United Road Services, Inc.
$75,000,000
8% Convertible Subordinated
Debentures due 2008
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Purchase Agreement
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Dated as of November 19, 1998
United Road Services, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Albany, New York 12205
$75,000,000
8% Convertible Subordinated
Debentures due 2008
As of November 19, 1998
Charter URS LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Ladies and Gentlemen:
United Road Services, Inc., a Delaware corporation (the "Company"),
agrees with Charter URS LLC ("Charterhouse") as follows:
1. AUTHORIZATION OF DEBENTURES
The Company has authorized the issue and sale of up to $75,000,000
aggregate principal amount of its 8% Convertible Subordinated Debentures due
2008 (the "Debentures"). The Debentures shall be substantially in the form set
out in Exhibit 1 attached hereto, with such changes therefrom, if any, as may be
approved by Charterhouse and the Company. Certain capitalized terms used in this
Agreement are defined in Schedule A; references to a "Schedule" or an "Exhibit"
are, unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.
2. SALE AND PURCHASE OF DEBENTURES
2.1. Subject to the terms and conditions of this Agreement, the Company
will issue and sell to Charterhouse, and Charterhouse will purchase from the
Company, at the First Closing (as defined in Section 4.1), an aggregate of
$43,500,000 in principal amount of the Debentures at 100% of the principal
amount thereof.
2.2. Subject to the terms and conditions of this Agreement, the Company
will issue and sell to Charterhouse, and Charterhouse will purchase from the
Company, at the Second Closing (as defined in Section 4.2), an aggregate of
$31,500,000 in principal amount of the Debentures at 100% of the principal
amount thereof.
3. INTENTIONALLY OMITTED
4. CLOSINGS
4.1. FIRST CLOSING
4.1.1 The sale and purchase of an aggregate of $43,500,000 in principal
amount of the Debentures to be purchased by Charterhouse shall occur at the
offices of Proskauer Rose LLP ("Proskauer"), ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, at 9:00 a.m., Eastern Standard Time, at a closing (the "First Closing")
on the twelfth Business Day following the execution of this Agreement, subject
to the satisfaction or waiver of the conditions set forth in Section 5.1 (the
"First Issue Date") or such other Business Day thereafter as may be agreed upon
by Charterhouse and the Company. At the First Closing, the Company will deliver
to Charterhouse the Debentures to be purchased by Charterhouse in the form of a
single Debenture (or such greater number of Debentures as Charterhouse may
request) dated the First Issue Date and registered in Charterhouse's name (or in
the name of Charterhouse's nominee), against delivery by Charterhouse to the
Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer for the account of the Company to such
bank account as the Company shall have notified Charterhouse in writing.
(a) If at the First Closing the Company shall fail to tender such
Debentures to Charterhouse as provided above in this Section 4.1, or any of the
conditions specified in Section 5.1.1 shall not have been fulfilled to
Charterhouse's satisfaction, Charterhouse shall, at Charterhouse's election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights Charterhouse may have by reason of such failure or such
nonfulfillment.
(b) If at the First Closing Charterhouse shall fail to pay the purchase
price for the Debentures to the Company as provided above in this Section 4.1,
or any of the conditions specified in Section 5.1.2 shall not have been
fulfilled to the Company's satisfaction, the Company shall, at the Company's
election, be relieved of all further obligations under this Agreement (other
than as provided in Section 17.1), without thereby waiving any rights the
Company may have by reason of such failure or such nonfulfillment.
4.2. THE SECOND CLOSING
4.2.1 The sale and purchase of an aggregate of $31,500,000 in principal
amount of the Debentures to be purchased by Charterhouse shall occur at the
offices of Proskauer at 9:00 a.m., Eastern Standard Time, at a closing (the
"Second Closing") on the twelfth Business Day following the date of the Special
Meeting (as defined in Section 5.2.1) subject to the satisfaction or waiver of
the conditions set forth in Section 5.2 (the "Second Issue Date") or such other
Business Day thereafter as may be agreed upon by Charterhouse and the Company.
At the Second Closing, the Company will deliver to Charterhouse the Debentures
to be purchased by Charterhouse in the form of a single Debenture (or such
greater number of Debentures as Charterhouse may request) dated the Second Issue
Date and registered in Charterhouse's name
(or in the name of Charterhouse's nominee), against delivery by Charterhouse to
the Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer for the account of the Company to such
bank account as the Company shall have notified Charterhouse in writing.
(a) If at the Second Closing the Company shall fail to tender such
Debentures to Charterhouse as provided above in this Section 4.2, or any of the
conditions specified in Section 5.2.1 shall not have been fulfilled to
Charterhouse's satisfaction by March 31, 1999, Charterhouse shall, at
Charterhouse's election, be relieved of all further obligations with respect to
the purchase of the Debentures to be issued and sold at the Second Closing,
without thereby waiving any rights Charterhouse may have by reason of such
failure or such nonfulfillment.
(b) If at the Second Closing Charterhouse shall fail to pay such
purchase price for the Debentures to the Company as provided above in this
Section 4.2, or any of the conditions specified in Section 5.2.2 shall not have
been fulfilled to the Company's satisfaction by March 31, 1999, the Company
shall, at the Company's election, be relieved of all further obligations with
respect to the issuance of the Debentures to be issued at the Second Closing
without thereby waiving any rights the Company may have by reason of such
failure or such nonfulfillment.
5. CONDITIONS TO THE CLOSINGS
5.1. CONDITIONS TO FIRST CLOSING
5.1.1 Charterhouse's obligation to purchase and pay for the Debentures
to be sold to Charterhouse at the First Closing is subject to the fulfillment or
waiver, prior to or at the First Closing, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company in this Agreement and the Other Agreements which are
qualified as to materiality shall be true and correct, and all other
representations and warranties of the Company in this Agreement and the Other
Agreements shall be true and correct, in all material respects, in each case (i)
when made and (ii) at the time of the First Closing (except where such
representations and warranties expressly relate to a specific date or time
(other than the date hereof) which need only be true and correct as of such date
or time).
(b) Performance; No Default. The Company shall have performed
and complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the First Closing
and after giving effect to the issue and sale of the Debentures no Default or
Event of Default shall have occurred and be continuing.
(c) Compliance Certificates.
(i) Officer's Certificate. The Company shall have
delivered to Charterhouse an Officer's Certificate, dated the date of the First
Closing, certifying that the conditions specified in Sections 5.1.1(a) and
5.1.1(b) have been fulfilled.
(ii) Secretary's Certificate. The Company shall have
delivered to Charterhouse a certificate of the secretary of the Company
certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of the
Debentures, this Agreement and the Other Agreements and the approval of the
issuance of the Debentures pursuant to this Agreement.
(d) Opinion of Counsel. Charterhouse shall have received an
opinion, dated the date of the First Closing, from ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇ Will"), counsel to the Company, reasonably acceptable to Proskauer.
(e) Purchase Permitted by Applicable Law, etc. On the date of
the First Closing, Charterhouse's purchase of the Debentures shall not (i)
violate any applicable law or regulation (including, without limitation,
Regulation U, T, or X of the Board of Governors of the Federal Reserve System)
and (ii) subject Charterhouse to any tax, penalty or liability under or pursuant
to any applicable law or regulation.
(f) Bank Consent. The consent described in Section 5.1.2(e)
shall have been received by the Company.
(g) Other Agreements and Documents. All Other Agreements
(other than the Voting Agreements) shall be in full force and effect and the
Company and the other parties thereto shall have delivered to Charterhouse a
true, complete and executed copy of each Other Agreement (other than the Voting
Agreements). All documents and instruments incident to the transactions
contemplated by this Agreement and the Other Agreements shall be satisfactory to
Charterhouse and Proskauer, its counsel, and Charterhouse and Proskauer shall
have received all such counterpart originals or certified or other copies of
such documents (other than the Voting Agreements) as they may reasonably
request.
5.1.2 The Company's obligation to issue and sell the Debentures to be
sold to Charterhouse at the First Closing is subject to the fulfillment or
waiver, prior to or at the First Closing, of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Charterhouse in this Agreement which are qualified as to
materiality shall be true and correct, and all other representations and
warranties of Charterhouse in this Agreement shall be true and correct, in all
material respects, in each case (i) when made and (ii) at the time of the First
Closing (except where such representations and warranties expressly relate to a
specific date or time (other than the date hereof) which need only be true and
correct as of such date or time).
(b) Performance. Charterhouse shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at the First Closing.
(c) Officer's Certificate. Charterhouse shall have delivered
to the Company an Officer's Certificate, dated the date of the First Closing,
certifying that the conditions specified in Sections 5.1.2(a) and 5.1.2(b) have
been fulfilled.
(d) Other Documents. All documents and instruments incident to
the transactions contemplated by this Agreement shall be satisfactory to the
Company and ▇▇▇▇▇▇▇▇▇ Will, its counsel, and ▇▇▇▇▇▇▇▇▇ Will shall have received
all such counterpart originals or certified or other copies as they may
reasonably request.
(e) Bank Consent. The Company shall have received the consent
of its lenders under the Senior Credit Agreement (as defined in Section 11.7) to
the issuance and sale of $75,000,000 in aggregate principal amount of the
Debentures, and the execution and performance of this Agreement and the
transactions contemplated hereby.
(f) Opinion of Counsel. The Company shall have received an
opinion of its tax counsel, ▇▇▇▇▇▇▇▇▇, Will, or if it is unable to obtain such
opinion on or prior to the First Closing, an opinion of tax counsel to
Charterhouse, to the effect that the interest on the Debentures should be
deductible.
5.2. CONDITIONS TO SECOND CLOSING
5.2.1 Charterhouse's obligation to purchase and pay for the Debentures
to be sold to Charterhouse at the Second Closing is subject to the fulfillment
or waiver, prior to or at the Second Closing, of the following conditions:
(a) Stockholder Approval. At a special meeting of the
stockholders of the Company entitled to vote (the "Special Meeting") the
stockholders shall have approved the issuance to Charterhouse pursuant to this
Agreement of securities convertible into 20% or more of the Common Stock of the
Company outstanding prior to such issuance (the "20% Issuance").
(b) Representations and Warranties. The representations and
warranties of the Company in this Agreement and the Other Agreements which are
qualified as to materiality shall be true and correct, and all other
representations and warranties of the Company in this Agreement and the Other
Agreements shall be true and correct, in all material respects, in each case (i)
when made and (ii) at the time of the Second Closing (except where such
representations and warranties expressly relate to a specific date or time
(other than the date hereof) which need only be true and correct as of such date
or time).
(c) Performance; No Default. The Company shall have performed
and complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Second
Closing and after giving effect to the issue and sale of the Debentures no
Default or Event of Default shall have occurred and be continuing.
(d) Compliance Certificates.
(i) Officer's Certificate. The Company shall have
delivered to Charterhouse an Officer's Certificate, dated the date of the Second
Closing, certifying that the conditions specified in Sections 5.2.1(b) and
5.2.1(c) have been fulfilled.
(ii) Secretary's Certificate. The Company shall have
delivered to Charterhouse a certificate of the secretary of the Company
certifying as to the resolutions attached thereto and other corporate
proceedings (including the approval of the 20% Issuance by the stockholders)
relating to the authorization, execution and delivery of the Debentures to be
purchased at the Second Closing and the approval of the issuance of such
Debentures pursuant to this Agreement.
(e) Opinion of Counsel. Charterhouse shall have received an
opinion, dated the date of the Second Closing, from ▇▇▇▇▇▇▇▇▇ Will, counsel to
the Company in the form of the opinion described in Section 5.1.1(d).
(f) The average of the daily closing prices of the Common
Stock for the 30 consecutive trading days ending the day before the Special
Meeting shall be not less than $10.00 per share. (See Section 10.5.1 to
determine the "closing price").
(g) Purchase Permitted by Applicable Law, etc. On the date of
the Second Closing, Charterhouse's purchase of the Debentures shall not (i)
violate any applicable law or regulation (including, without limitation,
Regulation U, T, or X of the Board of Governors of the Federal Reserve System)
and (ii) subject Charterhouse to any tax, penalty or liability under or pursuant
to any applicable law or regulation.
(h) Other Agreements and Documents. The Other Agreements shall
be in full force and effect. All documents and instruments incident to the
transactions contemplated by this Agreement and the Other Agreements shall be
satisfactory to Charterhouse and Proskauer, its counsel, and Charterhouse and
Proskauer shall have received all such counterpart originals or certified or
other copies as they may reasonably request.
5.2.2 The Company's obligation to issue and sell the Debentures to be
sold to Charterhouse at the Second Closing is subject to the fulfillment or
waiver, prior to or at the Second Closing, of the following conditions:
(a) Stockholder Approval. At the Special Meeting the
stockholders shall have approved the 20% Issuance.
