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EXHIBIT 10.3
STOCK PURCHASE AGREEMENT
by and among
COMPLETE BUSINESS SOLUTIONS, INC.
and
CDR-COOKIE ACQUISITION L.L.C.
and
CDR-COOKIE ACQUISITION VI-A L.L.C.
as Purchasers
Dated as of March 17, 2000
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Table of Contents
Page
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ARTICLE I
STOCK PURCHASE
1.1 Sale and Purchase of the Preferred Shares.......................................................2
1.2 Initial Closing.................................................................................2
1.3 Subsequent Closing..............................................................................3
1.4 Allocation......................................................................................3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Organization....................................................................................4
2.2 Capitalization..................................................................................4
2.3 Authorization; Validity of Agreement............................................................5
2.4 No Violations; Consents and Approvals...........................................................6
2.5 SEC Reports and Financial Statements............................................................7
2.6 Absence of Certain Changes......................................................................8
2.7 Absence of Undisclosed Liabilities..............................................................8
2.8 Information in Proxy Statement..................................................................8
2.9 Employee Benefit Plans; ERISA...................................................................8
2.10 Litigation; Compliance with Law.................................................................9
2.11 Intellectual Property..........................................................................10
2.12 Material Contracts; Registration Rights Agreements.............................................11
2.13 Taxes..........................................................................................12
2.14 Environmental Matters..........................................................................12
2.15 Shareholder Approval...........................................................................13
2.16 Brokers........................................................................................14
2.17 Insurance......................................................................................14
2.18 Labor Matters, etc.............................................................................14
2.19 Disclosure.....................................................................................14
2.20 Takeover Statutes..............................................................................15
2.21 Customers; Liability for Defective Services....................................................15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
3.1 Organization, No Prior Business................................................................15
3.2 Authorization; Validity of Agreement...........................................................16
3.3 Consents and Approvals; No Violations..........................................................16
3.4 Information in Proxy Statement.................................................................17
3.5 Financing......................................................................................17
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3.6 Brokers........................................................................................17
3.7 Litigation; Compliance with Law................................................................17
3.8 Knowledge......................................................................................18
ARTICLE IV
CORPORATE GOVERNANCE
4.1 Composition of the Board of Directors, etc.....................................................18
4.2 Non-Voting Observer............................................................................19
4.3 Directors'and Observer's Expenses; Fees........................................................20
4.4 Information, VCOC..............................................................................20
4.5 Supermajority Voting Provisions................................................................20
4.6 Responsibilities of Co-Chairmen, CEO...........................................................22
4.7 By-Laws........................................................................................23
ARTICLE V
CERTAIN EQUITY MATTERS
5.1 Subscription Rights............................................................................23
5.2 Issuance and Delivery of New Securities........................................................23
5.3 Limitation on Purchases of Equity Securities...................................................24
ARTICLE VI
COVENANTS OF THE COMPANY
6.1 Covenants of the Company.......................................................................25
6.2 Access and Information.........................................................................26
6.3 Shareholders'Meeting; Proxy Statement..........................................................26
6.4 Notification of Certain Matters................................................................28
6.5 Press Releases; Interim Public Filings.........................................................28
6.6 Reservation of Common Stock for Conversion and Exercise........................................28
6.7 Listing........................................................................................28
6.8 Periodic Information...........................................................................28
6.9 Preferred Share Rights.........................................................................29
6.10 New Shareholders...............................................................................29
6.11 Executive Committee............................................................................29
6.12 Shareholder Rights.............................................................................30
6.13 No Solicitation by the Company.................................................................30
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ARTICLE VII
COVENANTS OF THE COMPANY AND THE PURCHASERS
7.1 Public Announcements...........................................................................31
7.2 Further Actions................................................................................32
7.3 Further Assurances.............................................................................32
7.4 Certain Tax Matters............................................................................32
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Condition to Obligations of Each Party.........................................................34
8.2 Conditions to Obligations of the Purchasers....................................................35
8.3 Conditions to Obligations of the Company.......................................................36
8.4 Conditions to Obligations to Consummate the Second Tranche Transactions........................37
ARTICLE IX
TERMINATION
9.1 Termination....................................................................................37
9.2 Effect of Termination..........................................................................38
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by the Company.................................................................39
10.2 Indemnification by the Purchasers..............................................................39
10.3 Indemnification Procedures.....................................................................40
10.4 Remedies.......................................................................................41
10.5 Tax Treatment of Adjustments...................................................................41
10.6 Survival.......................................................................................41
ARTICLE XI
INTERPRETATION; DEFINITIONS
11.1 Definitions....................................................................................41
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ARTICLE XII
MISCELLANEOUS
12.1 Fees and Expenses..............................................................................50
12.2 Severability...................................................................................51
12.3 Specific Enforcement...........................................................................51
12.4 Entire Agreement...............................................................................51
12.5 Counterparts...................................................................................51
12.6 Notices........................................................................................51
12.7 Amendments; Waivers, etc.......................................................................53
12.8 Cooperation....................................................................................54
12.9 Successors and Assigns.........................................................................54
12.10 Transfer of Preferred Shares, etc..............................................................54
12.11 Governing Law, etc.............................................................................55
12.12 Necessary Adjustments..........................................................................56
12.13 No Inconsistent Agreements.....................................................................56
12.14 No Third Party Beneficiaries...................................................................56
12.15 Replacement of Share Certificates..............................................................56
Exhibit A Form of Certificate of Designation
Exhibit B Form of 25 Warrant
Exhibit C Form of 31 Warrant
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Indemnification Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
March 17, 2000, is entered into by and among CD&R-Cookie Acquisition, L.L.C., a
Delaware limited liability company ("CDR-Cookie VI") that is wholly-owned by
▇▇▇▇▇▇▇, Dubilier & Rice Fund VI Limited Partnership, a Cayman Islands exempted
limited partnership ("Fund VI") and CDR-Cookie Acquisition VI-A, L.L.C., a
Delaware limited liability company ("CDR-Cookie VI-A") that is wholly-owned by
▇▇▇▇▇▇▇, Dubilier & Rice Fund VI-A Limited Partnership, a Cayman Islands
exempted limited partnership ("Fund VI-A"), as purchasers (the "Purchasers"),
and Complete Business Solutions, Inc., a Michigan corporation (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to the terms and conditions hereof, the
Company desires to sell to the Purchasers and the Purchasers desire to purchase
from the Company at the Initial Closing (i) an aggregate of 100,000 shares of
the Company's Series A voting convertible preferred stock, without par value
(the "Preferred Shares"), having the terms set forth in the certificate of
designation attached hereto as Exhibit A (the "Certificate of Designation"), and
(ii) one or more warrants, each substantially in the form of Exhibit B hereto,
to purchase an aggregate of three million shares of the Company's common stock,
without par value (the "Common Stock"), in accordance with the terms of such
warrant at an exercise price of $25 per share (the "25 Warrant");
WHEREAS, subject to the approval of the holders of a majority
of the shares of Common Stock present at the annual meeting of the Company's
shareholders (the "Annual Meeting") duly convened by the Board of Directors of
the Company (the "Board" and such approval, the "Shareholder Approval") and
pursuant to the terms and conditions hereof, the Company desires to sell to the
Purchasers and the Purchasers desire to purchase from the Company at the
Subsequent Closing (i) an aggregate of an additional 100,000 Preferred Shares,
(ii) one or more warrants, each substantially in the form of Exhibit C hereto,
to purchase an aggregate of 1.8 million shares of Common Stock in accordance
with the terms of such warrant at an exercise price of $31 per share (the "31
Warrant" and, together with the 25 Warrant, the "Warrants"), and (iii) an
additional 25 Warrant to purchase an additional 500,000 shares of Common Stock;
WHEREAS, the Board, based on the unanimous recommendation of a
special committee of independent directors of the Company (the "Special
Committee"), has approved, and deems it advisable and in the best interests of
the shareholders of the Company to consummate, the transactions contemplated by
this Agreement, upon the terms and subject to the conditions set forth herein;
and
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WHEREAS, the Company has, as of the date hereof, entered into
an agreement (the "Consulting Agreement") with CD&R pursuant to which CD&R has
agreed to provide to the Company financial and management advisory services as
may be requested from time to time in accordance with the terms of such
agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
set forth, the parties agree as follows:
ARTICLE I
STOCK PURCHASE
1.1 Sale and Purchase of the Preferred Shares. Subject to the
terms and conditions hereof at the Initial Closing and the Subsequent Closing,
the Company agrees to sell to the Purchasers and the Purchasers agree, jointly
and severally, to purchase from the Company, for an aggregate purchase price of
$200 million (the "Purchase Price"), an aggregate of 200,000 Preferred Shares
and the Warrants. The Purchasers shall purchase the Preferred Shares and the
Warrants hereunder on a pro rata basis.
1.2 Initial Closing.
(a) Time and Place of Initial Closing. Unless this Agreement
shall have been terminated and the transactions contemplated herein shall have
been abandoned pursuant to Article 9 hereof, the initial closing (the "Initial
Closing") shall take place at the offices of Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, at 10:00 A.M., New York time, on the second
Business Day after the satisfaction or waiver of all of the conditions to the
Initial Closing (other than those conditions that by their nature are to be
satisfied at the Initial Closing, but subject to the satisfaction or waiver of
those conditions). The "Initial Closing Date" shall be the date the Initial
Closing occurs.
(b) Transactions at the Initial Closing. At the Initial
Closing, subject to the terms and conditions of this Agreement:
(i) The Company shall (i) issue to the Purchasers an aggregate
of 100,000 of the Preferred Shares and (ii) deliver to the Purchasers
one or more certificates registered in the name of the Purchasers
representing the 25 Warrant with respect to three million shares of
Common Stock; and
(ii) The Purchasers shall pay to the Company an aggregate of
$100 million of the Purchase Price, by wire transfer of immediately
available funds to an account or accounts designated by the Company at
least five Business Days prior to the Closing Date.
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1.3 Subsequent Closing.
(a) Time and Place of Subsequent Closing. Unless this
Agreement shall have been terminated and the transactions contemplated herein
shall have been abandoned pursuant to Article 9 hereof, the subsequent closing
(the "Subsequent Closing") shall take place at the offices of Debevoise &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New York
time, no later than the second Business Day after the satisfaction or waiver of
all of the conditions set forth in Article 8 hereof (other than those conditions
that by their nature are to be satisfied at the Subsequent Closing, but subject
to the satisfaction or waiver of those conditions). The "Subsequent Closing
Date" shall be the date the Subsequent Closing actually occurs.
(b) Transactions at the Subsequent Closing. At the Subsequent
Closing, subject to the terms and conditions of this Agreement:
(i) The Company shall (i) issue to the Purchasers an aggregate
of 100,000 of the Preferred Shares, (ii) deliver to the Purchasers one
or more certificates registered in the name of the Purchasers
representing the 31 Warrant with respect to 1.8 million shares of
Common Stock and (iii) deliver to the Purchasers one or more
certificates registered in the name of the Purchasers representing the
additional 25 Warrant with respect to 500,000 shares of Common Stock ;
and
(ii) The Purchasers shall pay to the Company an aggregate of
$100 million of the Purchase Price, by wire transfer of immediately
available funds to an account or accounts designated by the Company at
least five Business Days prior to the Subsequent Closing Date.
1.4 Allocation. For all Tax purposes, the parties agree to
allocate (i) $100 million of the Purchase Price as follows: $72,102,036 and
$27,897,964 to the Preferred Shares and the 25 Warrant, respectively, acquired
at the Initial Closing, and (ii) $100 million of the Purchase Price as follows:
$75,420,295, $4,863,646 and $19,716,059 to the Preferred Shares the 31 Warrant
and the additional 25 Warrant, respectively, acquired at the Subsequent Closing.
Except as required by applicable Law, no party shall take any position for any
Tax purpose inconsistent with this allocation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company disclosure schedule
(which shall set forth with reasonable specificity by reference to Sections of
this Agreement the disclosure matters contained therein) delivered on or prior
to the date hereof (the "Company Disclosure Schedule") or (ii) the Filed Company
SEC Documents, the
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Company represents and warrants to the Purchasers as of the date hereof and as
of each Closing Date that:
2.1 Organization. Each of the Company and its Subsidiaries is
a corporation or other entity duly organized, validly existing, and in good
standing (with respect to jurisdictions that recognize the concept of good
standing) under the laws of the jurisdiction of its incorporation or
organization, and has all requisite corporate power and authority to own, lease,
use and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be in good standing of any Subsidiary
would not have a Material Adverse Effect. Each of the Company and its
Subsidiaries is qualified or licensed to do business as a foreign corporation
and is in good standing (with respect to jurisdictions that recognize the
concept of good standing) in each jurisdiction in which it owns real property or
in which the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed in
the aggregate would not have a Material Adverse Effect. None of the Company or
any of its Subsidiaries is in breach or violation of any of its certificate of
incorporation, by-laws or other organizational documents. The Company has
previously delivered to the Purchasers a complete and correct copy of each of
its restated articles of incorporation, as amended (the "Articles of
Incorporation") and By-Laws, as currently in effect. Schedule 2.1 of the Company
Disclosure Schedule sets forth a complete and correct list of the Subsidiaries
of the Company and their respective jurisdictions of incorporation or
organization. Pursuant to the By-Laws of the Company and resolutions duly
adopted by the Board thereunder, the Executive Committee of the Board currently
has the authority to appoint and terminate the Chief Executive Officer of the
Company.
2.2 Capitalization.
(a) The authorized capital stock of the Company consists of
200,000,000 shares of Common Stock and 1,000,000 Preferred Shares. At the close
of business on March 10, 2000: (i) 37,834,202 shares of Common Stock were issued
and outstanding; (ii) 3,393,782 shares of Common Stock were reserved for
issuance pursuant to the 1996 Stock Option Plan and the Employee Stock Purchase
Plan, of which 4,096,511 shares are subject to outstanding options to purchase
Common Stock (the "Company Stock Options"); and (iii) no Preferred Shares have
been designated or issued prior to the date hereof. All outstanding shares of
capital stock of the Company are, and all shares thereof which may be issued
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except as expressly provided
in this Agreement and except for changes since March 10, 2000 resulting from the
issuance of shares of Common Stock upon exercise of Company Stock Options
granted prior to the date hereof pursuant to the Plans, (x) there are not
issued, reserved for issuance or outstanding (A) any shares of capital stock or
other voting securities of the Company, (B) any securities of the Company or any
of its Subsidiaries convertible into or exchangeable or exercisable for shares
of capital stock or voting securities of the Company, (C) any
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warrants, calls, options or other rights to acquire from the Company or any of
its Subsidiaries or any obligation of the Company or any of its Subsidiaries to
issue, or cause to be issued, any capital stock, voting securities or securities
or options convertible into or exchangeable or exercisable for capital stock or
voting securities of the Company, (y) there are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any such securities or options other than those described in the second
sentence of this Section 2.2(a) and (z) there are no voting trusts or similar
agreements to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries.
