of Rule 502(c) under the Act), (b) any action involving a public offering within
the meaning of Section 4(2) of the Act, or (c) any action which would require
the registration of the offering and sale of the Series A Preferred Stock or the
Series C Preferred Stock pursuant to this Agreement under the Act or which would
violate applicable state securities or "blue sky" laws. Seller has not made and
will not make, directly or indirectly, any offer or sale of the Series A
Preferred Stock, the Series C Preferred Stock, or of securities of the same or a
similar class as the Series A Preferred Stock or the Series C Preferred Stock if
as a result the offer and sale of the Series A Preferred Stock and Series C
Preferred Stock contemplated hereby could fail to be entitled to exemption from
the registration requirements of the Act. As used herein, the terms "offer" and
"sale" have the meanings specified in Section 2(3) of the Act.
5.13 Opinion of Independent Investment Banking Firm. Seller has obtained
advice from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated that the financial terms of the
transactions contemplated by this Agreement are reasonable.
5.14 Other Matters. The Parties agree that each of the representations and
warranties made by Seller to the lenders pursuant to the Credit Facility will be
incorporated herein by reference as if such representations and warranties had
been made directly to Purchaser. By Closing on this Agreement, Seller agrees
that Purchaser may rely on such representations as if set forth fully herein.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to Seller that:
6.1 Organization, Good Standing, Power, Authority, Etc. Purchaser is a
limited partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization.
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6.2 Authority and Qualification of Purchaser. Purchaser has all requisite
partnership power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of Purchaser. No vote of
the holders of partnership interests is necessary to approve or adopt this
Agreement or the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Purchaser and, assuming such agreement constitutes a
legal, valid and binding obligation of each of the other parties thereto,
constitutes a valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity.
6.3 No Contravention, Conflict, Breach, Etc. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time or both) under, or result in
the termination of, or accelerate the performance required by, or give rise to a
right of termination, cancellation or acceleration of any obligation under, or
to increased, additional, accelerated or guaranteed rights or entitlements of
any person under, or result in the creation of any Lien on the properties or
assets of Purchaser or any of its subsidiaries pursuant to, (a) any provision of
the Purchaser's organizational documents, or (b) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Purchaser or any
subsidiary of Purchaser or their respective properties or assets.
6.4 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state, local, or foreign
government or any court, administrative agency, tribunal or commission or other
Government Entity is required by or with respect to Purchaser in connection with
the execution and delivery of this Agreement by Purchaser or the consummation by
Purchaser of the transactions contemplated hereby, except for such consents,
approvals, orders, authorizations, registrations, declarations or filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Purchaser or (ii) filings required
pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
6.5 Brokers. No broker, investment banker, financial advisor or other person
is entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Purchaser.
6.6 Investment Intent. Purchaser is an "Accredited Investor" within the
meaning of Rule 501(a) of Regulation D under the Act, and it is or will be
acquiring the Issuable Securities for its own account and not with a view to, or
for sale in connection with, any distribution thereof in violation of the Act.
It understands that the Issuable Securities have not been registered under the
Act by reason of a specific exemption from the registration provisions thereof
which depends upon, among other things, the bona fide nature of their investment
intent as expressed herein.
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ARTICLE VII
CORPORATE GOVERNANCE
7.1 Board of Directors.
(a) At all times on and after the Closing Date, for so long as Purchaser
and its Affiliates own or control at least 10% of the outstanding shares of
Common Stock, and until ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ no longer wishes to serve as a director,
Seller shall take all such actions as may be necessary or appropriate to cause
▇▇. ▇▇▇▇ to be elected or re-elected as a member of the Board and to be
maintained in such position at all times.
(b) In the event that a vacancy is created on the Board at any time by the
death, disability, retirement, or resignation of ▇▇. ▇▇▇▇, Purchaser and Seller
will take such actions as will result in the election or appointment of a new
director designated by Purchaser, provided that such designee is acceptable to
Seller.
7.2 Observer Rights for Purchaser Designee. Seller shall, for so long as
Purchaser and its Affiliates own or control at least 10% of the outstanding
shares of Common Stock, permit an individual designated by Purchaser and
acceptable to Seller to attend and observe meetings of the Board, and such
designee shall have the right to receive all written information provided by
Seller to the Board (but only if specifically requested by such designee). Such
designee shall have no right to vote on any matter presented to the Board, but
otherwise shall have all rights of a Director, including: (i) the right to
examine books and records of Seller; (ii) the right to review and participate in
all discussions of the Board including, without limitation, capital or equity
programs; (iii) the right to receive, upon request, any information relating to
Seller and the Subsidiaries, and to any Affiliates thereof; and (iv) the right
to meet on a regular basis with the management personnel of Seller and the
Subsidiaries, or any Affiliates thereof; provided that any such designee shall
agree to be bound by all policies relating to confidentiality and material non-
public information which are applicable to the Directors and senior executive
officers of Seller.
ARTICLE VIII
COVENANTS OF THE PARTIES
8.1 Restrictions. Purchaser covenants and agrees with Seller that Purchaser
will not dispose of any of Purchaser's shares of the Issuable Securities except
pursuant to (a) an effective registration statement under the Act or (b) an
applicable exemption from registration under the Act. In connection with any
sale by Purchaser pursuant to clause (b) of the preceding sentence, Purchaser
shall furnish to Seller, if requested by Seller, an opinion of counsel
reasonably satisfactory to Seller to the effect that such exemption from
registration is available in connection with such sale.
8.2 Pre-Closing Activities. From and after the date of this Agreement until
the Closing, each of Seller and Purchaser shall act with good faith towards, and
shall use all commercially reasonable efforts to consummate, the
15
transactions contemplated by this Agreement, and neither Seller nor Purchaser
will take any action that would prohibit or impair its ability to consummate the
transactions contemplated by the Merger Agreement and this Agreement.
8.3 Filing with SEC. So long as any of the Issuable Securities are
outstanding, Seller shall file with the SEC the annual reports and quarterly
reports and the information, documents and other reports that are required to be
filed with the SEC pursuant to Sections 13 and 15 of the Exchange Act, so long
as Seller has or is required to have a class of securities registered under the
Exchange Act and is then subject to the reporting requirements of the Exchange
Act, at the ▇▇▇▇ ▇▇▇▇▇▇ is required to file the same with the SEC and, promptly
after Seller is required to file such reports, information or documents with the
SEC, to mail copies of such reports, information and documents to the holders of
the Series A Preferred Stock, Series B Preferred Stock, the Conversion Shares,
Series C Preferred Stock and the Series C Redemption Shares at their addresses
set forth in the register maintained by the transfer agent therefor.
8.4 Stockholder Meeting. Seller shall cause a special meeting of its common
stockholders (the "Stockholder Meeting") to be held as soon as practicable but
in no event later than six months after the Closing, for the purpose of
approving (i) the issuance of the Series B Preferred Stock (pursuant to the
Exchange contemplated by Section 8.13 hereof (the "Exchange Approval")) as
required by NYSE Rule 312 and (ii) an amendment to the Certificate of
Incorporation of Seller providing for an increase in the number of authorized
common shares to such number as may be deemed appropriate by Seller (the
"Charter Amendment Approval" and, together with the Exchange Approval, the
"Stockholder Approval"), and transacting such other business as may properly
come before the meeting or any adjournment thereof, (the "Stockholder Meeting
Matters"). Seller shall use its best efforts to obtain the Stockholder Approval
no later than six months after the Closing. Purchaser shall vote, and shall
cause its Affiliates to vote, all shares of Seller voting securities which they
may hold at the time of the Stockholder Meeting in favor of the Stockholder
Approval.
8.5 Proxy Statement. Seller covenants that the Proxy Statement will not
include any untrue statement of a material fact, or omit to state any material
fact, necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
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Seller's covenant shall not encompass any information in the Proxy Statement
that was furnished in writing to Seller by or on behalf of Purchaser for use
specifically in connection with the preparation of the Proxy Statement.
8.6 Stock Exchange Listing. Subsequent to consideration by the shareholders
of Seller of the Stockholder Meeting Matters at the Shareholders Meeting and
until such shares shall cease to be outstanding, Seller shall take all steps
necessary to ensure that the Series A Preferred Stock (if still outstanding),
Conversion Shares and Series C Preferred Stock (if still outstanding) and Series
C Redemption Shares (if any) are approved for trading, subject to notice of
issuance by the NYSE and any other securities exchange on which the Common Stock
is listed.
8.7 HSR. Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to take, or cause to be taken, all
16
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective all necessary filings required pursuant to the HSR Act no
later than five Business Days from the date of this Agreement, and shall use
their best efforts to obtain the early termination of the waiting period
thereunder, provided that neither Seller nor Purchaser shall be required to
agree to dispose of or hold separate any portion of its business or assets.
8.8 Equity Proposals.
(a) Prior to the Closing, Seller agrees that neither Seller nor any
Subsidiary nor any of the respective officers and directors of Seller or any of
the Subsidiaries shall, and Seller shall direct and use its best efforts to
cause its employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by Seller or any
Subsidiary) not to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal or offer (including, without limitation,
any proposal or offer to stockholders of Seller) with respect to the offer, sale
or issuance of Preferred Stock or other comparable equity securities as
contemplated by this Agreement (any such proposal or offer being hereinafter
referred to as an "Equity Proposal") or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any Person relating to an Equity Proposal, or otherwise facilitate
directly or indirectly any effort or attempt to make or implement an Equity
Proposal; and
(b) Seller will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. Seller will take the necessary steps to
inform the individuals or entities referred to in the first sentence hereof of
the obligations undertaken in this subsection 8.8(b). Seller will notify
Purchaser immediately if any such inquiries or proposals are received by, any
such information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with Purchaser.
8.9 Publicity. Seller and Purchaser will consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or by obligations pursuant to any listing agreement with
any securities exchange.
8.10 Securities. Seller hereby covenants to Purchaser, that from and after
the date hereof and so long as Purchaser owns any Issuable Securities:
(a) Unissued Shares of Common Stock. (i) Reserve and keep available out of
its authorized but unissued shares of Series B Preferred Stock and Common Stock
(including any shares held by Seller in its corporate treasury), for the purpose
of issuing any and all payment in kind dividends and effecting the Exchange and
the exercise in full of conversion and other rights related to the Series B
Preferred Stock and the Series C Preferred Stock, such number of its duly
authorized shares of Series B Preferred Stock
17
and Common Stock as shall be sufficient to effect such exercise, and if at any
time the number of authorized but unissued shares of Series B Preferred Stock or
Common Stock shall not be sufficient to effect such exercise, subject to any
required approval by the holders of the Common Stock and as may otherwise be
required pursuant to the DGCL and applicable federal and state securities laws,
Seller shall take all such corporate action as may be necessary (and desirable
in the reasonable discretion of Purchaser) to increase its authorized but
unissued shares of Series B Preferred Stock and Common Stock to such number of
shares as shall be sufficient for such purposes, and (ii) reserve and keep
available out of its authorized but unissued shares of Series A Preferred Stock,
for the purpose of issuing any and all payment in kind dividends on the Series A
Preferred Stock, such number of its duly authorized shares of Series A Preferred
Stock as shall be sufficient to effect any such dividend contemplated by the
Series A Preferred Stock, and if at any time the number of authorized but
unissued Series A Preferred Stock shall not be sufficient to effect such
dividends, subject to any required approval by the holders of the Common Stock
and as may otherwise be required pursuant to the DGCL and applicable federal and
state securities laws, Seller shall take all corporate action as may be
necessary (and desirable in the reasonable discretion of Purchaser) to increase
its authorized but unissued Series A Preferred Stock to such number of shares as
shall be sufficient for such purposes.
(b) Exchange of Certificates. Seller shall, upon surrender by the holder
of any certificates representing the Series A Preferred Stock, the Series B
Preferred Stock or the Series C Preferred Stock (or securities issued upon
exchange, conversion or redemption of any of the foregoing) for exchange or
reissuance at the office of Seller, cause to be issued in exchange therefor new
certificates in such denomination or denominations as may be requested for the
same aggregate number of such securities (or securities issued upon exchange,
conversion or redemption thereof) represented by the certificates so surrendered
and registered as such holder may request, subject to the provisions hereof.
(c) Replacement of Certificates. Upon receipt by Seller of evidence
reasonably satisfactory to it of loss, theft, destruction or mutilation of any
certificate evidencing any of the Series A Preferred Stock, the Series B
Preferred Stock, or the Series C Preferred Stock (or securities issued upon
exchange, conversion or redemption of any of the foregoing), and (in case of
loss, theft or destruction) of indemnity reasonably satisfactory to Seller, and
upon the surrender and cancellation of such certificate, if mutilated, Seller
shall make and deliver in lieu of such certificate a new certificate for the
number of such securities (or securities issued upon exchange, conversion or
redemption thereof), as the case may be, evidenced by such lost, stolen,
destroyed or mutilated certificate which remains outstanding. Purchaser's
agreement of indemnity shall constitute indemnity satisfactory to Seller for the
purposes of this Section 8.10 without the need of any further surety or bond.
(d) Government and Other Approvals. Seller shall promptly prepare, submit
and file with all public and governmental authorities, all applications,
notices, registrations, certificates, statements and such other information,
documents and instruments as may be required pursuant to any federal, state,
local or foreign law or rule or regulation of the NYSE, NASD
18
or any other securities exchange, in connection with the consummation of the
transactions contemplated by this Agreement, including the effect of any
dividends, exchange, conversion or redemption rights, anti-dilution provisions
or Board control contemplated by the terms of the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, or other securities of
Seller which may be acquired by Purchaser pursuant to this Agreement and the
Certificates of Designation. Seller shall use its best efforts to obtain any
necessary consents or approvals from any Government Entity in connection with
the consummation of the transactions contemplated by this Agreement, including
the effect of any dividends, exchange, conversion or redemption rights or anti-
dilution provisions contemplated by the terms of the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock or other securities
of Seller which may be acquired by Purchaser pursuant to this Agreement and the
Certificates of Designation. Purchaser shall provide all cooperation and
support, and take all such actions as may be reasonably required to facilitate
such filings and obtain such consents.
8.11 Access, Information and Confidentiality.
(a) Pre-Closing Access. Upon reasonable notice prior to the Closing,
Seller shall (and shall cause each of the Subsidiaries to) afford Purchaser and
its representatives reasonable access to its properties, books, contracts and
records and personnel and advisors and Seller shall (and shall cause each of the
Subsidiaries to) furnish promptly to Purchaser all information concerning its
business, properties and personnel as Purchaser or its representatives may
reasonably request.
(b) Post-Closing Access. From the date hereof until the Stockholder
Meeting, Seller shall permit Purchaser (and its designated representatives) to
visit and inspect any of the properties of Seller and the Subsidiaries,
including the books and records of Seller and the Subsidiaries (and to make
extracts and copies therefrom), and to consult with respect to and discuss the
affairs, businesses, finances, operations and accounts of Seller and the
Subsidiaries with the officers, directors and employees of such entities, all at
such reasonable times and as often as Purchaser may reasonably request.
(c) Information. Seller covenants that so long as Purchaser owns at least
10% of any Issuable Securities it will deliver to Purchaser the following:
(i) As soon as practicable and in any event within 45 days after the end
of each quarterly period (other than the last quarterly period) in each fiscal
year, (A) a consolidated statement of income and consolidated statements of
changes in financial position and cash flows of Seller and the Subsidiaries for
such quarterly period and for the period from the beginning of the current
fiscal year to the end of such quarterly period, and (B) a consolidated balance
sheet of Seller and the Subsidiaries as at the end of such quarterly period,
setting forth in each case, in comparative form, figures for the corresponding
periods in the preceding fiscal year and corresponding figures for the budget
for such quarterly period, all in reasonable detail and certified by an
authorized financial officer of Seller, subject to changes resulting from year-
end adjustments;
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(ii) As soon as practicable and in any event within 120 days after the
end of each fiscal year, (A) a consolidated statement of income and consolidated
statements of changes in financial position and cash flows of Seller and the
Subsidiaries for such year, and (B) a consolidated balance sheet of Seller and
the Subsidiaries as of the end of such year, setting forth in each case, in
comparative form, corresponding consolidated figures from the preceding annual
audit and corresponding figures for the budget for such fiscal year, all in
reasonable detail together with an opinion directed to Seller of independent
public accountants of recognized standing selected by Seller;
(iii) Promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as it shall send to its public
stockholders and copies of all registration statements (without exhibits), other
than on Form S-8 or any similar successor form, and all reports which it files
with the Commission (or any governmental body or agency succeeding to the
functions of the Commission);
(iv) With reasonable promptness, such other financial data as any
Purchaser may reasonably request.
(d) Confidentiality. Purchaser recognizes and acknowledges that it has in
the past, currently has, and in the future may possibly have, access to certain
confidential information of Seller. Purchaser agrees that it will not disclose
confidential information with respect to Seller to any Person for any purpose or
reason whatsoever, except to authorized representatives of Seller and to counsel
and other advisers, provided, however, that such advisers (other than counsel)
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agree to the confidentiality provisions of this subsection 8.11(d), unless (i)
such information becomes known to the public generally through no fault of
Purchaser, or (ii) disclosure is required by law or the order of any
governmental authority under color of law; provided, however, that prior to
-------- -------
disclosing any information pursuant to clauses (i) or (ii) above, Purchaser
shall, if possible, give prior written notice thereof to Seller and provide
Seller with the opportunity to contest such disclosure.
8.12 Maintenance of Business. Seller covenants that between the date of this
Agreement and Closing, it shall and shall cause each of the Subsidiaries to:
(a) conduct its business (including, but not limited to, making loans,
paying directors, officers and employees, including any salary, bonus, or other
compensation policy, disposing or acquiring assets, and incurring liabilities)
only in the ordinary course, consistent with past practice;
(b) use commercially reasonable efforts to preserve its business
organizations intact, to retain the services of its present officers and
employees and to preserve the good will of the suppliers and customers and
others having business relations with it;
(c) comply in all material respects with all laws that may be applicable to
its business;
(d) not make any distributions or dividends to its stockholders; and
20
(e) comply with its stated official accounting policies with respect to
charge-offs and loss provisions.
Subject to the foregoing, any transaction or action that is not in the
ordinary course of business, consistent with Seller's past practice, shall be
subject to the prior written consent of Purchaser.