(b) Representations and Warranties. The representations and
warranties of Charterhouse in this Agreement which are qualified as to
materiality shall be true and correct, and all other representations and
warranties of Charterhouse in this Agreement shall be true and correct, in all
material respects, in each case (i) when made and (ii) at the time of the Second
Closing (except where such representations and warranties expressly relate to a
specific date or time (other than the date hereof) which need only be true and
correct as of such date or time).
(c) Performance; No Default. Charterhouse shall have performed
and complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Second
Closing.
(d) Officer's Certificate. Charterhouse shall have delivered
to the Company an Officer's Certificate, dated the date of the Second Closing,
certifying that the conditions specified in Sections 5.2.2 (b) and 5.2.2(c) have
been fulfilled.
(e) Other Documents. All documents and instruments incident to
the transactions contemplated by this Agreement shall be satisfactory to the
Company and ▇▇▇▇▇▇▇▇▇ Will, its counsel, and the Company and ▇▇▇▇▇▇▇▇▇ Will
shall have received all such counterpart originals or certified or other copies
as they may reasonably request.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
6.1. ORGANIZATION; POWER AND AUTHORITY
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is duly qualified as
a foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, be expected to have a Material Adverse Effect. The Company has the
corporate power and authority (i) to own or hold under lease the properties it
purports to own or hold under lease and to transact the business it transacts
and proposes to transact except where the failure to have such corporate power
or authority would not, individually or in the aggregate, be expected to have a
Material Adverse Effect, (ii) to execute and deliver this Agreement, the Other
Agreements to which it is a party, and the Debentures and (iii) to perform the
provisions hereof and thereof.
6.2. AUTHORIZATION, ETC.
This Agreement, the Other Agreements to which the Company is a party
and the Debentures have been duly authorized by all necessary corporate action
on the part of the Company, and this Agreement constitutes, and upon execution
and delivery thereof, each Other Agreement to which the Company is a party and
the Debentures will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The Common Stock issuable upon conversion of the Debentures has been duly
authorized and reserved for issuance and upon issuance of the Common Stock upon
conversion of the Debentures pursuant to Section 10 hereof such Common Stock
will be validly issued, fully paid and nonassessable.
6.3. CAPITALIZATION
6.3.1 As of the date hereof, the authorized capital stock of the
Company consists of (i) 35,000,000 shares of common stock, par value $.001 per
share (the "Common Stock"), of which 14,538,730 shares are issued and
outstanding and (ii) 5,000,000 shares of preferred stock, par value $.001 per
share (the "Company Preferred Stock"), of which no shares are issued and
outstanding.
6.3.2 The outstanding shares of Common Stock of the Company have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of preemptive rights). As of the date hereof, except as disclosed in
the previous paragraph or as set forth in Schedule 6.3.2 (a) or Schedule 6.3.2
(b), there are no other shares of capital stock of the Company authorized and
reserved for issuance and the Company does not have any commitment to authorize,
issue or sell any of its capital stock or securities convertible into or
exchangeable for its capital stock. The number of shares of Common Stock which
are issuable and reserved for issuance upon exercise of stock options or
warrants of the Company as of the date hereof (and the exercise price thereof)
are disclosed on Schedule 6.3.2 (b). The Company has no outstanding securities
convertible into capital stock of the Company. Schedule 6.3.2 (c) lists all
stock option plans of the Company.
6.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES
6.4.1 The Company has disclosed in Schedule 6.4.1 (a) a list of all of
its Subsidiaries together with the jurisdiction of organization of each such
Subsidiary. All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary of the Company have been validly issued, are fully
paid and nonassessable and are owned by the Company or another Subsidiary free
and clear of any Lien, except for Liens on certain Subsidiaries' shares as set
forth on Schedule 6.4.1 (b). The Company owns no equity interests in any other
Person other than the Subsidiaries listed on Schedule 6.4.1(a).
6.4.2 Each Subsidiary of the Company is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, and is duly qualified as a foreign corporation
or other legal entity and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, be expected to have a Material Adverse Effect. Each such Subsidiary
has the corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the business
it transacts and proposes to transact except where the failure to have such
power or authority would not, individually or in the aggregate, be expected to
have a Material Adverse Effect.
6.5. FILED DOCUMENTS AND FINANCIAL STATEMENTS
6.5.1 Each of the documents filed by the Company with the SEC complied
when filed in all material respects with all of the requirements of the
Securities Act and the Exchange Act, as applicable, and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be contained therein or necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements (excluding proforma financial statements)
contained in such filings (including in each case the related schedules and
notes) fairly present in all material respects the combined financial position
of the Company and its Subsidiaries as of the respective dates and the combined
results of their operations and cash flows for the respective periods and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved (subject, in the case of any interim financial statements, to
normal year-end adjustments).
6.5.2 The Company's unaudited interim financial statements, included in
the information listed in Schedule 6.5.2 and delivered to Charterhouse, were
prepared in all material respects on the same basis as the financial statements
contained in the documents filed with the SEC and fairly present the financial
position of the Company as of the dates referenced therein subject to normal
year-end adjustments.
6.5.3 The Company's financial projections included in the information
listed in Schedule 6.5.3 and delivered to Charterhouse were prepared in good
faith based on assumptions believed to have been reasonable at the time made and
were prepared in all material respects consistent with past accounting
practices; provided, however, that no representation or warranty is made with
respect to actual financial results which may vary from such projections.
6.6. COMPLIANCE WITH LAW, ETC.
The execution, delivery and performance by the Company of this
Agreement, the Other Agreements to which it is a party and the Debentures will
not (i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any Property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, credit
agreement, corporate charter or bylaws, or any other agreement, lease or
instrument to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with, or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary, which
violation would reasonably be expected to have a Material Adverse Effect.
6.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement, the Other
Agreements to which the Company is a party and the Debentures, except (i) the
filing of a proxy statement and related documents with the SEC in connection
with the Special Meeting and (ii) a filing pursuant to the HSR Act as may be
required in connection with the issuance or conversion of the Debentures.
6.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS
6.8.1 Except as set forth in Schedule 6.8.1, there are no actions,
suits or proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary or any Property of the
Company or any Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority which actions, suits or proceedings
would reasonably be expected to have a Material Adverse Effect.
6.8.2 Except as set forth in Schedule 6.8.2, neither the Company nor
any Subsidiary is in default under any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any applicable
law, ordinance, rule or regulation (including without limitation Environmental
Laws) of any Governmental Authority which default or violation would reasonably
be expected to have a Material Adverse Effect.
6.9. TAXES
6.9.1 The Company has duly, timely and properly filed when due, all
national, local and other Tax Returns required to be filed by it with respect to
its sales, income, business or operations, except for such failures which would
not reasonably be expected to have a Material Adverse Effect, and such Tax
Returns are true, complete and accurate in all material respects. The Company
has duly paid all Taxes due from it as shown on such Tax Returns except where
the failure to pay such taxes would not reasonably be expected to have a
Material Adverse Effect.
6.9.2 All amounts required to be withheld by the Company from customers
or from or on behalf of employees for income, value added, "social security" and
unemployment insurance taxes have been collected or withheld and either paid to
the appropriate governmental agency or set aside and, to the extent required by
law, held in accounts for such purpose, except for such amounts, the failure of
which to withhold, collect, pay, set aside or hold in accounts for such purpose
would not reasonably be expected to have a Material Adverse Effect.
6.9.3 Except as set forth in Schedule 6.9, there are no pending or, to
the knowledge of the Company, threatened actions or proceedings by any
applicable taxing authority for the assess ment, collection, adjustment or
deficiency of Taxes against the Company which actions or proceedings would
reasonably be expected to have a Material Adverse Effect.
6.10. CONTRACTS AND COMMITMENTS
6.10.1 Except as set forth in Schedule 6.10:
(a) The Company has no agreements, contracts, or commitments,
written or oral, which either individually or in conjunction with other
agreements, contracts or commitments with the same party and in connection with
the same matter, are Material;
(b) No Material contract or bid is anticipated to result in
any loss (other than losses covered by insurance) to the Company upon completion
or performance thereof, and no Material contract or bid is at prices Materially
above or below the usual prices of the Company for the same or similar products
or services;
(c) The Company has no outstanding Material contracts,
agreements or arrangements with any Affiliate or 5% or greater stockholder of
the Company;
(d) The Company has no collective bargaining or union
contracts or agreements;
(e) The Company is not in breach or default, and there is no
basis for any valid claim of breach or default by the Company, under any
Material contract, license agreement, commitment or restriction (whether written
or oral) to which the Company is a party or by which the Company or any of its
assets are bound and, to the knowledge of the Company, there exists no event or
condition which (whether with or without notice, lapse of time, or both) would
constitute a default by the Company thereunder, give rise to a right to
accelerate or terminate any provision thereof or give rise to any Lien on the
Property or assets of the Company, except for such breaches, defaults, rights to
acceleration or termination or Liens that would not reasonably be expected to
have a Material Adverse Effect; and to the knowledge of the Company, no other
party to any such contract, agreement or commitment is in breach or default
thereof which breach or default would not reasonably be expected to have a
Material Adverse Effect;
(f) The Company is not restricted by any agreement or other
commitment from carrying on its business as currently conducted anywhere in the
world;
(g) Each contract and agreement referred to in Schedule 6.10
is valid and in full force and effect, and accurate and complete copies thereof,
together with all amendments thereto, have been heretofore delivered to
Charterhouse.
6.11. ENVIRONMENTAL MATTERS
6.11.1 All of the operations of the Company comply, and have at all
times complied, in all material respects with all applicable Environmental Laws
and the Company is not subject to any Material Environmental Liabilities. The
Company has not engaged in, authorized, allowed or suffered any operations or
activities upon any of the Real Property for the purpose of or in any way
involving the handling, manufacture, treatment, processing, storage, use,
generation, release,
discharge, emission, dumping or disposal of any Hazardous Substances at, on or
under the Real Property, except in material compliance with all applicable
Environmental Laws.
6.11.2 To the knowledge of the Company, none of the Real Property or
any assets of the Company contain any Hazardous Substances in, on, over, under
or at in concentrations or amounts which would Materially violate Environmental
Laws or impose material liability or obligations on the Company under the
Environmental Laws for any assessment, investigation, corrective action,
remediation or monitoring of Hazardous Substances.
6.11.3 To the knowledge of the Company, there are no conditions
existing at any Real Property or with respect to any other assets of the
Company, that require, or which with the giving of notice or the passage of time
or both may require monitoring, assessment, investigation, remedial or
corrective action, or removal or closure pursuant to the Environmental Laws
except for such monitoring, assessments, investigations, remedial or corrective
actions, removals or closures which would not reasonably be expected to have a
Material Adverse Effect.
6.12. ABSENCE OF CERTAIN CHANGES OR EVENTS
6.12.1 Except as set forth in Schedule 6.12, since September 30, 1998,
the Company has conducted its business in the usual, regular and ordinary
course. Without limiting the generality of the foregoing, except as set forth in
Schedule 6.12, since September 30, 1998 the Company has not:
(a) suffered any change that would have a Material Adverse
Effect on the Company;
(b) suffered any Material damage, destruction or casualty loss
(whether or not covered by insurance);
(c) entered into any Material agreement except agreements in
the ordinary course of business;
(d) made any Material change in its accounting methods,
principles or practices;
(e) authorized, declared, set aside or paid any dividend or
other distribution;
(f) redeemed, purchased or otherwise acquired any of its
shares of capital stock or authorized any stock split or recapitalization;
(g) borrowed or agreed to borrow any funds or incurred,
assumed or become subject to, whether directly or by way of guarantee or
otherwise, any liabilities or obligations which individually or in the aggregate
are Material;
(h) paid, discharged or satisfied any Material claim,
liability or obligation other than the payment, discharge or satisfaction of
liabilities and obligations incurred in the ordinary course of business and
consistent with past practice;
(i) sold, transferred, or otherwise disposed of any of its
Material Properties or assets, except in the ordinary course of business and
consistent with past practice;
(j) disposed of, abandoned or permitted to lapse any rights to
the use of any Material intellectual property used in the conduct of its
business, or disposed of or disclosed, or permitted to be disclosed (except as
necessary in the conduct of its business) such Material intellectual property,
to any Person;
(k) made any individual capital expenditures or commitments in
excess of $150,000 for repairs or additions to property, plant, equipment or
tangible capital assets; or
(l) agreed, whether in writing or otherwise, to take any
action described in this Section 6.12.