(b) The Preferred Shares being issued at each Closing have
been duly authorized by all necessary corporate action on the part of the
Company (except for the filing with the Department of Consumer and Industry
Services of the State of Michigan or any successor agency or administrator of
the Certificate of Designation), and at each Closing the Preferred Shares issued
thereat will have been validly issued and, assuming payment therefor has been
made, will be fully paid and nonassessable, and the issuance of such Preferred
Shares will not be subject to preemptive or subscription rights of any other
shareholder of the Company. The Company has validly reserved for issuance a
number of shares of Common Stock that will be sufficient to permit the
conversion in full of the Preferred Shares into shares of Common Stock, and,
upon conversion, such shares of Common Stock (the "Conversion Shares") will be
validly issued and outstanding, fully paid and nonassessable. The shares
issuable upon exercise of the Warrants (the "Warrant Shares") have been duly
authorized by all necessary corporation action on the part of the Company, and
the Company has validly reserved for issuance a number of shares of Common Stock
that will be sufficient to permit the exercise in full of the Warrants. Assuming
payment therefor has been made, upon issuance and exercise of the Warrants, the
Warrant Shares will be validly issued and outstanding, fully paid and
nonassessable. Upon the adoption of the Certificate of Designation, the
Preferred Shares shall have the voting and other rights specified therein and
upon their issuance, the Conversion Shares and the Warrant Shares shall have the
voting and other rights attributable to Common Stock.
(c) All of the outstanding shares of capital stock (or
equivalent equity interests of entities other than corporations) of each of the
Company's Subsidiaries are beneficially owned, directly or indirectly, by the
Company and neither the Company nor any of its Subsidiaries owns any shares of
capital stock or other securities of, or interest in, any other Person (other
than any Subsidiaries listed on Schedule 2.1 of the Company Disclosure Schedule
or other Persons listed in Schedule 2.2(c) of the Company Disclosure Schedule),
or is obligated to make any capital contribution to or other investment in any
such Person.
2.3 Authorization Validity of Agreement. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and the
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Ancillary Agreements to which it is a party and to consummate (i) the
transactions contemplated for the Initial Closing (the "First Tranche
Transactions"), (ii) subject to the Shareholder Approval as contemplated by
Section 6.3 hereof, the transactions contemplated for the Subsequent Closing
(the "Second Tranche Transactions") and (iii) the transactions contemplated by
the Ancillary Agreements to which it is a party. The execution, delivery and
performance by the Company of this Agreement and the Ancillary Agreements to
which it is a party and the consummation of the transactions contemplated hereby
and thereby have been duly recommended by the Special Committee and duly
authorized by the Board and, other than the Shareholder Approval of the Second
Tranche Transactions, no other corporate proceedings on the part of the Company
are necessary to authorize the execution and delivery of this Agreement and the
Ancillary Agreements to which it is a party by the Company and the consummation
of the transactions contemplated hereby and thereby. This Agreement has been
duly executed and delivered by the Company and, assuming due authorization,
execution and delivery of this Agreement by the Purchasers, is a valid and
binding obligation of the Company in accordance with its terms. Each Ancillary
Agreement to which it is a party, when executed and delivered, assuming due
authorization, execution and delivery of such Ancillary Agreements by the
counterparties thereto, will constitute a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
2.4 No Violations; Consents and Approvals.
(a) Neither the execution and delivery of this Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby will (i) violate any provision of the Articles of Incorporation or
By-Laws of the Company, (ii) conflict with, result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration, or to the imposition of any Lien) under, or result in the
acceleration or trigger of any payment, time of payment, vesting or increase in
the amount of any compensation or benefit payable pursuant to, the terms,
conditions or provisions of any note, bond, mortgage, indenture, guarantee or
other evidence of indebtedness, or any lease, license, contract, agreement, plan
or other instrument or obligation, to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their assets may be
bound or (iii) conflict with or violate any Laws applicable to the Company, any
of its Subsidiaries or any of their properties or assets; except in the case of
clause (ii) for such conflicts, violations, breaches or defaults which in the
aggregate would not have a Material Adverse Effect or materially impair or delay
the consummation of the transactions contemplated hereby.
(b) No filing or registration with, declaration or
notification to, or order, authorization, consent or approval of, any federal,
state, local or foreign court, legislative, executive or regulatory authority or
agency (a "Governmental Authority") or any other
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Person is required in connection with the execution, delivery and performance of
this Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except (i) the Shareholder Approval of the
Second Tranche Transactions, (ii) pursuant to applicable requirements under the
Exchange Act and the HSR Act, and (iii) such other consents, approvals,
authorizations, and notifications, of or to any Person, other than a material
consent, approval, authorization and notification of or to any Governmental
Authority, the failure of which to be obtained or made in the aggregate would
not have a Material Adverse Effect or materially impair or delay the
consummation of the transactions contemplated hereby.
2.5 SEC Reports and Financial Statements.
(a) Since the date of its initial public offering, the Company
has timely filed with the SEC all forms and documents required to be filed by it
under the Securities Act and the Exchange Act (collectively, the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents (i) did not
contain any untrue statement of a material fact or omit 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 and (ii) complied as to form in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as
applicable, and the applicable rules and regulations of the SEC thereunder.
(b) The consolidated financial statements included in the
Company SEC Documents have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as otherwise noted therein
and except that the quarterly financial statements are subject to year end
adjustment and do not contain all footnote disclosures required by GAAP) and
fairly present in all material respects the consolidated financial position and
the consolidated results of operations and cash flows of the Company and its
consolidated Subsidiaries as at the dates thereof or for the periods presented
therein.
(c) Schedule 2.5(c) of the Company Disclosure Schedule sets
forth a draft consolidated balance sheet of the Company dated as of and as at
December 31, 1999 (the "Balance Sheet") and draft consolidated statements of
income, draft consolidated statements of cash flow and draft consolidated
statements of stockholders' equity for the year ended December 31, 1999 (such
financial statements, including the notes thereto, the "Financial Statements").
The Balance Sheet and the Financial Statements have been prepared in accordance
with GAAP and consistent with the Company's past practices. The Balance Sheet
and the Financial Statements, when presented in final audited form, together
with the Company's independent accountant's report thereon and notes thereto
shall present fairly in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the dates and for the periods
indicated therein, shall have been prepared in accordance with GAAP consistently
applied with the financial
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statements and balance sheets contained in the Filed Company SEC Documents and
shall be consistent with the Balance Sheet and Financial Statements set forth in
Schedule 2.5(c) of the Company Disclosure Schedule.
2.6 Absence of Certain Changes. Since December 31, 1999, (i)
no event, occurrence, fact, condition, change, development or effect exists or
has occurred or is threatened that, individually or in the aggregate, has had or
would have a Material Adverse Impact (other than a Material Adverse Impact
resulting primarily and directly from the announcement of the transactions
contemplated hereby and compliance by the Company with the terms of this
Agreement, or solely from the failure by the Company to meet internal
projections or forecasts due to causes that would not otherwise constitute a
Material Adverse Impact); (ii) the Company and its Subsidiaries have conducted
their respective operations only in the ordinary course consistent with past
practices and (iii) the Company and its Subsidiaries have not taken any action
that if, taken after the date hereof would constitute a breach of any of the
provisions of Article VI.
2.7 Absence of Undisclosed Liabilities. Except: (i) as and to
the extent reflected on and reserved against in the Balance Sheet, (ii) as
disclosed in the Company SEC Documents filed with the SEC and publicly available
prior to the date hereof and in any amendments filed with respect thereto prior
to the date hereof (the "Filed Company SEC Documents") or (iii) for Liabilities
that would not in the aggregate have a Material Adverse Effect, the Company and
its Subsidiaries have not incurred any Liabilities that would be required to be
reflected or reserved against in a consolidated balance sheet of the Company
prepared in accordance with GAAP consistently applied with the financial
statements and balance sheets contained in the Filed Company SEC Documents or
reflected on the notes thereto.
2.8 Information in Proxy Statement. The Proxy Statement (and
any amendment thereof or supplement thereto) at the date mailed to Company
shareholders and at the time of the Annual Meeting, (i) will not contain any
untrue statement of a material fact or omit 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 are made, not misleading and (ii)
will comply in all material respects with the applicable provisions of the
Exchange Act and the rules and regulations thereunder; except that no
representation is made by the Company with respect to statements made in the
Proxy Statement based on information supplied by the Purchasers specifically for
inclusion in the Proxy Statement.
2.9 Employee Benefit Plans; ERISA.
(a) Each "employee benefit plan" (as defined in Section 3(3)
of ERISA) and each employment agreement, collective bargaining agreement,
consulting agreement, severance agreement, bonus, incentive or deferred
compensation, stock option or other
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equity based, severance, termination, change in control, retention, employment,
vacation, medical, dental, life, disability, death benefit, other welfare,
profit-sharing, retirement, pension, post-retirement benefits, or other
compensation or benefit plan, agreement, policy or arrangement in respect of
which the Company or any of its Subsidiaries has any material liability
(collectively, the "Plans") has been filed with the Filed Company SEC Documents
or is listed on Schedule 2.9(b) of the Company Disclosure Schedule. Except as
disclosed in the Filed Company SEC Documents, the Company has not incurred or
become subject to any material liability under Title I or IV of ERISA, the
penalty or excise tax provisions of the Code relating to employee plans or any
similar Laws of a foreign jurisdiction. To the knowledge of the Company, no
condition exists or event has occurred that presents a risk to the Company of
incurring or becoming subject to any such material liability.
(b) All amounts payable under the Plans are deductible for
federal income tax purposes and none of the Company and its Subsidiaries will,
as a result of the transactions contemplated by this Agreement (either alone or
together with other events), make or become obligated to make any "excess
parachute payment" as defined in Section 280G of the Code. No current or former
employee, director, agent, independent contractor or officer of the Company or
any Subsidiary is or will become entitled to any severance pay or unemployment
compensation, or any additional or new compensation, benefits or other
compensatory payment or an increase in the amount of any compensation, benefits
or other compensatory payment in connection with or as a result of the
consummation of the transactions contemplated by this Agreement. Neither the
vesting nor the timing of the payment of any such compensation, benefit or other
compensatory payment in respect of any such employee or director has been or
will be accelerated in connection with or as a result of the consummation of the
transactions contemplated by this Agreement.
2.10 Litigation; Compliance with Law.
(a) There is no suit, claim, action, arbitration, proceeding
or investigation or other Litigation (as defined below) pending or, to the
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries or any of their properties or assets which, individually or in the
aggregate, if determined adversely to the Company or any such Subsidiary, would
have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is subject to any settlement or similar agreement with any Governmental
Authority, or to any order, judgment, decree, injunction or award of any
Governmental Authority or arbitrator, that individually or in the aggregate,
would have a Material Adverse Effect. "Litigation" means any action, cause of
action, claim, demand, suit, proceeding, citation, summons, subpoena, inquiry or
investigation of any nature, civil, criminal, regulatory or otherwise, in law or
in equity, pending or threatened, by or before any court, tribunal, arbitrator
or other Governmental Authority.
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(b) The Company and each of its Subsidiaries is in compliance
in all material respects with all Laws applicable to it, and neither the Company
nor any of its Subsidiaries has received any notice alleging noncompliance. The
Company and each of its Subsidiaries has all material licenses, permits,
variances, consents, authorizations, waivers, grants, franchises, concessions,
exemptions, orders, registrations and approvals of Governmental Authorities or
other Persons (collectively, "Permits") that are required in order to permit
each to carry on its business as it is presently conducted except where failure
to hold such Permits in the aggregate would not have a Material Adverse Effect.
All such Permits are in full force and effect and the Company and each of its
Subsidiaries is in compliance in all material respects with the terms of such
Permits, including requirements for notifications, filing, reporting, posting
and maintenance of logs and records.
(c) There is no Litigation pending or, to the knowledge of the
Company, threatened, that would result in the termination, modification or
nonrenewal of any Permit, and, to the knowledge of the Company, neither the
Company nor any of its Subsidiaries has received notice that any Permit will be
terminated or modified or cannot be renewed in the ordinary course of business,
and there is no reasonable basis for any such termination, modification or
nonrenewal, except for such terminations, modifications or nonrenewals as in the
aggregate would not have a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not violate any Permit, or result in any
termination, modification or nonrenewal thereof, except for such violations,
terminations, modifications or nonrenewals thereof as in the aggregate would not
have a Material Adverse Effect.
2.11 Intellectual Property.
(a) The Company and its Subsidiaries own (beneficially and as
of record), or possess valid and legally enforceable licenses to use
Intellectual Property used or held for use in connection with, necessary for the
conduct of, or otherwise material to, their business and operations as currently
conducted (the "Company Intellectual Property").
(b) The conduct of the business of the Company and its
Subsidiaries as currently conducted does not infringe or conflict with any
Intellectual Property of any Person, and neither the Company nor any of its
Subsidiaries has received notice or has actual knowledge of any such current
infringement or conflict, except, in each case, for such infringements or
conflicts thereof as in the aggregate would not have a Material Adverse Effect.
To the knowledge of the Company, no Person is infringing or allegedly infringing
any Intellectual Property of the Company or its Subsidiaries. As of the date
hereof, no claim or demand of any Person has been made or, to the knowledge of
the Company or any Subsidiary, threatened, nor is there any Litigation that is
pending or, to the knowledge of the Company, threatened, that (i) challenges the
rights of the Company
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or any Subsidiary in respect of any Company Intellectual Property, or (ii)
asserts that the Company or any Subsidiary is infringing or otherwise in
conflict with, any Intellectual Property, except in each case for such
challenges, assertions or claims that in the aggregate would not have a Material
Adverse Effect. None of the Company Intellectual Property is or has been the
subject of any Litigation within the last five years, whether or not resolved in
favor of the Company or any Subsidiary.
(c) Except as would not in the aggregate have a Material
Adverse Effect, all Owned Software, when delivered or made available to
customers does not contain any viruses or defects that would prevent it from
performing in all respects the tasks and functions that it was intended to
perform.
(d) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the loss
of, or creation of any Lien on, the rights of the Company or any Subsidiary with
respect to the Intellectual Property owned or used by them, except where such
losses and such Liens in the aggregate would not have a Material Adverse Effect.
2.12 Material Contracts; Registration Rights Agreements.
(a) Schedule 2.12(a) of the Disclosure Schedule sets forth a
complete and accurate list of Contracts that would be required to be filed as an
exhibit to the Company's Annual Report on Form 10-K, if such Annual Report were
required to be filed on the date hereof, a copy of each of which Contract has
been provided to the Purchasers (the "Material Contracts").