8.13 Exchange. In the event Seller shall have obtained the Stockholder
Approval, on the first Business Day following the last to occur of (a) delivery
to Purchaser of a Certificate of the Chief Executive Officer or other executive
officer of Seller certifying that the Stockholder Approval has been obtained,
which Certificate shall be delivered within one Business Day of obtaining the
Stockholder Approval and (b) termination of any applicable waiting period under
the HSR Act, then the Bridge Securities and any additional shares of Series A
Preferred Stock paid as dividends thereon shall, without any further action on
the part of Seller or the holders thereof, be exchanged for shares of Series B
Preferred Stock (the "Exchange"). If the Stockholder Approval has not been
obtained prior to six months after the Closing, then the Exchange shall not take
place without the prior written consent of the holders of at least 67% of the
shares of Series A Preferred Stock and Series C Preferred Stock. In connection
with the Exchange, the holders of the Bridge Securities or any additional shares
of Series A Preferred Stock paid as dividends thereon shall receive the number
of shares of Series B Preferred Stock equal to (x) 46,082.95 plus the number of
any additional shares of Series A Preferred Stock paid as dividends thereon then
owned by them on the date of the Exchange (after giving effect to any accrued
dividends and interest), divided by (y) 2,170. From and after the date of the
Exchange all of the Bridge Securities and any additional shares of Series A
Preferred Stock paid as dividends thereon shall be deemed to have been exchanged
for the Series B Preferred Stock into which they were exchangeable. Holders of
Issuable Securities shall be entitled to obtain certificates representing the
Series B Preferred Stock to which they are entitled pursuant to the Exchange by
delivering to Seller certificates representing the Series A Preferred Stock and
the Series C Preferred Stock. Seller shall not take any action between the date
hereof and the date set for redemption of the Series A Preferred Stock that
would cause the Conversion Price (as defined in the Series B Certificate of
Designation) to be any amount other than $21.70 per share if shares of Series B
Preferred Stock were outstanding on the date hereof without making appropriate
adjustments thereof in the conversion price (which such adjustment or cumulative
adjustments to the Series B Preferred Stock shall take effect immediately after
the Exchange).
8.14 Tax Matters. Purchaser intends that no pay-in-kind dividends on the
Series A Preferred Stock or the Series B Preferred Stock will, when paid or
accrued, be includible in Purchaser's gross income for federal, state or local
tax purposes. Accordingly, for so long as there are any shares of Series A
Preferred Stock or Series B Preferred Stock outstanding then: (a) unless Seller
concludes in good faith that there is no reasonable basis to make or file any
tax return that is consistent with such intention, Seller shall not make or file
any tax return that is inconsistent with such intention; (b) if by reason of any
action taken by Seller over the objection of Purchaser the pay-in-kind dividends
which accrue or are paid with respect to the Series A Preferred Stock or Series
B Preferred Stock become taxable as
21
income for tax purposes when paid or accrued, Seller shall pay to the holders of
such securities such additional amount (the "Gross Up Amount") as may be
necessary to fund any federal, state or local income tax payable with respect to
such dividend. Such Gross Up Amount shall also include an amount necessary to
fund the payment of any such income tax payable with respect to the Gross Up
Amount. Such Gross Up Amount shall be paid upon notice to Seller at least ten
(10) days before the date on which the relevant income tax payment is due or
made. Prior to receiving any taxable distribution from Seller, Purchaser shall
provide Seller with such documentation as may be reasonably requested by Seller
in order to make such distribution without withholding for tax purposes. All
amounts paid or accrued on any Issuable Security shall be net of applicable
withholding taxes.
8.15 Authorized Shares. If Seller is unable to obtain the Stockholder
Approval, it will use its best efforts to obtain an amendment to the Certificate
of Incorporation providing for an increase in the number of authorized shares of
Common Stock to such number as is sufficient to permit the repurchase by Seller
of the Series C Preferred Stock pursuant to the terms of the Certificate of
Designation for the Series C Preferred Stock.
ARTICLE IX
TERMINATION
9.1 General. Except for the obligations in Article IX, Article XI and
Section 8.11(a) and (d), this Agreement and the transactions contemplated hereby
shall terminate without any action by the parties hereto if the Closing shall
not have occurred on or before November 30, 1999. This Agreement may be
terminated at any time prior to the Closing (i) by a written instrument executed
and delivered by Seller and Purchaser; (ii) by Purchaser upon any material
breach or default by Seller under this Agreement; or (iii) by Seller upon any
material breach or default by Purchaser under this Agreement.
9.2 Breach By Seller. A material breach or default by Seller shall occur:
(a) in the event that any representation or warranty of Seller set forth in
Article V shall be false in any material respect; or
(b) in the event that Seller (or any applicable Subsidiary) shall not
perform in any material respect any covenant required of it in Article III or
Article VIII not otherwise waived by Purchaser; or
(c) breach of or default by Seller or any Subsidiary under any of the
Transaction Documents.
9.3 Breach By Purchaser. A material breach or default by Purchaser shall
occur
(a) in the event that any representation or warranty of Purchaser set forth
in Article VI shall be false in any material respect; or
(b) in the event that Purchaser shall not perform in any material respect
any covenant required of it in Article IV or VIII not otherwise waived by
Seller; or
22
(c) breach of or default by Purchaser under any of the Transaction
Documents.
9.4 Specific Remedies. In addition to the termination of this Agreement and
the transactions contemplated herein prior to Closing, in the event of a
material breach or default by a party (the "Breaching Party"), the Breaching
Party shall indemnify the non-breaching party for any and all loss, cost, and
expense caused by the breach of representation, warranty, or covenant.
ARTICLE X
SURVIVAL; INDEMNIFICATION
10.1 Survival of Representations and Warranties and Covenants. All
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement and the delivery of Bridge Securities
for a period of two (2) years from the date of such delivery and any examination
or investigation made by any party to this Agreement or any of their successors
and assigns. All covenants shall survive for the periods specified therein or,
if no period is specified, for a period of two (2) years.
10.2 Indemnification of Seller. From and after the Closing Purchaser shall
indemnify Seller and its Affiliates, officers, directors, employees, partners
(general or limited), shareholders, and shareholders of their partners (general
or limited), for, and shall defend and hold harmless each of them from, against,
and with respect to all Indemnifiable Losses as a result of, arising from, in
connection with, or incident to (a) any breach or inaccuracy of any
representation or warranty Purchaser makes in this Agreement; or (b) any failure
of Purchaser to fulfill, satisfy, and discharge any of its obligations or
covenants under this Agreement.
10.3 Indemnification of Purchaser. From and after the Closing Seller shall
indemnify Purchaser and its Affiliates, officers, directors, employees, partners
(general or limited) and shareholders of its partners (general or limited) for,
and shall defend and hold harmless each of them from, against, and with respect
to all Indemnifiable Losses as a result of, arising from, in connection with, or
incident to (a) any breach or inaccuracy of any written representation or
warranty made by Seller in this Agreement; or (b) any failure of Seller to
fulfill, satisfy, and discharge any of its obligations or covenants under this
Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Successors and Assigns. All covenants and agreements contained in this
Agreement by or on behalf of the parties hereto shall bind, and inure to the
benefit of, the respective successors and assigns of the parties hereto;
PROVIDED, HOWEVER, that the rights granted to the parties hereto may not be
assigned (except to wholly-owned subsidiaries of such parties) without the prior
written consent of the other parties. Purchaser may assign to one or
23
more of its affiliated partnerships its obligations hereunder in whole or in
part, but shall not be relieved of such obligations.
11.2 Performance; Waiver. The provisions of this Agreement (including this
Section 11.2) may be modified or amended, and waivers and consents to the
performance and observance of the terms hereof may be given by written
instrument executed and delivered by Seller and (1) prior to the Closing, by
Purchaser and (2) after the Closing, by the holder or holders of a majority of
the Series A Preferred Stock and Series C Preferred Stock or, after the
Exchange, of the Series B Preferred Stock. The failure at any time to require
performance of any provision hereof shall in no way affect the full right to
require such performance at any time thereafter (unless performance thereof has
been waived in accordance with the terms hereof for all purposes and at all
times by the parties to whom the benefit of such performance is to be rendered).
The waiver by any party to this Agreement of a breach of any provision hereof
shall not be taken or held to be a waiver of any succeeding breach of such
provision or any other provision or as a waiver of the provision itself.
11.3 Notices. All notices or other communications given or made hereunder
shall be validly given or made if in writing and delivered by facsimile
transmission or in person at, or mailed by overnight courier to, the following
addresses (and shall be deemed effective at the time of receipt thereof).
If to Seller:
URS Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Godward LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser:
RCBA Strategic Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
24
or to such other address as the party to whom notice is to be given may have
previously furnished notice in writing to the other in the manner set forth
above.
11.4 Expenses.
(a) Seller shall reimburse Purchaser for all of Purchaser's reasonable
out-of pocket costs and third party expenses (including professional fees), that
Purchaser incurred in association with this Agreement including, but not limited
to, conducting "due diligence" review of Seller, as and when such expenses are
incurred; PROVIDED, HOWEVER, that if Purchaser has breached this Agreement as
provided in Section 9.3, and Seller terminates this Agreement, each party shall
bear its own expenses.
(b) In addition to any other reimbursement to which Purchaser is entitled
pursuant to this Section, Seller shall pay to Purchaser in cash at Closing the
sum of One Million Five Hundred Thousand Dollars ($1,500,000.00) as a
transaction fee.
11.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware as applied to contracts made
and performed within the State of Delaware, without regard to principles of
conflicts of law.
11.6 Severability; Interpretation. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, each of Seller and Purchaser directs that such
court interpret and apply the remainder of this Agreement in the manner which it
determines most closely effectuates their intent in entering into this
Agreement, and in doing so particularly take into account the relative
importance of the term, provision, covenant or restriction being held invalid,
void or unenforceable.
11.7 Headings. The index and section headings herein are for convenience
only and shall not affect the construction hereof.
11.8 Entire Agreement. This Agreement together with the other Transaction
Documents embody the entire agreement between the Parties relating to the
subject matter hereof and any and all prior oral or written agreements,
representations or warranties, contracts, understandings, correspondence,
conversations, and memoranda, whether written or oral, among Seller and
Purchaser, or between or among any agents, representatives, parents,
subsidiaries, Affiliates, predecessors in interest or successors in interest,
with respect to the subject matter hereof.
11.9 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
11.10 Absence of Third Party Beneficiary Rights. No provision of this
Agreement is intended, nor will be interpreted, to provide or to create any
third party beneficiary rights or any other rights of any kind in any client,
25
customer, Affiliate, shareholder, employee, or partner of any party hereto or
any other Person.
11.11 Mutual Drafting. This Agreement is the mutual product of the parties
hereto, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of each of the parties, and shall not be construed for
or against any party hereto.
11.12 Further Representations. Each party to this Agreement acknowledges and
represents that it has been represented by its own legal counsel in connection
with the transactions contemplated by this Agreement, with the opportunity to
seek advice as to its legal rights from such counsel. Each party further
represents that it is being independently advised as to the tax consequences of
the transactions contemplated by this Agreement and is not relying on any
representation or statements made by the other party as to such tax
consequences.
11.13 Specific Performance; Remedies.
(a) Seller acknowledges that Purchaser will be irreparably harmed and that
there will be no adequate remedy at law for any violation by Seller of the
covenants or agreements contained in Sections 8.4 (Stockholder Meeting), 8.6
(Stock Exchange Listing), 8.8 (Equity Proposals), 8.9 (Publicity), 8.10
(Securities), 8.11(a), (b) and (c) (Pre-Closing Access; Post-Closing Access;
Information), 8.13 (Exchange), and 8.14 (Tax Matters) of this Agreement. It is
accordingly agreed that, in addition to any other remedies which may be
available upon the breach of any such covenants or agreements, Purchaser shall
have the right to obtain injunctive relief to restrain a breach or threatened
breach of, or otherwise to obtain specific performance of, these covenants and
agreements of Seller.
(b) Purchaser acknowledges that Seller will be irreparably harmed and that
there will be no adequate remedy at law for any violation by Purchaser of the
covenants or agreements contained in Section 8.9 (Publicity) and subsection
8.11(d) (Confidentiality) of this Agreement. It is accordingly agreed that, in
addition to any other remedies which may be available upon the breach of any
such covenants or agreements, Seller shall have the right to obtain injunctive
relief to restrain a breach or threatened breach of, or otherwise to obtain
specific performance of, these covenants and agreements of Purchaser.
[Remainder of page left intentionally blank.]
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
RCBA STRATEGIC PARTNERS, L.P. URS CORPORATION
By: RCBA GP, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------- -------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Member Title: Vice President and
Chief Financial Officer
27
EXHIBIT 1.7
CERTIFICATE OF DESIGNATION
of
SERIES A
PREFERRED STOCK
of
URS CORPORATION
===================
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
===================
URS Corporation, a Delaware corporation (the "Corporation"), certifies that
pursuant to the authority contained in its Certificate of Incorporation, as
amended, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, its Board of Directors (the "Board of
Directors") has adopted the following resolution creating a series of its
Preferred Stock, par value $.01 per share, designated as Series A Preferred
Stock:
RESOLVED, that a series of authorized Preferred Stock, par value $.01 per
share, of the Corporation be hereby created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
The shares of such series shall be designated as the "Series A Preferred
Stock" (the "Series A Preferred Stock") and the number of shares constituting
such series shall be 300,000 shares of Series A Preferred Stock. Section 12
below contains the definitions of certain defined terms used herein.
Section 2. Dividends and Distributions.
(a) The holders of shares of Series A Preferred Stock, in preference to
the holders of shares of the Common Stock and of any other Capital Stock of the
Corporation ranking junior to the Series A Preferred Stock as to payment of
dividends, shall be entitled to receive on the last day of each calendar
quarter, cumulative dividends on the Series A Preferred Stock accruing on a
daily basis (computed on the basis of a 360-day year of twelve 30-day months) at
the rate per annum equal to the Dividend Rate (as defined herein) per share of
Series A Preferred Stock calculated as a percentage of $2,170.00, compounded
quarterly, from and including the date of issuance until the redemption of the
Series A Preferred Stock. Such dividends shall be paid in kind as herein
provided, and will be paid whether or not they have been declared and whether or
not there are profits, surplus or other funds of the
Corporation legally available for the payment of dividends. Dividends on the
Series A Preferred Stock shall be paid in additional shares of Series A
Preferred Stock valued at $2,170.00 per share. For purposes hereof, the
"Dividend Rate" shall mean eight percent (8%) per annum from the date of initial
issuance of the Series A Preferred Stock until six (6) months after the date of
issuance, and (ii) and fifteen percent (15%) thereafter (except as otherwise
provided in the last sentence of Section 4(b)(ii)); PROVIDED, HOWEVER, that if
Stockholder Approval (as such term is defined in the Securities Purchase
Agreement) has not been obtained within six (6) months after the date of
issuance, then the Dividend Rate shall be retroactively recalculated as if it
were fifteen percent (15%) from the time of issuance and additional dividend
shares shall be paid in respect of such retroactive increase.
(b) In case the Corporation or any Subsidiary of the Corporation shall at
any time or from time to time declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or other
securities or property or rights or warrants to subscribe for securities of the
Corporation or any of its Subsidiaries by way of dividend or spin off) on the
Common Stock, other than any dividend or distribution of shares of Common Stock
covered by paragraph (b)(i) of Section 7 hereof (a "Covered Distribution"), the
holders of shares of Series A Preferred Stock shall be entitled to receive from
the Corporation, with respect to each share of Series A Preferred Stock held, in
addition to the dividends payable under paragraph (a) of this Section 2, the
same dividend or distribution received by a holder of the number of shares of
Common Stock equal to the Common Liquidation Equivalent per share of Series A
Preferred Stock on the record date for such dividend or distribution. Any such
dividend or distribution shall be declared, ordered, paid or made on the Series
A Preferred Stock at the same time such dividend or distribution is declared,
ordered, paid or made on the Common Stock and shall be in addition to any
dividends payable under paragraph (a) of this Section 2.
Section 3. Voting Rights.
So long as any shares of Series A Preferred Stock shall be outstanding and
unless the consent or approval of a greater number of shares shall then be
required by law, without first obtaining the consent or approval of the
Requisite Holders, voting as a single class, given in person or by proxy at a
meeting at which the holders of such shares shall be entitled to vote separately
as a class, or by written consent, the Corporation shall not (and shall not
permit or authorize any subsidiary to): (i) authorize, create or issue any
class or series, or any shares of any class or series, of stock having any
preference or priority as to voting, dividends or upon liquidation, dissolution
or winding up over the Series A Preferred Stock ("Senior Stock"); (ii)
authorize, create or issue any class or series, or any shares of any class or
series, of stock ranking on a parity as to voting, dividends or upon
liquidation, dissolution or winding up with the Series A Preferred Stock
("Parity Stock"); (iii) reclassify any shares of stock of the Corporation into
shares of Senior Stock or Parity Stock; (iv) authorize any security exchangeable
for, convertible into, or evidencing the right to purchase any shares of Senior
Stock or Parity Stock, other than the exchange of Series B Exchangeable
Convertible Preferred Stock of the Corporation (the "Series B Preferred Stock")
for shares of Series A Preferred Stock and Series C
Preferred Stock of the Corporation (the "Series C Preferred Stock"); (v) alter
or change the rights, preferences or privileges of the Series A Preferred Stock;
(vi) increase or decrease the authorized number of shares of Series A Preferred
Stock or issue shares of Series A Preferred Stock other than to holders of
Series A Preferred Stock pursuant to its terms; or (vii) amend or waive any
provision of the Corporation's Certification of Incorporation or bylaws in a
manner adverse in any respect to the holders of Series A Preferred Stock.
Section 4. Mandatory Repurchase by the Corporation.
(a) On the twelfth anniversary of the Closing Date of the Securities
Purchase Agreement, the Corporation shall purchase for cash from each holder of
shares of Series A Preferred Stock the number of shares of the Series A
Preferred Stock held by such holder on such twelfth anniversary. Repurchases
made pursuant to this Section 4(a) shall be effected on such anniversary date
(or such other day as the holder and the Corporation may agree) and shall be for
the Liquidation Preference. The place of payment shall be at an office or
agency fixed therefor by the Corporation or, if not fixed, at the principal
executive office of the Corporation.
(b) (i) On the date fixed for repurchase, each holder of shares of
Series A Preferred Stock shall surrender the certificate representing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment in cash therefor provided in this
Section 4. Dividends with respect to the shares of Series A Preferred Stock so
purchased shall cease to accrue after the date so purchased, such shares shall
no longer be deemed outstanding after such date and the holders thereof shall
cease to be stockholders of the Corporation and all rights whatsoever with
respect to the shares so purchased shall terminate.