6.13. ABSENCE OF UNDISCLOSED LIABILITIES
Except as set forth in Schedule 6.13, the Company has no Material
liabilities, losses or obligations of any nature, whether absolute, accrued,
contingent or otherwise, except for (i) liabilities included or reflected in the
financial statements of the Company for the nine months ended September 30, 1998
and adequately reserved against therein in accordance with GAAP, (ii)
liabilities disclosed in the Schedules hereto, (iii) liabilities incurred in the
ordinary course of business subsequent to September 30, 1998, (iv) liabilities
or performance obligations arising in the ordinary course of business (and not
as a result of a breach or default by the Company) out of or under agreements,
contracts, leases, arrangements or commitments to which the Company is a party
or (v) liabilities under this Agreement.
6.14. TITLE TO PROPERTY; LEASES
The Company and its Subsidiaries have good title to their respective
Material Properties, including all such Properties reflected in the Company's
unaudited balance sheet as of September 30, 1998 or purported to have been
acquired by the Company or any Subsidiary after said date (except as sold or
otherwise disposed of), in each case free and clear of Liens, except for those
defects in title and Liens that, individually or in the aggregate, would not
have a Material Adverse Effect or as otherwise set forth on Schedule 6.14.
6.15. LICENSES, PERMITS, ETC.
The Company and its Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, service marks, trademarks and
trade names, or rights thereto, that are necessary for the conduct of their
respective businesses, except where the failure to have
such licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto would not have a Material
Adverse Effect.
6.16. COMPLIANCE WITH ▇▇▇▇▇
6.16.1 The Company, each Subsidiary and each ERISA Affiliate has
operated and administered each Plan in substantial compliance with all
applicable laws and in substantial compliance with its terms. None of the
Company, any Subsidiary or any ERISA Affiliate has incurred any Material
liability pursuant to ERISA (including, without limitation Title I or IV of
ERISA or the penalty or excise tax provisions of the Code), and, to the
knowledge of the Company, no event, transaction or condition has occurred or
exists (or is reasonably expected to occur or exist) that would reasonably be
expected to result in the incurrence of any such Material liability by the
Company, any Subsidiary or any ERISA Affiliate, or in the imposition of any Lien
on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to ERISA or the Code or to such penalty or
excise tax provisions or to section 401(a)(29) or 412 of the Code, other than
such liens or liabilities as would not be expected individually or in the
aggregate to have a Material Adverse Effect.
6.16.2 The present value of the benefit liabilities under each of the
Plans subject to Title IV of ERISA determined as of the end of each such Plan's
most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the current value of the assets of such Plan allocable to
such benefit liabilities. The term "benefit liabilities" has the meaning
specified in section 4001 of ERISA and the terms "current value" and "present
value" have the meaning specified in section 3 of ERISA.
6.16.3 Each Plan intended to qualify under section 401(a) of the Code
is qualified and any trust maintained pursuant thereto is exempt from federal
income taxation under section 501 of the Code and, to the knowledge of the
Company, nothing has occurred or is expected to occur that has caused or could
cause the loss of such qualification or exemption except for such losses that
would not have a Material Adverse Effect. No claim, lawsuit, arbitration or
other action has been asserted, instituted, or, to the knowledge of the Company,
is threatened against any Plan (other than non-material routine claims for
benefits, and appeals of such claims), any trustee or fiduciaries thereof, the
Company, any Subsidiary, any ERISA Affiliate, any director, officer, or employee
thereof, or any of the assets of any trust of the Plans, except for those
claims, lawsuits, arbitrations or other actions that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
No "prohibited transaction," within the meaning of section 4975 of the Code and
section 406 of ERISA, has occurred or is expected to occur with respect to the
Plan except for such transactions that would not have a Material Adverse Effect.
No Plan is under audit or investigation by the Internal Revenue Service, U.S.
Department of Labor, or any other governmental authority and no such completed
audit, if any, has resulted in the imposition of any Material tax or penalty.
No amounts payable under any Plan will fail to be deductible for
federal income tax purposes by virtue of section 280G or 162(m) of the Code,
except where any such failure,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. None of the Company, any Subsidiary or any ERISA
Affiliate maintains, contributes to, or in any way provides for any benefits of
any kind whatsoever (other than under section 4980B of the Code, the Federal
Social Security Act, or a plan qualified under section 401(a) of the Code) to
any current or future retiree or terminee, except where the obligations with
respect to such benefits would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. None of the Company, any
Subsidiary or any ERISA Affiliate has any Material unfunded liabilities pursuant
to any Plan that is not intended to be qualified under section 401(a) of the
Code.
6.17. MARGIN REGULATIONS
No part of the proceeds from the sale of the Debentures hereunder will
be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 207), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation Y of said Board (12 CFR 220).
6.18. EXISTING INDEBTEDNESS
Neither the Company nor any Subsidiary is in default and no waiver of
default is currently in effect, in the payment of any principal of or interest
on any Indebtedness of the Company or such Subsidiary in an aggregate principal
amount in excess of $1,000,000 and to the knowledge of the Company no event or
condition exists with respect to any such Indebtedness of the Company or any
Subsidiary that would permit (or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Indebtedness to become due and
payable before its stated maturity or before its regularly scheduled dates of
payment.
6.19. STATUS UNDER CERTAIN STATUTES
Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
6.20. FOREIGN CORRUPT PRACTICES ACT; NO UNLAWFUL PAYMENTS
The Company is not in violation of section 30A of the Exchange Act. No
director, officer, agent, employee, or any other Person acting on behalf the
Company has, directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses; made any
unlawful payment to government officials or employees or to political parties or
campaigns; established or maintained any unlawful fund of corporate monies or
other assets; made or received any bribe, or any unlawful rebate, payoff,
influence payment, kickback or other payment, to any governmental or
non-governmental Person, regardless of form,
whether in money, property, or services, to obtain favorable treatment in
securing business or to obtain special concessions, or to pay for favorable
treatment for business or for special concessions secured, the result of which
would have a Material Adverse Effect.
6.21. PROXY STATEMENT AND REQUIRED VOTE
The Company Proxy Statement relating to the Special Meeting will not,
at the dates mailed to the holders of Common Stock of the Company and at the
time of the Special Meeting, 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. The Company Proxy Statement will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
6.22. YEAR 2000 COMPLIANCE
The computer systems of the Company (including without limitation all
software, hardware, workstations and related components, automated devices,
embedded chips and other date sensitive equipment) are Year 2000 Compliant or
will be Year 2000 Compliant by August 31, 1999 except where the failure to be
Year 2000 Compliant would not have a Material Adverse Effect.
6.23. NO BROKERS OR FINDERS
Except as set forth on Schedule 6.23, no agent, broker, finder, or
investment or commercial banker or other Person or firm engaged by or acting on
behalf of the Company or any Subsidiary in connection with the negotiation,
execution or performance of this Agreement or the transactions contemplated by
this Agreement, is or will be entitled to any brokerage or finder's or similar
fee or other commission as a result of this Agreement or such transactions.
7. REPRESENTATIONS OF THE PURCHASER
7.1. AUTHORIZATION, ETC.
Charterhouse is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Charterhouse represents that this Agreement and the Other Agreements to which it
is or becomes a party, has been duly authorized by all necessary organizational
action on the part of it, and this Agreement and the Other Agreements to which
it is or becomes a party, constitutes, and upon execution and delivery by the
Company of this Agreement and the Other Agreements, will constitute, legal,
valid and binding obligations of it enforceable against it in accordance with
their terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
7.2. PURCHASE FOR INVESTMENT
Charterhouse represents that it is purchasing the Debentures for
investment purposes, for its own account or for one or more separate accounts
maintained by it and not with a view to the distribution thereof, provided that
the disposition of its property shall at all times be within its control.
Charterhouse acknowledges that the Debentures have not been registered under the
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not required to register the
Debentures. Charterhouse is an "Accredited Investor" as defined under Rule 501
of Regulation D promulgated under the Securities Act.
8. INFORMATION AS TO THE COMPANY
8.1. FINANCIAL AND BUSINESS INFORMATION
The Company shall deliver to each holder of a minimum of $5,000,000 in
principal amount of the Debentures:
(a) Monthly Statements -- promptly after delivery of such reports to
management:
(i) duplicate copies of preliminary flash financial reports
prepared monthly in the normal course of business for Company
management and/or board of directors with respect to the Company's
operations by region and business segment; and
(ii) duplicate copies of operational summaries prepared
monthly in the normal course of business for Company management and/or
board of directors with respect to the Company's regional and
geographical results of operations;
(b) Quarterly Statements -- within 45 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter; and
(ii) consolidated statements of income, changes in
stockholders' equity and cash flows of the Company and its
Subsidiaries, for such quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year (if applicable) all in
reasonable detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial Officer as
fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments, provided that delivery
within the time period specified above of copies of the Company's Quarterly
Report on Form 10-Q prepared in compliance with the requirements therefor and
filed with the SEC shall be deemed to satisfy the requirements of this Section
8.1(b);
(c) Annual Statements -- within 90 days after the end of each fiscal
year of the Company, duplicate copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the
end of such year, and
(ii) consolidated statements of income, changes in
stockholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year (if applicable) all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an opinion thereon of independent
certified public accountants of recognized national standing, which opinion
shall state that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon and their
results of operations and cash flows in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion, provided that the
Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's Annual Report to stockholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements therefor
and filed with the SEC shall be deemed to satisfy the requirements of this
Section 8.1(c);
(d) SEC and Other Reports -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement sent
by the Company or any Subsidiary to public securities holders generally, and
(ii) each regular or periodic report, each registration statement that shall
have become effective (without exhibits except as expressly requested by such
Holder), and each final prospectus and all amendments thereto filed by the
Company or any Subsidiary with the SEC;
(e) Notice of Default or Event of Default -- promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default, a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(f) ERISA Matters -- promptly, and in any event within ten days after a
Responsible Officer knows of the occurrence of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the
Company, any Subsidiary or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, where any reportable event, as
defined in section 4043(c) of ERISA and the regulation thereunder, has
occurred for which notice thereof has not been waived pursuant to such
regulations as in effect on the date thereof; or
(ii) where any proceeding under section 4042 of ERISA has
occurred for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company, any Subsidiary or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan; or
(iii) the incurrence of any Material liability by the Company,
any Subsidiary or any ERISA Affiliate pursuant to ERISA, including
Title I or IV of ERISA, or the penalty or excise tax provisions of the
Code relating to employee benefit plans, or the imposition of any
Material Lien on any of the rights, properties or assets of the Company
or any ERISA Affiliate pursuant to ERISA or the Code or such penalty or
excise tax provisions;
(g) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations under this
Agreement, the Other Agreements to which it is a party and the Debentures as
from time to time may be reasonably requested by any such Holder of Debentures.
8.2. INSPECTION
The Company shall permit the representatives of each Holder of a
minimum of $5,000,000 in principal amount of Debentures at the expense of the
Company to visit and inspect any of the offices or properties of the Company or
any Significant Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants, during normal business hours and
with prior notice; provided, however, that each Holder agrees to conduct, and
the Company shall be required to pay the Holder's expenses, only for such
visits, inspections, examinations, copies and discussions as are reasonably
necessary to keep the Holder informed of the Company's affairs, finances and
accounts.
9. OPTIONAL REDEMPTION OF THE DEBENTURES
9.1. OPTIONAL REDEMPTION
If at any time following the fifth anniversary of the First Issue Date,
the average of the closing prices of the Common Stock on the NASDAQ/NMS (or such
other national market system or exchange on which such shares are then listed,
traded or quoted) exceeds, for a period of 30 consecutive trading days, 150.0%
of the Conversion Price, the Company may, at any time, after such 30th
consecutive trading day give notice (in accordance with Section 9.2 below) to
the Holders that it wishes to redeem the outstanding Debentures in whole but not
in part at a redemption price equal to 100% of the principal amount of such
Debentures, together with accrued interest to the Redemption Date (as defined in
Section 9.2), subject to any Holder's right to first convert the Debentures into
Common Stock pursuant to Section 10.2 hereof.
9.2. ELECTION TO REDEEM; NOTICE TO HOLDERS
The Company shall give each Holder of Debentures written notice of an
optional redemption pursuant to Section 9.1 hereof not less than 30 days prior
to the date fixed for such redemption (the "Redemption Date"), specifying the
Redemption Date and the redemption price. During such 30-day period and on or
prior to the Business Day preceding the Redemption Date, a Holder of Debentures
may inform the Company of its intent to exercise the Holder's right to convert
the Debentures into Common Stock. If such notice is given, the conversion of the
Debentures will be carried out in accordance with the provisions of Section 10
of this Agreement.