(b) Each of the Material Contracts is in full force and
effect, and neither the Company nor any of its Subsidiaries, nor, to the
knowledge of the Company, any other Person, is in breach of, or default under,
any such Material Contract, and no event has occurred that with notice or
passage of time or both would constitute such a breach or default thereunder by
the Company or any of its Subsidiaries, or, to the knowledge of the Company, any
other Person, except for such failures to be in full force and effect and such
conflicts, violations, breaches or
defaults as in the aggregate would not have a Material Adverse Effect or
materially delay the consummation of the transactions contemplated hereby.
(c) Section 2.12(c) of the Company Disclosure Schedule sets
forth a complete and accurate list of each Contract the Company has entered into
with any Person, pursuant to which Contract such Person has the right to request
or to cause the Company to effect registrations under the Securities Act of
Equity Securities held by such Person (each, a "Registration Rights Agreement")
and the number of demand registration rights outstanding thereunder on the date
hereof. On or prior to the date
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hereof the Company has provided the Purchasers a complete and accurate copy of
each such Registration Rights Agreement. There are no agreements between
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Company with respect to employment, share ownership,
indemnification, standstill, equity or voting matters other than the R
Employment Agreement, the R Subscription Agreement, the R Indemnification
Agreement or as set forth in Section 2.12 of the Disclosure Schedule.
2.13 Taxes.
(a) Each of the Company, its Subsidiaries, and any
Consolidated Group (as defined below) has timely filed all material Tax Returns
(as defined below) required to be filed by it and has timely paid all Taxes
shown on such Tax Returns, and all such Tax Returns are correct and complete in
all material respects. All material Taxes required to be withheld by the Company
or any of its Subsidiaries have been timely withheld and so paid to the proper
taxing authority or properly set aside in accounts for such purpose.
(b) No audits or other administrative proceedings or court
proceedings are presently pending with regard to any material Taxes or Tax
Return of any of the Company, its Subsidiaries or any Consolidated Group. None
of the Company or any of its Subsidiaries has received any notice of deficiency
or assessment from any taxing authority with respect to liabilities for income
or any material other Taxes which has not been fully paid or finally settled.
(c) There is no liability for Taxes for which the Company or
any of its Subsidiaries would be held liable solely by reason of Section
1.1502-6 of the Treasury Regulations or any comparable provisions of any other
Tax law or as a successor or transferee. Neither the Company nor any of its
Subsidiaries is a party to or bound by or has any obligation under any Tax
sharing, allocation, indemnity or other similar agreement or arrangement entered
into with any person (other than the Company and its Subsidiaries).
(d) "Consolidated Group" shall mean any consolidated,
combined, unitary or aggregate group for Tax purposes of which the Company or
any of its Subsidiaries is a member. "Tax Returns" shall mean all federal,
state, local and foreign tax returns, declarations, statements, reports,
schedules, forms and information returns, and any amendments to any of the
foregoing, relating to Taxes.
2.14 Environmental Matters.
(a) Except as would not have a Material Adverse Effect:
(i) each of the Company and its Subsidiaries is in compliance
in all respects with all applicable Environmental Laws pertaining to
any of the properties and assets of the Company or any of its
Subsidiaries and, to the
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knowledge of the Company, no violation by the Company or any of its
Subsidiaries is being alleged of any applicable Environmental Law
relating to any of their respective properties and assets or the use or
ownership thereof, or to their respective businesses and operations;
(ii) to the knowledge of the Company, neither the Company nor
any of its Subsidiaries has caused or taken any action that will result
in, and neither the Company nor any of its Subsidiaries is subject to,
any liability or obligation on the part of the Company or any of its
Subsidiaries relating to (x) the environmental conditions on, under,
or about the properties or assets currently owned, leased, operated or
used by the Company or any of its Subsidiaries, including without
limitation, the air, soil and groundwater conditions at such properties
or (y) the past or present use, management, handling, transport,
treatment, generation, storage, disposal, discharge, leak, emission, or
other manner of release of any Hazardous Materials; and
(iii) the Company has disclosed and made available to the
Purchasers all information, including, without limitation, all studies,
analyses and test results, in the possession, custody or control of or
otherwise known to the Company or any of its Subsidiaries relating to
(x) the environmental conditions on, under or about properties or
assets currently or formerly owned, leased, operated or used by the
Company or any of its Subsidiaries or any predecessor in interest
thereto at the present time or in the past, and (y) any Hazardous
Materials used, managed, handled, transported, treated, generated,
stored, discharged, leaked, emitted, or otherwise released by the
Company or any of its Subsidiaries or any other Person on, under, about
or from any of the properties currently or formerly owned or leased, or
otherwise in connection with the use or operation of any of the
properties and assets of the Company or any of its Subsidiaries, or
their respective businesses and operations.
(b) "Environmental Law" means any foreign, federal, state or
local law, regulation, rule, ordinance or case law relating to pollution or
protection of human health and safety or the environment, including, but not
limited to, laws relating to releases or threatened releases of Hazardous
Materials into the environment and including laws pertaining to the protection
of the health and safety of employees. "Hazardous Materials" means any substance
or material that is classified or regulated as "hazardous" or "toxic" pursuant
to any Environmental Law, including without limitation, asbestos,
polychlorinated biphenyls and petroleum.
2.15 Shareholder Approval. Except for the Shareholder Approval
of the Second Tranche Transactions, no vote of or approval by the Company's
shareholders or the Board is required under the MBCA, the Articles of
Incorporation or the By-Laws of the Company to approve this Agreement, the
issuance to the Purchasers of the Preferred
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Shares, the Conversion Shares or the Warrant Shares or the consummation of any
of the other transactions contemplated hereby.
2.16 Brokers. Except for ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ and
▇▇▇▇▇ Incorporated (the "Financial Advisor") and The Chesapeake Group, a
complete and accurate copy of each engagement letter, or a complete and accurate
description of the understanding between the Company and each entity if an
engagement letter is unavailable, of which has been provided to the Purchasers,
no broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or any of
its Subsidiaries, that is or will be payable by the Company or any of its
Subsidiaries.
2.17 Insurance. Schedule 2.17 of the Company Disclosure
Schedule contains a complete and correct list of all insurance policies
maintained at present by or on behalf of the Company and its Subsidiaries. Such
policies are in full force and effect, and all premiums due thereon have been
paid. The Company and its Subsidiaries have complied in all material respects
with the terms and provisions of such policies.
2.18 Labor Matters, etc. Neither the Company nor any of its
Subsidiaries is a party to or bound by and none of their respective employees is
subject to any collective bargaining agreement, memorandum of understanding or
other written document relating to the terms and conditions of employment for
any group of employees (any such agreement, memorandum or document, a
"Collective Bargaining Agreement"), and there are no labor unions or other
organizations representing or purporting or attempting to represent any
employees employed by any of the Company and its Subsidiaries. Since December
31, 1998, there has not occurred or been threatened any strike, slowdown,
picketing, work stoppage, concerted refusal to work overtime or other similar
labor activity with respect to any employees of the Company or any of its
Subsidiaries. There are no material labor disputes currently subject to any
grievance procedure, arbitration or litigation with respect to any employee of
the Company or any of its Subsidiaries. The Company and its Subsidiaries have
complied with all applicable Laws pertaining to the employment or termination of
employment of their respective employees, including, without limitation, all
such Laws relating to labor relations, equal employment opportunities, fair
employment practices, prohibited discrimination or distinction and other similar
employment activities, except for any failures so to comply that individually or
in the aggregate would not have a Material Adverse Effect.
2.19 Disclosure. No representation or warranty by the Company
contained in this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein, in light of the circumstances under which they were made, not
misleading. To the knowledge of the Company, there is no information relating to
the Company or any of its Subsidiaries that
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could reasonably be expected to be material to the Company and its Subsidiaries,
taken as a whole, that has not been disclosed to the Purchaser prior to or after
the date hereof (as to any fact arising or that becomes known after the date
hereof) in accordance with the terms of Section 12.6.
2.20 Takeover Statutes. Prior to the date hereof, each of the
Board and the Company have taken all necessary action such that no "Fair price,"
"Moratorium," "control share acquisition" or other similar anti-takeover statute
or regulation enacted under state or federal laws in the United States (each, a
"Takeover Statute") applicable to the Company or any of its Subsidiaries,
including, without limitation, Chapter 7A and Chapter 7B of the MBCA, is
applicable to the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
2.21 Customers; Liability for Defective Services. Since
December 31, 1999, other than in the ordinary course of business, the Company
(a) has not received any notice and has no reason to believe that any material
customer of the Company (i) has ceased to purchase, will cease to purchase, or
has terminated or will terminate any contract in respect of the purchase of,
services provided by the Company, or (ii) has materially reduced or will
materially reduce the purchase of services provided by the Company, or (b) has
not adopted any plan or policy or agreed or otherwise made any commitment
(regardless of whether such agreement or commitment would constitute an
enforceable obligation or contract under applicable law) to permit or suffer any
material customer of the Company to materially reduce the price it will pay for
any services of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Except as disclosed in the Purchaser disclosure schedule
(which shall set forth with reasonable specificity by reference to the Sections
of this Agreement the disclosure matters therein) delivered on or prior to the
date hereof (the "Purchaser Disclosure Schedule"), each Purchaser represents and
warrants to the Company as of the date hereof and as of each Closing Date as
follows:
3.1 Organization, No Prior Business. Each Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of Delaware, with all requisite power and authority to own, lease
and operate its properties and to conduct its business as now being conducted.
Neither Purchaser has engaged in any business or activity of any kind, or
entered into any agreement or arrangement with any person or any entity or
incurred, directly or indirectly, any material liabilities or obligations, other
than in connection with the transactions contemplated hereby.
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3.2 Authorization; Validity of Agreement. Each Purchaser has
the requisite power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party and to consummate the First Tranche
Transactions and the Second Tranche Transactions and the transactions
contemplated by the Ancillary Agreements to which it is a party. The execution,
delivery and performance by each Purchaser of this Agreement and the Ancillary
Agreements to which it is a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action by each Purchaser and no other proceedings on the part of the Purchasers
are necessary to authorize the execution and delivery of this Agreement by
either Purchaser and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each Purchaser and is a
valid and binding obligation of each of them enforceable against each in
accordance with its terms. Each Ancillary Agreement to which it is a party, when
executed and delivered, assuming due authorization, execution and delivery of
such Ancillary Agreements by the counterparties thereto, will constitute a valid
and binding obligation of each Purchaser enforceable against such Purchaser in
accordance with its terms.
3.3 Consents and Approvals; No Violations.
(a) Neither the execution and delivery of this Agreement by
the Purchasers nor the consummation by the Purchasers of the transactions
contemplated hereby will (i) conflict with, result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any Contract
to which either Purchaser is a party or by which or any of such Purchaser's
assets may be bound or (ii) conflict with or violate any Laws applicable to
either Purchaser or any of such Purchaser's properties or assets; except in the
case of clause (i) for such conflicts, violations, breaches or defaults which in
the aggregate would not have a Material Adverse Effect or materially impair or
delay the consummation of the transactions contemplated by this Agreement.
(b) Assuming that the representation and warranty of the
Company set forth in Section 2.4(b) is true and correct, no filing or
registration with, declaration or notification to, or order, authorization,
consent or approval of, any Governmental Authority is required in connection
with the execution and delivery of this Agreement by the Purchasers or the
consummation by the Purchasers of the transactions contemplated hereby, except
(i) pursuant to the applicable requirements under the HSR Act, (ii) applicable
requirements under the Exchange Act, and (iii) such other consents, approvals,
authorizations and notifications of or to any Person, other than a material
consent, approval, authorization and notification of or to any Governmental
Authority, the failure of which to be obtained or made would not have a Material
Adverse Effect, or materially impair or delay the consummation of the
transactions contemplated by this Agreement.
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3.4 Information in Proxy Statement. None of the information
supplied in writing by the Purchasers specifically for inclusion in the Proxy
Statement (including any amendments or supplements thereto) will, at the date
mailed to shareholders and at the time of the Annual Meeting, contain any untrue
statement of a material fact or omit 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 are made, not misleading.
3.5 Financing. CDR-Cookie VI and CDR-Cookie VI-A have each
received and delivered to the Company a letter, as in effect on the date hereof,
from Fund VI, whereby Fund VI has committed, upon the terms and subject to the
conditions set forth therein, to provide equity financing to the Purchasers up
to an aggregate of $200 million.
3.6 Brokers. Except as otherwise previously disclosed by the
Purchasers to the Company in writing, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchasers, that is or will be payable by the
Company or any of its Subsidiaries.
3.7 Litigation; Compliance with Law.
(a) There is no suit, claim, action, arbitration, proceeding
or investigation or other Litigation pending or, to the knowledge of the
Purchasers, threatened, against the Purchasers or any of their properties or
assets which, individually or in the aggregate, if determined adversely to the
Purchasers, would reasonably have a Material Adverse Effect. The Purchasers are
not subject to any settlement or similar agreement with any Governmental
Authority, or to any order, judgment, decree, injunction or award of any
Governmental Authority or arbitrator, that individually or in the aggregate,
would have a Material Adverse Effect.
(b) The Purchasers are in compliance in all material respects
with all Laws applicable to them, and the Purchasers have not received any
notice alleging noncompliance. The Purchasers have all Permits that are required
in order to permit each to carry on its business as it is presently conducted
except where failure to hold such Permits in the aggregate would not have a
Material Adverse Effect. All such Permits are in full force and effect and the
Purchasers are in compliance in all material respects with the terms of such
Permits, including requirements for notifications, filing, reporting, posting
and maintenance of logs and records.
(c) There is no Litigation pending or, to the knowledge of the
Purchasers, threatened, that would result in the termination, modification or
nonrenewal of any Permit, and, to the knowledge of the Purchasers, they have not
received notice that any
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Permit will be terminated or modified or cannot be renewed in the ordinary
course of business, and there is no reasonable basis for any such termination,
modification or nonrenewal, except for such terminations, modifications or
nonrenewals as in the aggregate would not have or result in a Material Adverse
Effect. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not violate
any Permit, or result in any termination, modification or nonrenewal thereof,
except for such violations, terminations, modifications or nonrenewals thereof
as in the aggregate would not have a Material Adverse Effect.
(d) The Purchasers are purchasing the Preferred Shares, the
Warrants, the Conversion Shares and the Warrant Shares solely for investment,
with no intention to resell such securities in contravention of the Securities
Act. The Purchasers hereby acknowledge that the Preferred Shares and Warrants
have not been, and the Conversion Shares and the Warrant Shares will not be,
registered pursuant to the Securities Act and may not be transferred in the
absence of such registration or an exemption therefrom under the Securities Act.