(ii) If the funds legally available for such purchase are not
sufficient to purchase all the shares of Series A Preferred Stock tendered to
the Corporation for purchase, the Corporation shall purchase the greatest number
of whole shares for which such funds are so available on a pro rata basis among
all tendering holders based on the ratio of the number of shares tendered by
each of them to the aggregate amount of all shares so tendered, and the
certificates representing the unpurchased shares shall be deemed not to be
surrendered for repurchase, such unpurchased shares shall remain outstanding and
the rights of the holders of shares of Series A Preferred Stock thereafter shall
continue to be those of a holder of shares of the Series A Preferred Stock;
PROVIDED, HOWEVER, the Corporation shall thereafter be required to repurchase
all such remaining shares at the first date it has sufficient funds legally
available for such purpose at the price it would have paid at the date such
shares were actually tendered and the Corporation shall give notice as aforesaid
to each holder whose shares were not repurchased for such reason and such holder
shall thereafter have the right to elect to have such shares repurchased, such
election to be made within 30 days of receipt of such notice. For purposes of
this Section, the Corporation shall be deemed not to have sufficient funds
legally available for any such purchase if the Board of Directors reasonably
determines that immediately after such repurchase the Corporation would be
insolvent. Upon the failure to purchase all of the Series A Preferred Stock as
required by this Section 4, the
Dividend Rate on any such stock that has not been purchased shall automatically,
pursuant to Section 2(a), increase to eighteen percent (18%).
(c) Whenever the Corporation shall not have redeemed the shares of Series
A Preferred Stock within five (5) Business Days of the date such redemption is
required by Section 4(a), thereafter and until all redemption payments shall
have been made, if and so long as any shares of Series A Preferred Stock remain
outstanding, the Corporation shall not, nor shall it permit any of its
Subsidiaries to: (i) declare or pay dividends, or make any other distributions,
on any shares of Common Stock or other capital stock of the Corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Stock ("Junior Stock"), other than dividends or distribution
payable in Junior Stock; (ii) declare or pay dividends, or make any other
distributions, on any shares of Parity Stock, other than dividends or
distributions payable in Junior Stock, except dividends paid ratably on the
Series A Preferred Stock and all Parity Stock on which dividends are payable or
in arrears, in proportion to the total amounts to which the holders of all such
shares are then entitled; (iii) redeem or purchase or otherwise acquire for
consideration (other than Junior Stock) any shares of Junior Stock or Parity
Stock (other than, with respect to Parity Stock, ratably with the Series A
Preferred Stock); or (iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, other than purchases ratably among all
holders of the Series A Preferred Stock.
(d) The Corporation shall not permit any Subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of capital stock of
the Corporation unless the Corporation could, pursuant to paragraph (c) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares.
Any shares of Series A Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof, and, if necessary to provide for the lawful
purchase of such shares, the capital represented by such shares shall be reduced
in accordance with the General Corporation Law of the State of Delaware. All
such shares shall upon their cancellation become authorized but unissued shares
of Preferred Stock, par value $.01 per share, of the Corporation and may be
reissued as part of another series of Preferred Stock, par value $.01 per share,
of the Corporation subject to the conditions or restrictions on authorizing, or
creating or issuing any class or series, or any shares of any class or series,
set forth in Section 3.
Section 6. Liquidation, Dissolution or Winding Up.
If the Corporation shall adopt a plan of liquidation or of dissolution, or
commence a voluntary case under the Federal bankruptcy laws or any other
applicable state or Federal bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in any involuntary case under any such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Corporation or of any substantial part
of its property, or make an assignment for the benefit of its creditors,
or admit in writing its inability to pay its debts generally as they become due,
or if a decree or order for relief in respect of the Corporation shall be
entered by a court having jurisdiction in the premises in an involuntary case
under the Federal bankruptcy laws or any other applicable Federal or state
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or ordering the winding
up or liquidation of its affairs, and any such decree or order shall be unstayed
and in effect for a period of ninety (90) consecutive days and on account of
such event the Corporation shall liquidate, dissolve or wind up, or upon any
other liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (i) to the holders of shares of Junior Stock, unless prior
thereto, the holders of shares of Series A Preferred Stock shall have received
in cash the Liquidation Preference, or (ii) to the holders of shares of Parity
Stock, except distributions made ratably on the Series A Preferred Stock and all
such Parity Stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up of the
Corporation. A consolidation, merger, corporate reorganization, recapitalization
or other similar transaction as a result of which the beneficial holders of the
Corporation's Common Stock immediately prior to such transaction do not hold,
directly or indirectly, in excess of 50% of the combined voting securities
entitled to vote generally in the election of the directors of the surviving or
resulting corporation immediately after such transaction, and a sale or other
disposition of all or substantially all of the assets of the Corporation in one
transaction or series of related transactions, each shall be deemed to be a
"liquidation" within the meaning of this Section 6; provided that no such
transaction shall be deemed to be a "liquidation" if first approved by the Board
of Directors of the Corporation and the Requisite Holders.
Section 7. Common Liquidation Equivalent.
(a) Subject to the provisions for adjustment hereinafter set forth, the
"Common Liquidation Equivalent" of each share of Series A Preferred Stock shall
be equal to an amount that would be payable to the holder of such share upon the
occurrence of an event described in Section 6 had such holder, immediately prior
to such event, exchanged such shares for shares of Common Stock at the
Applicable Exchange Rate. The Applicable Exchange Rate in effect at any time
shall be the quotient obtained by dividing $2,170.00 by the Applicable Exchange
Value, calculated as provided in Section 7(b).
(b) The Applicable Exchange Value shall be $21.70, except that such amount
shall be adjusted from time to time in accordance with this Section 7. The
Applicable Exchange Value shall be subject to adjustment from time to time as
follows:
(i) In case the Corporation shall at any time or from time to time
after the original issuance of the Series A Preferred Stock declare a dividend,
or make a distribution, on the outstanding shares of Common Stock in either
case, in shares of Common Stock, or effect a subdivision, combination,
consolidation or reclassification of the outstanding shares of Common Stock into
a greater or lesser number of shares of Common Stock, then, and in each such
case, the Applicable Exchange Value in effect immediately prior to such event or
the record date therefor, whichever is earlier, shall be adjusted by
multiplying the Applicable Exchange Value by a fraction, the numerator of which
is the number of shares of Common Stock that were outstanding immediately prior
to such event and the denominator of which is the number of shares of Common
Stock outstanding immediately after such event. An adjustment made pursuant to
this clause (i) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of any such subdivision,
reclassification, consolidation or combination, at the close of business on the
day upon which such corporate action becomes effective.
(ii) In addition to the foregoing adjustments in subSection (i) above,
the Corporation will be permitted to make such reductions in the Applicable
Exchange Value as it considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights will not
be taxable to the holders of the shares of Common Stock.
(iii) No adjustment in the Applicable Exchange Value shall be required
unless such adjustment would require an increase or decrease of at least 0.1% of
the Applicable Exchange Value; provided, that any adjustments which by reason of
this subSection (v) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 7 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
(iv) In each case of an adjustment or readjustment of the Applicable
Exchange Rate, the Corporation at its expense will furnish each holder of Series
A Preferred Stock with a certificate, executed by the president and chief
financial officer (or in the absence of a person designated as the chief
financial officer, by the treasurer) showing such adjustment or readjustment,
and stating in detail the facts upon which such adjustment or readjustment is
based.
Section 8. Rank.
The Series A Preferred Stock shall rank, with respect to dividend rights and
rights upon liquidation, winding up and dissolution, prior to all classes and
series of the Corporation's preferred stock authorized or outstanding on the
date of initial issuance of the Series A Preferred Stock (other than the Series
C Preferred Stock, which shall rank on a par with the Series A Preferred Stock)
and prior to all classes of Common Stock.
Section 9. Other Covenants.
(a) Transfer Taxes. The Corporation shall pay any and all issue or other
taxes that may be payable in respect of any issue or delivery of shares of
Series B Preferred Stock on exchange of the Series A Preferred Stock and other
securities. The Corporation shall not, however, be required to pay any income
tax or tax which may be payable in respect of any transfer involved in the issue
or delivery of Series A Preferred Stock (or other securities or assets) in a
name other than that in which the shares of Series A Preferred Stock so
exchanged were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the
Corporation the amount of such tax or has established, to the satisfaction of
the Corporation, that such tax has been paid.
(b) Prior Notice of Certain Events. In case:
(i) the Corporation shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or of any other rights or warrants; or
(ii) of any reclassification of Common Stock (other than a subdivision
or combination of the outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation shall be required, or of the
sale or transfer of all or substantially all of the assets of the Corporation or
of any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or other property; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series A Preferred Stock, and shall cause to be mailed to the holders of record
of the Series A Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen days prior to
the applicable record date hereinafter specified, a notice stating, as the case
may be, (x) the record date (if any) for the purpose of such dividend,
distribution, redemption, repurchase or granting of rights or warrants or, if no
record date is to be set, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective, and the date, if any, as of which
it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
Section 10. Remedies.
(a) The Corporation stipulates that the remedies at law of each holder of
Series A Preferred Stock in the event of any failure in the performance of or
compliance with any of the terms hereof are not and will not be adequate and
that, to the fullest extent permitted by law, such terms may be specifically
enforced by a decree for the specific performance of any agreement contained
herein or by an injunction against a violation of any of the terms hereof or
otherwise without requiring any holder to post a bond or other security except
to the extent required by applicable law.
(b) Any holder of Series A Preferred Stock shall be entitled to recover
from the Corporation the reasonable attorneys' fees and expenses
incurred by such holder in connection with the enforcement by such holder of any
obligation of the Corporation hereunder.
(c) No failure or delay on the part of any holder of Series A Preferred
Stock in exercising any right, power or remedy hereunder or under applicable law
or otherwise shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder
or thereunder. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law or otherwise.
Section 11. Severability of Provisions.
Whenever possible, each provision hereof shall be interpreted in a manner as
to be effective and valid under applicable law, but if any provision hereof 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 or otherwise adversely affecting the remaining provisions hereof.
If a court of competent jurisdiction should determine that a provision hereof
would be valid or enforceable if a period of time were extended or shortened or
a particular percentage were increased or decreased, then such court may make
such change as shall be necessary to render the provision in question effective
and valid under applicable law.
Section 12. Definitions.
For the purposes of the Certificate of Designation of Series A Preferred Stock
which embodies this resolution:
(a) "Accrued Dividends" to a particular date (the "Applicable Date") shall
mean (i) all dividends accrued but not paid on the Series A Preferred Stock
pursuant to paragraph (a) of Section 2, whether or not declared, accrued to the
Applicable Date, plus (ii) all dividends or distributions payable pursuant to
paragraph (b) of Section 2 for which the Covered Distribution was declared,
ordered, paid or made on or prior to the Applicable Date.
(b) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which commercial banks in the City of New York are authorized or
obligated by law or executive order to close.
(c) "capital stock" shall mean (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
(d) "Closing Price" per share of Common Stock on any date shall mean the
last sale price, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, in either case as reported on the Nasdaq
National Market or in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange or American Stock Exchange, as the case may be, or, if
the Common Stock is listed or admitted to trading on the New York Stock Exchange
or American Stock Exchange, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other system then in use,
or, if on any such date the Common Stock is not quoted by any such organization,
the average of the Closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors and reasonably acceptable to the Requisite Holders.
(e) "Common Liquidation Equivalent" shall have the meaning set forth in
Section 7.
(f) "Current Market Price" per share of Common Stock on any date shall mean
the average of the Closing Prices of a share of Common Stock for the twenty (20)
consecutive Trading Days ending on the date in question. If on any such Trading
Day the Common Stock is not quoted by any organization referred to in the
definition of Closing Price, the fair value of the Common Stock on such day, as
reasonably determined in good faith by the Board of Directors of the
Corporation, shall be used.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Liquidation Preference" shall mean an amount per share of Series A
Preferred Stock equal to the greater of (i) the Common Liquidation Equivalent
and (ii) the Preferred Liquidation Amount.
(i) "Person" shall mean an individual, partnership, corporation, limited
liability company or partnership, unincorporated organization, trust or joint
venture, or a governmental agency or political subdivision thereof, or other
entity of any kind.
(j) "Preferred Liquidation Amount" per share of Series A Preferred Stock
shall be an amount equal to $2,170.00 plus all Accrued Dividends thereon to the
date of determination.
(k) "Requisite Holders" shall mean the holders of sixty-seven percent
(67%) of the then-outstanding shares of Series A Preferred Stock.
(l) "Securities Purchase Agreement" shall mean that certain agreement
dated as of May 5, 1999 by and among the Corporation and certain purchasers of
the Series A Preferred Stock party thereto.
(m) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
(n) "Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is quoted, listed or admitted to
trading is open for the transaction of business or, if the Common Stock is not
quoted, listed or admitted to trading on any national securities exchange
(including the Nasdaq Stock Market), any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation
of Series A Preferred Stock to be duly executed by its President and attested to
by its Secretary and has caused its corporate seal to be affixed hereto, this
[ ] day of [ ], 1999.
URS CORPORATION
By:
---------------------------
EXHIBIT 1.7
CERTIFICATE OF DESIGNATION
of
SERIES B EXCHANGEABLE
CONVERTIBLE PREFERRED STOCK
of
URS CORPORATION
===================
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
===================
URS Corporation, a Delaware corporation (the "Corporation"), certifies that
pursuant to the authority contained in its Certificate of Incorporation, as
amended, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, its Board of Directors (the "Board of
Directors") has adopted the following resolution creating a series of its
Preferred Stock, par value $.01 per share, designated as Series B Exchangeable
Convertible Preferred Stock:
RESOLVED, that a series of authorized Preferred Stock, par value $.01 per
share, of the Corporation be hereby created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
The shares of such series shall be designated as the "Series B Exchangeable
Convertible Preferred Stock" (the "Series B Preferred Stock") and the number of
shares constituting such series shall be 150,000 shares of Series B Preferred
Stock. Section 14 below contains the definitions of certain defined terms used
herein.
Section 2. Dividends and Distributions.
(a) The holders of shares of Series B Preferred Stock, in preference to
the holders of shares of the Common Stock and of any other capital stock of the
Corporation ranking junior to the Series B Preferred Stock as to payment of
dividends, shall be entitled to receive on the last day of each calendar
quarter, cumulative dividends on the Series B Preferred Stock accruing on a
daily basis (computed on the basis of a 360-day year of twelve 30-day months) at
the rate per annum equal to the Dividend Rate (as defined herein) per share of
Series B Preferred Stock calculated as a percentage of $2,170.00, compounded
quarterly, from and including the date of issuance of the Series B Preferred
Stock until the conversion or exchange of the Series B Preferred Stock. Such
dividends shall be paid in kind as herein provided, and
will be paid whether or not they have been declared and whether or not there are
profits, surplus or other funds of the Corporation legally available for the
payment of dividends. Dividends on the Series B Preferred Stock shall be paid in
additional shares of Series B Preferred Stock valued at $2,170.00 per share. For
purposes hereof, the "Dividend Rate" shall mean eight percent (8%) per annum
from the date of initial issuance of the Series B Preferred Stock(except as
otherwise provided in the last sentence of Section 4(b)(ii)).
(b) In case the Corporation or any Subsidiary of the Corporation shall at
any time or from time to time declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or other
securities or property or rights or warrants to subscribe for securities of the
Corporation or any of its Subsidiaries by way of dividend or spin off) on the
Common Stock, other than any dividend or distribution of shares of Common Stock
covered by paragraph (b)(i) of Section 8 hereof (a "Covered Distribution"), the
holders of shares of Series B Preferred Stock shall be entitled to receive from
the Corporation, with respect to each share of Series B Preferred Stock held, in
addition to the dividends payable under paragraph (a) of this Section 2, the
same dividend or distribution received by a holder of the number of shares of
Common Stock into which such share of Series B Preferred Stock is convertible on
the record date for such dividend or distribution. Any such dividend or
distribution shall be declared, ordered, paid or made on the Series B Preferred
Stock at the same time such dividend or distribution is declared, ordered, paid
or made on the Common Stock and shall be in addition to any dividends payable
under paragraph (a) of this Section 2.
Section 3. Voting Rights.
In addition to any voting rights provided elsewhere herein, and any voting
rights provided by law, the holders of shares of Series B Preferred Stock shall
have the following voting rights:
(a) So long as the Series B Preferred Stock is outstanding, each share of
Series B Preferred Stock shall entitle the holder thereof to vote on all matters
voted on by holders of the capital stock of the Corporation into which such
share of Series B Preferred Stock is convertible, voting together as a single
class with the other shares entitled to vote, at all meetings of the
stockholders of the Corporation. With respect to any such vote, each share of
Series B Preferred Stock shall entitle the holder thereof to cast the number of
votes equal to the number of votes which could be cast in such vote by a holder
of the shares of capital stock of the Corporation into which such share of
Series B Preferred Stock is convertible on the record date for such vote or, if
no such record date is established, on the date any written consent of
stockholders is solicited.
(b) So long as any shares of Series B Preferred Stock shall be outstanding
and unless the consent or approval of a greater number of shares shall then be
required by law, without first obtaining the consent or approval of the
Requisite Holders, voting as a single class, given in person or by proxy at a
meeting at which the holders of such shares shall be entitled to vote separately
as a class, or by written consent, the Corporation shall not (and shall not
permit or authorize any subsidiary to): (i) authorize, create or issue any
class or series, or any shares of any class or series, of stock
having any preference or priority as to voting, dividends or upon liquidation,
dissolution or winding up over the Series B Preferred Stock ("Senior Stock");
(ii) authorize, create or issue any class or series, or any shares of any class
or series, of stock ranking on a parity as to voting, dividends or upon
liquidation, dissolution or winding up with the Series B Preferred Stock
("Parity Stock"); (iii) reclassify any shares of stock of the Corporation into
shares of Senior Stock or Parity Stock; (iv) authorize any security exchangeable
for, convertible into, or evidencing the right to purchase any shares of Senior
Stock or Parity Stock; (v) alter or change the rights, preferences or privileges
of the Series B Preferred Stock; (vi) increase or decrease the authorized number
of shares of Series B Preferred Stock or issue shares of Series B Preferred
Stock other than to holders of Series B Preferred Stock pursuant to its terms;
(vii) amend or waive any provision of the Corporation's Certification of
Incorporation or bylaws in a manner adverse in any respect to the holders of
Series B Preferred Stock; (viii) authorize or pay any cash dividend on Common
Stock or any other class or series of stock over which the Series B Preferred
Stock has any preference or priority as to voting, dividends or upon
liquidation, dissolution or winding-up ("Junior Stock"); or (ix) redeem,
repurchase, retire or otherwise acquire Common Stock or any other Junior Stock
(other than by conversion into or exchange for shares of Junior Stock and other
than any redemptions, repurchases or acquisitions made pursuant to and as
required by the terms of any employee incentive or benefit plan of the
Corporation as in effect from time to time).