9.3. DEBENTURES PAYABLE ON REDEMPTION DATE
Notice of redemption having been given, the Debentures shall, on the
Redemption Date, become due and payable at 100% of the principal amount of such
Debentures plus accrued interest to the Redemption Date, and from and after such
date (unless the Company shall default in the payment of such principal and
accrued interest) such Debentures shall cease to bear interest. The Company will
promptly cancel all Debentures redeemed by it and no Debentures may be issued in
substitution or exchange for any such Debenture.
10. OPTIONAL CONVERSION
10.1. INTENTIONALLY OMITTED
10.2. CONVERSION BY THE HOLDER
10.2.1 Subject to and upon compliance with the provisions of this
Section, at the option of the Holder thereof, any Debenture or any portion of
the principal amount thereof may be converted into fully paid and nonassessable
shares (calculated as to each conversion to the nearest 1/100th of a share) of
Common Stock, at the Conversion Price, determined as hereinafter provided, in
effect at the time of conversion. Such conversion right shall expire at the
close of
business on the tenth anniversary of the First Issue Date. In case the
Debentures are called for redemption by the Company pursuant to Section 9, such
conversion right in respect of the Debentures shall expire at the close of
business on the Business Day immediately preceding the Redemption Date, unless
(i) notice of conversion under Section 10.2.2 has been given by the Holder prior
to such time, or (ii) the Company defaults in making the payment due upon
redemption.
10.2.2 The Holder of any Debenture wishing to exercise the conversion
privilege shall give the Company irrevocable written notice of such election at
least 5 Business Days prior to the Business Day designated in such notice as the
date of conversion (the "Conversion Date"). Such notice shall also specify the
principal amount of Debentures to be converted. The Holder of any Debenture to
be converted shall, on or before the Conversion Date, surrender such Debenture,
duly endorsed or assigned to the Company or in blank, at the principal executive
office of the Company. Except as provided in Section 10.3.2, no payment or
adjustment shall be made upon any conversion on account of any interest accrued
on the Debentures surrendered for conversion or on account of any dividends on
the Common Stock issued upon conversion.
10.2.3 In the case of any Debenture which is converted in part only,
upon such conversion the Company shall execute and deliver to the holder
thereof, at the expense of the Company, a new Debenture(s) of authorized
denominations in aggregate principal amount equal to the unconverted portion of
the principal amount of such Debenture.
10.3. CONVERSION PRICE
10.3.1 The price at which shares of Common Stock shall be delivered
upon conversion shall be initially $15.00 per share of Common Stock (the
"Conversion Price"). The Conversion Price shall be adjusted in certain instances
as provided in paragraphs 10.5.1 through 10.5.6 of Section 10.5.
10.3.2 In the case of any Debenture which is converted after any
Regular Record Date and on or prior to the next succeeding Interest Payment Date
(other than any Debenture whose maturity is prior to such Interest Payment
Date), interest that is due shall be prorated to the Conversion Date and payable
on such Conversion Date in the manner provided in the second paragraph of
Section 16.3 of this Agreement to the Person in whose name that Debenture is
registered at the close of business on such Regular Record Date.
10.3.3 Debentures shall be deemed to have been converted immediately
prior to the close of business on the Conversion Date, and at such time the
rights of the holders of such Debentures as holders shall cease, and the Person
or Persons entitled to receive the Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the Conversion Date, the
Company shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 10.4.
10.4. FRACTIONS OF SHARES
No fractional shares of Common Stock shall be issued upon conversion of
Debentures. If more than one Debenture shall be surrendered for conversion at
one time by the same holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures (or specified portions thereof) so converted.
Instead of any fractional share of Common Stock which would otherwise be
issuable upon conversion of any Debenture(s) (or specified portions thereof),
the Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the market price per share of Common Stock at the
close of business on the Conversion Date.
10.5. ADJUSTMENT OF CONVERSION PRICE
10.5.1 SPECIAL DEFINITIONS. For purposes of this Section 10.5, the
following definitions shall apply:
(a) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities (as defined below).
(b) "Convertible Securities" shall mean any evidence of
Indebtedness, shares (other than Common Stock) or other securities convertible
into or exchangeable for Common Stock.
(c) "Additional Common Stock" shall mean all Common Stock
issued (or, pursuant to Section 10.5.2, deemed to be issued) by the Company
after the First Issue Date, other than Common Stock issued or issuable:
(i) upon conversion of the Debentures;
(ii) to officers, directors or employees of, or
consultants to, the Company pursuant to the stock option plans listed
on Schedule 6.3.2 (c);
(iii) for which adjustment of the Conversion Price is
made pursuant to Section 10.5.7;
(iv) in an underwritten public offering registered
under the Securities Act; and
(v) as part of the consideration to be paid by the
Company for the acquisition of stock or assets of another entity.
10.5.2 In the event the Company at any time or from time to time after
the First Issue Date shall issue any Options or Convertible Securities with an
exercise price or conversion price that is less than both (i) the Conversion
Price then in effect and (ii) 90% of the current market price (as determined as
provided in Section 10.5.10) or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of shares of
Common Stock (as set forth in the instrument relating thereto without regard to
any provisions contained therein designed to protect against dilution) issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Common Stock (subject to the limitations of
Section 10.5.1(c) hereof), issued as of the time of such issue or, in case such
a record date shall have been fixed, as of the close of business on such record
date, provided that in any such case in which shares of Additional Common Stock
are deemed to be issued, no further adjustments in the Conversion Price shall be
made upon the subsequent issue of Convertible Securities or Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
Securities.
10.5.3 In case the Company shall, at any time after the First Issue
Date, issue Additional Common Stock without consideration or for a consideration
per share less than 90% of the current market price (determined as provided in
Section 10.5.10) per share of the Common Stock on the date of such issue or be
deemed to have issued Additional Common Stock pursuant to Section 10.5.2, then
and in such event the then current Conversion Price shall be reduced,
concurrently with such issue, to a new Conversion Price (calculated to the
nearest cent) determined by multiplying the then current Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of shares of Common
Stock which the aggregate consideration received by the Company for the total
number of shares of Additional Common Stock so issued would purchase at the
current market price; and the denominator of which shall be the number of shares
of Common Stock outstanding immediately prior to such issue plus the number of
shares of such Additional Common Stock so issued (or deemed to have been
issued); and provided further that, for the purposes of this Section 10.5.3, all
shares of Common Stock issuable upon conversion of all outstanding Debentures
immediately prior to such issue of Additional Common Stock shall be deemed to be
outstanding.
10.5.4 For purposes of this Section 10.5, the consideration received by
the Company for the issue of any shares of Additional Common Stock shall be
computed as follows:
(a) Cash and Property. Such consideration shall:
(i) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Company, excluding amounts
paid or payable for accrued interest or accrued dividends;
(ii) insofar as it consists of property other than
cash, be computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Company Board; and
(iii) in the event Additional Common Stock is issued
together with other shares or securities or other assets of the Company
for consideration which covers both, be the
proportion of such consideration so received,
computed as provided in clauses (i) and (ii) above, as determined in
good faith by the Company Board.
(b) Options and Convertible Securities. The consideration per
share received by the Company for shares of Additional Common Stock deemed to
have been issued pursuant to Section 10.5.2, relating to Options and Convertible
Securities shall be determined by dividing:
(i) the total amount, if any, received or receivable
by the Company as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein designed to protect
against dilution) payable to the Company upon the exercise of such
Options or the conversion or exchange of such Convertible Securities,
or in the case of Options for Convertible Securities, the exercise of
such Options for Convertible Securities and the conversion or exchange
of such Convertible Securities; by
(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any
provision contained therein designed to protect against dilution)
issuable upon the exercise of such Options or conversion or exchange of
such Convertible Securities.
10.5.5 In case the Company shall, at any time after the First Issue
Date, pay or make an extraordinary dividend or other distribution payable in
shares of Common Stock on any class of capital stock of the Company, the
Conversion Price in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced (calculated to the nearest cent)
by multiplying such Conversion Price by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the close of business on
the date fixed for such determination and the denominator shall be the sum of
such number of shares and the total number of shares constituting such dividend
or other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
For the purposes of this paragraph, the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company.
The Company will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company.
10.5.6 In case the Company shall, at any time after the First Issue
Date, issue rights or warrants to all holders of its Common Stock entitling them
to subscribe for or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided in Section
10.5.10) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
in effect at the opening of business on the day following the date fixed for
such determination shall be reduced (calculated to the nearest cent) by
multiplying such Conversion Price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for
subscription or purchase would purchase at such current market price and the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, such reduction
to become effective immediately after the opening of business on the day
following the date fixed for such determination; provided, however, that if such
rights or warrants are only exercisable upon the occurrence of certain
triggering events, then the Conversion Price will not be adjusted until such
triggering events occur. For the purposes of this Section 10.5.6, the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company. The Company will not issue any rights or warrants
in respect of shares of Common Stock held in the treasury of the Company. If any
such rights or warrants shall expire without having been exercised, the
Conversion Price shall thereupon be readjusted to eliminate the amount of its
adjustment due to their issuance.
10.5.7 In case outstanding shares of Common Stock shall, at any time
after the First Issue Date, be subdivided into a greater number of shares of
Common Stock, the Conversion Price in effect at the opening of business on the
day following the day upon which such subdivision becomes effective shall be
proportionately reduced (calculated to the nearest cent), and, conversely, in
case outstanding shares of Common Stock shall each be combined (calculated to
the nearest cent) into a smaller number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
10.5.8 In case the Company shall, at any time after the First Issue
Date, by dividend or otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness or assets or shares of capital stock other than
Common Stock (excluding any dividend or distribution paid in cash out of the
retained earnings of the Company or any dividend or distribution referred
above), the Conversion Price shall be adjusted (calculated to the nearest cent)
so that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the date fixed for
the determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the current market price per share
(determined as provided in Section 10.5.10) of the Common Stock on the date
fixed for such determination less the then fair market value of the portion of
the assets or evidences of indebtedness so distributed applicable to one share
of Common Stock and the denominator shall be such current market price per share
of the Common Stock, such adjustment to become effective immediately prior to
the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution.
10.5.9 The reclassification of Common Stock into securities other than
Common Stock (other than any reclassification upon a consolidation or merger to
which Section 10.12 applies) shall be deemed to involve (i) a distribution of
such securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be "the date fixed
for the determination of stockholders entitled to receive such distribution" and
"the date fixed for such determination" within the meaning of Section 10.5.8),
and (ii) a
subdivision or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification into the
number of shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of Section
10.5.7).
10.5.10 For the purpose of any computation under paragraphs 10.5.3,
10.5.6 and 10.5.8 of this Section, the current market price per share of Common
Stock on any date shall be deemed to be the average of the daily closing prices
for the 10 consecutive Business Days before the day in question. The closing
price for each day shall be the closing price for such day reported in The Wall
Street Journal or, if not so reported, the last reported sales price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the
NASDAQ/NMS or, if the Common Stock is not listed or admitted to trading or
quoted on such National Market System, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, the average
of the closing bid and asked prices in the over-the-counter market as furnished
by any NASD member firm selected from time to time by the Company for that
purpose.
10.6. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE
Whenever the Conversion Price is adjusted as herein provided:
10.6.1 the Company shall compute the adjusted Conversion Price in
accordance with Section 10.5 and shall prepare a certificate signed by a Senior
Financial Officer of the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed at each office or agency maintained
for the purpose of conversion of the Debentures pursuant to Section 15; and
10.6.2 a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall forthwith be required, and as
soon as practicable after it is required, such notice shall be mailed by the
Company together with a copy of the certificate prepared in accordance with
Section 10.6.1 to all holders at their last addresses as they shall appear in
the Debenture Register.
10.7. NOTICE OF CERTAIN CORPORATE ACTION
In case:
10.7.1 the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any other rights (other than in connection with
the adoption of a shareholder rights plan); or
10.7.2 of any reclassification of the Common Stock of the Company, or
of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required (other than issuances of
Common Stock which require stockholder approval pursuant to the rules of the
NASDAQ/NMS), or of the sale or transfer of all or substantially all of the
assets of the Company; or
10.7.3 of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; then the Company shall cause to be filed at each
office or agency maintained for the purpose of conversion of the Debentures
pursuant to Section 15, and shall cause to be mailed to all holders at their
last addresses as they shall appear in the Debenture Register, at least 20 days
(or 10 days in any case specified in clause 10.7.1 above) prior to the
applicable record or effective date hereinafter specified, a notice describing
such event in reasonable detail and stating (x) the date on which a record is to
be taken for the purpose of such dividend, distribution, rights or warrants, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, rights or warrants are
to be determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
10.8. COMPANY TO RESERVE COMMON STOCK
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Debentures, the full number of shares of
Common Stock then issuable upon the conversion of all outstanding Debentures.