3.8 Knowledge. Neither the Purchasers nor, to the knowledge of
the Purchasers, any party acting on their behalf has any information or
knowledge that makes them believe that the Company's representations and
warranties set forth in Article II of this Agreement are not true and correct in
all material respects as of the date hereof.
ARTICLE IV
CORPORATE GOVERNANCE
4.1 Composition of the Board of Directors, etc.
(a) At and after the Initial Closing, the Board shall have
nine directors (subject to the right to increase the size of the Board pursuant
to Section 4.1(c)), divided into three classes. Three members of the Board shall
initially be designated by the Purchasers (the "Purchaser Directors"), one of
which shall be a Class I director, another of which shall be a Class II director
and the last of which shall be a Class III director. Six members of the Board
(the "Non-Purchaser Directors") shall initially be designated by the Company,
one of whom shall be ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. Initially, the three Purchaser
Directors shall be ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. At the
Initial Closing, each of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall be
Co-Chairmen of the Board. From the Initial Closing, until the occurrence of a
Director Termination Date, the Purchasers shall be entitled to designate ▇▇▇
▇▇▇▇▇▇▇▇▇▇ (or another Purchaser Director reasonably satisfactory to the Board)
as either (i) the Co-Chairman of the Board, or, (ii) if ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is no
longer a Co-Chairman, the Chairman of the Board.
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(b) The Purchasers shall be entitled to designate for election
to the Board three persons until such date as they no longer own, in the
aggregate, any combination of Preferred Shares and shares of Common Stock which,
taken together on an as-converted and as-exercised basis, represent at least 25%
of the number of shares of Acquired Common Stock (such date, the Director
Termination Date"). The Company shall use its best efforts to cause the
Purchaser Directors to be reelected at each shareholder meeting at which
directors are elected (and if such Purchaser Directors are not elected, the
Board shall take all action permitted by law to appoint such Purchaser Directors
to the Board). If a vacancy shall exist in the office of a Purchaser Director,
the Purchasers shall be entitled to designate a successor and, in connection
with the meeting of the shareholders of the Company next following such
election, designate such successor for election as director by the shareholders
and the Company shall use its best efforts to cause the successor to be so
elected. Upon the occurrence of the Director Termination Date, the Purchasers'
right to designate the Purchaser Directors shall cease and, upon notice of
termination from the Company to the Purchasers, the Purchasers shall cause the
Purchaser Directors to immediately resign. A Purchaser Director may be removed
only for cause.
(c) The size of the Board may be increased without the consent
of the Purchasers only as provided in this Section 4.1(c). The size of the Board
may be increased by one director to include as a director a newly appointed CEO
of the Company. If the size of the Board is otherwise increased, the Purchasers
shall have the right to at least proportionate representation on the Board
following such increase based on the composition of the Board as between
Purchaser Directors and Non-Purchaser Directors immediately prior to such
increase.
(d) Subject to any law or stock exchange rule prohibiting
committee membership by Affiliates of the Company, (i) the Purchasers shall be
entitled to at least proportionate representation by Purchaser Directors on any
committee of the Board of Directors, based on the composition of the board of
Directors as between Purchaser Directors and Non-Purchaser Directors, (ii) the
Chair of the Executive Committee shall be ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or such other Purchaser
Director as shall be reasonably acceptable to the Board, and (iii) the Chair of
the Compensation Committee shall be a Purchaser Director. At and after the
Initial Closing, (i) the Executive Committee of the Board shall consist of ▇▇▇
▇▇▇▇▇▇▇▇▇▇ as Chair, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ and (ii) the initial
Nominating Committee of the Board shall consist of ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ Land and ▇▇▇▇▇ ▇▇▇▇▇▇. Until the occurrence of a
Director Termination Date, any reconstituted Nominating Committee shall consist
of the same proportion of Purchaser Directors and Non-Purchaser Directors as the
initial Nominating Committee.
4.2 Non-Voting Observer. Until the occurrence of a Director
Termination Date, the Purchasers shall also be entitled to designate one
observer to the Board (the
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"Purchaser Observer"), who shall be an employee of CD&R. The Purchaser Observer
shall have the same access to information concerning the business and operations
of the Company and its Subsidiaries, and at the same time, as directors of the
Company, and shall be entitled to participate in discussions and consult with
the Board without voting.
4.3 Directors' and Observer's Expenses; Fees. The Company
shall promptly reimburse the Purchaser Directors and the Purchaser Observer for
all reasonable expenses incurred by them in connection with their attendance at
meetings and any other activities undertaken in their capacity as directors or
an observer. The Purchaser Directors shall receive standard board fees,
perquisites and option grants, in accordance with the Company's policy of paying
directors, as such policy may be in effect from time to time. Notwithstanding
anything herein to the contrary, no Purchaser Director shall be entitled to
additional compensation or to reimbursement of expenses in connection with
activities undertaken pursuant to the Consulting Agreement other than as
required to be paid to CD&R thereunder.
4.4 Information, VCOC.
(a) The Company shall furnish the Purchasers with such
financial and operating data and other information with respect to the business
and properties of the Company as the Company prepares and compiles for its
directors in the ordinary course and as the Purchasers may from time to time
request. The Company shall permit each of the Purchasers to discuss the affairs,
finances and accounts of the Company with, and to make proposals and furnish
advice with respect thereto to, the principal officers of the Company.
(b) The rights set forth in this Article IV are intended to
satisfy the requirement of contractual management rights for purposes of
qualifying the Purchaser's ownership interests in the Company as venture capital
investments for purposes of the Department of Labor's "plan assets" regulations.
4.5 Supermajority Voting Provisions.
(a) From the Initial Closing, until the occurrence of a
Director Termination Date, neither the Company nor the Board shall cause or
permit to occur any of the following events without the affirmative vote of more
than seventy percent of the members of the Board (except as permitted by Section
4.5(b):
(i) any issuance of Equity Securities other than (i) pursuant
to Company Stock Plans (up to a limit of 5% of the fully diluted common
stock outstanding immediately following the Subsequent Closing), (ii)
issuances pursuant to acquisitions or public offerings not exceeding 5%
in a single instance or 20% in the aggregate of the fully diluted
common stock outstanding immediately
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following the Subsequent Closing, or (iii) pursuant to currently
outstanding stock options previously disclosed to CD&R. No such
issuance will be permitted in any case if as a result thereof any
Person would own 10% of the fully diluted common stock outstanding
after such issuance;
(ii) any non de minimis purchase or sale of stock, any
purchase or sale of assets, any merger, consolidation or other business
combination transaction, involving the Company or any of its
Subsidiaries, on the one hand, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, or Affiliates of
▇▇. ▇▇▇▇▇▇▇▇▇ (other than the Company and its Subsidiaries), on the
other hand;
(iii) any purchases or other acquisitions of the stock or
assets of another Person (whether through merger, consolidation, other
business combination, lease or otherwise, and whether in one or a
series of related transactions) if the fair market value of the
consideration received by the parties other than the Company in all
such transactions in any fiscal year of the Company would exceed $35
million;
(iv) any sale, lease, transfer or other disposition in one
transaction or a series of related transactions, of subsidiaries,
divisions or assets of the Company, if the fair market value of the
consideration received in all such transactions in any fiscal year of
the Company would exceed $25 million;
(v) incurrence of Indebtedness in excess of $50 million;
(vi) any amendment or modification of the Articles of
Incorporation or the By-Laws of the Company that modifies, amends or is
inconsistent with the terms of this Agreement or the Certificate of
Designation; and
(vii) prior to the EC Date, any change to the composition,
powers or identity of the members of the Executive Committee of the
Board (provided, that the provisions of Section 4.1(d) shall continue
in effect until the Director Termination Date).
(b) Notwithstanding anything herein to the contrary, the
following matters are subject to approval by a simple majority of the Board:
(i) a sale by the company of Synova, Inc.
("Synova");
(ii) an initial public offering of Bridge
Strategies Group LLC ("Bridge");
(iii) an initial public offering of CBSI Complete
Business Solutions (Mauritius) Limited or
its Subsidiaries;
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(iv) the implementation of a "holding company"
structure;
(v) the creation of a venture fund, in an amount
not to exceed $200 million, for the purpose
of making investments in startup companies
(such investments are herein referred to as
"New Business Opportunities"); and
(vi) to the extent necessary to effectuate a
Change of Control Transaction that has been
approved by a simple majority of the Board,
the actions enumerated in section 4.5(a).
4.6 Responsibilities of Co-Chairmen, CEO.
(a) Co-Chairmen. While serving as Co-Chairman of the Company,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall have such duties and responsibilities consistent with
such title and position as the Board specifies from time to time, including,
without limitation, the primary responsibility (in consultation with the
Company's CEO and the Company's other Co-Chairman) for (i) the operations of
Synova, Bridge and New Business Opportunities and (ii) corporate transformation
issues relating to the Company's Asia operations; provided, however, that the
Company shall engage in any New Business Opportunity only in accordance with
guidelines approved by a simple majority of the Board. For so long as the
Purchasers are entitled to designate the Co-Chairman pursuant to Section 4.1,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (or another Purchaser Director reasonably satisfactory to the
Board) shall also serve as Co-Chairman of the Company, and shall have such
duties and responsibilities consistent with the such title and position as the
Board specifies from time to time, including, without limitation, the primary
responsibility for (i) recruiting and selecting a new CEO for the Company (in
consultation with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇), (ii) the Company's operations other than
Synova, Bridge and New Business Opportunities, and (iii) the integration of the
Company's Asia operations with its U.S. and European operations.
(b) CEO. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall serve as the Company's Chief
Executive Officer until the earlier of (i) such time as the Company hires a new
Chief Executive Officer and (ii) December 31, 2000, at which point ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ shall resign as Chief Executive Officer of the Company, but remain a
Co-Chairman of the Company. If a new Chief Executive Officer has not been hired
by the Company prior to December 31, 2000, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (or another Purchaser
Director reasonably acceptable to the Board) shall become the acting Chief
Executive Officer until such time as a new Chief Executive Officer is so hired.
The Company's newly hired Chief Executive Officer shall be responsible for the
Company's worldwide operations (other than those of Synova, Bridge and New
Business Opportunities).
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4.7 By-Laws. The Company and the Purchasers shall take or
cause to be taken all lawful action necessary to ensure at all times as of and
following the Initial Closing Date that the Company By-Laws are not inconsistent
with the provisions of this Agreement and the transactions contemplated hereby.
ARTICLE V
CERTAIN EQUITY MATTERS
5.1 Subscription Rights. Until the occurrence of a Director
Termination Date, if the Board shall authorize the issuance of New Securities
for cash (other than any New Securities issued (i) to officers, employees or
directors of the Company or any of its Subsidiaries pursuant to any Company
Stock Plan, (ii) in connection with any acquisition transaction, (iii) in
connection with a public offering of securities, and (iv) to the Purchasers or
their Affiliates (other than the Company and its Subsidiaries)), then, prior to
each such issuance of New Securities, the Company shall offer to the Purchasers
a Pro Rata Share of such New Securities. Any offer of New Securities made to the
Purchasers under this Section 5.1 shall be made by notice in writing (the
"Subscription Notice") at least 20 Business Days prior to the issuance of such
New Securities. The Subscription Notice shall set forth (i) the number of New
Securities proposed to be issued and the terms of such New Securities, (ii) the
consideration (or manner of determining the consideration), if any, for which
such New Securities are proposed to be issued and the terms of payment, (iii)
the number of New Securities offered to the Purchasers in compliance with the
provisions of this Section 5.1 and (iv) the proposed date of issuance of such
New Securities. Not later than 10 Business Days after its receipt of a
Subscription Notice, the Purchasers shall notify the Company in writing whether
it elects to purchase all or any portion of the New Securities offered to the
Purchasers pursuant to the Subscription Notice. If the Purchasers shall elect to
purchase any such New Securities, the New Securities which it shall have elected
to purchase shall be issued and sold to the Purchasers by the Company at the
same time and on the same terms and conditions as the New Securities are issued
and sold to other Persons. If, for any reason, the issuance of New Securities is
not consummated, the Purchasers' right to its Pro Rata Share of such issuance
shall lapse, subject to the Purchasers' ongoing subscription right with respect
to issuances of New Securities at later dates or times. The Purchasers agree
that the Company may grant rights to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ equivalent to (but not
better than) those set forth in this Section 5.1.
5.2 Issuance and Delivery of New Securities. The Company
represents and covenants to the Purchasers that (i) upon issuance, all the
shares of New Securities sold to the Purchasers pursuant to this Article V shall
be duly authorized, validly issued, fully paid and nonassessable and will be
approved (if outstanding securities of the Company of the same type are at the
time already approved) for listing on the Nasdaq National Market or for
quotation or listing on the principal trading market for the
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securities of the Company at the time of issuance, (ii) upon delivery of such
shares, they shall be free and clear of all Liens and shall not be subject to
any preemptive right of any stockholder of the Company, (iii) in connection with
any such issuance, the Company shall have taken all necessary actions such that
no Takeover Statute shall be applicable to any such issuance and (iv) upon
issuance all the shares of New Securities shall have the voting and other rights
attributable to the Common Stock or the Preferred Shares under the Certificate
of Designation, as the case may be. Each share certificate representing New
Securities issued or delivered by the Company hereunder shall bear the legend
set forth in Section 12.10.
5.3 Limitation on Purchases of Equity Securities. (a) Except
as permitted by a majority of the Non-Purchaser Directors, during the period
commencing on the date hereof and ending on the earlier of (x) the fifth
anniversary of the Initial Closing and (y) the occurrence of a Director
Termination Date, the Purchasers and their Affiliates shall not, directly or
indirectly:
(i) acquire, or offer or agree to acquire, beneficial
ownership (as defined in Rule 13d-3 and 13d-5 under the Exchange Act)
of any Voting Securities;
(ii) contrary to the recommendation of the Board, participate
in any "solicitation" of "proxies" (as such terms are used in the proxy
rules of the SEC), vote any shares of capital stock of the Company,
initiate, propose or otherwise solicit stockholders of the Company for
the approval of one or more stockholder proposals or induce or attempt
to induce any other individual, firm, corporation, partnership or other
entity to initiate any stockholder proposal;
(iii) join in or in any way participate in a pooling
agreement, syndicate, voting trust or other arrangement with respect to
the Company's Voting Securities, or otherwise act in concert with, any
other Person (other than Affiliates of the Purchasers, or ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ or Affiliates of ▇▇. ▇▇▇▇▇▇▇▇▇), for the purpose of
acquiring, holding, voting or disposing of the Company's securities;
(b) Notwithstanding anything to the contrary in this
Agreement, however, nothing contained in this Section 5.3 shall be deemed to (i)
restrict the manner in which the Purchaser Directors or the Purchaser Observer
participate in deliberations or discussion of the Board in compliance with their
fiduciary duties, (ii) prevent the Purchasers from acquiring any of the
Preferred Shares, the Conversion Shares or the Warrant Shares pursuant to the
terms of this Agreement, the Certificate of Designation and the Warrants (and
the Purchasers shall not be deemed to have breached any covenant in this
Agreement solely as a result of such acquisition) or (iii) restrict the
Purchasers from acquiring beneficial ownership over Voting Securities, whether
by purchase of such Voting Securities, by proxy or otherwise, up to an aggregate
amount of 49.9% of the Voting Securities from time to time outstanding. Nothing
herein shall be construed as
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permitting the Purchasers and their Affiliates from acquiring beneficial
ownership of Voting Securities in excess of 49.9% of the Voting Securities from
time to time outstanding during the time period contemplated in Section 5.3(a)
unless otherwise permitted by a majority of the Non-Purchaser Directors. This
Article V expressly supercedes Section 8 of the Confidentiality Agreement, dated
February 1, 2000, by and between CD&R and the Company, which Section 8 is hereby
terminated and of no further force and effect.