Section 4. Mandatory Repurchase by the Corporation.
(a) On the twelfth anniversary of the Closing Date of the Securities
Purchase Agreement, the Corporation shall purchase for cash from each holder of
shares of Series B Preferred Stock the number of shares of the Series B
Preferred Stock held by such holder on such twelfth anniversary. Repurchases
made pursuant to this Section 4(a) shall be effected on such anniversary date
(or such other day as the holder and the Corporation may agree) and shall be for
the Conversion Value. The place of payment shall be at an office or agency
fixed therefor by the Corporation or, if not fixed, at the principal executive
office of the Corporation.
(b) (i) On the date fixed for repurchase, each holder of shares of
Series B Preferred Stock shall surrender the certificate representing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment in cash therefor provided in this
Section 4. Dividends with respect to the shares of Series B Preferred Stock so
purchased shall cease to accrue after the date so purchased, such shares shall
no longer be deemed outstanding after such date and the holders thereof shall
cease to be stockholders of the Corporation and all rights whatsoever with
respect to the shares so purchased shall terminate.
(ii) If the funds legally available for such purchase are not
sufficient to purchase all the shares of Series B Preferred Stock tendered to
the Corporation for purchase, the Corporation shall purchase the greatest number
of whole shares for which such funds are so available on a pro rata basis among
all tendering holders based on the ratio of the number of shares tendered by
each of them to the aggregate amount of all shares so tendered, and the
certificates representing the unpurchased shares shall be deemed not to be
surrendered for repurchase, such unpurchased shares shall remain
outstanding and the rights of the holders of shares of Series B Preferred Stock
thereafter shall continue to be those of a holder of shares of the Series B
Preferred Stock; PROVIDED, HOWEVER, the Corporation shall thereafter be required
to repurchase all such remaining shares at the first date it has sufficient
funds legally available for such purpose at the price it would have paid at the
date such shares were actually tendered and the Corporation shall give notice as
aforesaid to each holder whose shares were not repurchased for such reason and
such holder shall thereafter have the right to elect to have such shares
repurchased, such election to be made within 30 days of receipt of such notice.
For purposes of this Section, the Corporation shall be deemed not to have
sufficient funds legally available for any such purchase if the Board of
Directors reasonably determines that immediately after such repurchase the
Corporation would be insolvent. Upon the failure to purchase all of the Series B
Preferred Stock as required by this Section 4, the Dividend Rate on any such
stock that has not been purchased shall automatically, pursuant to Section 2(a),
increase to twelve percent (12%). If any part of the Series B Preferred Stock
has not been purchased pursuant to this Section 4 three (3) months after the
twelfth anniversary of the Closing Date of the Securities Purchase Agreement,
the Dividend Rate shall thereafter increase to fifteen percent (15%).
Section 5. Conversion at Option of the Corporation.
(a) On or after the third anniversary of the Closing Date of the
Securities Purchase Agreement (the "Third Anniversary"), so long as shares of
Common Stock shall have traded on the Primary Exchange for at least thirty (30)
of the forty-five (45) trading days immediately preceding the Determination Date
(defined below), at a Closing Price in excess of the Hurdle Percentage of the
Conversion Price then in effect for the Series B Preferred Stock for each such
trading day, all, but not less than all, of the shares of Series B Preferred
Stock may, at the option of the Corporation, be converted into shares of Common
Stock. The Corporation shall send notice of mandatory conversion to each of the
holders of the Series B Preferred Stock at such holder's address as it appears
on the transfer books of the Corporation.
(b) Subject to the provisions for adjustment set forth in Section 8, each
share of Series B Preferred Stock shall be -- if the Corporation so elects as
provided in Section 5(a) -- converted into a number of fully paid and
nonassessable shares of Common Stock equal to the product obtained by
multiplying the Applicable Conversion Rate by the number of shares of Series B
Preferred Stock being converted. The Applicable Conversion Rate shall be the
quotient obtained by dividing the Conversion Value on the date of conversion by
the applicable Conversion Price.
Section 6. Reacquired Shares.
Any shares of Series B Preferred Stock converted, purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof, and, if necessary to provide
for the lawful purchase of such shares, the capital represented by such shares
shall be reduced in accordance with the General Corporation Law of the State of
Delaware. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock, par value $.01 per share, of the Corporation
and may be reissued as part of another series of Preferred Stock,
par value $.01 per share, of the Corporation subject to the conditions or
restrictions on authorizing, or creating or issuing any class or series, or any
shares of any class or series, set forth in paragraph (b) of Section 3.
Section 7. Liquidation, Dissolution or Winding Up.
If the Corporation shall adopt a plan of liquidation or of dissolution, or
commence a voluntary case under the Federal bankruptcy laws or any other
applicable state or Federal bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in any involuntary case under any such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Corporation or of any substantial part
of its property, or make an assignment for the benefit of its creditors, or
admit in writing its inability to pay its debts generally as they become due, or
if a decree or order for relief in respect of the Corporation shall be entered
by a court having jurisdiction in the premises in an involuntary case under the
Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and any such decree or order shall be unstayed and
in effect for a period of ninety (90) consecutive days and on account of such
event the Corporation shall liquidate, dissolve or wind up, or upon any other
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (i) to the holders of shares of Junior Stock, unless prior thereto, the
holders of shares of Series B Preferred Stock shall have received in cash the
Liquidation Preference, or (ii) to the holders of shares of Parity Stock, except
distributions made ratably on the Series B Preferred Stock and all such Parity
Stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up of the
Corporation.
Section 8. Conversion.
Each share of Series B Preferred Stock may, at the option of the holder
thereof, be converted into shares of Common Stock at any time, whether or not
the Corporation has given notice of exchange under Section 9, on the terms and
conditions set forth in this Section 8. In addition:
(a) Subject to the provisions for adjustment hereinafter set forth, each
share of Series B Preferred Stock shall be convertible in the manner hereinafter
set forth into a number of fully paid and nonassessable shares of Common Stock
equal to the product obtained by multiplying the Applicable Conversion Rate by
the number of shares of Series B Preferred Stock being converted. The Applicable
Conversion Rate shall be the quotient obtained by dividing the Conversion Value
on the date of conversion by the applicable Conversion Price.
(b) The Conversion Price shall be subject to adjustment from time to time
as follows:
(i) In case the Corporation shall at any time or from time to time
after the original issuance of the Series B Preferred Stock declare a dividend,
or make a distribution, on the outstanding shares of Common Stock in
either case, in shares of Common Stock, or effect a subdivision, combination,
consolidation or reclassification of the outstanding shares of Common Stock into
a greater or lesser number of shares of Common Stock, then, and in each such
case, the Conversion Price in effect immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted by multiplying the
Conversion Price by a fraction, the numerator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this clause (i)
shall become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification,
consolidation or combination, at the close of business on the day upon which
such corporate action becomes effective.
(ii) In addition to the foregoing adjustments in subsections (i), the
Corporation will be permitted to make such reductions in the Conversion Price as
it considers to be advisable in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights will not be taxable to the
holders of the shares of Common Stock.
(iii) In any case in which this Section 8 shall require that an
adjustment (including by reason of the last sentence of subsection (i) above) be
made immediately following a record date, the Corporation may elect to defer the
effectiveness of such adjustment (but in no event until a date later than the
effective time of the event giving rise to such adjustment), in which case the
Corporation shall, with respect to any share of Series B Preferred Stock
converted after such record date and on and before such adjustment shall have
become effective (x) defer paying any cash payment pursuant to Section 8(f)
hereof or issuing to the holder of such shares of Series B Preferred Stock the
number of shares of Common Stock and other capital stock of the Corporation (or
other assets or securities) issuable upon such conversion in excess of the
number of shares of Common Stock and other capital stock of the Corporation
issuable thereupon only on the basis of the Conversion Price prior to
adjustment, and (y) not later than five Business Days after such adjustment
shall have become effective, pay to such holder the appropriate cash payment
pursuant to Section 8(f) hereof and issue to such holder the additional shares
of Common Stock and other capital stock of the Corporation issuable on such
conversion.
(iv) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 0.1% of the
Conversion Price; provided, that any adjustments which by reason of this
subsection (iv) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
8 shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.
(c) (i) In case of any capital reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
paragraph (b) (i) of this Section 8), or in case of any consolidation or merger
of the Corporation with or into another corporation, or in case of any sale or
conveyance to another corporation of
the property of the Corporation as an entirety or substantially as an entirety
(each of the foregoing being referred to as a "Transaction"), (x) if such
Transaction occurs prior to the Third Anniversary and constitutes or leads to a
Change in Control, each holder of Series B Preferred Stock shall then be
entitled to the acceleration and immediate vesting of all dividends such holder
would have accrued on and prior to the Third Anniversary, and (y) each share of
Series B Preferred Stock then outstanding shall thereafter be convertible into,
in lieu of the Common Stock issuable upon such conversion prior to the
consummation of such Transaction, the kind and amount of shares of stock and
other securities and property (including cash) receivable upon the consummation
of such transaction by a holder of that number of shares of Common Stock into
which one share of Series B Preferred Stock was convertible immediately prior to
such Transaction (including, on a pro rata basis, the cash, securities or
property received by holders of Common Stock in any tender or exchange offer
that is a step in such Transaction). In any such case, if necessary, appropriate
adjustment (as determined by the Board of Directors) shall be made in the
application of the provisions set forth in this Section 8 with respect to rights
and interests thereafter of the holders of shares of Series B Preferred Stock to
the end that the provisions set forth herein for the protection of the
conversion rights of the Series B Preferred Stock shall thereafter be
applicable, as nearly as reasonably may be, to any such other shares of stock
and other securities and property deliverable upon conversion of the shares of
Series B Preferred Stock remaining outstanding (with such adjustments in the
conversion price and number of shares issuable upon conversion and such other
adjustments in the provisions hereof as the Board of Directors shall determine
to be appropriate). In case securities or property other than Common Stock shall
be issuable or deliverable upon conversion as aforesaid, then all references in
this Section 8 shall be deemed to apply, so far as appropriate and as nearly as
may be, to such other securities or property.
(ii) Notwithstanding anything contained herein to the contrary, the
Corporation will not effect any Transaction unless, prior to the consummation
thereof, the Surviving Person (as defined in Section 14) thereof shall assume,
by written instrument mailed to each record holder of shares of Series B
Preferred Stock, at such holder's address as it appears on the transfer books of
the Corporation, the obligation to deliver to such holder such cash and such
securities to which, in accordance with the foregoing provisions, such holder is
entitled. Nothing contained in this paragraph (c) shall limit the rights of
holders of the Series B Preferred Stock to convert the Series B Preferred Stock
in connection with the Transaction.
(d) The holder of any shares of Series B Preferred Stock may exercise its
right to convert such shares into shares of Common Stock by surrendering for
such purpose to the Corporation, at its principal office or at such other office
or agency maintained by the Corporation for that purpose, a certificate or
certificates representing the shares of Series B Preferred Stock to be converted
duly endorsed to the Corporation in blank accompanied by a written notice
stating that such holder elects to convert all or a specified whole number of
such shares in accordance with the provisions of this Section 8. The
Corporation will pay any and all issue and other taxes (other than taxes based
on income) that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series B Preferred Stock pursuant hereto. As
promptly as practicable, and in any event within three Business
Days after the surrender of such certificate or certificates and the receipt of
such notice relating thereto and, if applicable, payment of all transfer taxes
(or the demonstration to the satisfaction of the Corporation that such taxes
have been paid), the Corporation shall deliver or cause to be delivered (i)
certificates registered in the name of such holder representing the number of
validly issued, fully paid and nonassessable full shares of Common Stock to
which the holder of shares of Series B Preferred Stock so converted shall be
entitled and (ii) if less than the full number of shares of Series B Preferred
Stock evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the number of
shares evidenced by such surrendered certificate or certificates less the number
of shares converted. Such conversion shall be deemed to have been made at the
close of business on the date of receipt of such notice and of such surrender of
the certificate or certificates representing the shares of Series B Preferred
Stock to be converted so that the rights of the holder thereof as to the shares
being converted shall cease except for the right to receive shares of Common
Stock and any declared but unpaid dividends in accordance herewith, and the
person entitled to receive the shares of Common Stock shall be treated for all
purposes as having become the record holder of such shares of Common Stock at
such time.
(e) Notwithstanding any other provisions of this Certificate of
Designation, shares of Series B Preferred Stock may be converted at any time
and, if subject to exchange, up to the close of business on the last Business
Day immediately preceding the date fixed for such exchange of such shares.
(f) In connection with the conversion of any shares of Series B Preferred
Stock, no fractions of shares of Common Stock shall be issued, but in lieu
thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Common Stock on the day on which such
shares of Series B Preferred Stock are deemed to have been converted.
(g) In case at any time or from time to time the Corporation shall pay any
dividend or make any other distribution to the holders of its Common Stock, or
shall offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Corporation or consolidation or merger of the Corporation with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Corporation as an entirety or substantially as an entirety, or there shall
be a voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, then, in any one or more of said cases the Corporation shall give
at least twenty (20) days' prior written notice (the time of mailing of such
notice shall be deemed to be the time of giving thereof) to the registered
holders of the Series B Preferred Stock at the addresses of each as shown on the
books of the Corporation of the date on which (i) the books of the corporation
shall close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which paragraph (c) applies the Corporation shall give at least
thirty (30) days' prior written notice as aforesaid. Such notice shall also
specify the date as of which the holders of
the Common Stock and of the Series B Preferred Stock of record shall participate
in said dividend, distribution or subscription rights or shall be entitled to
exchange their Common Stock or Series B Preferred Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale or conveyance, or participate in such dissolution, liquidation or
winding up, as the case may be.
(h) Whenever the number of shares of Common Stock into which each share of
Series B Preferred Stock is convertible (or the number of votes to which each
share of Series B Preferred Stock is entitled) is adjusted as provided in
Section 8 hereof, the Corporation shall promptly mail to the holders of record
of the outstanding shares of Series B Preferred Stock at their respective
addresses as the same shall appear in the Corporation's stock records a notice
stating that the number of shares of Common Stock into which the shares of
Series B Preferred Stock are convertible has been adjusted and setting forth the
new number of shares of Common Stock (or describing the new stock, securities,
cash or other property) into which each share of Series B Preferred Stock is
convertible, as a result of such adjustment, a brief statement of the facts
requiring such adjustment and the computation thereof, and when such adjustment
became effective.
Section 9. Exchange at the Option of the Corporation.
(a) The Corporation may, at its option, exchange the Series B Preferred
Stock, in whole but not in part, at any time, for Exchange Debentures; PROVIDED,
HOWEVER, that (i) on the date of such exchange there are no accumulated and
unpaid dividends on the Series B Preferred Stock (including the dividend payable
on such date) that are not paid contemporaneously with such exchange or other
contractual impediments to such exchange; (ii) such exchange is permitted under
applicable law; and (iii) the Corporation shall have delivered to the Trustee
under the Exchange Indenture, an opinion of counsel with respect to the due
authorization and issuance of the Exchange Debentures.
(b) Upon any exchange of Series B Preferred Stock for Exchange Debentures
pursuant to this Section 9, each Holder of Series B Preferred Stock will be
entitled to receive, subject to the second succeeding sentence, $1.00 principal
amount of Exchange Debentures for each $1.00 of Conversion Value of Series B
Preferred Stock so exchanged. The Exchange Debentures will be issued in
registered form without coupons. Exchange Debentures issued in exchange for
Preferred Stock will be issued in principal amounts of $1,000 and integral
multiples thereof to the extent possible, and will also be issued in principal
amounts less than $1,000 so that each Holder of Series Preferred Stock will
receive certificates representing the entire amount of Exchange Debentures to
which such Holder's shares of Preferred Stock entitle such Holder; PROVIDED,
HOWEVER, that the Corporation may pay cash in lieu of issuing a Exchange
Debenture in a principal amount less than $1,000.
(c) The Corporation will send a written notice of exchange (the "Exchange
Notice") by first-class mail to each Holder of record of shares of Series B
Preferred Stock not fewer than thirty (30), nor more than sixty (60), days
before the date fixed for any exchange (the "Exchange Date") at its registered
address and notice, if mailed in the manner herein provided, shall conclusively
be presumed to have been given, whether or not the Holder
receives such notice; PROVIDED, HOWEVER, that no failure to give such notice nor
any deficiency therein shall affect the validity of the procedure for the
exchange of any shares of Series B Preferred Stock to be exchanged except as to
the Holder or Holders to whom the Corporation has failed to give said notice or
except as to the Holder or Holders whose notice was defective. The Exchange
Notice shall state: (1) the Exchange Date; (2) that the Holder is to surrender
to the Corporation, in the manner and at the place or places designated, his
certificate or certificates representing the shares of Preferred Stock to be
exchanged; (3) that dividends on the shares of Series B Preferred Stock to be
exchanged shall cease to accrue on such Exchange Date whether or not
certificates representing shares of Series B Preferred Stock are surrendered for
exchange on such Exchange Date unless the Corporation shall default in the
delivery of the Exchange Debentures to Holders of the Preferred Stock who have
duly surrendered their certificates for exchange in accordance with Section 9(c)
on or before the Exchange Date; and (4) that interest on the Exchange Debentures
shall accrue from the Exchange Date whether or not certificates for shares of
Series B Preferred Stock are surrendered for exchange on such Exchange Date.
(d) On and after the Exchange Date, dividends will cease to accrue on the
outstanding shares of Series B Preferred Stock, and all rights of the Holders of
Series B Preferred Stock (except the right to receive the Exchange Debentures or
an amount in cash, to the extent applicable, equal to the accumulated and unpaid
dividends to the Exchange Date and, if the Corporation so elects, cash in lieu
of any Exchange Debenture that is in a principal amount that is not an integral
multiple of $1,000) will terminate. From and after the Exchange Date, the
person entitled to receive the Exchange Debentures issuable upon such exchange
will be treated for all purposes as the registered holder of such Exchange
Debentures.