10.9. INTENTIONALLY OMITTED
10.10. COVENANT AS TO COMMON STOCK
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Debentures will, upon issuance, be fully paid and
nonassessable and the Company will pay all taxes (including transfer and stamp),
liens and charges with respect to the issue thereof.
10.11. CANCELLATION OF CONVERTED DEBENTURES
All Debentures delivered for conversion shall be delivered to and
canceled by the Company.
10.12. PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS
In case of any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company)
or any sale or transfer of all or substantially all of the assets of the
Company, the Person formed by such consolidation or resulting from such merger
or which acquires such assets, as the case may be, shall execute and deliver a
supplement to this Agreement providing that the holder of each Debenture then
outstanding shall have the right thereafter, during the period that such
Debenture shall be convertible as specified in Section 10.2, to convert such
Debenture into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares (including fractional shares) of Common Stock of the Company
into which such Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer. Such supplement to this Agreement shall
provide for adjustments which, for events subsequent to the effective date of
the event which triggers the requirement of such supplement to this Agreement,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 10. The above provisions of this Section 10.12 shall
similarly apply to successive consolidations, mergers, sales or transfers.
11. AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Debentures are
outstanding:
11.1. COMPLIANCE WITH LAW
The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
11.2. INSURANCE
The Company will maintain, with reputable insurers, insurance with
respect to the properties and businesses of the Company and its subsidiaries
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
industry.
11.3. MAINTENANCE OF PROPERTIES
The Company will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective Material
Properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent
the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its Properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
would not, individually or in the aggregate, have a Material Adverse Effect.
11.4. PAYMENT OF TAXES
The Company will and will cause each of its Subsidiaries to file all
income tax or similar tax returns required to be filed in any jurisdiction and
to pay and discharge all taxes shown to be due and payable on such returns and
all other taxes, assessments, governmental charges, or levies payable by any of
them, to the extent such taxes and assessments have become due and payable and
before they have become delinquent, provided that neither the Company nor any
Subsidiary need pay any such tax or assessment if (i) the amount, applicability
or validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (ii) the nonpayment of all such
taxes and assessments in the aggregate would not reasonably be expected to have
a Material Adverse Effect.
11.5. CORPORATE EXISTENCE, ETC.
Except as provided in Section 12.1, the Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Section 12.1, the Company will at all times preserve and keep in full force and
effect the corporate existence of each of its Subsidiaries (unless merged or
consolidated into the Company or a Subsidiary) and all rights and franchises of
the Company and its Subsidiaries unless, in the good faith judgment of the
Company, the termination of or failure to preserve and keep in full force and
effect such corporate existence, right or franchise would not, individually or
in the aggregate, have a Material Adverse Effect.
11.6. REPURCHASE OF THE DEBENTURES AT THE OPTION OF THE HOLDER UPON
A CHANGE OF CONTROL
11.6.1 Upon the occurrence of a Change of Control, the Company shall
make an offer (subject only to conditions required by applicable law, if any) to
each Holder (the "Change of Control Offer"), to repurchase for cash all or any
part of such holder's Debentures on a date (the "Change of Control Purchase
Date") that is no later than 60 Business Days after the occurrence of such
Change of Control, at the Change of Control Purchase Price specified below, plus
accrued and unpaid interest to the Change of Control Purchase Date, and each
Holder shall have the right, at such Holder's option, to tender such Holder's
Debentures to the Company on the terms set
forth in the Change of Control Offer. The Change of Control Offer shall be made
within 10 Business Days following a Change of Control, and shall remain open for
20 Business Days following its commencement (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, the Company
promptly, but, in any event, no later than 60 Business Days from the Change of
Control, shall purchase all Debentures properly tendered in response to the
Change of Control Offer and each Holder who has given a notice pursuant to this
Section 11.6.1 that such Holder desires to accept the Change of Control Offer
for all or part of such Holder's Debentures shall be obligated to tender and
sell such Debentures to the Company pursuant to such Offer.
11.6.2 As used herein, a "Change of Control" means:
(i) any merger or consolidation of the Company with or into
any Person or any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the assets of the Company on a
consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable), is or becomes the beneficial owner (as such term is
used in Rule 13d-3 of the Exchange Act or any successor provision
thereto), directly or indirectly, of more than 50% of the total voting
power in the aggregate normally entitled to vote in the election of
directors, managers or trustees, as applicable, of the transferee(s) or
surviving entity or entities,
(ii) any "person" or "group," becomes the beneficial owner,
directly or indirectly, of more than 50% of the total voting power in
the aggregate of all classes of capital stock of the Company then
outstanding normally entitled to vote in elections of directors, or
(iii) during any period of 12 consecutive months after the
First Issue Date, individuals, together with successors selected by
such individuals, who at the beginning of any such 12-month period
constituted the Board of Directors of the Company cease for any reason
(other than a planned retirement) to constitute a majority of the Board
of Directors of the Company then in office, as applicable.
The "Change of Control Purchase Price" means
(i) 106.5% of the principal amount of the Debentures, if a
Change of Control occurs on or prior to the fifth anniversary of the
First Issue Date.
(ii) 103% of the principal amount of the Debentures, if a
Change of Control occurs after the fifth anniversary of the First Issue
Date.
11.6.3 On or before the Change of Control Purchase Date, the Company
will (i) accept for payment the Debentures or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) promptly pay the holders of
Debentures so accepted an amount equal to the
Change of Control Purchase Price (together with accrued and unpaid interest, if
any), and (iii) authenticate and deliver to such holders a new Debenture equal
in principal amount to any unpurchased portion of the Debenture surrendered.
11.7. DEBENTURES SUBORDINATE TO SENIOR OBLIGATIONS
The Company covenants and agrees, and each holder of a Debenture, by
acceptance thereof, likewise covenants and agrees (i) that, to the extent and in
the manner set forth in this Section 11.7, the Company's Senior Obligations (as
defined in Section 11.7.4), if any, will be senior in right of payment to the
Debentures, and (ii) that the subordination provisions set forth in this Section
11.7 are, and are intended to be, an inducement and a consideration to each
holder of any Senior Obligation, whether such Senior Obligation was created or
acquired before or after the date of this Agreement, to acquire and continue to
hold, or to continue to hold, such Senior Obligation, and each holder of Senior
Obligations shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or continuing to hold, such
Senior Obligations.
11.7.1 As used herein, "senior in right of payment to the Debentures"
means that:
(i) no part of the Debt shall have any claim to the assets of
the Company on a parity with or prior to the claim of the Senior
Obligations; and
(ii) unless and until the Senior Obligations have been paid in
full, without the express prior written consent of all holders of such
Senior Obligations, no Holder will take, demand (including by means of
any legal action) or receive from the Company, and the Company will not
make, give or permit, directly or indirectly, by set-off, redemption,
purchase or in any other manner, any cash payment of or security for
the whole or any part of the Debt; provided, however, that (x) so long
as no default exists in the payment of any principal of or premium, if
any, or interest on any Senior Obligations, the Company may make, and
the Holders may receive, scheduled payments on account of the Debt in
accordance with the terms hereof, except if a default in the
performance or observance of any term or condition relating to any
Senior Obligations (other than a default in the payment of any
principal of or premium, if any, or interest on the Senior Obligations)
has occurred and is continuing that permits the holders of the Senior
Obligations to declare such Senior Obligations to be due and payable,
any Designated Holder of Senior Obligations (as defined in Section
11.7.6) may give notice (a "Senior Blockage Notice") to the Company
(provided, however, no more than one Senior Blockage Notice may be
given during any 360 consecutive day period) that until all Senior
Obligations are paid in full, no scheduled payments (whether in cash or
securities, but excluding additional Debentures) may be made by the
Company on account of the Debt during the period ("Senior Blockage
Period") commencing on the date of such Senior Blockage Notice and
ending on the earliest of: (A) 180 days after the date of such Senior
Blockage Notice; (B) the date such default is cured or waived; and (C)
the date that the holders of the Senior Obligations shall have given
notice to the Company of termination of the Senior Blockage Period, and
except when a default in the payment of
any principal of, premium if any, or interest on the Senior Obligations
has occurred and is continuing or would result therefrom, (y) at any
time Debentures may be converted in accordance with the terms hereof,
and (z) upon the acceleration of the maturity of any Senior
Obligations, the Holders may accelerate the scheduled maturities of the
Debentures if and to the extent permitted hereby at such time but such
acceleration shall not give (i) any Holder any right to take, demand
(including by means of any legal action) or receive from the Company,
or (ii) the Company the right to make, give or permit, directly or
indirectly, by set-off, redemption, purchase or in any other manner,
any cash payment of or security for the whole or any part of the
Debentures unless and until the Senior Obligations have been paid in
full.
11.7.2 Any payment or distribution by the Company to which any Holder
would be entitled except for the provisions hereof (whether in cash or
securities, but excluding additional Debentures) shall be paid or delivered by
the Holder, or any receiver, trustee in bankruptcy, liquidating trustee,
disbursing agent or other Person making such payment or distribution, to the
holders of the Senior Obligations or their representative, ratably in accordance
with the amounts thereof, to the extent necessary to pay in full all Senior
Obligations, before any payment or distribution shall be made to any Holder.
11.7.3 The expressions "prior payment in full," "payment in full,"
"paid in full" and any other similar terms or phrases when used herein with
respect to the Senior Obligations shall mean the payment in full in cash of all
of the Senior Obligations; and the expression "any cash payment of or security
for the whole or any part of the Debt" and any other similar terms or phrases
when used herein shall not be deemed to include a payment or distribution of
stock or securities of the Company provided for by a plan of reorganization or
readjustment authorized by an order or decree of a court of competent
jurisdiction in a reorganization proceeding under any applicable bankruptcy law,
or of any other corporation provided for by such plan of reorganization or
readjustment, which stock or securities are subordinated in right of payment to
all then outstanding Senior Obligations to substantially the same extent as the
Debentures are so subordinated as provided in this Section 11.7. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of all or substantially all of its properties and assets as an
entirety to another Person upon the terms and conditions set forth in Section
12.1 shall not be deemed a "proceeding" for the purposes of this Section 11.7 if
the Person formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer such properties and assets
as an entirety, as the case may be, shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions set forth in Section
12.1.
11.7.4 As used herein, "Senior Obligations" shall mean collectively all
obligations of the Company (i) under or in connection with the Senior Credit
Agreement (as defined below) and the other "Loan Documents" referred to in the
Senior Credit Agreement; (ii) to any Bank (as defined below) or any affiliate of
a Bank under or in connection with (x) any interest rate, currency or commodity
swap agreement, cap agreement or collar agreement or any other agreement or
arrangement designed to protect the Company against fluctuations in interest
rates, currency
exchange rates or commodity prices, or (y) any purchase card or credit card
issued by such Bank or such affiliate, (iii) to any Bank or any affiliate of any
Bank under or in connection with any other credit arrangement (including without
limitation any lease by such Bank or such affiliate, any guaranty issued by the
Company in favor of such Bank or such affiliate and any deposit account services
(including in respect of any overdraft) if such obligation is secured by the
assets of the Company; and (iv) under or in connection with any other secured
Indebtedness of the Company having an initial principal amount in excess of
$5,000,000 which by its express terms states that it is a "Senior Obligation";
in each case (a) whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, and (b) whether on account of
principal, premium, interest (including, without limitation, interest accruing
after the maturity date of any Senior Obligation and interest accruing after the
commencement of any bankruptcy, insolvency, reorganization or similar proceeding
relating to the Company, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), reimbursement obligations, fees,
indemnities, costs, expenses or otherwise. For purposes of the foregoing,
"Senior Credit Agreement" means the Amended and Restated Credit Agreement dated
as of October 30, 1998 among the Company, various financial institutions and
Bank of America National Trust and Savings Association, as Agent, as amended,
restated or otherwise modified from time to time, together with any replacement
or refinancing thereof; and "Bank" means any bank, insurance company, mutual
fund or other financial institution which from time to time is a party to the
Senior Credit Agreement.
11.7.5 As used herein, "Debt" shall mean collectively the unpaid
principal of, premium, if any, and interest on (including, without limitation,
interest accruing after the maturity date of any Debenture and interest accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Company, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding) and all other obligations in respect of the Debentures, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter incurred, in each case whether on account of principal, premium,
interest, reimbursement obligations, rights to rescission, fees, indemnities,
costs, expenses or otherwise.
11.7.6 As used herein, "Designated Holder of Senior Obligations" means
(i) the Agent under the Senior Credit Agreement or (ii) any holder of Senior
Obligations (or representative of holders of Senior Obligations) in an initial
aggregate principal amount of $20,000,000 or more (excluding Senior Obligations
under the Senior Credit Agreement).