ARTICLE VI
COVENANTS OF THE COMPANY
6.1 Covenants of the Company. During the period from the date
of this Agreement and continuing until the Subsequent Closing, the Company
agrees as to itself and its Subsidiaries that, except as (i) set forth in
Schedule 6.1, (ii) to the extent that the Purchasers otherwise consent in
writing, (iii) required by Law, (iv) mandatorily required by any Plan, or (v)
specifically required by this Agreement:
(a) Reasonable Efforts. The Company will, and will cause its
Subsidiaries to, use commercially reasonable efforts to preserve the
relationships with customers, suppliers and others having business dealings with
the Company and its Subsidiaries.
(b) Other Transactions. The Company will not, nor will it
permit any of its Subsidiaries to, do any of the following (except as otherwise
expressly provided herein):
(i) amend its Articles of Incorporation (except to the extent
necessary to adopt the Certificate of Designation), By-Laws or other
organizational documents (except to comply with the terms of this
Agreement and consummate the transactions contemplated herein and for
immaterial amendments to the certificate of incorporation or bylaws of
any of the Company's Subsidiaries, provided such amendments in no way
adversely affect the Purchasers or the rights granted to the Purchaser
hereunder);
(ii) declare or pay any dividend or make any distribution with
respect to the assets of the Company and its Subsidiaries;
(iii) redeem or otherwise acquire any shares of its capital
stock or issue any capital stock (except upon exercise of options
issued prior to the date hereof under a Company Stock Option Plan), or
any option or warrant or right relating thereto;
(iv) split, combine or reclassify any shares of its capital
stock;
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(v) incur any liabilities, obligations or indebtedness for
borrowed money or guarantee any such liabilities, obligations or
indebtedness, other than in the ordinary course of business consistent
with past practice (except as incurred in connection with acquisitions
to the extent permitted hereby) and in an aggregate amount that would
not be material to the Company and its Subsidiaries, taken as a whole;
(vi) take any action or omit to take any action, which action
or omission would result in a breach of any of the representations and
warranties set forth in Article II;
(vii) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value;
(viii) enter into any agreement or take any action in
violation of the terms of this Agreement or any Contract that would be
required to be set forth on Schedule 2.12 if in effect on the date
hereof ;
(ix) agree, whether in writing or otherwise, to do any of the
foregoing.
(c) Certificate of Designation. Prior to the Initial Closing,
the Board will cause the Certificate of Designation to be filed with the
Department of Consumer and Industry Services of the State of Michigan or any
successor agency or administrator.
6.2 Access and Information. So long as this Agreement remains
in effect, prior to the Subsequent Closing, the Company will (and will cause
each of its Subsidiaries and each of their respective accountants, counsel,
consultants, officers, directors, employees, agents and representatives to) give
the Purchasers and their representatives, reasonable access during reasonable
business hours to all of their respective properties, assets, books, contracts,
commitments, reports and records relating to the Company and its Subsidiaries,
and furnish to them all such documents, records and information with respect to
the properties, assets and business of the Company and its Subsidiaries and
copies of any work papers relating thereto as the Purchasers shall from time to
time reasonably request. The Company will use reasonable efforts to keep the
Purchasers generally informed as to the affairs of the business of the Company
and its Subsidiaries and shall consult with the representatives of the
Purchasers on material matters pertaining to the Business.
6.3 Shareholders' Meeting; Proxy Statement.
(a) As promptly as practicable after the date hereof, the
Company shall prepare the Proxy Statement, and the Company shall prepare and
file with the SEC, and the Purchasers shall cooperate with the Company in such
preparation and filing, the Schedule 14A in which the Proxy Statement shall be
included. The Company will use its
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reasonable best efforts, after consultation with the Purchasers, to respond
promptly to any comments made by the SEC with respect to the Schedule 14A or the
Proxy Statement and use its reasonable best efforts to cause the Proxy Statement
to be cleared by the SEC, as promptly as practicable following such filing. The
Company will use its reasonable best efforts to cause a definitive proxy
statement (the "Proxy Statement") to be mailed to its shareholders as promptly
as practicable after the Proxy Statement is cleared by the SEC. The Company
shall include in the Proxy Statement the recommendation of the Board and the
Special Committee that shareholders of the Company approve the Second Tranche
Transactions, unless such recommendation has been withdrawn or modified as
permitted by Section 6.13.
(b) The Company shall, as soon as practicable, in accordance
with applicable law and the Articles of Incorporation and the By-Laws of the
Company, duly call, set a record date for, give notice of, convene and hold the
Annual Meeting for the purpose of considering and taking action upon this
Agreement and such other matters as may be appropriate at the Annual Meeting.
The Company shall, through its Board of Directors, recommend that its
shareholders approve the Second Tranche Transactions and shall use all
reasonable efforts to solicit from shareholders of the Company proxies in favor
of the approval thereof, unless such recommendation has been withdrawn or
modified as permitted by Section 6.13.
(c) If at any time prior to the Subsequent Closing Date any
event relating to the Company or any of its affiliates, or its, or its
affiliates', respective officers, directors or shareholders, should be
discovered which should be set forth in an amendment of, or a supplement to such
Schedule 14A or the Proxy Statement, the Company shall promptly so inform the
Purchasers and will furnish all necessary information to the Purchasers relating
to such event and an appropriate amendment or supplement to such Schedule 14A or
Proxy Statement will thereafter be filed with the SEC by the Company. All
documents that the Company is responsible for filing with the SEC in connection
with the transactions contemplated by this Agreement shall comply in all
material respects, both as to form and otherwise, with the Exchange Act and the
rules and regulations thereunder.
(d) The Company will immediately notify the Purchasers of the
receipt of any comments from the SEC concerning any of the filings described in
this Section 6.3. All filings with the SEC and all mailings to the Company's
stockholders in connection with the Purchasers, including the Proxy Statement,
shall be subject to the prior review and comment and with respect to matters
pertaining to the Purchasers, the approval of the Purchasers. No such filing or
mailing shall be made without the prior consent of the Purchasers.
(e) If at any time prior to the Subsequent Closing Date any
event relating to the Purchasers or any of their Affiliates, or their
Affiliates' respective officers,
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directors or shareholders should be discovered which should be set forth in an
amendment of, or a supplement to, such Schedule 14A or the Proxy Statement, the
Purchasers shall promptly so inform the Company and will furnish all necessary
information to the Company relating to such event and an appropriate amendment
or supplement to such Schedule 14A or Proxy Statement will thereafter be filed
with the SEC by the Company. All documents that the Purchasers are responsible
for filing with the SEC in connection with the transactions contemplated by this
Agreement shall comply in all material respects, both as to form and otherwise,
with the Exchange Act and the rules and regulations thereunder.
6.4 Notification of Certain Matters. The Company shall give
prompt notice to the Purchasers, and the Purchasers shall give prompt notice to
the Company, of (i) the occurrence or non-occurrence of any event the occurrence
or non-occurrence of which would cause any representation or warranty of the
Company, or of the Purchasers, as the case may be, contained in this Agreement
to be untrue or inaccurate in any material respect at any Closing, (ii) any
material failure of the Company, or the Purchasers, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder and (iii) any event, occurrence, fact, condition,
change, development or effect that, individually or in the aggregate, would have
a Material Adverse Effect or a breach of Section 6.1; provided, however, that
any failure to provide such notice pursuant to this Section 6.4 shall not
constitute a separate breach of the terms of this Agreement.
6.5 Press Releases; Interim Public Filings. The Company shall
deliver to the Purchasers complete and correct copies of all press releases and
public filings made between the date hereof and the Subsequent Closing Date,
and, to the extent any such press release and public filings refer in any way to
the Purchasers or their Affiliates, they shall be subject to the prior review
and comment of the Purchasers.
6.6 Reservation of Common Stock for Conversion and Exercise.
The Company shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of issuance upon the
conversion of the Preferred Shares and exercise of the Warrants, such number of
shares of Common Stock as may be issued upon conversion of all outstanding
Preferred Shares not previously converted and exercise of all outstanding
Warrants not previously exercised.
6.7 Listing. The Company shall use its reasonable best efforts
to cause the shares of Common Stock issuable upon conversion of the Preferred
Shares or exercise of the Warrants to be listed or otherwise eligible for
trading on the NASDAQ National Market System or another national securities
exchange.
6.8 Periodic Information. For so long as the Preferred Shares
or any Conversion Shares or Warrant Shares are outstanding, the Company shall
file all reports
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required to be filed by the Company under Section 13 or 15(d) of the Exchange
Act and shall provide the holders of the Preferred Shares, Conversion Shares and
Warrant Shares with the information specified in Rule 144A(d) under the
Securities Act.
6.9 Preferred Share Rights.
(a) Change of Control. After the date hereof, the Company
shall not, nor shall it agree to, engage in a Change of Control (as such term is
defined in the Certificate of Designation), unless (i) if the Initial Closing
has occurred, it offers to repurchase the Preferred Shares issued to the
Purchasers as provided in Section 9 of the Certificate of Designation, and (ii)
if either the Initial or the Subsequent Closing has not occurred, it pays the
Purchasers an amount equal to the difference between (A) the amount the
Purchasers would have been entitled to receive pursuant to Section 9 of the
Certificate of Designation had such closing or closings occurred immediately
prior to such Change of Control, and (B) the initial liquidation preference that
would have been attributable to the Preferred Shares had such closing or
closings occurred immediately prior to the Change of Control.
(b) Special Voting Rights. Following the Closing, the Company
shall not take any of the actions described in Section 3(b) of the Certificate
of Designation unless the holders of the Preferred Shares shall have first been
allowed to vote on such action as a single class, as described in Section 3(b)
of the Certificate of Designation.
(c) Redemption, Repurchase. Following the tenth anniversary of
the Closing Date, upon the request of the Purchasers (or any Affiliates
thereof), the Company shall redeem the Preferred Shares as provided in Section 8
of the Certificate of Designation. Following the Shareholder Approval Deadline
(as defined in the Certificate of Designation), the Company shall offer to
repurchase the Preferred Shares, as provided in Section 9 of the Certificate of
Designation.
6.10 New Shareholders. The Company agrees to use commercially
reasonable efforts to cause any Person or "group" (as defined in the Exchange
Act) that acquires ten percent or more of the Company's Voting Securities from
the Company or an Affiliate in a merger, stock purchase (other than in an
underwritten public offering) or other business combination to, enter into an
agreement to vote their shares of capital stock so as to effectuate the
Purchasers' rights under Section 4.1.
6.11 Executive Committee. Until the occurrence of the
Subsequent Closing, no change shall be made to the composition, powers or
identity of the members of the Executive Committee of the Board, as extant on
the Initial Closing Date, without the consent of the Purchasers.
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6.12 Shareholder Rights. The Board shall take all necessary
action such that, effective immediately after the Subsequent Closing, the
Company shall have adopted a shareholder rights plan (or "poison pill"), in form
and substance reasonably satisfactory to the Purchasers.
6.13 No Solicitation by the Company.
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its directors, officers
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its Subsidiaries to, directly
or indirectly through another person, (i) solicit, initiate or knowingly
encourage (including by way of furnishing non-public information), or take any
other action designed to facilitate, any inquiries or the making of any proposal
which constitutes either a Company Takeover Proposal or an Alternative Proposal
or (ii) participate in any discussions or negotiations regarding any Company
Takeover Proposal or Alternative Proposal; provided, however, that if the
Special Committee or the Board determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to act in a manner
consistent with its fiduciary duties to the Company's shareholders under
applicable Law, the Company may, in response to any Company Takeover Proposal or
Alternative Proposal that was not solicited by it and that does not otherwise
result from a breach of this Section 6.13 and, subject to providing prior notice
of any such proposal or any such request for non-public information and of its
decision to take such action to the Purchasers, (x) furnish information with
respect to the Company and it Subsidiaries to any person inquiring about or
making a Company Takeover Proposal or Alternative Proposal pursuant to a
customary confidentiality agreement (as determined by the Company based on the
advice of its outside counsel) and (y) participate in discussions or
negotiations regarding such Company Takeover Proposal or Alternative Proposal,
as the case may be.
(b) Except as expressly permitted by this Section 6.13,
neither the Board, the Special Committee nor any other committee shall (i)
withdraw or modify, in a manner adverse to the Purchasers the approval or
recommendation by such Board or such committee of the Second Tranche
Transactions or this Agreement, (ii) approve or recommend, or propose publicly
to approve or recommend, any Company Takeover Proposal or Alternative Proposal,
or (iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Company Takeover Proposal or Alternative Proposal, unless the Special Committee
or the Board, determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to act in a manner consistent with its
fiduciary duties to the Company's shareholders under applicable Law.
Notwithstanding the foregoing provisions of this Section 6.13(b), prior to the
adoption of this Agreement by the Company's shareholders at the Annual Meeting,
the Board, to the extent that it determines in good faith, following the
recommendation of the Special Committee and
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after consultation with outside counsel, that in light of a Company Superior
Proposal it is necessary to do so in order to act in a manner consistent with
its fiduciary duties to the Company's shareholders under applicable law, may
terminate this Agreement solely in order to concurrently enter into a definitive
agreement with respect to any Company Superior Proposal, but only at a time that
is after the third business day following the Purchasers' receipt of written
notice advising them that the Board is prepared to accept a Company Superior
Proposal, specifying the material terms and conditions of such Company Superior
Proposal, all of which information will be kept confidential by the Purchasers
in accordance with the terms of the Confidentiality Agreement.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.13, the Company shall advise the
Purchasers of any request for information or of any Company Takeover Proposal or
Alternative Proposal, within one Business Day of the Company's receipt of such
request or such Company Takeover Proposal or Alternative Proposal, as the case
may be, and the material terms and conditions of such request or such Company
Takeover Proposal or Alternative Proposal.