(e) On or before the Exchange Date, each Holder of Series B Preferred
Stock shall surrender the certificate or certificates representing such shares
of Preferred Stock, in the manner and at the place designated in the Exchange
Notice. Upon surrender in accordance with the Exchange Notice of the
certificates representing any shares of Series B Preferred Stock so exchanged,
duly endorsed (or otherwise in proper form for transfer, as determined by the
Company), such shares shall be exchanged by the Company for Exchange Debentures
in accordance with Section 9(b). The Corporation shall pay interest on the
Exchange Debentures at the rate and on the dates specified therein from the
Exchange Date.
(f) Notwithstanding the foregoing provisions of this Section 9, the
Corporation shall not be entitled to exchange the Series B Preferred Stock for
Exchange Debentures if such exchange, or any term or provision of the Exchange
Indenture or the Exchange Debentures, or the performance of the Company's
obligations under this Certificate of Designation, the Preferred Stock, the
Exchange Indenture or the Exchange Debentures, shall violate or conflict with
any applicable law or agreement or instrument then binding on the Company or if,
at the time of such exchange, the Company is insolvent or would be rendered
insolvent by such exchange.
(g) Notwithstanding the foregoing, if notice of exchange has been given
pursuant to this Section 9 and any holder of shares of Preferred Stock shall,
prior to the close of business on the Exchange Date, give written
notice to the Corporation pursuant to Section 8 of the conversion of any or all
of the shares held by the holder (accompanied by a certificate or certificates
for such shares, duly endorsed or assigned to the Corporation), then the
exchange shall not become effective as to the shares to be converted and the
conversion shall become effective as provided in Section 8.
(h) Prior to the Exchange Date, the Corporation will comply with any
applicable securities and blue sky laws with respect to the exchange of the
Series B Preferred Stock for the Debentures.
Section 10. Rank.
The Series B Preferred Stock shall rank, with respect to dividend rights and
rights upon liquidation, winding up and dissolution, prior to all classes and
series of the Corporation's preferred stock authorized or outstanding on the
date of initial issuance of the Series B Preferred Stock and prior to all
classes of Common Stock.
Section 11. Other Covenants.
(a) Reservation of Shares; Transfer Taxes; Etc.
(i) The Corporation shall at all times reserve and keep available,
out of its authorized and unissued stock, solely for the purpose of effecting
the conversion of the Series B Preferred Stock, such number of shares of its
Common Stock or Common Stock free of preemptive rights as shall from time to
time be sufficient to effect the conversion of all shares of Series B Preferred
Stock from time to time outstanding. The Corporation shall from time to time, in
accordance with the laws of the State of Delaware, increase the number of
authorized shares of Common Stock if at any time the number of shares of
authorized and unissued Common Stock shall not be sufficient to permit the
conversion of all the then outstanding shares of Series B Preferred Stock.
(ii) If any shares of Common Stock required to be reserved for
purposes of conversion of the Series B Preferred Stock hereunder require
registration with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the Corporation will
in good faith and as expeditiously as possible endeavor to cause such shares to
be duly registered or approved, as the case may be. If the Common Stock is
listed on the New York Stock Exchange or any other national securities exchange
or national quotation service, the Corporation will list and keep listed on such
exchange, upon official notice of issuance, all shares of Common Stock issuable
upon conversion of the shares of Series B Preferred Stock.
(iii) The Corporation shall pay any and all issue or other taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion or exchange of the Series B Preferred Stock. The Corporation shall
not, however, be required to pay any income tax or tax which may be payable in
respect of any transfer involved in the issue or delivery of Common Stock (or
other securities or assets) in a name other than that in which the shares of
Series B Preferred Stock so converted were registered, and no such issue or
delivery shall be made unless and until the person requesting
such issue has paid to the Corporation the amount of such tax or has
established, to the satisfaction of the Corporation, that such tax has been
paid.
(b) Prior Notice of Certain Events. In case:
(i) the Corporation shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or of any other rights or warrants; or
(ii) of any reclassification of Common Stock (other than a subdivision
or combination of the outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation shall be required, or of the
sale or transfer of all or substantially all of the assets of the Corporation or
of any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or other property; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series B Preferred Stock, and shall cause to be mailed to the holders of record
of the Series B Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen days prior to
the applicable record date hereinafter specified, a notice stating, as the case
may be, (x) the record date (if any) for the purpose of such dividend,
distribution, redemption, repurchase or granting of rights or warrants or, if no
record date is to be set, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective, and the date, if any, as of which
it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
Section 12. Remedies.
(a) The Corporation stipulates that the remedies at law of each holder of
Series B Preferred Stock in the event of any Triggering Event or threatened
Triggering Event or otherwise or other failure in the performance of or
compliance with any of the terms hereof are not and will not be adequate and
that, to the fullest extent permitted by law, such terms may be specifically
enforced by a decree for the specific performance of any agreement contained
herein or by an injunction against a violation of any of the terms hereof or
otherwise without requiring any holder to post a bond or other security except
to the extent required by applicable law.
(b) Any holder of Series B Preferred Stock shall be entitled to recover
from the Corporation the reasonable attorneys' fees and expenses incurred by
such holder in connection with any Triggering Event or enforcement by such
holder of any obligation of the Corporation hereunder.
(c) No failure or delay on the part of any holder of Series B Preferred
Stock in exercising any right, power or remedy hereunder or under applicable law
or otherwise shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder
or thereunder. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law or otherwise.
Section 13. Severability of Provisions.
Whenever possible, each provision hereof shall be interpreted in a manner as
to be effective and valid under applicable law, but if any provision hereof 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 or otherwise adversely affecting the remaining provisions hereof.
If a court of competent jurisdiction should determine that a provision hereof
would be valid or enforceable if a period of time were extended or shortened or
a particular percentage were increased or decreased, then such court may make
such change as shall be necessary to render the provision in question effective
and valid under applicable law.
Section 14. Definitions.
For the purposes of the Certificate of Designation of Series B Exchangeable
Convertible Preferred Stock which embodies this resolution:
(a) "Acceleration Amount" per share of Series B Preferred Stock shall
mean, as of the date of conversion or exchange of the Series B Preferred Stock
under Section 5, 8 or 9 hereof, or the date of any payments on the Series B
Preferred Stock under Section 7 hereof, or as of any other date on which it is
necessary to determine the number of shares of Common Stock into which a share
of Series B Preferred Stock is then convertible: (i) following a Change in
Control and prior to the Third Anniversary, an amount calculated to provide the
holder of a share of Series B Preferred Stock, as of such date, with a gross
amount of accretion calculated at the rate of eight percent (8%) on $2,170.00
per share of Series B Preferred Stock, compounded quarterly, from the date of
conversion or exchange of the Series B Preferred Stock under Section 5, 8 or 9
hereof, or the date of any payments on the Series B Preferred Stock under
Section 7 hereof, or the date of any other determination, as the case may be, to
and including the Third Anniversary, or (ii) other than as specified in clause
(i), zero.
(b) "Accrued Dividends" to a particular date (the "Applicable Date") shall
mean (i) all dividends accrued but not paid on the Series B Preferred Stock
pursuant to paragraph (a) of Section 2, whether or not declared, accrued to the
Applicable Date, plus (ii) all dividends or distributions payable pursuant to
paragraph (b) of Section 2 for which the Covered Distribution was declared,
ordered, paid or made on or prior to the Applicable Date.
(c) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
by the Securities and Exchange Commission under the Exchange Act.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which commercial banks in the City of New York are authorized or
obligated by law or executive order to close.
(e) "capital stock" shall mean (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
(f) "Change in Control" shall mean any of the following:
(i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than the
Corporation, or any of its Subsidiaries, or any employee benefit plan or related
trust of the Corporation or any of its Subsidiaries or any Excluded Person or
Excluded Group (an "Acquiring Person"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors; or
(ii) the approval by the stockholders of the Corporation, other than
any Excluded Person or Excluded Group, of a reorganization, merger or
consolidation, in each case, with respect to which all or substantially all of
the individuals and entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such reorganization,
merger or consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the Corporation
resulting from such reorganization, merger or consolidation; or
(iii) the sale or other disposition of all or any substantial part of
the assets of the Corporation, other than to any Excluded Person or Excluded
Group, in one transaction or series of related transactions;
provided that the occurrence of any event identified in subparagraphs (i)
through (iii) above that would otherwise be treated as a Change in Control shall
not constitute a Change in Control hereunder if (x) the Board of Directors of
the Corporation, by vote duly taken, and (y) the Requisite Holders of Series B
Preferred Stock, by written consent, shall so determine.
(g) "Closing Price" per share of Common Stock on any date shall mean the
last sale price, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, in either case as reported on
the Nasdaq National Market or in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange or American Stock Exchange, as the case may be, or, if
the Common Stock is listed or admitted to trading on the New York Stock Exchange
or American Stock Exchange, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other system then in use,
or, if on any such date the Common Stock is not quoted by any such organization,
the average of the Closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors and reasonably acceptable to the Requisite Holders.
(h) "Conversion Price" shall mean initially $21.70 per share, as adjusted
from time to time in accordance with Section 8.
(i) "Conversion Value" per share of Series B Preferred Stock shall mean an
amount equal to the sum of (x) $2,170.00, (y) all Accrued Dividends thereon to
the date of conversion and (z) the Acceleration Amount.
(j) "Current Market Price" per share of Common Stock on any date shall
mean the average of the Closing Prices of a share of Common Stock for the twenty
(20) consecutive Trading Days ending on the date in question. If on any such
Trading Day the Common Stock is not quoted by any organization referred to in
the definition of Closing Price, the fair value of the Common Stock on such day,
as reasonably determined in good faith by the Board of Directors of the
Corporation, shall be used.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "Exchange Debenture" shall mean the Subordinated Exchange Debentures
of the Corporation, issuable in exchange for the Series B Preferred Stock.
(m) "Excluded Group" shall mean a "group" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) that includes one or more Excluded
Persons; provided that the voting securities of the Corporation "beneficially
owned" (as such term is used in Rule 13d-3 promulgated under the Exchange Act)
by such Excluded Persons represents a majority of the voting securities
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such group.
(n) "Excluded Person" shall mean each of RCBA Strategic Partners, L.P.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ & Associates, L.P. and any affiliate (as defined in the Exchange
Act) of any of the foregoing.
(o) "Hurdle Percentage" shall mean 135%.
(p) "Liquidation Preference" shall mean an amount per share of Series B
Preferred Stock equal to the greater of (i) the Conversion Value or
(ii) in the event of any liquidation or winding up of the Corporation, the
amount the holders of the Series B Preferred Stock would have received had they
converted into Common Stock immediately prior to such liquidation or winding up
and, if such liquidation or winding up occurs prior to the Third Anniversary of
the Closing Date of the Securities Purchase Agreement, the amount such holders
would have received had they received the additional dividends that would have
been paid from the date of liquidation or winding up through such Third
Anniversary, and such additional shares were also converted into Common Stock
immediately prior to such liquidation or winding up.
(q) "Person" shall mean an individual, partnership, corporation, limited
liability company or partnership, unincorporated organization, trust or joint
venture, or a governmental agency or political subdivision thereof, or other
entity of any kind.
(r) "Requisite Holders" shall mean the holders of sixty-seven percent
(67%) of the then-outstanding shares of Series B Preferred Stock.
(s) "Securities Purchase Agreement" shall mean that certain agreement
dated as of May 5, 1999 by and among the Corporation and certain purchasers of
the Series B Preferred Stock party thereto.
(t) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
(u) "Surviving Person" shall mean the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or a substantial part of the properties and assets of the
Corporation, or the Person consolidating with or merging into the Corporation in
a merger, consolidation or other corporate combination in which the Corporation
is the continuing or surviving Person, but in connection with which the Series B
Preferred Stock or Common Stock of the Corporation is exchanged, converted or
reinstated into the securities of any other Person or cash or any other
property; provided, however, if such Surviving Person is a direct or indirect
-------- -------
Subsidiary of a Person, the parent entity also shall be deemed to be a Surviving
Person.
(v) "Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is quoted, listed or admitted to
trading is open for the transaction of business or, if the Common Stock is not
quoted, listed or admitted to trading on any national securities exchange
(including the Nasdaq Stock Market), any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(w) "Triggering Event" shall mean any one or more of the following:
(i) The Corporation shall fail to redeem any part or all of the Series
B Preferred Stock in accordance with Section 4.
(ii) The Corporation shall fail to pay any dividend on any Series B
Preferred Stock on any dividend payment date in accordance with Section 2 for
any reason, including but not limited to, that such payment is prohibited by
applicable law or the Board of Directors elect not to pay such dividend, or
shall otherwise violate any term of Section 2 and such failure shall not be
cured within a period of 30 days after such dividend payment date or violation
(which cure shall be effected in a manner ensuring the holders the same yield as
if such violation had not occurred).
(iii) The Corporation shall enter into any transaction or take any
action required to be approved by any holders of Series B Preferred Stock
without obtaining the requisite approval of the holders of the Series B
Preferred Stock.
(iv) The Corporation shall (A) fail for any reason to issue Common
Stock as required under Section 8 upon the request of any holder of Series B
Preferred Stock; or (B) so long as any shares of the Series B Preferred Stock
are outstanding, fail to make any anti-dilution adjustment thereunder, and, in
each case, such failure to issue Common Stock or to make such adjustment shall
continue for 30 days after notice.
(v) The Corporation shall adopt a plan of liquidation or of
dissolution, or commence a voluntary case under the Federal bankruptcy laws or
any other applicable state or Federal bankruptcy, insolvency or similar law, or
consent to the entry of an order for relief in any involuntary case under any
such law or to the appointment of a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of the Corporation or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due, or if a decree or order for relief in respect of the Corporation
shall be entered by a court having jurisdiction in the premises in an
involuntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Corporation or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs.
(x) "Voting Stock" shall mean the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation
of Series B Exchangeable Convertible Preferred Stock to be duly executed by its
President and attested to by its Secretary and has caused its corporate seal to
be affixed hereto, this [ ] day of [ ], 1999.
URS CORPORATION
By:
-------------------------
EXHIBIT 1.7
CERTIFICATE OF DESIGNATION
of
SERIES C
PREFERRED STOCK
of
URS CORPORATION
===================
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
===================
URS Corporation, a Delaware corporation (the "Corporation"), certifies that
pursuant to the authority contained in its Certificate of Incorporation, as
amended, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, its Board of Directors (the "Board of
Directors") has adopted the following resolution creating a series of its
Preferred Stock, par value $.01 per share, designated as Series C Preferred
Stock:
RESOLVED, that a series of authorized Preferred Stock, par value $.01 per
share, of the Corporation be hereby created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
The shares of such series shall be designated as the "Series C Preferred
Stock" (the "Series C Preferred Stock") and the number of shares constituting
such series shall be 450,000 shares of Series C Preferred Stock. Section 11
below contains the definitions of certain defined terms used herein.
Section 2. Dividends and Distributions.
(a) The holders of shares of Series C Preferred Stock shall not be
entitled to any dividends or distributions except as provided in Section 2(b).
(b) In case the Corporation or any Subsidiary of the Corporation shall at
any time or from time to time declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or other
securities or property or rights or warrants to subscribe for securities of the
Corporation or any of its Subsidiaries by way of dividend or spin off) on the
Common Stock, the holders of shares of Series C Preferred Stock shall be
entitled to receive from the Corporation, with respect to each share of Series C
Preferred Stock held, the same dividend or distribution
received by a holder of the number of shares of Common Stock equal to one share
multiplied by the Liquidation Multiplier.
Section 3. Voting Rights.
So long as any shares of Series C Preferred Stock shall be outstanding and
unless the consent or approval of a greater number of shares shall then be
required by law, without first obtaining the consent or approval of the
Requisite Holders, voting as a single class, given in person or by proxy at a
meeting at which the holders of such shares shall be entitled to vote separately
as a class, or by written consent, the Corporation shall not (and shall not
permit or authorize any subsidiary to): (i) authorize, create or issue any
class or series, or any shares of any class or series, of stock having any
preference or priority as to voting, dividends or upon liquidation, dissolution
or winding up over the Series C Preferred Stock ("Senior Stock"); (ii)
authorize, create or issue any class or series, or any shares of any class or
series, of stock ranking on a parity as to voting, dividends or upon
liquidation, dissolution or winding up with the Series C Preferred Stock
("Parity Stock") other than the issuance of shares of Series A Preferred Stock
of the Corporation (the "Series A Preferred Stock") as dividends in accordance
with such stock's terms; (iii) reclassify any shares of stock of the Corporation
into shares of Senior Stock or Parity Stock; (iv) authorize any security
exchangeable for, convertible into, or evidencing the right to purchase any
shares of Senior Stock or Parity Stock other than the exchange of Series B
Exchangeable Convertible Preferred Stock of the Corporation (the "Series B
Preferred Stock") for shares of Series A Preferred Stock and Series C Preferred
Stock; (v) alter or change the rights, preferences or privileges of the Series C
Preferred Stock; (vi) increase or decrease the authorized number of shares of
Series C Preferred Stock or issue shares of Series C Preferred Stock other than
to holders of Series C Preferred Stock pursuant to its terms; or (vii) amend or
waive any provision of the Corporation's Certification of Incorporation or
bylaws in a manner adverse in any respect to the holders of Series C Preferred
Stock.
Section 4. Mandatory Repurchase by the Corporation.
(a) On the twelfth anniversary of the Closing Date of the Securities
Purchase Agreement, the Corporation shall repurchase from each holder of shares
of Series C Preferred Stock the number of shares of the Series C Preferred Stock
held by such holder on such twelfth anniversary. Repurchases made pursuant to
this Section 4(a) shall be effected on such anniversary date (or such other day
as the holder and the Corporation may agree) and shall be for the Liquidation
Preference. The Corporation, at its election, may pay the Liquidation
Preference in cash, in Common Stock valued at the Current Market Price on the
date of repurchase, or any combination thereof. The place of payment shall be
at an office or agency fixed therefor by the Corporation or, if not fixed, at
the principal executive office of the Corporation.