11.7.7 Any Designated Holder of Senior Obligations is hereby authorized
to (i) file an appropriate claim for and on behalf of any Holder if such Holder
does not file, and there is not otherwise filed on behalf of such Holder, a
proper claim or proof of claim in the form required in any bankruptcy,
insolvency, reorganization or similar proceeding with respect to the Company at
least 30 days before the expiration of the time to file such claim or proof of
claim and (ii) file an appropriate ballot for and on behalf of any Holder if
such Holder does not file, and there is not otherwise filed on behalf of such
Holder, a proper ballot in any such proceeding in the form required at least 10
days before the expiration of the time to file such ballot.
11.7.8 If any Event of Default shall occur and be continuing, the
Holders shall not, without the prior written consent of the agent under the
Senior Credit Agreement (the "Agent"), accelerate the maturity of any Debt, or
institute proceedings to enforce or collect any Debt, or commence or join with
any other creditor of the Company in commencing any bankruptcy, insolvency,
reorganization or similar proceeding against the Company, or otherwise exercise
any right or remedy in respect of the Debt, except after the first to occur of a
Standstill Termination Event or the 30th day following the giving of notice of
such Event of Default to the Agent by a Holder. For purposes of the foregoing, a
"Standstill Termination Event" will be deemed to occur upon (1) commencement of
a bankruptcy, insolvency, reorganization or similar proceeding by or against the
Company (provided that if such proceeding is instituted against the Company, a
Standstill Termination Event shall only be deemed to occur in respect thereof if
such proceeding has not been dismissed within 60 days of commencement thereof or
if the Company acquiesces thereto) or (2) the acceleration of the maturity of
any Senior Obligations.
11.7.9 The Holders agree with and for the benefit of each holder of
Senior Obligations that no provision of this Section 11.7 may be amended or
otherwise modified, and no other provision of this Agreement may be amended or
otherwise modified in any manner which is adverse to the holders of the Senior
Obligations, without (in each case) the prior written consent of all Designated
Holders of Senior Obligations.
12. NEGATIVE COVENANTS
The Company covenants that so long as any of the Debentures are
outstanding:
12.1. MERGER, CONSOLIDATION, ETC.
The Company shall not consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person unless:
12.1.1 the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the case may
be, shall be a solvent corporation organized and existing under the laws of the
United States or any State thereof (including the District of Columbia), and, if
the Company is not such corporation, such corporation shall have executed and
delivered to each holder of any Debentures its assumption of the due and
punctual performance and observance of each covenant and condition of this
Agreement, the Other Agreements and the Debentures; and
12.1.2 immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing.
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company or any
successor corporation that shall theretofore
have become such in the manner prescribed in this Section 12.1 from its
liability under this Agreement, the Other Agreements to which the Company is a
party or the Debentures.
12.2. NO DIVIDENDS
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly declare or pay any dividend or make any distribution on
account of the capital stock (including all shares, interests, participations,
rights or other equivalents of corporate stock) of the Company or any of its
Subsidiaries (other than dividends or distributions payable to the Company or
any of its Subsidiaries and other than dividends or distributions in connection
with a shareholder rights plan).
12.3. FORBEARANCE FROM RESTRICTIONS ON RIGHTS OF HOLDERS OF
DEBENTURES
The Company will not enter into any agreement or instrument or
otherwise agree to any covenant that would in any way limit the right of the
holders of the Debentures to convert the Debentures into Common Stock.
13. EVENTS OF DEFAULT
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
premium on any Debenture when the same becomes due and payable; or
(b) the Company defaults in the payment of any interest on any
Debenture for more than ten Business Days after the same becomes due
and payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Section 12.1; or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 13 and such default is not
remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Debenture
(any such written notice to be identified as a "notice of default" and
to refer specifically to this paragraph (d) of Section 13); or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this
Agreement or the Other Agreements to which the Company is a party
proves to have been false or incorrect in any material
respect on the date as of which made if a date is specified, or
as of the respective Closings; or
(f) (i) the Company or any Significant Subsidiary is in
default (as principal or as guarantor or other surety) in the payment
of any principal of or premium or make-whole amount or interest on any
Indebtedness that is outstanding in an aggregate principal amount of at
least $1,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Significant Subsidiary is in
default in the performance of or compliance with any term of any
evidence of any Indebtedness in an aggregate outstanding principal
amount of at least $1,000,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a
consequence of such default or condition such Indebtedness has become,
or has been declared due and payable before its stated maturity or
before its regularly scheduled dates of payment; or
(g) the Company or any Significant Subsidiary (i) is generally
not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company
or any of its Significant Subsidiaries, a custodian, receiver, trustee
or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for
relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of
any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any of its
Significant Subsidiaries, or any such petition shall be filed against
the Company or any of its Significant Subsidiaries and such petition
shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $2,000,000 are rendered against one or more of
the Company and its Significant Subsidiaries and which judgments are
not, within 60 days after entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within 60 days after the
expiration of such stay; or
(j) (i) with respect to any Plan, a prohibited transaction
within the meaning of section 4975 of the Code or section 406 of ERISA
shall occur which has a reasonable likelihood of resulting in direct or
indirect liability to the Company, (ii) with respect to any Plan
subject to Title IV of ERISA, the filing of a notice by the Company or
an ERISA Affiliate to voluntarily terminate any such Plan in a distress
termination, (iii) with respect to any Multiemployer Plan, the Company
or any ERISA Affiliate shall incur any withdrawal liability in excess
of $50,000 or (iv) with respect to any Plan subject to Title IV of
ERISA, the Company or any ERISA Affiliate shall incur an accumulated
funding deficiency or request a funding waiver from the Internal
Revenue Service, provided that an event listed in clauses (i) through
(iv) hereof shall constitute an Event of Default only if it has a
Material Adverse Effect.
14. REMEDIES ON DEFAULT, ETC.
14.1. ACCELERATION. Subject to Section 11.7.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 13 has occurred, all the Debentures then
outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holder(s) may at any time at its or their option, by notice or notices
to the Company, declare all the Debentures then outstanding to be immediately
due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 13 has occurred and is continuing, any holder or holders of Debentures
at the time outstanding affected by such Event of Default may at any time, at
its or their option, by notice or notices to the Company, declare all the
Debentures held by it or them to be immediately due and payable.
Upon any Debentures becoming due and payable under this Section 14.1,
whether automatically or by declaration, such Debentures will forthwith mature
and the entire unpaid principal amount of such Debentures, plus all accrued and
unpaid interest thereon to the date of payment of the principal thereof shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived.
14.2. OTHER REMEDIES
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Debentures have become or have been declared
immediately due and payable under Section 14.1, the Required Holder(s) may
proceed to protect and enforce the rights of such holder by an action at law,
suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any Debenture, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
Notwithstanding the foregoing, the holder of any Debenture shall have
the right, which is absolute and unconditional, to receive payment of the
principal of, premium, if any, and interest
on such Debenture and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such holder.
14.3. RESCISSION
At any time after any Debentures have been declared due and payable
pursuant to clause (b) of Section 14.1, the holders of not less than 25% in
principal amount of the Debentures then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Debentures, all principal of
and premium, if any, on any Debentures that are due and payable other than by
reason of such declaration and are unpaid, and all interest on such overdue
principal and (to the extent permitted by applicable law) any overdue interest
in respect of the Debentures, at the Default Rate, (b) all Events of Default and
Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 20, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Debentures. No rescission and annulment
under this Section 14.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.
14.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Debenture in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Debenture upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Company under Section 17,
the Company will pay to the holder of each Debenture on demand such further
amount as shall be sufficient to cover all costs and expenses of such holder
incurred in any enforcement or collection proceeding under this Section 14,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements.
15. REGISTRATION; EXCHANGE; SUBSTITUTION OF DEBENTURES
15.1. REGISTRATION OF DEBENTURES
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Debentures (the "Debenture
Register"). The name and address of each holder of one or more Debentures, each
transfer thereof and the name and address of each transferee of one or more
Debentures shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Debenture shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary. The Company shall give to any holder of at least 5%
of the original aggregate principal amount of
Debentures promptly upon request therefor, a complete and correct copy of the
names and addresses of all registered holders of Debentures.
15.2. TRANSFER AND EXCHANGE OF DEBENTURES
The Debentures are subject to restrictions upon transfer. As long as
such restrictions on transfer are complied with, upon surrender of any Debenture
at the principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Debenture or his attorney duly authorized in writing
and accompanied by the address for notices of each transferee of such Debenture
or part thereof), the Company shall execute and deliver, at the Company's
expense (except as provided below), one or more new Debentures (as requested by
the holder thereof) in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Debenture. Each such new
Debenture shall be payable to such Person as such holder may request and shall
be substantially in the form of Exhibit 1. Each such new Debenture shall be
dated and bear interest from the date to which interest shall have been paid on
the surrendered Debenture or dated the date of the surrendered Debenture if no
interest shall have been paid thereon; provided, however, that the aggregate
amount of interest payable during any quarter with respect to any transferred
Debenture shall in no event exceed the amount of interest that would have been
payable during such quarter with respect to such Debenture absent such transfer.
Debentures shall not be transferred in denominations of less than $100,000,
provided that if necessary to enable the registration of transfer by a holder of
its entire holding of Debentures, one Debenture may be in a denomination of less
than $100,000. Any transferee, by its acceptance of a Debenture registered in
its name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 7.2.
15.3. REPLACEMENT OF DEBENTURES
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any
Debenture, and:
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it, or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Debenture, dated and bearing interest from the date to which interest shall have
been paid on such lost, stolen, destroyed or mutilated Debenture or dated the
date of such lost, stolen, destroyed or mutilated Debenture if no interest shall
have been paid thereon.
16. PAYMENTS ON DEBENTURES
16.1. PLACE OF PAYMENT
Subject to Section 16.2, payments of principal and interest becoming
due and payable on the Debentures shall be made in Albany, New York, at the
principal office of the Company. The Company may at any time, by notice to each
holder of a Debenture, change the place of payment of the Debentures so long as
such place of payment shall be either the principal office of the Company in
such jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
16.2. HOME OFFICE PAYMENT
So long as Charterhouse or ▇▇▇▇▇▇▇▇▇▇▇▇'s nominee shall be the
registered holder of any Debenture, and notwithstanding anything contained in
Section 16.1 or in such Debenture to the contrary, the Company will pay all sums
becoming due on such Debenture for principal, premium, if any, and interest by
the method and at the address as Charterhouse shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Debenture or the making of any notation thereon, except
that, in order to receive payment or prepayment in full of any Debenture,
Charterhouse shall surrender such Debenture for cancellation to the Company at
its principal executive office or at the place of payment most recently
designated by the Company pursuant to Section 16.1. Prior to any sale or other
disposition of any Debenture held by Charterhouse or ▇▇▇▇▇▇▇▇▇▇▇▇'s nominee
▇▇▇▇▇▇▇▇▇▇▇▇ will surrender such Debenture to the Company in exchange for a new
Debenture(s) pursuant to Section 15.2.
16.3. INTEREST
Interest on the Debentures shall be computed on the basis of a 360-day
year of twelve 30- day months at a rate of 8% per annum from the Issue Date,
payable in equal quarterly installments on each Interest Payment Date of each
year (or such prorated amount as may be applicable with respect to the first
payment) until the principal on the Debentures becomes due and payable. To the
extent permitted by law, interest on any overdue payment of principal or
interest shall be payable quarterly at a rate equal to 10% per annum (the
"Default Rate").
From the Issue Date through and including the day after the first
Interest Payment Date following the fifth anniversary of the Issue Date, such
interest shall be paid on each Interest Payment Date by the issuance to the
Holder of additional Convertible Debentures in the principal amount of the
interest payable on such Interest Payment Date. After the first Interest Payment
Date following the fifth anniversary of the Issue Date, such interest shall be
paid in either (I) additional Convertible Debentures in the principal amount of
the interest payable on such Interest Payment Date or (ii) cash; the method of
payment to be determined by the Company in its discretion.