(d) Nothing contained in this Section 6.13 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) and 14d-9 promulgated under the Exchange Act or from making any
disclosure to the Company's shareholders if, in the good faith judgment of the
Special Committee or the Board, after consultation with outside counsel, failure
so to disclose would be inconsistent with its obligations under applicable law.
(e) The parties agree that, following the Initial Closing Date
until the Subsequent Closing Date, any determination with respect to a Company
Takeover Proposal at a meeting of the Board convened to consider such Company
Takeover Proposal shall be made by Non-Purchaser Directors who are also not
officers or employees of the Company; provided that nothing in this Section
6.13(e) shall prevent any director from participating in such meeting and
consulting with the Board on such Company Takeover Proposal in compliance with
their fiduciary duties.
ARTICLE VII
COVENANTS OF THE COMPANY AND THE PURCHASERS
7.1 Public Announcements.
(a) On the date hereof, the Company and the Purchasers shall
jointly prepare a press release by the Company, satisfactory in form and
substance to each of them, announcing (i) the general terms of the transactions
contemplated hereby (ii) that ▇▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇ will be
Co-Chairmen of the Board and (iii) the general reasons for the transactions
contemplated hereby.
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(b) Prior to the Initial Closing, except as required by
applicable Law, no party shall, nor shall permit its Affiliates to, make any
public announcement in respect of this Agreement or the transactions
contemplated hereby without the prior consent of the other parties.
7.2 Further Actions.
(a) From the date hereof to the Subsequent Closing, each party
agrees to use its reasonable best efforts to take all actions and to do all
things necessary or appropriate to consummate the transactions contemplated
hereby and by the Ancillary Agreements as promptly as possible, including,
without limitation: (i) filing or supplying all applications, notifications and
information required to be filed or supplied by it pursuant to applicable Law,
(ii) obtaining all Consents and Governmental Approvals necessary or appropriate
to be obtained by it in order to consummate transactions contemplated hereby and
thereby, (iii) obtaining Shareholder Approval of the Second Tranche Transactions
and (iv) coordinating and cooperating with the other parties in exchanging such
information and supplying such reasonable assistance as may be reasonably
requested by the other parties.
(b) The Company shall use its best efforts to take all
necessary steps under the Articles of Incorporation and the Company's By-Laws to
increase by 4 million the number of shares of Common Stock available for grant
as Company Stock Options under existing Plans or pursuant to new Plans.
(c) The Purchasers shall not exercise their special voting
rights under Section 3(b) of the Certificate of Designation so as to prevent a
Change of Control Transaction that has been approved as contemplated by this
Agreement.
(d) The Company agrees that at no time shall it exercise its
rights under Section 11 of the Certificate of Designation with respect to
Preferred Shares beneficially owned by the Purchasers or their Affiliates.
7.3 Further Assurances. Following the Initial Closing, each
party shall execute and deliver such additional instruments, documents,
conveyances or assurances and take such other actions as shall be necessary, or
otherwise reasonably requested by another party hereto, to confirm and assure
the rights and obligations provided for in this Agreement and the Ancillary
Agreements, and render effective the consummation of the transactions
contemplated hereby and thereby.
7.4 Certain Tax Matters.
(a) The Company shall consult in good faith with the
Purchasers concerning (i) the tax treatment of the Preferred Shares and any
actual or constructive distributions made or deemed made to the Purchasers and
(ii) any available alternatives
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for minimizing any withholding tax in respect of such actual or constructive
distributions. The Company does not presently intend to withhold tax on account
of any "constructive distribution." In the event that the Company determines
that such withholding is required, the Company shall comply with the terms of
Section 7.4(b) below.
(b) At least 30 days prior to making any withholding tax
payment on account of any actual or constructive distributions made or deemed
made to the Purchasers, the Company shall (x) provide a written notice to the
Purchasers (which notice shall set forth an estimate of the amount of the
anticipated withholding tax payment), (y) consult in good faith with the
Purchasers concerning whether all or a portion of such anticipated withholding
tax payment is required under applicable Law and concerning any available
alternatives that could reduce or eliminate the amount of withholding tax
required to be made and (z) afford the Purchasers the opportunity to fund any
withholding tax that the Company determines (after consulting with the
Purchasers as provided herein) required to be made, provided that:
(A) the Company shall not withhold or deduct any tax on any
constructive distribution deemed made to the Purchasers without the
prior written consent of the Purchasers;
(B) provided that the Company shall have given the Purchasers written
notice and otherwise complied with the terms of this Section 7.4(b),
the Purchasers shall defend, indemnify and hold the Company harmless
against any withholding tax (together with interest, penalties and
additions thereto) on any constructive distribution deemed made to the
Purchasers if the Company has not timely received from the Purchasers
the amount necessary to pay such withholding tax;
(C) the Purchasers shall have full participation rights in any audit,
examination, investigation and proceeding relating to any withholding
tax described in clause (B) above; and
(D) control of decisions with respect to any such audit, examination,
investigation or proceeding shall be made solely by the Company and the
Company shall reasonably cooperate with, and provide reasonable
assistance, to the Purchasers (including, without limitation, access to
the records, making personnel available and executing the applicable
power of attorney) concerning any matter described in this proviso.
With respect to any withholding tax payable in respect of dividends under the
Code, the Company shall not treat any actual or constructive distribution made
or deemed made to the Purchasers as giving rise to any withholding tax unless
such distribution is described in Section 316 of the Code. For such purposes, in
determining whether any distribution is described in section 316 of the Code,
the Company shall make a reasonable estimate as
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to whether the Company will have current earnings and profits as of the close of
the taxable year in which the distribution is made.
(c) Notwithstanding any provisions in this Agreement to the
contrary, if the Company receives any written notice of assessment or demand
from the Internal Revenue Service that the Company is required to pay any
withholding tax on account of any actual or constructive distribution made or
deemed made to the Purchasers, the Company shall have the right to require, by
written request to the Purchasers together with a copy of such written notice of
assessment or demand, that the Purchasers pay, by wire transfer of immediately
available funds, the amount necessary to pay any such assessment or demand
(other than interest, penalties and additions thereto); provided that the
Purchasers shall not be required to pay any amounts hereunder that the
Purchasers shall have previously paid, whether through withholding or deduction,
setoff or any direct payment in respect of such withholding tax, to the Company
or to any applicable withholding agent or to any applicable taxing authority;
and provided further that, the Purchasers shall have full participation rights
in any proceeding relating to such assessment or demand.
(d) The Company shall pay, by wire transfer of immediately
available funds, to the Purchasers any refund received by the Company of
withholding tax in respect of any actual or constructive distribution made or
deemed made to the Purchasers.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Condition to Obligations of Each Party. The obligation of
the parties to consummate the transactions contemplated hereby and by the
Ancillary Agreements to which each is a party shall be subject to the
fulfillment of the following conditions on or prior to each Closing Date (any or
all of which may be waived, in whole or in part, in writing to the extent
permitted by applicable Law):
(a) No Injunction, etc. Consummation of the transactions
contemplated hereby or by the Ancillary Agreements shall not have been
restrained, enjoined or otherwise prohibited or made illegal by any applicable
Law. No Governmental Authority shall have enacted any applicable Law to make
illegal the consummation of the transactions contemplated hereby or by the
Ancillary Agreements, and no proceeding with respect to the application of any
such applicable Law to such effect shall be pending.
(b) Consents. Any applicable waiting period under the HSR Act
with respect to the purchase of the Preferred Shares and the Warrants shall have
expired or been terminated, and all Governmental Approvals and all Consents
required to be
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obtained for the consummation of the transactions contemplated by this Agreement
and the Ancillary Agreements shall have been obtained and remain in full force
and effect.
8.2 Conditions to Obligations of the Purchasers. The
obligation of the Purchasers to consummate the transactions contemplated hereby
and by the Ancillary Agreements shall be subject to the fulfillment on or prior
to each Closing Date (or waiver by the Purchasers) of the following additional
conditions, which the Company agrees to use its reasonable best efforts to cause
to be fulfilled:
(a) Representations, Performance, etc. The representations and
warranties of the Company contained herein and in the Ancillary Agreements to
which the Company is a party shall be true and correct in all respects (in the
case of any representation or warranty containing any materiality qualification)
or in all material respects (in the case of any representation or warranty
without any materiality qualification) at and as of the date hereof and at and
as of each Closing Date with the same effect as though made on and as of such
Closing Date, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
that are qualified as to materiality shall be true and correct, and those that
are not so qualified shall be true and correct in all material respects, on and
as of such earlier date), and the Purchasers shall have received a certificate
signed by an officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed or complied in all material respects with all obligations
and covenants required to be performed or complied with prior to each Closing by
the Company under this Agreement and the Purchasers shall have received a
certificate signed by an officer of the Company to such effect.
(c) Ancillary Agreements. On or prior to any Closing Date, (i)
the Company and the Purchasers shall have entered into a registration rights
agreement in the form of Exhibit D hereto (the "CDR Registration Rights
Agreement") and such agreement shall remain in full force and effect; (ii) the
Company and the Purchasers shall have entered into an indemnification agreement
substantially in the form of Exhibit E hereto (the "Indemnification Agreement")
and on and prior to each Closing Date such agreement shall remain in full force
and effect; (iii) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and each Purchasers shall have entered into
an agreement simultaneously with the execution of this Agreement with respect to
certain voting, standstill and other matters (the "Voting Agreement") and the
Company and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall have entered into an agreement
simultaneously with the execution of this Agreement with respect to matters set
forth in Article 5 (the "R Subscription Agreement" and, together with the Voting
Agreement, the "R Agreements") and such agreements shall remain in full force
and effect; and (iv) the Company and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall have entered into
an
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employment agreement simultaneously with the execution hereof (the "R
Employment Agreement") and such agreement shall remain in full force and effect.
(d) Board of Directors. On or prior to the Initial Closing
Date the Board shall consist of nine persons and include the Purchaser Directors
and the Non-Purchaser Directors.
(e) Opinions of Counsel. On or prior to each Closing Date, the
Purchasers shall have received such opinions of counsel, dated the Closing Date,
from Butzel Long, counsel to the Company, and from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, special
counsel to the Company, each in the respective form attached hereto as Schedule
8.2 and an opinion reasonably satisfactory to the Purchasers with respect to the
due authorization, execution and delivery of the Voting Agreement under New York
and Michigan law.
(f) Corporate Proceedings. The Purchasers shall have received
a certificate, dated the Closing Date, executed by the Secretary of the Company
certifying as of the Closing Date (i) that attached thereto is (x) a true and
correct copy of the Articles of Incorporation, (y) a true and correct copy of
the Bylaws of the Company, (z) a true and correct copy of resolutions of the
Board or a duly authorized committee thereof authorizing the execution, delivery
and performance of this Agreement and the Ancillary Agreements to which it is a
party by the Company and the consummation of the transactions contemplated
hereby and thereby, and resolutions adopted prior to the execution hereof,
making the determinations contemplated by Section 2.20 hereof and attributing to
the Executive Committee of the Board the powers and authority described in
Section 2.1 hereof, (ii) that the documents described in clauses (x), (y) and
(z) are in full force and effect and have not been amended, modified or
supplemented, and (iii) as to the incumbency of the officers of the Company
executing this Agreement, any Ancillary Agreement or any documents or
instruments executed in connection herewith.
(g) Other Parties. (A) No Person or "group" (as defined in the
Exchange Act) other than the Purchasers shall have acquired beneficial ownership
of more than 15% of the outstanding Voting Securities, and (B) no Person other
than the Purchasers shall have entered into an agreement in principle or
definitive agreement with the Company with respect to a tender or exchange offer
for any shares of Common Stock or a merger, consolidation or other business
combination involving the Company.
(h) Transaction Fee; Transaction Expenses. The Purchasers'
transaction Expenses shall have been paid to the Purchasers and the Transaction
Fee shall have been paid to CD&R.
8.3 Conditions to Obligations of the Company. The obligation
of the Company to consummate the transactions contemplated hereby and by the
Ancillary Agreements shall be subject to the fulfillment (or waiver by the
Company), on or prior to
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each Closing Date, of the following additional conditions, which the Purchasers
agree to use their reasonable best efforts to cause to be fulfilled:
(a) Representations, Performance, etc. The representations and
warranties of the Purchasers contained herein and in the Ancillary Agreements to
which it is a party shall be true and correct in all respects (in the case of
any representation or warranty containing any materiality qualification) or in
all material respects (in the case of any representation or warranty without any
materiality qualification) at and as of the date hereof and on and as of each
Closing Date with the same effect as though made at and as of such Closing Date,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties that are
qualified as to materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, on and as of such
earlier date), and the Company shall have received a certificate of the
Purchasers to such effect.
(b) Performance of Obligations of the Purchasers. The
Purchasers shall have performed or complied with all obligations and covenants
required to be performed or complied with prior to each Closing by the
Purchasers under this Agreement and the Company shall have received a
certificate of the Purchasers to such effect.
(c) Opinions of Counsel. The Company shall have received such
opinions of counsel, dated the Closing Date, from Debevoise & ▇▇▇▇▇▇▇▇, counsel
to the Purchasers, in the form attached hereto as Schedule 8.3.
(d) Funding of Purchase Price. The Purchasers shall have
received the amount of the Purchase Price to be paid at such Closing from
Fund-VI, all of such funds to be used exclusively as payment of such amount of
the Purchase Price.
8.4 Conditions to Obligations to Consummate the Second Tranche
Transactions. In addition to each of the foregoing conditions, the obligations
of the Purchasers and the Company to consummate the Second Tranche Transactions
shall be conditioned upon the receipt of Shareholder Approval of the Second
Tranche Transactions prior to August 30, 2000.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated with respect
to any Closing Date that shall not have occurred at any time prior to such
Closing Date:
(a) by the written agreement of the parties hereto;
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(b) by the Purchasers by written notice to the Company if (i)
any of the conditions set forth in Section 8.1, 8.2 or 8.4 (including with
respect to any representations and warranties) shall not have been, or if it
becomes apparent that any of such conditions will not be, fulfilled by 5:00 p.m.
New York time on June 30, 2000 (with respect to Sections 8.1 and 8.2) or August
30, 2000 (with respect to Sections 8.1, 8.2 and 8.4), unless such failure shall
be due to the failure of the Purchasers to perform or comply with any of the
covenants, agreements or conditions hereof to be performed or complied with by
them on or prior to the Closing or (ii) the Board or the Special Committee, at
any time prior to the consummation of the Subsequent Closing, withdraws,
modifies or changes its recommendation of the Second Tranche Transaction or this
Agreement and the transactions contemplated hereby in a manner adverse to the
Purchasers or otherwise exercises the rights provided in Section 6.13, or shall
have resolved to do any of the foregoing;
(c) by the Company by written notice to the Purchasers if (i)
any of the conditions set forth in Section 8.1, 8.3 or 8.4 (including with
respect to any representations and warranties) shall not have been, or if it
becomes apparent that any of such conditions will not be, fulfilled by 5:00 p.m.
New York time on June 30, 2000 (with respect to Sections 8.1 and 8.3) or August
30, 2000 (with respect to Sections 8.1, 8.3 and 8.4), unless such failure shall
be due to the failure of the Purchasers to perform or comply with any of the
covenants, agreements or conditions hereof to be performed or complied with by
them on or prior to the Closing or (ii) the Board or the Special Committee, at
any time prior to the consummation of the Subsequent Closing, withdraws,
modifies or changes its recommendation of the Second Tranche Transaction or this
Agreement and the transactions contemplated hereby in a manner adverse to the
Purchasers or otherwise exercises the rights provided in Section 6.13, or shall
have resolved to do any of the foregoing.
9.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to the provisions of Section 9.1, written notice thereof
shall forthwith be given by the terminating party or parties, specifying the
provisions hereof pursuant to which such termination is effected, and this
Agreement shall become void and have no effect, without any liability to any
Person in respect hereof or of the transactions contemplated hereby on the part
of any party hereto, or any of its directors, officers, employees, agents,
consultants, representatives, advisers, stockholders or Affiliates, except as
specified in Section 12.1 and except for any liability resulting from such
party's breach of this Agreement.
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ARTICLE X
INDEMNIFICATION
10.1 Indemnification by the Company.
(a) The Company covenants and agrees to defend, indemnify and
hold the Purchasers and their Affiliates (the "Purchaser Indemnitees") harmless
from and against, and pay or reimburse Purchaser Indemnitees for, any and all
Losses (whether attributable in whole or in part to the acts or omissions of the
Purchaser Indemnitees) resulting from or arising out of either:
(i) any breach of any representation or warranty made by the
Company in any provision of this Agreement or under any Ancillary
Agreement or in connection herewith or therewith; or
(ii) any failure of the Company to perform any covenant or
agreement hereunder or under any Ancillary Agreement or to fulfill any
other obligation in respect hereof or thereof.
(b) (i) Except with respect to Losses described by Section
10.1(a)(ii), the Company shall not be required to indemnify Purchaser
Indemnitees unless the aggregate amount of all claims against the Company under
this Section 10.1 exceeds $3,400,000, in which event the Purchasers shall be
entitled to make a claim against the Company for the full amount of any Losses,
and (ii) the liability of the Company under this Section 10.1 shall not exceed
the Purchase Price.
10.2 Indemnification by the Purchasers.
(a) The Purchasers covenant and agree to defend, indemnify and
hold the Company harmless from and against, and pay or reimburse the Company
for, any and all Losses (whether attributable in whole or in part to the acts or
omissions of the Company) resulting from or arising out of:
(i) any breach in any representation or warranty made by the
Purchasers herein or under any Ancillary Agreement, or in connection
herewith or therewith; or
(ii) any failure of the Purchasers to perform any covenant or
agreement hereunder or under any Ancillary Agreement, or fulfill any
other obligation in respect hereof or thereof.
(b) (i) Except with respect to Losses described by Section
10.2(a)(ii), the Purchasers shall not be required to indemnify the Company
unless the aggregate amount
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of all claims against the Purchasers under this Section 10.2 exceeds $3,400,000,
in which event the Company shall be entitled to make a claim against the
Purchasers for the full amount of any Losses, and (ii) the liability of the
Purchasers under this Section 10.2 shall not exceed the Purchase Price.
10.3 Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall (at the
expense of such Indemnifying Party) assume the defense of any claim or any
litigation resulting therefrom, provided, that, (i) the counsel for the
Indemnifying Party who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified
Party may participate in such defense at such Indemnified Party's expense, and
(iii) the omission by any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its indemnification obligation under
this Agreement except to the extent that such omission results in a failure of
actual notice to the Indemnifying Party and such Indemnifying Party is
materially damaged as a result of such failure to give notice. Except with the
prior written consent of the Indemnified Party, no Indemnifying Party, in the
defense of any such claim or litigation, shall consent to entry of any judgment
or enter into any settlement that provides for injunctive or other nonmonetary
relief affecting the Indemnified Party or that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. In the event that the Indemnified Party shall in good faith
determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
Tax liability or its ability to conduct its businesses, or that the Indemnified
Party may have available to it one or more defenses or counterclaims that are
inconsistent with one or more of those that may be available to the Indemnifying
Party in respect of such claim or any litigation relating thereto, the
Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party, provided, that, if the
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided, the Indemnified Party shall have the full right to defend against any
such claim or demand and shall be entitled to settle or agree to pay in full
such claim or demand, at the sole expense of the Indemnifying Party. In any
event, the Indemnifying Party and the Indemnified Party shall cooperate in the
defense of any claim or litigation subject to this Article X and the records of
each shall be available to the other with respect to such defense.
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10.4 Remedies. Except in the case of fraud, the rights and
remedies provided for in this Agreement and the Ancillary Agreements are the
exclusive rights and remedies that any party may have at law or in equity.
10.5 Tax Treatment of Adjustments. The Purchasers and the
Company agree to treat any indemnity payment made pursuant to Section 10.1 or
10.2 as an adjustment to the Purchase Price for all Tax purposes.
10.6 Survival. The representations and warranties and all
indemnification obligations contained in this Agreement shall survive the
execution and delivery of this Agreement, any examination by or on behalf of the
parties hereto and the completion of the transactions contemplated herein, but
only to the extent specified below:
(a) except as set forth in clauses (b) and (c) below, the
representations and warranties contained in Articles II and III, (and the
indemnification obligations in respect thereof under clauses (i) of Section
10.1(a) and 10.2(a)), shall survive for twelve months following the Subsequent
Closing Date (except with respect to claims for Losses incurred within such
period that have been filed within 30 days of the termination of such period).
(b) the representations and warranties contained in Sections
2.1, 2.2, 2.3, 2.4, 2.5, 2.20, 3.1, 3.2, and 3.6 shall survive without
limitation;
(c) the indemnification obligations under clauses (ii) of
Section 10.1(a) and 10.2(a) shall survive with respect to any covenant covered
thereby for the period such covenant is in force and effect.
ARTICLE XI
INTERPRETATION; DEFINITIONS
11.1 Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
25 Warrants: is defined in the recitals to this Agreement.
31 Warrants: is defined in the recitals to this Agreement.
Acquired Common Stock: (i) prior to the occurrence of the
Subsequent Closing, the Common Stock issuable upon conversion of the Preferred
Shares acquired by the Purchasers at the Initial Closing and upon exercise of
the 25 Warrant, and (ii) thereafter, the Common Stock issuable upon conversion
of the Preferred Shares acquired by the Purchasers at both the Initial Closing
and the Subsequent Closing and upon conversion of both the Warrants.
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Affiliate: shall have the meaning set forth in Rule 12b-2
under the Exchange Act (as in effect on the date of this Agreement).
Agreement: is defined in the introductory paragraph to this
Agreement.
Alternative Proposal: means any bona fide third party proposal
with respect to a direct or indirect acquisition or purchase of a business that
constitutes a portion of net revenues, net income or assets of the Company and
its Subsidiaries, taken as a whole, or a portion of any class of equity
securities of the Company, any tender offer or exchange offer that if
consummated would result in any person beneficially owning a portion of any
class of any equity securities of the Company, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company (or any Subsidiary whose business constitutes
a portion of the net revenues, net income or assets of the Company and its
Subsidiaries taken as a whole), other than the transactions contemplated by this
Agreement.
Ancillary Agreement: means any of the CDR Registration Rights
Agreement, the Indemnification Agreement, the Certificate of Designation, the
Warrants, the Consulting Agreement, the Voting Agreement, the R Subscription
Agreement and the R Employment Agreement.
Annual Meeting: is defined in the recitals to this Agreement.
Articles of Incorporation: is defined in Section 2.1.
Balance Sheet: is defined in Section 2.5(c).
Board: is defined in the recitals to this Agreement.
Bridge: is defined in Section 4.5.
Business: means the business of the Company and its
Subsidiaries.
Business Day: means any day on which banking institutions are
open in the City of New York.
CD&R: ▇▇▇▇▇▇▇, Dubilier & Rice, Inc., a Delaware corporation.
CDR-Cookie VI: is defined in the introductory paragraph of
this Agreement.
CDR-Cookie VI-A: is defined in the introductory paragraph of
this Agreement.
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CDR-Registration Rights Agreement: is defined in Section
8.2(c).
Certificate of Designation: is defined in the recitals to this
Agreement.
Change of Control Transaction: means any bona fide third party
proposal with respect to a direct or indirect acquisition or purchase of a
business that constitutes 50% or more of the net revenues, net income or assets
of the Company and its Subsidiaries, taken as a whole, or 50% or more of any
class of equity securities of the Company, any tender offer or exchange offer
that if consummated would result in any person beneficially owning 50% or more
of any class of any equity securities of the Company, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company (or any Subsidiary whose business
constitutes 50% or more of the net revenues, net income or assets of the Company
and its Subsidiaries taken as a whole), other than the transactions contemplated
by this Agreement.
Closing: means any of the Initial Closing or the Subsequent
Closing.
Closing Date: means any of the Initial Closing Date or the
Subsequent Closing Date.
Code: means the Internal Revenue Code of 1986, as amended.
Collective Bargaining Agreement: is defined in Section 2.18.
Common Stock: is defined in the recitals to this Agreement.
Company: is defined in the introductory paragraph to this
Agreement.
Company Disclosure Schedule: is defined in the introductory
paragraph to Article II.
Company Intellectual Property: is defined in Section 2.11(a).
Company SEC Documents: is defined in Section 2.5(a).
Company Stock Options: is defined in Section 2.2(a).
Company Superior Proposal: means any Alternative Proposal or
Company Takeover Proposal otherwise on terms that the Board determines in its
good faith judgment based on consultation with an investment banking firm of
national reputation and outside counsel, is more favorable to the Company's
stockholders than the transactions contemplated by this Agreement, considering
all factors including, without limitation, (i) the overall significance and
amount of the Alternative Proposal or
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Company Takeover Proposal in absolute terms to the Company, (ii) the services
that otherwise would be rendered to the Company pursuant to the Consulting
Agreement and by the Purchaser Directors, and (iii) the financing, to the extent
required, for the Alternative Proposal or the Company Takeover Proposal is then
committed or which, in the good faith judgment of the Board, is reasonably
capable of being obtained by such third party.
Company Takeover Proposal: means a Change of Control
Transaction.
Consent: any consent, approval, waiver, agreement, license, or
report or notice to, any Person.
Consolidated Group: is defined in Section 2.13(e).
Consulting Agreement: is defined in the recitals to this
Agreement.
Contract: any note, bond, mortgage, indenture, contract,
agreement, obligation, instrument, offer, commitment, understanding or other
arrangement.
Conversion Shares: is defined in Section 2.2(b).
Director Termination Date: is defined in Section 4.1(b).
EC Date: the later to occur of (i) the third anniversary of
the Subsequent Closing Date and (ii) the election to the Board of three
individuals who are not Purchaser Directors, are not officers or directors of
the Company and who are not members of the Board immediately following the
Initial Closing.
Environmental Law: is defined in Section 2.14(b).
Equity Security: means (i) any Common Stock or other capital
stock of the Company, (ii) any securities of the Company convertible into or
exchangeable for Common Stock or other capital stock of the Company, or (iii)
any options, rights or warrants (or any similar securities) issued by the
Company to acquire Common Stock or other capital stock of the Company.
ERISA: means the Employee Retirement Income Security Act, as
amended.
Exchange Act: means the Securities Exchange Act of 1934, as
amended.
Expenses: is defined in Section 12.1(b).
Filed Company SEC Documents: is defined in Section 2.7.
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Financial Advisor: is defined in Section 2.16.
Financial Statements: is defined in Section 2.5(c).
First Tranche Transactions: is defined in Section 2.3.
Fund VI: is defined in the introductory paragraph of this
Agreement.
Fund VI-A: is defined in the introductory paragraph of this
Agreement.
GAAP: means United States generally accepted accounting
principles.
Governmental Approval: any consent, approval, authorization,
waiver, permit, concession, franchise, agreement, license, exemption or order
of, declaration or filing with, or report or notice to, any Governmental
Authority.
Governmental Authority: is defined in Section 2.4(b).
Hazardous Materials: is defined in Section 2.14(b).
HSR Act: the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
Indebtedness: of any Person at any date, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (other than trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all leases the obligations of such Person in respect of
which are required in accordance with GAAP to be capitalized, (d) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and (e) all indebtedness or obligations of the types
referred to in the preceding clauses (a) through (d) secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
Indemnification Agreement: is defined in Section 8.2(c).
Indemnified Party: is defined in Section 10.3.
Indemnifying Party: is defined in Section 10.3.
Initial Closing: is defined in Section 1.2(a).
Initial Closing Date: is defined in Section 1.2(a).
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Intellectual Property: means any and all mask works, software,
data and documentation, trademarks, trade names, copyrights and service marks,
including applications to register and registrations for any of the foregoing,
United States and foreign patents, patent applications and patent disclosures,
inventions, processes, designs, formulae, trade secrets, know-how and other
proprietary rights and information, and all similar intellectual property rights
(including moral rights).
knowledge: qualifications as to the knowledge of any Person
with respect to any matter shall mean the actual knowledge of such Person or
senior management of such Person.
Law: all applicable provisions of all (a) constitutions,
treaties, statutes, laws (including the common law), codes, rules, regulations,
ordinances or orders of any Governmental Authority, (b) Governmental Approvals
and (c) orders, decisions, injunctions, judgments, awards and decrees of or
agreements with any Governmental Authority.
Litigation is defined in Section 2.10(a).
Losses: any and all liabilities, obligations, commitments,
losses, fines, penalties, sanctions, costs (including court costs), expenses,
interest, royalties, deficiencies or damages (whether absolute, accrued,
conditional or otherwise and whether or not resulting from third-party claims),
including out-of-pocket expenses and reasonable fees and expenses of attorneys,
accountants, consultants and expert witnesses incurred in the investigation or
defense of any of the same or in asserting any of the respective rights of the
Purchasers or the Company under Article X or under any Ancillary Agreement.
Material Adverse Effect: on or with respect to an entity (or
group of entities taken as a whole) means any state of facts, event, change or
effect that has had, or would reasonably be expected to have, a material adverse
effect on the business, properties, results of operations or condition (whether
financial or other) of such entity (or, if with respect thereto, of such group
of entities taken as a whole), or on the ability of such entity (or group of
entities) to consummate the transactions contemplated hereby or to perform its
obligations hereunder.
Material Adverse Impact: on or with respect to an entity (or
group of entities taken as a whole) means any state of facts, event, change or
effect that has had or would have a material adverse effect on the business,
properties, results of operations or condition (whether financial or other) of
such entity (or, if with respect thereto, of such group of entities taken as a
whole), or on the ability of such entity (or group of entities) to consummate
the transactions contemplated hereby or to perform its obligations hereunder.
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Material Contracts: is defined in Section 2.12(a).
MBCA: means the Michigan Business Corporation Act, as amended.
New Business Opportunities: is defined in Section 4.5.
New Security: means any Equity Security issued by the Company
after the Initial Closing; provided that "New Security" shall not include (i)
any securities issuable upon conversion of any convertible Equity Security, (ii)
any securities issuable upon exercise of any option, warrant or other similar
Equity Security or (iii) any securities issuable in connection with any stock
split, stock dividend or recapitalization of the Company where such securities
are issued to all stockholders of the Company on a pro rata basis.
Non-Purchaser Director: means any director of the Company not
designated by the Purchasers.
Owned Software: all computer software developed by or for the
Company or any of its Subsidiaries or in connection with the business of the
foregoing by any employee of the Company or any of its Subsidiaries or by an
independent contractor.
Permit: is defined in Section 2.10(b).
Person: means any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization,
government or department or agency of a government.
Plans: is defined in Section 2.9(b).
Preferred Shares: is defined in the recitals to this
agreement.
Pro Rata Share: means the fraction of an entire issuance of
New Securities, the numerator of which shall be the number of shares of Common
Stock owned or receivable upon conversion of the Preferred Shares and exercise
of the Warrants by Purchasers and their Affiliates (other than the Company and
its Subsidiaries) immediately prior to such issuance of such New Securities and
the denominator of which shall be the aggregate number of shares of Common Stock
outstanding immediately prior to such issuance of such New Securities and
receivable upon conversion of the Preferred Shares and exercise of the Warrants.
Proxy Statement: is defined in Section 6.3(a).
Purchase Price: is defined in Section 1.1.
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Purchasers: is defined in the introductory paragraph to this
Agreement.
Purchaser Directors: is defined in Section 4.1.
Purchaser Disclosure Schedule: is defined in the introductory
paragraph to Article III.
Purchaser Indemnitees: is defined in Section 10.1(a).
Purchaser Observer: is defined in Section 4.2.
Registration Rights Agreement: is defined in Section 2.12(c).
R Agreements: is defined in Section 8.2(c).
R Employment Agreement: is defined in Section 8.2(c).
R Subscription Agreement: is defined in Section 8.2(c).
R Indemnification Agreement: means an agreement dated of even
date herewith between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Company pursuant to which the
Company will indemnify ▇▇. ▇▇▇▇▇▇▇▇▇ in accordance with the terms therein.
SEC: means the Securities and Exchange Commission.
Second Tranche Transactions: is defined in Section 2.3.
Securities Act: means the Securities Act of 1933, as amended.
Security: means at any time Equity Securities and any shares
of any class of capital stock of
the Company.
Shareholder Approval: is defined in the recitals to this
Agreement.
Special Committee: is defined in the recitals to this
Agreement.
Subscription Notice: is defined in Section 5.1.
Subsequent Closing: is defined in Section 1.3(a).
Subsequent Closing Date: is defined in Section 1.3(a).
Subsidiary: means, as to any Person, any corporation or other
entity at least a majority of the shares of stock or interest of which having
general voting power under ordinary circumstances to elect a majority of the
Board of Directors of such
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corporation or others performing similar functions with respect to such entity
is, at the time as of which the determination is being made, owned by such
Person, or one or more of its Subsidiaries or by such Person and one or more of
its Subsidiaries, other than any such corporation or other entity that conducts
no business and holds no more than de minimis assets.
Synova: is defined in Section 4.5(b).
Takeover Statute: is defined in Section 2.20.
Tax: any federal, state, provincial, local, foreign or other
income, alternative minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits, gross
receipts, value added, sales (including, without limitation, bulk sales), use,
goods and services, excise, customs duties, transfer, conveyance, mortgage,
registration, stamp, documentary, recording, premium, severance, environmental
(including, without limitation, taxes under Section 59A of the Code), real
property, personal property, ad valorem, intangibles, rent, occupancy, license,
occupational, employment, unemployment insurance, social security, disability,
workers' compensation, payroll, health care, withholding, estimated or other
similar tax, levy, impost, fee, duty or other governmental charge or assessment
or deficiencies thereof (including all interest and penalties thereon and
additions thereto, whether disputed or not) imposed by any Governmental
Authority or other taxing authority.
Tax Returns: is defined in Section 2.13(e).
Termination Fee: an amount equal to $6,000,000.
Transaction Fee: an amount equal to $6,000,000.
Voting Agreement: is defined in Section 8.2(c).
Voting Securities: means at any time shares of any class of
capital stock of the Company which are then entitled to vote generally in the
election of directors.
Warrants: is defined in the recitals to this Agreement.
Warrant Shares: is defined in Section 2.2(b) of this
Agreement.
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ARTICLE XII
MISCELLANEOUS
12.1 Fees and Expenses.
(a) Except as contemplated by this Agreement, all costs and
expenses incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses except that the Company shall bear and pay the costs and expenses
incurred in connection with (i) the preparation, filing, printing and mailing of
the Proxy Statement (including SEC filing fees) and (ii) the filings of the
notification and report forms under the HSR Act (including filings fees).
(b) The Company shall promptly pay the Purchasers an amount
equal to all Expenses (as defined below) in the event that this Agreement is
terminated for any reason other than a breach by the Purchasers of this
Agreement or an Ancillary Agreement. The Company shall promptly pay to CD&R the
Termination Fee if (i) prior to the Initial Closing, this Agreement is
terminated for any reason other than a breach by the Purchasers of this
Agreement or an Ancillary Agreement or the failure of the applicable waiting
period under the HSR Act to expire or terminate or, (ii) following the Initial
Closing, this Agreement is terminated by reason of (x) failure of Shareholder
Approval to be obtained prior to August 30, 2000, (y) the termination of this
Agreement pursuant to either Section 9.1(b)(ii) or Section 9.1(c)(ii), or (z) a
breach by the Company of this Agreement. All such payments shall be in
immediately available funds. In the event that the Company shall pay the
Purchasers an amount in respect of Expenses and such amount shall subsequently
prove to exceed the amount of Expenses actually incurred, the Purchasers shall
refund the excess to the Company. The term "Expenses" means all out-of-pocket
fees, costs and other expenses incurred or assumed by the Purchasers or incurred
on their behalf in connection with this Agreement, the Ancillary Agreements or
any of the transactions contemplated hereby and thereby, including the
preparation, execution and delivery of this Agreement and the Ancillary
Agreements, compliance herewith and therewith and any amendments to or waivers
of this Agreement or the Ancillary Agreements.
(c) The Company acknowledges that the agreements contained in
this Section 12.1 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Purchasers would not enter
into this Agreement; accordingly, if the Company fails promptly to pay the
amount due pursuant to this Section 12.1, and, in order to obtain such payment,
the Purchasers commence a suit which results in a judgment against the Company
for any of the Termination Fee or Expenses set forth in this Section 12.1, the
Company shall pay to the Purchasers their costs and expenses (including
attorneys' fees and expenses) in connection with such suit,
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together with interest on the amount of such Termination Fee and Expenses at the
rate on six-month U.S. Treasury obligations plus 300 basis points in effect on
the date such payment was required to be made.
(d) This Section 12.1 shall survive any termination of this
Agreement.
12.2 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable.
12.3 Specific Enforcement. The Purchasers, on the one hand,
and the Company, on the other, acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement or the
Certificate of Designation were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement or the Certificate of Designation and to enforce
specifically the terms and provisions hereof and thereof in any court of the
United States or any state thereof having jurisdiction, this being in addition
to any other remedy to which they may be entitled at law or equity.
12.4 Entire Agreement. This Agreement (including the documents
set forth in the Exhibits and Schedules hereto), together with the Ancillary
Agreements, contains the entire understanding of the parties with respect to the
transactions contemplated hereby.
12.5 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
12.6 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be validly given, made or served, if in writing and
delivered personally, by telecopy (except for legal process) or sent by
registered mail, postage prepaid, if to:
the Company:
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Complete Business Solutions, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention of: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Butzel Long
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention of: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention of: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
the Purchasers:
CDR-Cookie Acquisition L.L.C.
c/o CD&R Associates VI Limited Partnership
CRD-Cookie Acquisition VI-A L.L.C.
c/o CD&R Associates VI-A Limited Partnership
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇, Dubilier & Rice, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention of: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention of: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telex number as any party may, from time to time,
designate in a written notice given in a like manner.
12.7 Amendments; Waivers, etc. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. 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
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies of any party
based upon, arising out of or otherwise in respect of any inaccuracy or breach
of any representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.
The representations and warranties of the Company shall not be affected or
deemed waived by reason of any investigation made by or on behalf of the
Purchasers (including but not limited to by any of its advisors, consultants or
representatives) or by
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reason of the fact that the Purchasers or any of their advisors, consultants or
representatives knew or should have known that any such representation or
warranty is or might be inaccurate.
12.8 Cooperation. The Purchasers and the Company agree to
take, or cause to be taken, all such further or other actions as shall
reasonably be necessary to make effective and consummate the transactions
contemplated by this Agreement.
12.9 Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns. Notwithstanding anything to the
contrary herein, each Purchaser may assign any and all of its rights and
obligations under this Agreement to the other. In no event shall the rights and
obligations set forth in Articles 4 and 5 shall be binding on, or inure to the
benefit of, any transferee of the Acquired Common Stock.
12.10 Transfer of Preferred Shares, etc. The Purchasers
understand and agree that the Preferred Shares, the Conversion Shares, the
Warrants and the Warrant Shares have not been registered under the Securities
Act or the securities laws of any state and that they may be sold or otherwise
disposed of only in one or more transactions registered under the Securities Act
and, where applicable, such laws or as to which an exemption from the
registration requirements of the Securities Act and, where applicable, such laws
is available. The Purchasers acknowledge that except as provided in the
Registration Rights Agreement, the Purchasers have no right to require the
Company to register Preferred Shares, the Conversion Shares, the Warrants or the
Warrant Shares. The Purchasers understand and agree that each certificate
representing Preferred Shares, Conversion Shares, Warrants, or Warrant Shares
(other than, Preferred Shares, Warrants, Conversion Shares or Warrant Shares
which have been transferred in a transaction registered under the Securities Act
or exempt from the registration requirements of the Securities Act pursuant to
Rule 144 thereunder or any similar rule or regulation) shall bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
and the Purchasers agree to transfer Preferred Shares, Conversion Shares,
Warrants and Warrant Shares only in accordance with the provisions of such
legend. At the holder's request, the Company shall exchange any such legended
securities for unlegended securities at any time after (i) such securities have
been held, or deemed, by virtue of
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tacking holding periods as contemplated by Rule 144, to have been held for a
period of two years by the holder thereof, and (ii) such holder has not been an
affiliate (within the meaning of Rule 144) of the Company for three months.
12.11 Governing Law, etc.
(a) EXCEPT TO THE EXTENT THAT THE LAW OF MICHIGAN MANDATORILY
APPLIES, THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING AS TO
VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES THEREOF TO THE EXTENT
THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT
OF THE PROVISIONS OF THIS AGREEMENT AND OF THE DOCUMENTS REFERRED TO IN THIS
AGREEMENT, AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
EACH PARTY HEREBY WAIVES AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY ACTION,
SUIT OR PROCEEDING FOR THE INTERPRETATION AND ENFORCEMENT HEREOF, OR ANY SUCH
DOCUMENT OR IN RESPECT OF ANY SUCH TRANSACTION, THAT SUCH ACTION, SUIT OR
PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SUCH COURTS OR THAT THE
VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT
MAY NOT BE ENFORCED IN OR BY SUCH COURTS. EACH PARTY HEREBY CONSENTS TO AND
GRANTS ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE
SUBJECT MATTER OF ANY SUCH DISPUTE AND AGREES, TO THE MAXIMUM EXTENT PERMITTED
BY LAW, THAT THE MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 12.6 OR IN SUCH OTHER
MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE
THEREOF.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OR ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS
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AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 12.11(b).
12.12 Necessary Adjustments. If, after the date hereof, the
Company shall (a) issue or deliver any shares of its Common Stock as a result of
the declaration or payment of a dividend of Common Stock payable in, or other
distribution to holders of Common Stock of, shares of Common Stock, (b)
subdivide its outstanding shares of Common Stock into a larger number of shares
of Common Stock, (c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, (d) issue any shares of capital stock
in a reclassification of the Common Stock, or (e) undertake any similar
transaction, then the threshold amounts described in Section 4.1(b) shall be
proportionately adjusted.
12.13 No Inconsistent Agreements. The Company will not
hereafter enter into any agreement which is inconsistent with the rights granted
to the Purchasers by this Agreement or the Ancillary Agreements. The Company
will not hereafter enter into any agreement with [R] that provides ▇▇. ▇▇▇▇▇▇▇▇▇
with subscription, indemnification, registration or other rights similar to
those granted to the Purchaser under this Agreement or the Ancillary Agreements,
that are superior to such rights granted to the Purchasers.
12.14 No Third Party Beneficiaries. Nothing contained in this
Agreement is intended to confer upon any person or entity other than the parties
hereto and their respective successors and permitted assigns, any benefit, right
or remedies under or by reason of this Agreement; provided, however, that the
parties hereto hereby acknowledge and agree that the Purchaser Indemnitees
(other than the Purchasers) are third party beneficiaries of Article X of this
Agreement.
12.15 Replacement of Share Certificates. Upon receipt of an
affidavit of loss with respect to any certificate representing Preferred Shares,
Conversion Shares, Warrants or Warrant Shares or, in the case of any mutilation
of such certificate, upon surrender of such certificate, the Company at its
expense shall execute and deliver, in lieu thereof, a new certificate
representing such Preferred Shares.
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IN WITNESS WHEREOF, each of the Purchasers and the Company has
caused this Agreement to be duly executed as of the day and year first above
written.
COMPLETE BUSINESS SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
CDR-COOKIE ACQUISITION, L.L.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
CDR-COOKIE ACQUISITION VI-A,
L.L.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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