(b) On or after the sixth anniversary of the Closing Date of the
Securities Purchase Agreement or, if earlier, the fifth Business Day after the
Corporation has sufficient shares of Common Stock authorized to permit the
repurchase of the outstanding Series C Preferred Stock, any holder of shares of
Series C Preferred Stock shall have the right (a person exercising such
right, an "Electing Holder") to require the Corporation to repurchase all, but
not less than all, of the shares of Series C Preferred Stock owned by such
Electing Holder by giving the Corporation at least one-hundred twenty (120) days
prior written notice of his/her/its intent to have the Corporation repurchase
his/her/its shares of Series C Preferred Stock in exchange for the Liquidation
Preference. The notice shall set forth the date set for repurchase, which date
shall be a Business Day, and the number of shares owned by the Electing Holder.
The Corporation, at its election, may choose to pay the Liquidation Preference
in cash, in Common Stock valued at the Current Market Price on the date of the
written notice to the Corporation, or any combination of thereof.
(c) (i) On the date fixed for repurchase, each holder of shares of
Series C Preferred Stock shall surrender the certificate representing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment in cash and/or Common Stock therefor
provided in this Section 4. Such shares shall no longer be deemed outstanding
after such date and the holders thereof shall cease to be holders of Series C
Preferred Stock of the Corporation and all rights whatsoever with respect to the
shares so purchased shall terminate. As promptly as practicable, and in any
event within three Business Days after the surrender of such certificate or
certificates, the Corporation shall deliver or cause to be delivered cash,
Common Stock, or any combination thereof as specified above. To the extent
Common Stock is issued, certificates therefore shall be registered in the name
of such holder representing the number of validly issued, fully paid and
nonassessable full shares of Common Stock to which the holder of shares of
Series C Preferred Stock so repurchased shall be entitled. Such repurchase
shall be deemed to have been made at the close of business on the date of
surrender of the certificate or certificates representing the shares of Series C
Preferred Stock to be repurchased so that the rights of the Electing Holder as
to the shares being repurchased shall cease except for the right to receive cash
and/or shares of Common Stock (and, to the extent the person received the shares
of Common Stock, such person shall be treated for all purposes as having become
the record holder of such shares of Common Stock at such time).
(ii) If the cash legally available and Common Stock authorized by the
board of directors of the Corporation for such purchase are not sufficient to
purchase all the shares of Series C Preferred Stock tendered to the Corporation
for purchase pursuant to paragraph (a) or (b) of this Section 4, the Corporation
shall purchase the greatest number of whole shares for which such funds and
stock are so available on a pro rata basis among all tendering holders based on
the ratio of the number of shares tendered by each of them to the aggregate
amount of all shares so tendered, and the certificates representing the
unpurchased shares shall be deemed not to be surrendered for repurchase, such
unpurchased shares shall remain outstanding and the rights of the holders of
shares of Series C Preferred Stock thereafter shall continue to be those of a
holder of shares of the Series C Preferred Stock; PROVIDED, HOWEVER, the
Corporation shall thereafter be required to repurchase all such remaining shares
at the first date it has sufficient funds legally available and Common Stock
authorized for such purpose at the price it would have paid at the date such
shares were actually tendered and the Corporation shall give notice as aforesaid
to each holder whose shares were not repurchased for such reason and such holder
shall thereafter have the right to elect to have such shares repurchased, such
election to be made
within 30 days of receipt of such notice. For purposes of this Section, the
Corporation shall be deemed not to have sufficient funds legally available for
any such purchase if the Board of Directors reasonably determines that
immediately after such repurchase the Corporation would be insolvent or if such
repurchase would conflict with the terms or conditions of, or result in a
default under, any instrument or agreement applicable to or binding upon the
Corporation, pursuant to which the Corporation has incurred indebtedness for
borrowed money in an aggregate principal amount in excess of $50 million.
(d) Whenever the Corporation shall not have redeemed the shares of Series
C Preferred Stock within five (5) Business Days of the date such redemption is
required by Section 4(a) or 4(b), thereafter and until all redemption payments
shall have been made, if and so long as any shares of Series C Preferred Stock
remain outstanding, the Corporation shall not, nor shall it permit any of its
Subsidiaries to: (i) declare or pay dividends, or make any other distributions,
on any shares of Common Stock or other capital stock of the Corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series C Stock ("Junior Stock"), other than dividends or distribution
payable in Junior Stock; (ii) declare or pay dividends, or make any other
distributions, on any shares of Parity Stock (other than Series A Preferred
Stock), other than dividends or distributions payable in Junior Stock, except
dividends paid ratably on the Series C Preferred Stock and all Parity Stock on
which dividends are payable or in arrears, in proportion to the total amounts to
which the holders of all such shares are then entitled; (iii) redeem or purchase
or otherwise acquire for consideration (other than Junior Stock) any shares of
Junior Stock or Parity Stock (other than, with respect to Parity Stock, ratably
with the Series C Preferred Stock); or (iv) purchase or otherwise acquire for
consideration any shares of Series C Preferred Stock, other than purchases
ratably among all holders of the Series C Preferred Stock.
(e) The Corporation shall not permit any Subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of capital stock of
the Corporation unless the Corporation could, pursuant to paragraph (d) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares.
Any shares of Series C Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof, and, if necessary to provide for the lawful
purchase of such shares, the capital represented by such shares shall be reduced
in accordance with the General Corporation Law of the State of Delaware. All
such shares shall upon their cancellation become authorized but unissued shares
of Preferred Stock, par value $.01 per share, of the Corporation and may be
reissued as part of another series of Preferred Stock, par value $.01 per share,
of the Corporation subject to the conditions or restrictions on authorizing, or
creating or issuing any class or series, or any shares of any class or series,
set forth in Section 3.
Section 6. Liquidation, Dissolution or Winding Up.
If the Corporation shall adopt a plan of liquidation or of dissolution, or
commence a voluntary case under the Federal bankruptcy laws or any other
applicable state or Federal bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in any involuntary case under any such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Corporation or of any substantial part
of its property, or make an assignment for the benefit of its creditors, or
admit in writing its inability to pay its debts generally as they become due, or
if a decree or order for relief in respect of the Corporation shall be entered
by a court having jurisdiction in the premises in an involuntary case under the
Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and any such decree or order shall be unstayed and
in effect for a period of ninety (90) consecutive days and on account of such
event the Corporation shall liquidate, dissolve or wind up, or upon any other
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (i) to the holders of shares of Junior Stock, unless prior thereto, the
holders of shares of Series C Preferred Stock shall have received in cash the
Liquidation Preference, or (ii) to the holders of shares of Parity Stock, except
distributions made ratably on the Series C Preferred Stock and all such Parity
Stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up of the
Corporation. A consolidation, merger, corporate reorganization,
recapitalization or other similar transaction as a result of which the
beneficial holders of the Corporation's Common Stock immediately prior to such
transaction do not hold, directly or indirectly, in excess of 50% of the
combined voting securities entitled to vote generally in the election of the
directors of the surviving or resulting corporation immediately after such
transaction, and a sale or other disposition of all or substantially all of the
assets of the Corporation in one transaction or series of related transactions,
each shall be deemed to be a "liquidation" within the meaning of this Section 6;
provided that no such transaction shall be deemed to be a "liquidation" if first
approved by the Board of Directors of the Corporation and the Requisite Holders.
Section 7. Rank.
The Series C Preferred Stock shall rank, with respect to dividend rights and
rights upon liquidation, winding up and dissolution, prior to all classes and
series of the Corporation's preferred stock authorized or outstanding on the
date of initial issuance of the Series C Preferred Stock (other than the Series
A Preferred Stock, which shall rank on a par with the Series C Preferred Stock)
and prior to all classes of Common Stock.
Section 8. Other Covenants.
----------------
(a) Transfer Taxes. The Corporation shall pay any and all issue or other
taxes that may be payable in respect of any issue or delivery of shares of
Series B Preferred Stock on exchange of the Series C Preferred Stock and other
securities. The Corporation shall not, however, be required to pay any income
tax or tax which may be payable in respect of any transfer involved in the issue
or delivery of Series C Preferred Stock (or other securities or
assets) in a name other than that in which the shares of Series C Preferred
Stock so exchanged were registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the Corporation
the amount of such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.
(b) Prior Notice of Certain Events. In case:
(i) the Corporation shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or of any other rights or warrants; or
(ii) of any reclassification of Common Stock (other than a subdivision
or combination of the outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation shall be required, or of the
sale or transfer of all or substantially all of the assets of the Corporation or
of any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or other property; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series C Preferred Stock, and shall cause to be mailed to the holders of record
of the Series C Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen days prior to
the applicable record date hereinafter specified, a notice stating, as the case
may be, (x) the record date (if any) for the purpose of such dividend,
distribution, redemption, repurchase or granting of rights or warrants or, if no
record date is to be set, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective, and the date, if any, as of which
it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
Section 9. Remedies.
(a) The Corporation stipulates that the remedies at law of each holder of
Series C Preferred Stock in the event of any failure in the performance of or
compliance with any of the terms hereof are not and will not be adequate and
that, to the fullest extent permitted by law, such terms may be specifically
enforced by a decree for the specific performance of any agreement contained
herein or by an injunction against a violation of any of the terms hereof or
otherwise without requiring any holder to post a bond or other security except
to the extent required by applicable law.
(b) Any holder of Series C Preferred Stock shall be entitled to recover
from the Corporation the reasonable attorneys' fees and expenses incurred by
such holder in connection with the enforcement by such holder of any obligation
of the Corporation hereunder.
(c) No failure or delay on the part of any holder of Series C Preferred
Stock in exercising any right, power or remedy hereunder or under applicable law
or otherwise shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder
or thereunder. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law or otherwise.
Section 10. Severability of Provisions.
Whenever possible, each provision hereof shall be interpreted in a manner as
to be effective and valid under applicable law, but if any provision hereof 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 or otherwise adversely affecting the remaining provisions hereof.
If a court of competent jurisdiction should determine that a provision hereof
would be valid or enforceable if a period of time were extended or shortened or
a particular percentage were increased or decreased, then such court may make
such change as shall be necessary to render the provision in question effective
and valid under applicable law.
Section 11. Definitions.
For the purposes of the Certificate of Designation of Series C Preferred Stock
which embodies this resolution:
(a) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which commercial banks in the City of New York are authorized or
obligated by law or executive order to close.
(b) "capital stock" shall mean (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
(c) "Closing Price" per share of Common Stock on any date shall mean the
last sale price, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, in either case as reported on the Nasdaq
National Market or in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange or American Stock Exchange, as the case may be, or, if the Common Stock
is listed or admitted to trading on the New York Stock Exchange or American
Stock Exchange, or, if the Common Stock is not listed or admitted to trading on
any national securities exchange, the last quoted sale
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Common Stock is not quoted by
any such organization, the average of the Closing bid and asked prices as
furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors and reasonably acceptable to the Requisite
Holders.
(d) "Current Market Price" per share of Common Stock on any date shall
mean the average of the Closing Prices of a share of Common Stock for the twenty
(20) consecutive Trading Days ending on the date in question. If on any such
Trading Day the Common Stock is not quoted by any organization referred to in
the definition of Closing Price, the fair value of the Common Stock on such day,
as reasonably determined in good faith by the Board of Directors of the
Corporation, shall be used.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(f) "Liquidation Base Amount" shall mean $21.70; PROVIDED, HOWEVER, that
in case the Corporation shall at any time or from time to time after the
original issuance of the Series C Preferred Stock declare a dividend, or make a
distribution, on the outstanding shares of Common Stock in either case, in
shares of Common Stock, or effect a subdivision, combination, consolidation or
reclassification of the outstanding shares of Common Stock into a greater or
lesser number of shares of Common Stock, then, and in each such case, the
Liquidation Base Amount in effect immediately prior to such event or the record
date therefor, whichever is earlier, shall be adjusted by multiplying the
Liquidation Base Amount by a fraction, the numerator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event and
the denominator of which is the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this definition
shall become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification,
consolidation or combination, at the close of business on the day upon which
such corporate action becomes effective.
(g) "Liquidation Multiplier" shall mean eight (8); PROVIDED, HOWEVER, that
in case the Corporation shall at any time or from time to time after the
original issuance of the Series C Preferred Stock declare a dividend, or make a
distribution, on the outstanding shares of Common Stock in either case, in
shares of Common Stock, or effect a subdivision, combination, consolidation or
reclassification of the outstanding shares of Common Stock into a greater or
lesser number of shares of Common Stock, then, and in each such case, the
Liquidation Multiplier in effect immediately prior to such event or the record
date therefor, whichever is earlier, shall be adjusted by dividing the
Liquidation Multiplier by a fraction, the numerator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event and
the denominator of which is the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this definition
shall become effective (x) in the case of any such dividend
or distribution, immediately after the close of business on the record date for
the determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of any such subdivision,
reclassification, consolidation or combination, at the close of business on the
day upon which such corporate action becomes effective. In addition to the
foregoing, (I) if the Corporation fails to authorize sufficient common shares to
permit the repurchase of the Series C Preferred Stock on or prior to the sixth
anniversary or if the Corporation fails to repurchase the Series C Preferred
Stock as requested by an Electing Holder pursuant to Section 4(b) on or prior to
the sixth anniversary of the Closing Date (whether or not such repurchase is
permitted under the terms of the Corporation's debt facilities), then
immediately following the sixth anniversary the Liquidation Multiplier shall be
1.25 times the Liquidation Multiplier in effect immediately prior to such date
for purposes of the repurchase pursuant to Section 4(a) and 4(b) for repurchases
after that time; and (II) if the Corporation fails to repurchase the shares
requested by an Electing Holder pursuant to Section 4(b) on or prior to the
eighth anniversary (whether or not such repurchase is permitted under the terms
of the Corporation's debt facilities), then immediately following the eighth
anniversary the Liquidation Multiplier shall be 1.6 times the Liquidation
Multiplier in effect immediately prior to the eighth anniversary for repurchases
after that time. The adjustment specified in clause (II) shall be cumulative to,
and not in place of, the adjustment specified in clause (I).
(h) "Liquidation Preference" shall mean an amount per share of Series C
Preferred Stock equal to the sum of (i) $50.00 plus (ii) the greater of (y) zero
or (z) the product of the Liquidation Multiplier times the excess, if any, of
the Current Market Price on the date set for repurchase pursuant to Section 4(a)
or the date of the written notice pursuant to Section 4(b), as the case may be,
over the Liquidation Base Amount.
(i) "Person" shall mean an individual, partnership, corporation, limited
liability company or partnership, unincorporated organization, trust or joint
venture, or a governmental agency or political subdivision thereof, or other
entity of any kind.
(j) "Requisite Holders" shall mean the holders of sixty-seven percent
(67%) of the then-outstanding shares of Series C Preferred Stock.
(k) "Securities Purchase Agreement" shall mean that certain agreement
dated as of May 5, 1999 by and among the Corporation and certain purchasers of
the Series C Preferred Stock party thereto.
(l) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
(m) "Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is quoted, listed or admitted to
trading is open for the transaction of business or, if the Common Stock is not
quoted, listed or admitted to trading on any national securities exchange
(including the Nasdaq Stock Market), any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation
of Series C Preferred Stock to be duly executed by its President and attested to
by its Secretary and has caused its corporate seal to be affixed hereto, this
[ ] day of [ ], 1999.
URS CORPORATION
By:
---------------------------
EXHIBIT 1.32
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of June [ ], 1999,
among URS Corporation, a Delaware corporation (the "Corporation"), and RCBA
Strategic Partners, L.P., a Delaware limited partnership (the "Purchaser").
WHEREAS, the Corporation is a party to a Securities Purchase Agreement, dated
as of May 5, 1999 (as amended, the "Securities Purchase Agreement"), with the
Purchaser, pursuant to which the Corporation agreed to sell to the Purchaser and
the Purchaser agreed to purchase from the Corporation for an aggregate purchase
price of $100 million, upon the terms and subject to the conditions set forth
therein, (x) 46,082.95 shares of Series A Preferred Stock of the Corporation
(the "Series A Preferred Stock") and (y) 450,000 shares of Series C Preferred
Stock of the Corporation (the "Series C Preferred Stock");
WHEREAS, pursuant to the Securities Purchase Agreement, the Corporation and
Purchaser agreed that, upon receipt of stockholder approval of (x) certain
amendments to the Corporation's charter and (y) the issuance of convertible
preferred stock to Purchaser, the Series A Preferred Stock and Series C
Preferred Stock would be converted into Series B Convertible Exchangeable
Preferred Stock of the Corporation (the "Series B Preferred Stock");
WHEREAS, in order to induce the Purchaser to enter into the Securities
Purchase Agreement, the Corporation has agreed to provide the registration
rights set forth in this Agreement for the benefit of the Purchaser and its
direct and indirect transferees;
WHEREAS, the execution and delivery of this Agreement is a condition to the
Purchaser's obligations pursuant to the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, each of Purchaser and the Corporation (together "Parties") agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the following
respective meanings:
1.1 "Affiliate" means, with respect to any Person, any other Person directly
or indirectly Controlling, Controlled by or under common Control with such first
Person. "Control" means the power to direct or cause the direction of management
or policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise. Any director, member
of management or other employee of the Corporation or any of its Subsidiaries
who would not otherwise be an Affiliate of the Purchaser shall not be deemed to
be an Affiliate of the Purchaser.
1.2 "Agreement" is defined in the first paragraph of this Agreement.
1.3 "Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required to close.
1.4 "Closing Date" means the date the closing of the securities purchase under
the Securities Purchase Agreement.
1.5 "Common Stock" means the Common Stock, par value of $.01 per share, of the
Corporation.
1.6 "Conversion Shares" means the shares of Common Stock issued to a holder
upon the conversion of the Series B Preferred Stock.
1.7 "Corporation" is defined in the first paragraph of this Agreement.
1.8 "DTC" means the Depository Trust Company.
1.9 "Distributee" means any person that is a member, stockholder or partner of
Purchaser, or any person that is a member, stockholder or partner of a
Distributee to which Registrable Securities are transferred or distributed by
Purchaser or Distributee.
1.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time. Any reference to a particular section thereof
shall include a reference to the corresponding section, if any, of any such
successor federal statute, and the rules and regulations thereunder.
1.11 "Holder" means Purchaser and any other holder of Registrable Securities
under this Agreement, including an Affiliate, a Distributee or other successors,
assigns and transferees of Purchaser or a Holder that has received Registrable
Securities pursuant to Section 3.4 and agree to be bound by the terms of this
Agreement as contemplated by Section 3.4.
1.12 "NASD" means the National Association of Securities Dealers.
1.13 "NYSE" means the New York Stock Exchange.
1.14 "Person" means any natural person, firm, partnership, association,
corporation, company, trust, business trust, governmental entity or other
entity.
1.15 "Postponement Period" is defined in Section 2.3(n).