17. EXPENSES, ETC.
17.1. TRANSACTION EXPENSES
Notwithstanding the provisions of Sections 4.1.1(a) or 4.1.1(b) (unless
Charterhouse's failure to pay the purchase price as provided therein is due to a
failure by Charterhouse to satisfy its conditions) the Company will promptly pay
all reasonable out-of-pocket fees and expenses incurred by Charterhouse in
connection with the transactions contemplated hereby (including the reasonable
fees and expenses of a special counsel, accountants and other representatives
engaged by Charterhouse in connection with such transactions)("Transaction
Fees") up to a maximum of $500,000, whether or not this Agreement is terminated
prior to the First Closing or the Second Closing. The Transaction Fees in
connection with any amendments, waivers or consents under or in respect of this
Agreement, the Other Agreements or the Debentures (whether or not such
amendment, waiver or consent becomes effective) or in connection with any
required any HSR Act filing by Charterhouse, including, without limitation: (a)
the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement or the
Debentures or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Debentures,
or by reason of being a holder of any Debenture, (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the
Debentures shall not be subject to the $500,000 cap. The Company will pay, and
will save Charterhouse and each other holder of a Debenture harmless from, all
claims in respect of any fees, costs or expenses if any, of brokers and finders
(other than those retained by Charterhouse), its investment advisors and its
counsel, and any filing fees payable by the Company in connection with any
filings or submissions required under the HSR Act. At each Closing under this
Agreement, the Company will pay to Charterhouse Group International, Inc. a fee
in the amount of 1% of the principal amount of the Debentures issued at such
Closing.
17.2. SURVIVAL
The obligations of the Company under this Section 17 will survive the
payment or transfer of any Debenture, the enforcement, amendment or waiver of
any provision of this Agreement or the Debentures, and the termination of this
Agreement.
18. INDEMNIFICATION
18.1. INDEMNIFICATION BY THE COMPANY
18.1.1 From and after the Closing, the Company shall indemnify and hold
each Charterhouse entity, its Affiliates, and their respective directors,
officers, employees, share holders, partners, agents, successors and assigns
(collectively, "Charterhouse Claimants" and individually, a "Charterhouse
Claimant") harmless from and defend each of them from and against any and all
demands, claims, actions, liabilities, losses, costs, damages or expenses
whatsoever (including without limitation reasonable attorneys' fees and
expenses) (collectively,
"Claims") asserted against, imposed upon or incurred by the Charterhouse
Claimants resulting from or arising out of (i) any inaccuracy or breach of any
representation or warranty of the Company contained herein; and/or (ii) any
breach of any covenant or obligation of the Company contained herein. The
Charterhouse Claimant's right to indemnification shall not be limited or
affected in any way by any pre-Closing investigation by Charterhouse.
INDEMNIFICATION BY CHARTERHOUSE
18.1.2 From and after the Closing, Charterhouse shall indemnify and
hold the Company, its Affiliates and their respective directors, officers,
employees, shareholders, partners, agents, successors and assigns (collectively,
the "Company Claimants" and individually, a "Company Claimant") harmless from
and defend each of them from and against any and all Claims asserted against,
imposed upon or incurred by the Company Claimants resulting from or arising out
of any inaccuracy or breach of any representation or warranty of Charterhouse in
Section 7 hereof.
18.2. TERMS AND CONDITIONS OF INDEMNIFICATION
18.2.1 The respective obligations and liabilities of the Company and
Charterhouse (each, an "indemnifying party") to indemnify pursuant to this
Section 18 shall be subject to the following terms and conditions:
(a) The party seeking to be indemnified (the "Indemnified Party") shall
give the indemnifying party prompt written notice of any such claim. The
Indemnified Party's failure to give prompt notice, however, shall not serve to
eliminate or limit the Indemnified Party's right to indemnification hereunder
except to the extent such failure materially prejudices the rights of the
indemnifying party.
(b) The obligations and liabilities of the indemnifying party to
indemnify pursuant to this Section 18 in respect of any Claim by a third party
shall be subject to the following additional terms and conditions:
(i) The indemnifying party shall have the right to undertake,
by counsel or other representatives of its own choosing reasonably
satisfactory to the Indemnified Party, the defense, compromise, and
settlement of such Claim.
(ii) In the event that the indemnifying party shall elect not
to undertake such defense, or within a reasonable time after notice of
any such claim from the Indemnified Party shall fail to defend, the
Indemnified Party (upon further written notice to the indemnifying
party) shall have the right to undertake the defense, compromise or
settlement of such claim, by counsel or other representatives of its
own choosing, on behalf of and for the account and risk of the
indemnifying party.
18.2.2 Notwithstanding anything in this Section 18 to the contrary, (A)
if there is a reasonable probability that a Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall
have the right, at the cost and expense of the indemnifying party, to
participate in the defense, compromise or settlement of the Claim, (B) the
indemnifying party shall not, without the Indemnified Party's written consent,
settle or compromise any Claim or consent to entry of any judgment which does
not include as an unconditional term thereof the giving by the claiming party or
the plaintiff to the Indemnified Party of a release from all liability in
respect of such claim, and (C) in the event that the indemnifying party
undertakes defense of any Claim, the Indemnified Party by counsel or other
representative of its own choosing and at its sole cost and expense, shall have
the right to consult with the indemnifying party and its counsel or other
representatives concerning such claim (other than any claim for money damages
with respect to which the indemnifying party has agreed to indemnify the
Indemnified Party) and the indemnifying party and the Indemnified Party and
their respective counsel or other representatives shall cooperate with respect
to such claim, subject to the execution and delivery of a mutually satisfactory
joint defense agreement.
19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Debentures, the purchase or
transfer by Charterhouse of any Debenture or portion thereof or interest therein
and the payment of any Debenture, and may be relied upon by any Permitted
Transferee of a Debenture, regardless of any investigation made at any time by
or on behalf of Charterhouse or any Permitted Transferee of a Debenture until 30
days after ▇▇▇▇▇▇▇▇▇▇▇▇ receives the audited financial statements of the Company
for the year ended December 31, 1999. All statements contained in any
certificate delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement, the Other
Agreements and the Debentures embody the entire agreement and understanding
between Charterhouse and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
20. AMENDMENT AND WAIVER
20.1. REQUIREMENTS
This Agreement, the Other Agreements and the Debentures may be amended,
and the observance of any term hereof, of the Other Agreements or of the
Debentures may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Company and the Required Holders, except that
(a) no amendment or waiver of any of the provisions of Section 1, 2, 4, 5, 6.18,
9, 11.6, 11.7, 16.3, 18 or 24 or any defined term (as it is used therein), will
be effective as to Charterhouse unless consented to by Charterhouse in writing,
and (b) no such amendment or waiver may, without the written consent of the
holder of each Debenture at the time outstanding affected thereby: (I) subject
to the provisions of Section 14 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest on the
Debentures, (ii) change the percentage of the principal amount of the Debentures
the holders of
which are required to consent to any such amendment or waiver, or (iii) amend
any of Sections 10, 13, 14, 20 or 23 hereof.
20.2. SOLICITATION OF HOLDERS OF DEBENTURES
20.2.1 Solicitation. The Company will provide each holder of Debentures
(irrespective of the amount of Debentures then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Debentures. The Company will deliver executed or true and
correct copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 19 to each holder of outstanding Debentures promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite holders of Debentures.
20.2.2 Payment. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Debentures
as consideration for or as an inducement to the entering into by any holder of
Debentures of any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Debentures then
outstanding that consent thereto.
20.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 20
applies equally to all holders of Debentures and is binding upon them and upon
each future holder of any Debenture and upon the Company without regard to
whether such Debenture has been marked to indicate such amendment or waiver. No
such amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and the
holder of any Debenture nor any delay in exercising any rights hereunder or
under any Debenture shall operate as a waiver of any rights of any holder of
such Debenture. As used herein, the term "this Agreement" and references thereto
shall mean this Agreement as it may from time to time be amended or
supplemented.
20.4. DEBENTURES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Debentures then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Debentures, or have directed the taking of any
action provided herein or in the Debentures to be taken upon the direction of
the holders of a specified percentage of the aggregate principal amount of
Debentures then outstanding, Debentures directly or indirectly owned by the
Company or any of its Affiliates shall be deemed not to be outstanding.
21. NOTICES
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to Charterhouse or Charterhouse's nominee, c/o
Charterhouse Group International, Inc. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ Attention: President, with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(ii) if to any other holder of any Debenture, to such holder
at such address as such other holder shall have specified to the
Company in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of President, or at such
other address as the Company shall have specified to the holder of each
Debenture in writing, with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Washington, DC 20005
Notices under this Section 21 will be deemed given only when actually received.
22. REPRODUCTION OF DOCUMENTS
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by Charterhouse at the Closings (except the
Debentures themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to Charterhouse, may be reproduced
by Charterhouse by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and Charterhouse may destroy any
original document so reproduced.
23. STOCKHOLDER APPROVALS, ETC.
23.1. The Company shall take all action necessary, in accordance with
applicable law, the Company Charter and its By-laws, to duly call, give notice
of, convene and hold the Special Meeting as promptly as reasonably practicable
after the date on which the definitive Company Proxy Statement has been mailed
to the Company's stockholders for the purpose of considering and approving the
20% Issuance. The Company Board will recommend that holders of Common Stock vote
in favor of the 20% Issuance at the Special Meeting.
23.2. In connection with the Special Meeting, the Company (i) will as
promptly as practicable prepare and file with the SEC, will use its best efforts
to have cleared by the SEC and will thereafter mail to its stockholders as
promptly as practicable the Company Proxy Statement and all other proxy
materials for such meeting, (ii) will use its best efforts to obtain the
necessary approvals by its stockholders of the 20% Issuance (including, without
limitation, securing the services of a firm of proxy solicitors reasonably
acceptable to Charterhouse), and (iii) will otherwise comply with all legal
requirements applicable to such meeting. The Company will provide Charterhouse
with a copy of the preliminary proxy statement and all modifications thereto
prior to filing or delivery to the SEC and will consult with Charterhouse in
connection therewith. The Company will notify Charterhouse promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Company Proxy Statement or for
additional information and will supply Charterhouse with copies of all written
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Company
Proxy Statement or this Agreement. If at any time prior to the Special Meeting
there shall occur any event that should be set forth in an amendment or
supplement to the Company Proxy Statement, the Company will promptly prepare and
mail to its stockholders such an amendment or supplement.
24. SUBSTITUTION OF PURCHASER
Charterhouse shall have the right to substitute any one of
Charterhouse's Affiliates as the purchaser of the Debentures that Charterhouse
has agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both Charterhouse and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and the Other Agreements to
which Charterhouse is a party and shall contain a confirmation by such Affiliate
of the accuracy with respect to it of the representations set forth in Section
7. Upon receipt of such notice, wherever the word "Charterhouse" is used in this
Agreement (other than in this Section 24), such word shall be deemed to refer to
such Affiliate in lieu of Charterhouse, provided, however, that substitution of
Charterhouse's Affiliate shall not release Charterhouse from any liability under
this Agreement. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to Charterhouse all
of the Debentures then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "Charterhouse" is used in this
Agreement (other than in this Section 24), such word shall no longer be deemed
to refer to such Affiliate, but shall refer to Charterhouse, and Charterhouse
shall have all the rights of an original holder of the Debentures under this
Agreement.
25. MISCELLANEOUS
25.1. SUCCESSORS AND ASSIGNS
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective permitted successors and assigns (including, without limitation, any
Permitted Transferee of a Debenture) whether so expressed or not.
25.2. PAYMENTS DUE ON NON-BUSINESS DAYS
Anything in this Agreement or the Debentures to the contrary
notwithstanding, any payment of principal of or premium or interest on any
Debenture that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
25.3. SEVERABILITY
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
25.4. CONSTRUCTION
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
25.5. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
25.6. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. All
actions and proceedings arising out of or relating to this Agreement shall be
brought by the parties and heard and determined only in a Federal or State court
located in the Borough of Manhattan in the City and State of New York and the
parties hereto consent to jurisdiction before and waive any objections to the
venue of such New York and Federal courts. The parties hereto agree to accept
service of process in connection with any such action or proceeding in any
manner permitted for a notice hereunder.
25.7. FURTHER ASSURANCES
Each party shall cooperate and take such action as may be reasonably
requested by the other party in order to carry out the provisions and purposes
of this Agreement. In that regard, the Company agrees to cooperate with
Charterhouse with respect to any filing required pursuant to the HSR Act.
If Charterhouse is in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this Agreement and return
it to the Company, whereupon the foregoing shall become a binding agreement
between Charterhouse and the Company.
Very truly yours,
UNITED ROAD SERVICES, INC.
By: ______________________________
Name: ________________
Title: ________________
The foregoing is hereby
agreed to as of the
date thereof.
CHARTER URS LLC
By: ______________________________
Name:
Title:
SCHEDULE A
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"20% ISSUANCE" is defined in Section 5.2.
"AFFILIATE" means, at any time, and with respect to any Person, any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person. As used in this definition, "CONTROL" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of the
Company.