1.16 "Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and all
other amendments and supplements to the prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
1.17 "Purchaser" is defined in the introduction to this Agreement.
1.18 "Registrable Securities" means (i) the Series A Preferred Stock, (ii) the
Series C Preferred Stock; (iii) the Conversion Shares and the Repurchase Shares,
and (iv) any securities issued or issuable with respect to any of the foregoing
clauses (i) through (iii), (x) upon any conversion or exchange thereof, (y) by
way of stock dividend or other distribution, stock split or reverse stock split
or (z) in connection with a combination of shares, recapitalization, merger,
consolidation, exchange offer or other reorganization. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (A) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such Registration
Statement, (B) such securities shall have been distributed to the public in
reliance upon Rule 144 or may be so distributed pursuant to Rule 144(k), (C)
subject to the provisions of Section 2.1(b)(ii), such securities shall have been
otherwise transferred, new certificates for such securities not bearing a legend
restricting further transfer shall have been delivered by the Corporation and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
law then in force, (D) such securities shall have been acquired by the
Corporation or (E) sold in a private transaction in which the transferor's
rights under this Agreement were not assigned. In determining the number of
Registrable Securities outstanding at any time or whether the Holders of the
requisite number of Registrable Securities have taken any action hereunder and
in calculating the number of Registrable Securities for all other purposes under
this Agreement, each share of Series A Preferred Stock shall be deemed to have
been convertible into Common Stock (on the same terms and conditions as the
Series B Preferred Stock) and to have converted (to the fullest extent then
determinable) and such calculation shall include the number of Conversion Shares
that then would be deliverable upon the conversion of such stock (as if such
stock were convertible), and each share of Series C Preferred Stock shall be
deemed to have been repurchased by the Corporation (to the fullest extent then
determinable) and such calculation shall include the number of Repurchase Shares
then deliverable upon the repurchase of such Series C Preferred Stock (to the
fullest extent then determinable).
1.19 "Registration Expenses" means all fees and expenses incident to the
performance of or compliance with the provisions of this Agreement, whether or
not any registration statement is filed or becomes effective, including, without
limitation, all (i) registration and filing fees (including, without limitation,
(A) fees with respect to filings required to be made with the NASD in connection
with an underwritten offering, (B) fees and expenses of compliance with state
securities or blue sky laws, and (C) fees and other expenses associated with
admitting for trading on the NYSE or any other applicable exchange or automated
dealer system) the Series A Preferred Stock, the Series C Preferred Stock,
Conversion Shares and Repurchase Shares, (ii) printing expenses, (iii) fees and
disbursements of all independent certified public accountants referred to in
Section 2.3 (including, without limitation, the reasonable expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (iv) the fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Rule 2720 of the NASD Rules of Conduct, (v) fees and expenses of all
attorneys, advisers, appraisers and other persons retained by the Corporation or
any Subsidiary of the Corporation, (vi) internal expenses of the Corporation and
its Subsidiaries, (vii) the expense of any annual audit, (viii) the expenses
relating to printing, word processing and distributing all registration
statements, underwriting agreements, securities sales agreements, indentures and
any other documents necessary in order to comply with this Agreement, and (ix)
the reasonable out-of-pocket expenses and, as to in-house counsel, allocated
costs of the Holders of the Registrable Securities being registered in such
registration incurred in connection therewith including, without limitation, the
reasonable fees and disbursements of not more than one outside counsel and one
in-house counsel (who may be employed by an Affiliate of a Holder) chosen by the
Holders of a majority of the Registrable Securities to be included in such
Registration Statement. "Registration Expenses" shall not include any
underwriting discounts or commissions or any transfer taxes payable in respect
of the sale of Registrable Securities, which such expenses shall be paid or
borne by the Holders thereof. Nor shall "Registration Expenses" include any
fees or expenses incurred by or on behalf of any Holder who, without cause,
either withdraws a request for registration or withdraws from a registration.
1.20 "Registration Statement" means any registration statement of the
Corporation that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, and all amendments and supplements to any such
registration statement, including post-effective amendments, in each case
including the Prospectus, all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
1.21 "Repurchase Shares" means the shares of Common Stock issued to a holder
upon the repurchase of the Series C Preferred Stock.
1.22 "Rule 144" means Rule 144 (or any successor provision) under the
Securities Act.
1.23 "Rule 145" means Rule 145 (or any successor provision) under the
Securities Act.
1.24 "Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time. Any reference to a particular section thereof shall
include a reference to the corresponding section, if any, of any such successor
federal statute, and the rules and regulations thereunder.
1.25 "SEC" means the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
1.26 "Series A Preferred Stock" has the meaning given it in the first recital.
1.27 "Series B Preferred Stock" has the meaning given it in second recital.
1.28 "Special Registration" means the registration of shares of equity
securities and/or options or other rights in respect thereof to be offered
solely to directors, members of management, employees, consultants or sales
agents, distributors or similar representatives of the Corporation or its direct
or indirect Subsidiaries, solely on Form S-8 or any successor form.
1.29 "Subsidiary" means, with respect to any Person, any corporation or
Person, a majority of the outstanding voting stock or other equity interests of
which is owned, directly or indirectly, by that Person.
1.30 "underwritten registration" or "underwritten offering" means a
registration in which securities of the Corporation (including Registrable
Securities) are sold to an underwriter for reoffering to the public.
ARTICLE II
REGISTRATION
1.31 Demand Registration.
(1) Requests. Subject to the provisions of Section 2.6, at any time or from
time to time after 12 months from the date of this Agreement, Holders of not
less than 50% of the then outstanding Registrable Securities shall have the
right to make written requests that the Corporation effect up to two
registrations under the Securities Act of all or part of the Registrable
Securities of the Holders making such request, which requests shall specify the
intended method of disposition thereof by such Holders, including whether the
registration requested is for an underwritten offering. For a registration to be
underwritten, a majority of the Holders requesting registration (as measured by
ownership of Registrable Securities) must so request. The Corporation shall not
be required to effect more than two registrations under this Section 2.1.
(2) Obligation to Effect Registration.
(1) Within 10 business days after receipt by the Corporation of any
request for registration pursuant to Section 2.1, the Corporation shall promptly
give written notice of such requested registration to all Holders, and as soon
as practicable will use its best efforts to effect the registration under the
Securities Act of
(1) the Registrable Securities which the Corporation has been so
requested to register pursuant to Section 2.1, and
(2) all other Registrable Securities which the Corporation has been
requested to register by the Holders thereof by written request given to the
Corporation within 10 days after the Corporation has given such written notice
(which request shall specify the intended method of disposition of such
Registrable Securities), all to the extent required to permit the disposition
(in accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered.
(2) The Corporation's obligations under Section 2.1(a)(i) shall be subject
to the following limitations:
(1) the Corporation shall not be required to effect a registration
pursuant to this Section 2.1 during the period starting with the date of filing
of, and ending on the date one hundred eighty (180) days following the effective
date of, the registration statement pertaining to a public offering by the
Corporation; PROVIDED, HOWEVER, that unless the Holders are permitted to
register and sell in such offering all such Registrable Securities as they have
requested be included in such offering without cutback under Section 2.2(b)(ii),
then the Corporation may not decline to register shares pursuant to this clause
(1) more than once every two years (such time period to commence upon the
expiration of the end of the one hundred eighty (180) day period referred to
above); and
(2) the Corporation shall not be required to effect a registration on
Form S-1 if it has filed and has maintained an effective "shelf" Registration
Statement on Form S-3 pursuant to Section 2.1(c) and such Form S-3 is permitted
to be used by the Holders demanding registration.
(3) Shelf Registration. If requested by Holders of a majority of the
Registrable Securities as to which registration has been requested pursuant to
this Section 2.1, and if the Corporation is eligible to file such Registration
Statement on Form S-3, the Registration Statement covering such Registrable
Securities shall provide for the sale by the Holders thereof of the Registrable
Securities from time to time on a delayed or a continuous basis under Rule 415
under the Securities Act. If more than one underwritten offering is requested
under any particular shelf registration, each such additional underwritten
offering shall constitute a separate "demand" registration for purposes of
Section 2.1.
(4) Effective Registration Statement. A registration requested pursuant
to Section 2.1 shall not be deemed to have been effected unless it is declared
effective by the SEC and remains effective for the period specified in Section
2.3(b). Notwithstanding the preceding sentence, a registration requested
pursuant to Section 2.1 that does not become effective after the Corporation has
filed a Registration Statement with respect thereto by reason of the refusal to
proceed of the Holders of Registrable Securities requesting the registration, or
by reason of a request by a majority of the Selling Holders participating in
such registration that such registration be withdrawn, shall be deemed to have
been effected by the Corporation at the request of such Holders.
(5) Pro Rata Allocation. If the Corporation determines, based on
consultation with the managing underwriters or, in an offering which is not
underwritten, with an investment banker, that the number of securities to be
sold in any such offering should be limited due to market conditions or
otherwise, Holders of Registrable Securities proposing to sell their securities
in such registration shall share pro rata in the number of securities being
offered (as determined by the Holders holding a majority of the Registrable
Securities for which registration is being requested in consultation with the
managing underwriters or investment banker, as the case may be) and registered
for their account, such sharing to be based on the number of Registrable
Securities as to which registration was requested by such Holders.
(6) Inclusion of Other Securities in Demand Registration. Notwithstanding
any other provision of this Section 2.1, and subject to the Registration Rights
Agreement dated February 21, 1990 (the "1990 Registration Rights Agreement") by
and among the Corporation, ▇▇▇▇▇ Fargo Bank, N.A., a national banking
association, BK Capital Partners I, BK Capital Partners II, BK Capital Partners
III, Executive Life Insurance Company, Novato Partners, the Common Fund, ▇▇▇▇▇▇▇
▇. ▇▇▇▇ & Associates I, and the Management Holders (as defined therein):
(1) The Corporation may, subject to the remainder of this Section
2.1(f), elect to include in any Registration Statement made pursuant to Section
2.1(a), authorized but unissued shares of Common Stock or shares of Common Stock
held as treasury stock;
(2) The Corporation shall not register securities (other than
Registrable Securities) for sale for the account of any Person (other than the
Corporation) in any registration requested pursuant to Section 2.1(a); and
(3) If any Registration Statement made pursuant to Section 2.1(a)
involves an underwritten offering and the managing underwriter of such offering
(or, in connection with an offering that is not underwritten, an investment
banker) shall advise the Corporation that, in its view, the number of securities
requested to be included in such Registration exceeds the largest number that
can be sold in an orderly manner in such offering within a price range
acceptable to the selling Holders, the Corporation shall include in such
Registration:
(1) first, all shares of Common Stock requested to be included in such
Registration by the selling Holders as provided in Section 2.1(e); and
(2) second, to the extent that the number of securities to be
registered pursuant to clause (1) is less than the largest number that can be
sold in an orderly manner in such offering within a price range acceptable to
the selling Holders, securities that the Corporation proposes to register.
1.32 Piggyback Registration. If the Corporation at any time proposes to
register any of its common stock under the Securities Act (other than a
Registration relating solely to the sale of securities to participants in a
Company stock plan, on Form S-4 with respect to any merger, consolidation or
acquisition, pursuant to Section 2.1 or pursuant to a Special Registration),
whether or not for sale for its own account, and the registration form to be
used may be used for the registration of Registrable Securities, it shall each
such time give prompt written notice to all Holders of Registrable Securities of
its intention to do so and, upon the written request of any Holder of
Registrable Securities given to the Corporation within 10 days after the
Corporation has given any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Corporation will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Corporation has been so requested to register by the
Holders thereof, to the extent required to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable Securities so
to be registered, provided that:
(1) if, at any time after giving written notice of its intention to register
any securities and prior to the effective date of the Registration Statement
filed in connection with such registration, the Corporation shall determine for
any reason not to register such securities, the Corporation may, at its
election, give written notice of such determination to each Holder that was
previously notified of such registration and, thereupon, shall not register any
Registrable Securities in connection with such registration (but shall
nevertheless pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of any Holders to request that a registration
be effected under Section 2.1; and
(2) if the Corporation shall be advised in writing by the managing
underwriters (or, in connection with an offering which is not underwritten, by
an investment banker) that in their or its opinion the number of securities
requested to be included in such registration (whether by the Corporation,
pursuant to this Section 2.2 or pursuant to any other rights granted by the
Corporation to a holder or holders of its securities to request or demand such
registration or inclusion of any such securities in any such registration)
exceeds the number of such securities which can be sold in such offering in an
orderly manner within a price range that is acceptable to the Corporation, the
Corporation shall include in such Registration:
(1) first, all shares of Common Stock that the Company proposes to
register for its own account; and
(2) subject to the 1990 Registration Rights Agreement:
(1) second, to the extent that the number of shares registered pursuant
to clause (i) is less than the largest number that can be sold in an orderly
manner in such offering within a price range acceptable to the Corporation, the
Registrable Securities requested to be included by the Holders; and
(2) third, to the extent that the number of shares registered pursuant
to clauses (i) and (ii) is less than the largest number that can be sold in an
orderly manner in such offering within a price range acceptable to the
Corporation, the securities requested to be included by any other holders, and
the Corporation shall so provide in any registration agreement hereinafter
entered into with respect to any of its securities.
The securities to be included in any such registration pursuant to clause (ii)
or (iii) shall be allocated on a pro rata basis among all holders requesting
that securities be included in such registration pursuant to such clause on the
basis of the number of securities requested to be included by such holders. No
registration effected under this Section 2.2 shall relieve the Corporation from
its obligation to effect registrations upon request under Section 2.1. The
Corporation shall not be obligated to cause any "piggyback" registration to be
underwritten.
1.33 Registration Procedures. If and whenever the Corporation is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.1 and 2.2, the Corporation
shall:
(1) prepare and file with the SEC, as soon as practicable, a Registration
Statement with respect to such securities, make all required filings with the
NYSE and use best efforts to cause such Registration Statement to become
effective at the earliest possible date;
(2) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith and such
other documents as may be necessary to keep such Registration Statement
effective until the earlier of (i) 30 days after the effective date of such
Registration Statement (360 days in the case of a Shelf Registration pursuant to
Section 2.1(c)) or (ii) the consummation of the disposition by the Holders of
all the Registrable Securities covered by such Registration Statement and
otherwise comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement;
(3) furnish to counsel (if any) selected by the Holders of a majority of the
Registrable Securities covered by such Registration Statement and to counsel for
the underwriters in any underwritten offering copies of all documents proposed
to be filed with the SEC in connection with such registration a reasonable time
prior to the proposed filing thereof and give reasonable consideration in good
faith to any comments of such Holders, counsel and underwriters. The Corporation
shall not file any Registration Statement or Prospectus or any amendments or
supplements thereto pursuant to a registration under Section 2.1(a) if the
Holders of a majority of the Registrable Securities covered by such Registration
Statement, their counsel, or the underwriters, if any, shall reasonably object
in writing;
(4) furnish to each seller of Registrable Securities, without charge, such
reasonable number of conformed copies of such Registration Statement and of each
such amendment and supplement thereto (in each case, including all exhibits
(including exhibits incorporated by reference), financial statements, schedules
and all documents incorporated therein, deemed to be incorporated therein by
reference or filed therewith, except that the Corporation shall not be obligated
to furnish any seller of securities with more than two copies of such exhibits
and documents), such number of copies of the Prospectus included in such
Registration Statement (including each preliminary prospectus and any summary
prospectus) in conformity with the requirements of the Securities Act, and such
other documents, as such seller
may reasonably request in order to facilitate the disposition of the securities
owned by such seller;
(5) use its best efforts to register or qualify and cooperate with the
Holders of Registrable Securities, the underwriters and their respective
counsels in connection with the registration or qualification (or exemption from
such registration or qualification) of the securities covered by such
Registration Statement under such other securities or blue sky laws of such
jurisdictions as each seller shall request; provided, however, that where
Registrable Securities are offered other than through an underwritten offering,
the Corporation agrees to cause its counsel to perform blue sky investigations
and file registrations and qualifications required to be filed pursuant to this
Section 2.3(e); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be effective hereunder and do any and all other acts and things which may be
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the securities owned by such seller, except that the
Corporation shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified, subject itself to taxation in any jurisdiction wherein it is not so
subject, or take any action which would subject it to general service of process
in any jurisdiction wherein it is not so subject;
(6) (i) notify each Holder of Registrable Securities subject to such
Registration Statement if such Registration Statement, at the time it or any
amendment thereto became effective, (x) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading upon discovery by the
Corporation of such material misstatement or omission or (y) upon discovery by
the Corporation of the happening of any event as a result of which the
Corporation believes there would be such a material misstatement or omission,
and, as promptly as practicable, prepare and file with the SEC a post-effective
amendment to such registration statement and use best efforts to cause such
post-effective amendment to become effective such that such registration
statement, as so amended, shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and (ii) notify each Holder of
Registrable Securities subject to such Registration Statement, at any time when
a Prospectus relating thereto is required to be delivered under the Securities
Act, if the Prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading in each case upon discovery by the Company of such material
misstatement or omission or upon discovery by the Corporation of the happening
of any event as a result of which the Company believes there would be a material
misstatement or omission, and, as promptly as is practicable, prepare and
furnish to such Holder a reasonable number of copies of a supplement to or an
amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such Prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(7) otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as soon as
reasonably practicable, an earnings statement of the Corporation complying with
the provisions of Section 11(a) of the Securities Act and Rule 158 under the
Securities Act (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) (i) commencing at
the end of any fiscal quarter in which Registrable Securities are sold to an
underwriter or to underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to an underwriter or to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Corporation after the effective date of the relevant Registration Statement,
which statements shall cover said 12-month periods;
(8) promptly notify each Holder of any Registrable Securities covered by
such Registration Statement, their counsel and the underwriters (i) when such
Registration Statement, or any post-effective amendment to such Registration
Statement, shall have become effective, or any amendment of or supplement to the
Prospectus used in connection therewith shall have been filed, (ii) of any
request by the SEC to amend such Registration Statement or to amend or
supplement such Prospectus or for additional information, (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of such Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or the initiation or threatening of any proceedings for any of such
purposes, (iv) of the suspension of the qualification of such securities for
offering or sale in any jurisdiction, or of the institution of any proceedings
for any of such purposes and (v) if at any time when a Prospectus is to be
required by the Securities Act to be delivered in connection with the sale of
the Registrable Securities, the representations and warranties of the Company
contained in the underwriting agreement contemplated in Section 2.4(b) below, to
the knowledge of the Corporation, cease to be true and correct in any material
respect;
(9) use its best efforts to prevent the issuance of any order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of a Prospectus or suspending the qualification (or exemption
from qualification) of any of the Registrable Securities covered thereby for
sale in any jurisdiction, and, if any such order is issued, to obtain the
withdrawal of any such order at the earliest possible moment;
(10) if requested by the managing underwriter, if any, or the Holders of a
majority of the Registrable Securities being sold in connection with an
underwriting offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter, if any,
or such Holders reasonably request to be included therein to comply with
applicable law and (ii) make all required filings of such prospectus supplement
or such post-effective amendment as soon as practicable after the Corporation
has received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(11) cooperate with the Holders and the managing underwriter, if any, to
facilitate the timely preparation and delivery of new certificates representing
Registrable Securities to be sold against delivery by the Holders of any old
certificates representing such Registrable Securities, which new certificates
shall not bear any restrictive legends whatsoever and shall be in a form
eligible for deposit with DTC, and enable such Registrable Securities to be in
such denominations and registered in such names as the underwriters, if any, or
Holders may reasonably request at least two business days prior to any sale of
Registrable Securities in a firm commitment underwritten public offering;
(12) prior to the effective date of the Registration Statement, (i) provide
the registrar for the Common Stock or such other Registrable Securities with
printed certificates for such securities in a form eligible for deposit with DTC
and (ii) provide a CUSIP number for such securities;
(13) cause the Conversion Shares and Repurchase Shares, and use its best
efforts to cause the Series A Preferred Stock and Series C Preferred Stock, to
be admitted for trading on the NYSE (or such other exchange or automated trading
system as shall be the primary trading system or exchange for the Common Stock)
in the event that the Registrable Securities covered by such Registration
Statement include any Series A Preferred Stock, Series C Preferred Stock,
Conversion Shares and Repurchase Shares not already so listed; and
(14) have the right -- if the Board of Directors of the Company, in its good
faith judgment, determines that any Registration of shares of Common Stock
should not be made or continued because it would materially interfere with any
material financing, acquisition, corporation reorganization, merger, or other
transaction involving the Company or any of its subsidiaries, or would require
premature disclosure of material non-public information (a "Valid Business
Reason") -- (i) to postpone filing a Registration Statement until such Valid
Business Reason no longer exists, but in no event for more than 180 days, and
(ii) to cause any Registration Statement that has already been filed to be
withdrawn and its effectiveness terminated or to postpone amending or
supplementing such Registration Statement until such Valid Business Reason no
longer exists, but in no event for more than 90 days (the "Postponement
Period"); provided, however, that in no event shall the Company be permitted to
postpone or withdraw a Registration Statement within 180 days after the
expiration of the Postponement Period; and
(15) have the right to require each Holder of any Registrable Securities as
to which any registration is being effected to furnish to the Corporation such
information regarding such Holder and the distribution of such securities as the
Corporation may from time to time reasonably request in writing and as shall be
required by law in connection therewith. Each such Holder agrees to furnish
promptly to the Corporation all information required to be disclosed in order to
make the information previously furnished to the Corporation by such Holder not
materially misleading. The Corporation agrees not to file or make any amendment
to any Registration Statement with respect to any Registrable Securities, or any
amendment of or supplement to the Prospectus used in connection therewith, which
refers to any seller of any securities covered thereby by name, or otherwise
identifies such seller as the
holder of any securities of the Corporation, without the consent of such seller,
such consent not to be unreasonably withheld, except that no such consent shall
be required for any disclosure that is required by law. By the acquisition of
Registrable Securities, each Holder shall be deemed to have agreed that upon
receipt of any notice from the Corporation pursuant to Section 2.3(f) or (n),
such Holder will promptly discontinue such Holder's disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Holder shall have received, in the case of clause (i) of
Section 2.3(f), notice from the Corporation that such Registration Statement has
been amended, as contemplated by Section 2.3(f); in the case of clause (ii) of
Section 2.3(f), copies of the supplemented or amended Prospectus contemplated by
Section 2.3(f); or, in the case of Section 2.3(n), the time period specified has
elapsed or such Holder has received notice from the Corporation that the
Postponement Period has been terminated. If so directed by the Corporation, each
Holder will deliver to the Corporation (at the Corporation's expense) all
copies, other than permanent file copies, in such Holder's possession of the
Prospectus covering such Registrable Securities at the time of receipt of such
notice. In the event that the Corporation shall give any such notice, the period
mentioned in Section 2.3(b) shall be extended by the number of days during the
period from and including the date of the giving of such notice to and including
the date when each seller of any Registrable Securities covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 2.3(f).