"BUSINESS DAY" means for the purposes of any provision of this
Agreement, any day other than a Saturday, a Sunday or a day on which commercial
banks in New York are required or authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CHANGE OF CONTROL" is defined in Section 11.6.
"CHANGE OF CONTROL OFFER" is defined in Section 11.6.
"CHANGE OF CONTROL OFFER PERIOD" is defined in Section 11.6.
"CHANGE OF CONTROL PURCHASE DATE" is defined in Section 11.6.
"CHANGE OF CONTROL PURCHASE PRICE" is defined in Section 11.6.
"CHARTERHOUSE" is defined in the preamble.
"CLOSINGS" means the First Closing and the Second Closing.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"COMMON STOCK" is defined in Section 6.3.
"COMPANY" means United Road Services, Inc., a Delaware corporation.
"COMPANY BOARD" means the Board of Directors of the Company.
"COMPANY PREFERRED STOCK" is defined in Section 6.3.
"CONVERSION DATE" is defined in Section 10.2.
"CONVERSION PRICE" is defined in Section 10.3.
"DEBENTURES" is defined in Section 1.
"DEBENTURE REGISTER" is defined in Section 15.1.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" is defined in Section 16.3.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any entity (whether or not incorporated) that
is or was, within the preceding six years treated as a single employer together
with the Company (or any of its predecessors) under section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"EVENT OF DEFAULT" is defined in Section 13.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FIRST CLOSING" is defined in Section 4.1.
"FIRST ISSUE DATE" is defined in Section 4.1.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Significant
Subsidiary conducts all or any part of its business, or which has
jurisdiction over any properties of the Company or any Significant
Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (I) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"HOLDER" or "HOLDERS" means, with respect to any Debenture, the Person
in whose name such Debenture is registered in the register maintained by the
Company pursuant to Section 15.1.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended from time to time.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created
or arising under any conditional sale or other title retention
agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money); and
(f) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (e) hereof.
"INTEREST PAYMENT DATE" means each March 31, June 30, September 30 and
December 31.
"INVESTORS AGREEMENT" means the Investors Agreement, to be entered into
and dated as of the date hereof, between the Company and Charterhouse, as
amended, supplemented, changed or modified from time to time.
"ISSUE DATE" means the First Issue Date or the Second Issue Date, as
the case may be.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"LOCKUP AGREEMENT" means the Lockup Agreement dated as of the date
hereof between Charterhouse and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"MATERIAL" means material in relation to the business, operations,
financial condition, assets, or properties of the Company and its Subsidiaries
taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of the Company to
perform its obligations under this Agreement, the Other Agreements to which it
is a party and the Debentures, or (c) the validity or enforceability of this
Agreement, the Other Agreements to which it is a party or the Debentures.
"▇▇▇▇▇▇▇▇▇ WILL" is defined in Section 5.1.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NASDAQ/NMS" means the National Association of Securities Dealers
Automated Quotations National Market System.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"OTHER AGREEMENTS" means the Investors Agreement, the Registration
Rights Agreement, the Lockup Agreement, the Voting Agreements and the Side
Letter from
Charterhouse to the Company dated of even date herewith.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERMITTED TRANSFEREE" is defined in the Investors Agreement.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding six years, has been established or
maintained, or to which contributions are or, within the preceding six years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, ▇▇▇▇▇▇
or inchoate.
"PROSKAUER" is defined in Section 4.1.
"REAL PROPERTY" means any real property presently or formerly owned,
used, leased, occupied, managed or operated by the Company.
"REDEMPTION DATE: is defined in Section 9.2.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date hereof, between the Company and Charterhouse, as
amended, supplemented, changed or modified from time to time.
"REGULAR RECORD DATE" means the date that is fifteen days prior to an
Interest Payment Date.
"REQUIRED ▇▇▇▇▇▇(S)" means, at any time, the holder(s) of at least 50%
in principal amount of the Debentures at the time outstanding (exclusive of
Debentures then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"SEC" means the Securities and Exchange Commission.
"SECOND CLOSING" is defined in Section 4.2.
"SECOND ISSUE DATE" is defined in Section 4.2.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"SIGNIFICANT SUBSIDIARY" means at any time any Subsidiary that would at
such time constitute a "significant subsidiary" (as such term is defined in
Regulation S-X of the Securities and Exchange Commission as in effect on the
date of the Closing) of the Company.
"SPECIAL MEETING" is defined in Section 5.2.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"TAX RETURN" means each and every report, return, declaration,
information return, statement or other information required to be supplied to a
taxing or governmental authority with respect to any Tax or Taxes, including
without limitation any combined or consolidated return for any group of entities
including the Company.
"TAXES" (or "TAX" where the context requires) means all national,
local, foreign and other taxes (including, without limitation, income, profits,
value added, premium, estimated, excise, sales, use, occupancy, gross receipts,
franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment and payroll related and property taxes and other
governmental charges and assessments), whether attributable to statutory or
nonstatutory rules and whether or not measured in whole or in part by net
income, and including without limitation interest, additions to tax or interest,
charges and penalties with respect thereto, and expenses associated with
contesting any proposed adjustment related to any of the foregoing.
"VOTING AGREEMENTS" means the Voting Agreements dated as of the First
Closing among the Company, Charterhouse and each of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as amended, supplemented, changed or
modified from time to time.
"YEAR 2000 COMPLIANT" means that the computer systems (1) are capable
of recognizing, processing, managing, representing, interpreting, and
manipulating correctly date related data for dates earlier and later than
January 1, 2000, including, but not limited to, calculating, comparing, sorting,
storing, tagging and sequencing, without resulting in or causing logical or
mathematical errors or inconsistencies in any user-interface functionalities or
otherwise, including data input and retrieval, data storage, data fields,
calculations, reports, processing, or any other input or output, (2) have the
ability to provide date recognition for any data element without limitation
(including, but not limited to, date-related data represented without a century
designation, date-related data whose year is represented by only two digits and
date fields assigned special values), (3) have the ability to automatically
function into and beyond the year 2000 without human intervention and without
any change in operations associated with the advent of the year 2000, (4) have
the ability to correctly interpret data, dates and time into and beyond the year
2000, (5) have the ability not to produce noncompliance in existing information,
nor otherwise corrupt such data into and beyond the year 2000, (6) have the
ability to correctly
process after January 1, 2000 data containing dates before that date, (7) have
the ability to recognize all "leap years," including February 29, 2000.
TABLE OF CONTENTS
PAGE NO.
1. AUTHORIZATION OF DEBENTURES...........................................2
2. SALE AND PURCHASE OF DEBENTURES.......................................2
3. INTENTIONALLY OMITTED.................................................3
4. CLOSINGS..............................................................3
4.1. FIRST CLOSING................................................3
4.2. THE SECOND CLOSING...........................................3
5. CONDITIONS TO THE CLOSINGS.................................................4
5.1. CONDITIONS TO FIRST CLOSING.................................4
5.2. CONDITIONS TO SECOND CLOSING.................................6
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................8
6.1. ORGANIZATION; POWER AND AUTHORITY............................8
6.2. AUTHORIZATION, ETC...........................................8
6.3. CAPITALIZATION...............................................9
6.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.........9
6.5. FILED DOCUMENTS AND FINANCIAL STATEMENTS....................10
6.6. COMPLIANCE WITH LAW, ETC....................................10
6.7. GOVERNMENTAL AUTHORIZATIONS, ETC............................11
6.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS...............11
6.9. TAXES.......................................................11
6.10. CONTRACTS AND COMMITMENTS...................................12
6.11. ENVIRONMENTAL MATTERS .....................................12
6.12. ABSENCE OF CERTAIN CHANGES OR EVENTS........................13
6.13. ABSENCE OF UNDISCLOSED LIABILITIES .........................14
6.14. TITLE TO PROPERTY; LEASES...................................14
6.15. LICENSES, PERMITS, ETC......................................14
6.16. COMPLIANCE WITH ERISA .....................................15
6.17. MARGIN REGULATIONS..........................................16
6.18. EXISTING INDEBTEDNESS.......................................16
6.19. STATUS UNDER CERTAIN STATUTES...............................16
6.20. FOREIGN CORRUPT PRACTICES ACT; NO UNLAWFUL PAYMENTS.........16
6.21. PROXY STATEMENT AND REQUIRED VOTE...........................17
6.22. YEAR 2000 COMPLIANCE........................................17
6.23. NO BROKERS OR FINDERS.......................................17
7. REPRESENTATIONS OF THE PURCHASER.....................................17
7.1. AUTHORIZATION, ETC..........................................17
7.2. PURCHASE FOR INVESTMENT.....................................18
8. INFORMATION AS TO THE COMPANY........................................18
8.1. FINANCIAL AND BUSINESS INFORMATION..........................18
8.2. INSPECTION..................................................20
9. OPTIONAL REDEMPTION OF THE DEBENTURES................................21
10. OPTIONAL CONVERSION..................................................21
10.1. INTENTIONALLY OMITTED.......................................21
10.2. CONVERSION BY THE HOLDER........................... ........21
10.3. CONVERSION PRICE............................................22
10.4. FRACTIONS OF SHARES.........................................23
10.5. ADJUSTMENT OF CONVERSION PRICE .............................23
10.6. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE...................27
10.7. NOTICE OF CERTAIN CORPORATE ACTION..........................27
10.8. COMPANY TO RESERVE COMMON STOCK.............................28
10.9. INTENTIONALLY OMITTED.......................................28
10.10. COVENANT AS TO COMMON STOCK.................................28
10.11. CANCELLATION OF CONVERTED DEBENTURES........................28
10.12. PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF
ASSETS......................................................29
11. AFFIRMATIVE COVENANTS................................................29
11.1. COMPLIANCE WITH LAW.........................................29
11.2. INSURANCE...................................................29
11.3. MAINTENANCE OF PROPERTIES...................................30
11.4. PAYMENT OF TAXES............................................30
11.5. CORPORATE EXISTENCE, ETC....................................30
11.6. REPURCHASE OF THE DEBENTURES AT THE OPTION OF THE HOLDER
UPON A CHANGE OF CONTROL....................................30
11.7. DEBENTURES SUBORDINATE TO SENIOR OBLIGATIONS................32
12. NEGATIVE COVENANTS...................................................35
12.1. MERGER, CONSOLIDATION, ETC..................................35
12.2. NO DIVIDENDS................................................36
12.3. FORBEARANCE FROM RESTRICTIONS ON RIGHTS OF HOLDERS OF
DEBENTURES..................................................36
13. EVENTS OF DEFAULT ...................................................36
14. REMEDIES ON DEFAULT, ETC.............................................38
14.1. ACCELERATION. ..............................................38
14.2. OTHER REMEDIES..............................................38
14.3. RESCISSION..................................................39
14.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC...........39
15. REGISTRATION; EXCHANGE; SUBSTITUTION OF DEBENTURES...................39
15.1. REGISTRATION OF DEBENTURES..................................39
15.2. TRANSFER AND EXCHANGE OF DEBENTURES.........................40
15.3. REPLACEMENT OF DEBENTURES...................................40
16. PAYMENTS ON DEBENTURES...............................................41
16.1. PLACE OF PAYMENT............................................41
16.2. HOME OFFICE PAYMENT.........................................41
16.3. INTEREST....................................................41
17. EXPENSES, ETC........................................................42
17.1. TRANSACTION EXPENSES........................................42
17.2. SURVIVAL....................................................42
18. INDEMNIFICATION......................................................42
18.1. INDEMNIFICATION BY THE COMPANY..............................42
18.2. TERMS AND CONDITIONS OF INDEMNIFICATION.....................43
19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.........44
20. AMENDMENT AND WAIVER.................................................44
20.1. REQUIREMENTS................................................44
20.2. SOLICITATION OF HOLDERS OF DEBENTURES.......................45
20.3. BINDING EFFECT, ETC.........................................45
20.4. DEBENTURES HELD BY COMPANY, ETC.............................45
21. NOTICES..............................................................46
22. REPRODUCTION OF DOCUMENTS............................................46
23. STOCKHOLDER APPROVALS, ETC...........................................47
24. SUBSTITUTION OF PURCHASER............................................47
25. MISCELLANEOUS........................................................48
25.1. SUCCESSORS AND ASSIGNS......................................48
25.2. PAYMENTS DUE ON NON-BUSINESS DAYS...........................48
25.3. SEVERABILITY................................................48
25.4. CONSTRUCTION................................................48
25.5. COUNTERPARTS................................................48
25.6. GOVERNING LAW...............................................49
25.7. FURTHER ASSURANCES..........................................49
............................................................50
United Road Services, Inc.
$75,000,000
8% Convertible Subordinated
Debentures due 2008
-------------------------
Purchase Agreement
-------------------------
Dated as of November ___, 1998