1.34 Underwritten Offerings. The provisions of this Section 2.4 do not
establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 2.1 through 2.3, to any
registration that is an underwritten offering.
(1) Underwritten Offerings Exclusive. Whenever a registration requested
pursuant to Section 2.1 is for an underwritten offering, only securities that
are to be distributed by the underwriters may be included in the registration.
(2) Underwriting Agreement. If requested by the underwriters for any
underwritten offering by Holders pursuant to a registration requested under
Section 2.1, the Corporation shall enter into an underwriting agreement with
such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Holders of a majority of the
Registrable Securities to be covered by such registration and to the
underwriters and to contain such representations and warranties by the
Corporation and such other terms and provisions as are customarily contained in
agreements of this type, including, but not limited to, indemnities to the
effect and to the extent provided in Section 2.7, provisions for the delivery of
officers' certificates, opinions of counsel and accountants' "cold comfort"
letters, and hold-back arrangements. The Holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting
agreement.
(3) Selection of Underwriters. Whenever a registration requested pursuant to
Section 2.1 is for an underwritten offering, the Holders of a majority of the
Registrable Securities to be registered pursuant to such offering shall have the
right to select one or more underwriters to administer
the offering, subject to the consent of the Corporation, which shall not be
unreasonably withheld. If the Corporation at any time proposes to register any
of its securities under the Securities Act for sale for its own account and such
securities are to be distributed by or through one or more underwriters, the
Corporation shall have the right to select one or more underwriters to
administer the offering, subject to the consent of the Holders of a majority of
Registrable Securities to be registered pursuant to such offering, which shall
not be unreasonably withheld. In all cases in this Section 2.4(c), at least one
of the underwriters chosen by the Holders or the Corporation shall be an
underwriter of nationally recognized standing.
(4) Hold Back Agreements. If and whenever the Corporation proposes to
register any of its equity securities under the Securities Act, whether or not
for its own account (other than pursuant to a Special Registration), or is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 2.1 or 2.2, each Holder,
if required by the managing underwriter in an underwritten offering, agrees by
acquisition of such Registrable Securities not to effect (other than pursuant to
such registration) any public sale or distribution, including, but not limited
to, any sale pursuant to Rule 144, of any Registrable Securities, any other
equity securities of the Corporation or any securities convertible into or
exchangeable or exercisable for any equity securities of the Corporation during
the 10 days prior to, and for 180 days after, the effective date of such
registration, to the extent timely notified in writing by the Corporation or the
managing underwriter, and the Corporation agrees to cause each holder of any
equity security, or of any security convertible into or exchangeable or
exercisable for any equity security, of the Corporation purchased from the
Corporation at any time other than in a public offering to enter into a similar
agreement with the Corporation. The foregoing provisions shall not apply to any
Holder if such Holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, however, that any such Holder shall
undertake, in its request to participate in any such underwritten offering, not
to effect any public sale or distribution of any applicable class of Registrable
Securities commencing on the date of sale of such applicable class of
Registrable Securities unless it has provided 45 days prior written notice of
such sale or distribution to the underwriter or underwriters. The Corporation
further agrees not to effect (other than pursuant to such registration or
pursuant to a Special Registration) any public sale or distribution, or to file
any Registration Statement (other than such registration or a Special
Registration) covering any, of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
10 days prior to, and for 90 days after, the effective date of such registration
if required by the managing underwriter.
(5) in connection with an underwritten public offering only, furnish to each
underwriter
(1) an opinion of counsel for the Corporation experienced in securities
law matters, dated the effective date of the Registration Statement, and
(2) a "cold comfort" letter signed by the independent public accountants
who have issued an audit report on the Corporation's financial
statements included in the Registration Statement, subject to each seller having
executed and delivered to the independent public accountants such certificates
and documents as such accountants shall reasonably request, covering
substantially the same matters with respect to the Registration Statement (and
the Prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to the underwriters in underwritten public offerings of
securities.
1.35 Preparation; Reasonable Investigation. In connection with the preparation
and filing of each Registration Statement registering Registrable Securities
under the Securities Act, the Corporation shall give the Holders of such
Registrable Securities so to be registered and their underwriters, if any, and
their respective counsel and accountants, the opportunity to participate in the
preparation of such Registration Statement, each Prospectus included therein or
filed with the SEC, and each amendment thereof or supplement thereto, and shall
give each of them such access to all pertinent financial, corporate and other
documents and properties of the Corporation and its Subsidiaries, and such
opportunities to discuss the business of the Corporation with its officers,
directors, employees and the independent public accountants who have issued
audit reports on its financial statements as shall be necessary, in the
reasonable opinion of such Holders' and such underwriters' respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
1.36 Other Registrations. If and whenever the Corporation is required to use
its best efforts to effect the registration of any Registrable Securities under
the Securities Act pursuant to Section 2.1 or 2.2, and if such registration
shall not have been withdrawn or abandoned, the Corporation shall not be
obligated to and shall not file any Registration Statement with respect to any
of its securities (including Registrable Securities) under the Securities Act
(other than a Special Registration), whether of its own accord or at the request
or demand of any holder or holders of such securities, until a period of 180
days shall have elapsed from the effective date of such previous registration,
provided that the Corporation shall not be excused from filing a registration
statement by virtue of this Section 2.6 more than once in a 360 day period.
1.37 Indemnification.
(1) Indemnification by the Corporation. In the event of any registration of
any Registrable Securities under the Securities Act pursuant to Section 2.1 or
2.2, the Corporation shall indemnify and hold harmless the seller of such
securities, its directors, officers, and employees, each other person who
participates as an underwriter, broker or dealer in the offering or sale of such
securities and each other person, if any, who controls such seller or any such
participating person within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, against any and all losses, claims,
damages or liabilities, joint or several, to which such seller or any such
director, officer, employee, participating person or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement under which such securities were registered under the
Securities Act, any Prospectus or preliminary prospectus included therein, or
any amendment or supplement thereto, or (ii) any omission or alleged omission to
state a material fact required to be stated in any such Registration Statement,
Prospectus, preliminary prospectus, amendment or supplement or necessary to make
the statements therein not misleading; and the Corporation shall reimburse such
seller and each such director, officer, employee, participating person and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding as such expenses are incurred; provided that the
Corporation shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or omission made in any such Registration Statement,
Prospectus, preliminary prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the Corporation by such
seller or participating person expressly for use in the preparation thereof;
provided further that the Corporation shall not be liable and indemnification
shall not apply to amounts paid in any settlement effected without the consent
of the Corporation.
(2) Indemnification by the Sellers. In the event of any registration of any
Registrable Securities under the Securities Act pursuant to Section 2.1 or 2.2,
each of the prospective sellers of such securities, will indemnify and hold
harmless the Corporation, each director of the Corporation, each officer of the
Corporation who shall sign such Registration Statement, and each other person,
if any, who controls the Corporation or any such participating person within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any and all losses, claims, damages or liabilities, joint or several, to
which the Corporation or any such director, officer, employee, participating
person or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement under which such securities were registered under the
Securities Act, any Prospectus or preliminary prospectus included therein, or
any amendment or supplement thereto, or any omission or alleged omission to
state a material fact with respect to such seller required to be stated in any
such Registration Statement, Prospectus, preliminary prospectus, amendment or
supplement or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Corporation by such seller expressly for use in the
preparation of any such Registration Statement, Prospectus, preliminary
prospectus, amendment or supplement; provided that the liability of each such
seller shall be in proportion to and limited to the gross amount received by
such seller from the sale of Registrable Securities pursuant to such
Registration Statement; provided further that any Seller shall not be liable
and indemnification shall not apply to amounts paid in any settlement effected
without the consent of that Seller.
(3) Notices of Claims, etc. Promptly after receipt by an indemnified party
of notice of the commencement of any action or proceeding involving a claim
referred to in the preceding paragraphs of this Section 2.7, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party hereunder, give prompt written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
to give notice as provided therein shall not relieve the indemnifying party of
its obligations under the preceding paragraphs of this Section 2.7 unless the
failure to provide prompt written notice shall cause actual prejudice to the
indemnifying party. In case any such action is brought against an indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to retain counsel reasonably
satisfactory to such indemnified party to defend against such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel
and the payment of such fees by the indemnifying party or (ii) the named parties
to any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them or (iii) the indemnifying party has not retained counsel
to defend such proceeding, in which case (under any of such clauses (i), (ii) or
(iii)) it is understood that (x) the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm for all such
indemnified parties and (y) such firm shall be designated in writing by the
Holders of a majority of the Registrable Securities included in such
Registration Statement in the case of parties indemnified pursuant to Section
2.7(a) and by the Corporation in the case of parties indemnified pursuant to
Section 2.7(b). All fees and expenses that an indemnified party is entitled to
receive from an indemnifying party under this Section 2.7 shall be reimbursed as
they are incurred, provided that each such indemnified party shall promptly
repay such fees and expenses if it is finally judicially determined that such
indemnified party is not entitled to indemnification hereunder. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of such indemnified party, which consent shall not be unreasonably
withheld, consent to entry of any judgment or enter into any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(4) Other Indemnification. Indemnification similar to that specified in the
preceding paragraphs of this Section 2.7 (with appropriate modifications) shall
be given by the Corporation and each seller of Registrable Securities with
respect to any required registration or other qualification of such Registrable
Securities under any federal or state law or regulation of governmental
authority other than the Securities Act.
(5) Other Remedies. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Corporation or the Holders of Registrable Securities covered by the Registration
Statement in question and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Corporation and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 2.7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph of this Section 2.7 shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. No party shall be liable for contribution under this Section
2.7(e) except to the extent and under such circumstances as such party would
have been liable to indemnify under this Section 2.7 if such indemnification
were enforceable under applicable law.
(6) Officers and Directors. As used in this Section 2.7, the terms
"officers" and "directors" shall include the partners of Holders which are
partnerships and the members of Holders which are limited liability companies.
1.38 Expenses. The Corporation shall pay all Registration Expenses in
connection with each registration of Registrable Securities pursuant to this
Section 2, as provided in this Agreement.
ARTICLE III
MISCELLANEOUS
1.39 Legended Securities; etc. The Corporation shall issue new certificates
for Registrable Securities without a legend restricting further transfer if (I)
such securities have been sold to the public pursuant to an effective
Registration Statement under the Securities Act (other than Form S-8 if the
Holder of such Registrable Securities is an Affiliate) or Rule 144, or (ii) (x)
such issuance is otherwise permitted under the Securities Act, (y) the Holder of
such shares has delivered to the Corporation an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the Corporation, to such
effect and (z) the Holder of such shares expressly requests the issuance of such
certificates in writing.
1.40 Amendments and Waivers. This Agreement may be amended, modified or
supplemented, and the Corporation may take any action herein prohibited, or omit
to perform any act herein required to be performed by it, only if the
Corporation shall have obtained the written consent to such amendment, action or
omission to act, of the Holder or Holders of at least a majority of the
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders whose securities are being sold pursuant to
a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders may be given by Holders
of at least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; PROVIDED, HOWEVER, that the provisions
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence. No
amendment, modification or discharge of this Agreement, and no waiver hereunder,
shall be valid or binding unless set forth in writing. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party or parties granting
such waiver in any other respect or at any other time.
1.41 Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election and unless notice is otherwise
given to the Corporation by the record owner, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any Holder
or Holders pursuant to this Agreement or any determination of any number or
percentage of shares of Registrable Securities held by any Holder or Holders
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Corporation may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
1.42 Successors, Assigns and Transferees. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors assign and transferees. Purchaser or a Holder may assign its rights
hereunder in whole or in part to an Affiliate or to a Distributee or to other
successors, assigns and transferees of Purchaser or such Holder; provided that
such Affiliate, Distributee or successor, assignee or transferee expressly
agrees to be bound by this Agreement by written supplement. This Agreement
shall survive any transfer of Registrable Securities to and shall inure to the
benefit of an Affiliate, a Distributee or such other successors, assigns and
transferees of Purchaser or such Holder.
1.43 Notices. All notices or other communications given or made under this
Agreement shall be validly given or made if in writing and delivered by
facsimile transmission or in person at, or mailed by overnight courier to, the
following addresses (and shall be deemed effective at the time of receipt
thereof):
If to Seller:
URS Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Godward LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser:
RCBA Strategic Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party to whom notice is to be given may have
previously furnished notices to the other in the manner set forth above.
1.44 No Inconsistent Agreements. The Corporation shall not hereafter enter
into any agreement, or amend any existing agreement, with respect to its
securities if such agreement would be inconsistent with the rights granted to
the Holders by this Agreement.
1.45 Remedies; Attorneys' Fees. Each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, shall be entitled to specific performance of
its rights under this Agreement. The Corporation agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any provision of this Agreement and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate.
As between the parties to this Agreement, in any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorney's fees in addition to its costs and expenses and any other
available remedy.
1.46 Severability. If any clause, provision or section of this Agreement shall
be invalid, illegal or unenforceable, the invalidity, illegality or
unenforceability of such clause, provision or section shall not affect the
enforceability or validity of any of the remaining clauses, provisions or
sections hereof to the extent permitted by applicable law. The invalidity of any
one or more phrases, sentences, clauses, Sections or subsections of this
Agreement shall not affect the remaining portions of this Agreement.
1.47 Headings. The headings contained in this Agreement are for purposes of
convenience only and shall not affect the meaning or interpretation of this
Agreement.
1.48 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original and all of which together constitute
one and the same instrument.
1.49 No Third Party Beneficiaries. Except as provided in Sections 2.7 and 3.4,
nothing in this Agreement shall confer any rights upon any person or entity
other than the parties hereto, each such party's respective successors and
permitted assigns.
1.50 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware as applied to
contracts made and performed within the State of Delaware, without regard to
principles of conflicts of law.
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or
caused this Agreement to be executed on its behalf as of the date first written
above.
RCBA STRATEGIC PARTNERS, L.P. URS CORPORATION
By: By:
------------------------- -------------------------
Name: Name:
Title: Title: