Exhibit C
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CLASS A COMMON STOCK PURCHASE AGREEMENT
Dated as of September 7, 1999
among
VERIDIAN CORPORATION
and
THE INVESTORS PARTY HERETO
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TABLE OF CONTENTS
1. Definitions; Certain Rules of Construction ......................................... 1
2. Authorization, Sale and Purchase of Class A Common Stock. .......................... 9
2.1. Authorization of Class A Common Stock ....................................... 9
2.2. Sale and Purchase of Class A Common Stock ................................... 9
2.3. The Closing ................................................................. 10
3. Representations and Warranties of the Company ...................................... 10
3.1. Organization and Corporate Power ............................................ 10
3.2. Authorization ............................................................... 10
3.3. Capitalization .............................................................. 10
3.4. Subsidiaries ................................................................ 11
3.5. Financial Statements ........................................................ 12
3.6. Absence of Undisclosed Liabilities .......................................... 12
3.7. Absence of Certain Developments ............................................. 12
3.8. Title to Properties ......................................................... 14
3.9. Tax Matters ................................................................. 15
3.10. Contracts and Commitments ................................................... 17
3.11. No Defaults ................................................................. 17
3.12. Intellectual Property. ...................................................... 18
3.13. Effect of Transactions ...................................................... 20
3.14. No Governmental Consent or Approval Required ................................ 20
3.15. Litigation .................................................................. 20
3.16. Securities Laws ............................................................. 21
3.17. Business .................................................................... 21
3.18. Brokerage ................................................................... 21
3.19. Employees. .................................................................. 21
3.20. Insurance ................................................................... 22
3.21. Environmental Regulation .................................................... 22
3.22. Employee Benefit Plans. ..................................................... 23
3.23. Transactions with Affiliates ................................................ 25
3.24. [Intentionally Omitted.] .................................................... 25
3.25. Books and Records ........................................................... 25
3.26. Customer and Supplier Relations ............................................. 25
3.27. No Illegal Payments, Etc .................................................... 26
3.28. Year 2000 Compliance ........................................................ 26
3.29. Offering Memorandum ......................................................... 26
3.30. Disclosure .................................................................. 27
4. Representations, Warranties and Certain Other Agreements of the Investors. ......... 27
4.1. Representations, Warranties and Covenants ................................... 27
4.2. Legends ..................................................................... 28
5. Certain Covenants and Representations and Warranties. .............................. 28
5.1. General ..................................................................... 28
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5.2. Notices and Consents. ......................................... 28
5.3. Operation of Business ......................................... 29
5.4. Preservation of Business ...................................... 29
5.5. Full Access ................................................... 29
5.6. Notice of Developments ........................................ 29
5.7. Exclusivity ................................................... 30
5.8. The Acquisitions. ............................................. 30
6. Conditions to the Investors' Obligations at the Closing ............. 31
6.1. Representations and Warranties ................................ 31
6.2. Performance. .................................................. 32
6.3. Compliance Certificate. ....................................... 32
6.4. Certificate of Incorporation; By-laws ......................... 32
6.5. Acquisitions. ................................................. 32
6.6. Qualifications ................................................ 32
6.7. Proceedings and Documents ..................................... 33
6.8. Secretary's Certificate. ...................................... 33
6.9. Legal Opinion ................................................. 33
6.10. Financial Projections ......................................... 33
6.11. Stockholders Agreement ........................................ 33
6.12. Registration Rights Agreement. ................................ 33
6.13. Payment of Fees and Expenses .................................. 33
6.14. Debt Financing and Preferred Stock Financing .................. 34
6.15. Issuance of Shares to Monitor Company, Inc .................... 34
7. Conditions to the Company's Obligations at the Closing .............. 34
7.1. Representations and Warranties ................................ 34
7.2. Payment of Purchase Price ..................................... 34
7.3. Proceedings and Documents ..................................... 34
7.4. Qualifications ................................................ 34
7.5. Stockholders Agreement ........................................ 34
7.6. Acquisitions .................................................. 34
8. Affirmative Covenants of the Company and its Subsidiaries ........... 34
8.1. Financial and Other Information. .............................. 34
8.2. Confidentiality ............................................... 37
8.3. Expenses ...................................................... 37
8.4. Determination Event Fee ....................................... 38
8.5. Investor Consent Rights ....................................... 38
8.6. Redemption of Stock. .......................................... 38
9. Provisions Relating to Indemnification. ............................. 38
9.1. Indemnification ............................................... 38
9.2. Survival of Representations and Warranties .................... 39
9.3. Matters Involving Third Parties. .............................. 39
10. Termination. ........................................................ 41
10.1. Termination of Agreement ...................................... 41
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10.2. Effect of Termination ...................................... 42
11. Amended and Restated Shareholders Agreement ......................... 42
12. Notices ............................................................. 42
13. Reliance; Survival .................................................. 42
14. Third Party Beneficiary ............................................. 43
15. Assignment .......................................................... 43
16. Course of Dealing; Amendments, Waivers and Consents ................. 43
17. General ............................................................. 43
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EXHIBITS AND SCHEDULES
Exhibits
A - Investors
B - Amended and Restated Certificate of Incorporation
C - Stockholders Agreement
D - Registration Rights Agreement
Schedules
3.3 - Capitalization of the Company
3.4 - Subsidiaries of the Company
3.5 - Financial Statements
3.6 - Absence of Undisclosed Liabilities
3.7 - Absence of Certain Developments
3.8A - Title to Properties
3.8B - Leases
3.9 - Tax Matters
3.10 - Contracts and Commitments
3.11 - Defaults
3.12A - Protection of Intellectual Property
3.12B - Infringement of Intellectual Property
3.12C - Registration of Intellectual Property
3.12D - Licenses of Intellectual Property
3.13 - Effect of Transactions
3.14 - Governmental Consents and Approvals
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3.15 - Litigation
3.18 - Brokerage
3.19 - Employee Matters
3.20 - Insurance
3.21 - Environmental Matters
3.22 - Employee Benefit Plans
3.23 - Transactions with Affiliates
4.1.5 - Brokerage
4.1.6 - U.S. Citizens
8.1.4 - Preparation of Financial Statements
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Exhibit C
VERIDIAN CORPORATION
CLASS A COMMON STOCK
PURCHASE AGREEMENT
This Class A Common Stock Purchase Agreement, dated as of September 7,
1999, is among Veridian Corporation, a Delaware corporation (together with its
successors, the "Company"), and the Investors (as defined below).
RECITALS
WHEREAS, the Company desires to sell, and the Investors desire to
purchase shares of Class A Common Stock (as defined below);
WHEREAS, contemporaneously with the Closing, the Company proposes to
have certain Persons (the "Preferred Stock Investors") purchase shares of
redeemable preferred stock of the Company (the "Preferred Stock Financing");
WHEREAS, contemporaneously with the Closing, the Company will
consummate the acquisition of all of the outstanding equity interests in each of
(a) ERIM International, Inc., a Michigan corporation ("ERIM"), (b) MRJ Group,
Inc., a Delaware corporation ("MRJ"), and (c) Trident Data Systems, Inc., a
California corporation ("Trident"), as further described herein; and
WHEREAS, the Company proposes to enter into debt financing transactions
(the "Debt Financing Transactions") contemporaneously with the Closing, which
may include entering into a new credit facility, issuing high yield or other
debt securities in a private or public offering or engaging in other forms of
debt or mezzanine financing satisfactory to the Company and Investors;
NOW THEREFORE, in consideration of the premises and mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Company and the Investors hereby agree as
follows:
1. Definitions; Certain Rules of Construction. Certain capitalized terms
are used in this Agreement (as defined below) with the specific meanings defined
below in this Section 1. Except as otherwise explicitly specified to the
contrary or unless the context clearly requires otherwise, (a) the capitalized
term "Section" refers to sections of this Agreement, (b) the capitalized term
"Exhibit" refers to exhibits to this Agreement, (c) the capitalized term
"Schedule" refers to schedules to this Agreement, (d) references to a particular
Section include all subsections thereof, (e) the word "including" shall be
construed as "including without limitation," (f) references to a particular
statute or regulation include all rules and regulations thereunder and any
successor statute, rules or regulation, in each case as from time to time in
effect, (g) words in the singular or plural form include the plural and singular
form, respectively, (h) references to a particular Person include such Person's
successors and assigns to the extent not prohibited by this Agreement, and (i)
the phrase "made available to the Investors" means,
when referring to a document, that the Company has either (A) provided a copy of
such document to the Investors or, in the case of the MCP Investors, to MCP,
Ropes & ▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, as advisors to the MCP Investors, or (B)
has made such document available at its executive offices for review by the
Investors or, in the case of the MCP Investors, by MCP, Ropes & ▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP.
1.1. "1933 Act" means the Securities Act of 1933, as from time to time in
effect.
1.2. "1998 Financials" means the audited consolidated and unaudited
consolidating balance sheets of the Company and its Subsidiaries as at December
31, 1998 and the audited consolidated and unaudited consolidating statements of
income, cash flows and changes in stockholders' equity of the Company and its
Subsidiaries for the fiscal year then ended.
1.3. "1999 Financials" means the unaudited consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at June 30, 1999 and the
unaudited consolidated and consolidating statements of income, cash flows and
changes in stockholders' equity of the Company and its Subsidiaries for the
portion of the fiscal year then ended.
1.4. "Acquisition" is defined in Section 5.8.
1.5. "Acquisition Candidate" is defined in Section 5.8.
1.6. "Acquisition Document" is defined in Section 5.8.
1.7. "Action" means any claim, action, cause of action or suit (in contract
or tort or otherwise), litigation, arbitration, investigation, hearing, charge,
complaint, demand, notice or proceeding to, from, by or before any Governmental
Authority.
1.8. "Affiliate" means, with respect to any specified Person at any time,
(a) each Person directly or indirectly controlling, controlled by or under
direct or indirect common control with such specified Person at such time, (b)
each Person who is at the time in question an officer, director or direct or
indirect beneficial holder of at least 10% of any class of the outstanding
capital stock of such specified Person, (c) the Members of the Immediate Family
of (i) each officer, director or holder described in clause (b) above and (ii)
if such specified Person is a natural person, such specified Person, and (d)
each Person of which such specified Person or an Affiliate (as defined in
clauses (a) through (c) above) thereof shall, directly or indirectly,
beneficially own at least 10% of any class of outstanding capital stock or other
evidence of beneficial interest at such time; provided, however, that no
Investor shall be considered an Affiliate of the Company.
1.9. "Agreement" means this Class A Common Stock Purchase Agreement, as
amended and in effect from time to time.
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1.10. "Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms or could reasonably form, at
the time of any such determination, the basis for any specified consequence.
1.11. "Business Day" shall mean a day other than a Saturday or Sunday or a
day on which banks in Boston, Massachusetts or Alexandria, Virginia are
authorized or required to close.
1.12. "By-laws" means, with respect to any Person (other than an
individual), all by-laws relating to such Person, as from time to time in
effect.
1.13. "CERCLA" means the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
1.14. "Certificate of Incorporation" means the Amended and Restated
Certificate of Incorporation of the Company as attached hereto as Exhibit B, as
in effect at the Closing and as thereafter amended and in effect from time to
time.
1.15. "Charter" means the certificate or articles of incorporation or
organization, statute, constitution, joint venture, limited liability company or
partnership agreement or articles or other charter documents of any Person
(other than an individual), each as from time to time in effect.
1.16. "Class A Common Stock" means the Company's Class A Common Stock, par
value $.0001 per share.
1.17. "Class B Common Stock" means the Company's Class B Common Stock, par
value $.0001 per share.
1.18. "Closing" is defined in Section 2.3.
1.19. "Closing Date" is defined in Section 2.3.
1.20. "Code" means the federal Internal Revenue Code of 1986 or any
successor statute, and the rules and regulations thereunder, and in the case of
any referenced section of any such statute, rule or regulation, any successor
section thereto, collectively and as from time to time amended and in effect.
1.21. "Common Stock" means the Class A Common Stock and the Class B Common
Stock, collectively.
1.22. "Company" is defined in the preamble to this Agreement.
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1.23. "Company Plan" is defined in Section 3.22.
1.24. "Compensation" means, with respect to any Person, all salaries,
compensation, remuneration or bonuses of any character, and medical, surgical,
dental, hospital, disability, unemployment, retirement, pension, vacation,
insurance or fringe benefits of any kind, or other payments of any kind
whatsoever, made directly or indirectly by the Company or any of its
Subsidiaries to such Person or Members of the Immediate Family of such Person.
1.25. "Contractual Obligation" means, with respect to any Person, any
contract, agreement, deed, mortgage, lease, permit, license, commitment,
undertaking, arrangement or understanding, written or oral, or other document or
instrument (including any document or instrument evidencing or otherwise
relating to any Debt but excluding the Charter or By-laws of such Person) to
which or by which such Person is a party or otherwise subject or bound or to
which or by which any property or right of such Person is subject or bound.
1.26. "Conversion Shares" means the shares of Class B Common Stock issued
or issuable upon conversion of the Class A Common Stock.
1.27. "Debt" means, with respect to any Person, all obligations (including
all such obligations in respect of principal, accrued interest, penalties, fees
and premiums) of such Person (a) for borrowed money (including overdraft
facilities), (b) evidenced by notes, bonds, debentures or similar Contractual
Obligations, (c) for the deferred purchase price of property, goods or services
(other than trade payables or accruals incurred in the Ordinary Course of
Business), (d) under capital leases, (e) in respect of letters of credit and
bankers' acceptances and (f) in the nature of Guarantees of the obligations
described in clauses (a) through (e) above of any other Person.
1.28. "Debt Financing Transactions" is defined in the recitals to this
Agreement.
1.29. "Employee Plan" means any plan, program, agreement, policy or
arrangement, whether or not reduced to writing, that is (a) a Welfare Plan; (b)
a pension benefit plan within the meaning of Section 3(2) of ERISA; (c) a stock
bonus, stock purchase, stock option, restricted stock, stock appreciation right
or similar equity-based plan; or (d) any other deferred-compensation,
retirement, welfare-benefit, bonus, incentive or fringe-benefit plan, program or
arrangement covering a single individual or a group of individuals.
1.30. "Enforceable" means, with respect to any Contractual Obligation
stated to be Enforceable by or against any Person, that such Contractual
Obligation is a legal, valid and binding obligation enforceable by or against
such Person in accordance with its terms, except to the extent that enforcement
of the rights and remedies created thereby is subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application
affecting the rights and remedies of creditors and to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
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1.31. "Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment, including the Federal Occupational Health and
Safety Act.
1.32. "ERIM" is defined in the Recitals.
1.33. "ERISA" means the federal Employee Retirement Income Security Act
of 1974.
1.34. "Financials" means each of:
(a) the audited consolidated and unaudited consolidating balance
sheets of the Company and its Subsidiaries as at December 31, 1996 and
1997, and the audited consolidated and unaudited consolidating
statements of income, cash flows and changes in stockholder's equity of
the Company and its Subsidiaries for the fiscal years then ended;
(b) the 1998 Financials; and
(c) the 1999 Financials.
1.35. "GAAP" means United States generally accepted accounting
principles as set forth in the opinions and pronouncements of the Accounting
Principles Board, the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board and as in effect for the relevant time
period.
1.36. "Government Contract" means with respect to any Person, any
Contractual Obligation between such Person and the United States federal
government or any department, agency or instrumentality thereof, and any
Contractual Obligation in the nature of a subcontract at any tier held by such
Person under any such Contractual Obligation with respect to the performance of
which a third party is primarily responsible.
1.37. "Government Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
1.38. "Governmental Authority" means any United States federal, state
or local or any foreign government, governmental authority, regulatory or
administrative agency, governmental commission, court or tribunal (or any
department, bureau or division thereof) or any arbitral body.
1.39. "Guarantee" means, with respect to any Person, (a) any guarantee
of the payment or performance of, or any contingent obligation in respect of,
any Debt or other obligation of any other Person, (b) any other arrangement
whereby credit is extended to any obligor (other than such Person) on the basis
of any promise or undertaking of such Person (i) to pay the Debt of
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such obligor, (ii) to purchase any obligation owed by such obligor, (iii) to
purchase or lease assets (other than inventory in the Ordinary Course of
Business) under circumstances that would enable such obligor to discharge one or
more of its obligations, or (iv) to maintain the capital, working capital,
solvency or general financial condition of such obligor, and (c) any liability
as a general partner of a partnership or as a venturer in a joint venture in
respect of Debt or other obligations of such partnership or venture.
1.40. "Hazardous Material" means any pollutant, toxic or hazardous
material or waste, including any "hazardous substance" or "pollutant" or
"contaminant" as defined in Section 101(14) of CERCLA or any other Environmental
Law or regulated as toxic or hazardous under RCRA or any other Environmental
Law.
1.41. "HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976.
1.42. "Indemnified Party" is defined in Section 9.3.
1.43. "Indemnifying Party" is defined in Section 9.3.
1.44. "Intellectual Property" means, with respect to any Person, all of
such Person's right, title and interest in and to (a) all proprietary rights of
every kind and nature, including patents, copyrights, trademarks, service marks,
trade dress, logos, trade secrets and proprietary information (together with all
translations, adaptations, derivations and combinations thereof and all goodwill
associated therewith), (b) all applications for any of the foregoing and (c) all
licenses and agreements granting rights related to any of the foregoing.
1.45. "Investor" means each of the investors listed on Exhibit A,
together with their respective successors and assigns.
1.46. "Investor Indemnified Liabilities" is defined in Section 9.1.
1.47. "Investor Indemnified Person" is defined in Section 9.1.
1.48. "IRS" is defined in Section 3.9(c).
1.49. "Knowledge" means actual knowledge of a specified Person after
reasonable investigation; provided, however, that "Knowledge of the Company"
means the actual knowledge, after reasonable investigation of each of (a) the
Company's President and Chief Executive Officer, Chief Financial Officer, Senior
Vice President for Strategy and Corporate Development, Senior Vice President of
Organization Capabilities and Senior Vice President for Communications and
Policy, (b) the general manager and senior financial officer of each of the
Company's and its Subsidiaries' material business units, (c) the President of
each of the Company's Subsidiaries and (d) to the extent not previously named,
each member of the Company's Executive Leadership Team.
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1.50. "Legal Requirement" means any United States federal, state or
local or foreign law, statute, standard, ordinance, code, order, rule,
regulation, resolution or promulgation, or any order, judgment or decree of any
Governmental Authority, or any license, franchise, permit or similar right
granted under any of the foregoing, or any similar provision having the force or
effect of law.
1.51. "Lien" means any mortgage, pledge, lien, security interest,
charge, adverse or prior claim, encumbrance, restriction on transfer,
conditional sale or other title retention device or arrangement (including,
without limitation, a capital lease), transfer for the purpose of subjection to
the payment of any Debt or other obligation, or restriction on the creation of
any of the foregoing, whether relating to any property or right or the income or
profits therefrom; provided, however, that the term "Lien" shall not include (i)
statutory liens for Taxes to the extent that the payment thereof is not in
arrears or otherwise due, (ii) encumbrances in the nature of zoning
restrictions, easements, rights or restrictions of record on the use of real
property if the same do not impair its use in the conduct of the business of the
Company and its Subsidiaries as currently conducted and as currently proposed to
be conducted, (iii) statutory or common law liens to secure landlords, lessors
or renters under leases or rental agreements confined to the premises rented to
the extent that no payment or performance under any such lease or rental
agreement is in arrears or is otherwise due, (iv) deposits or pledges made in
connection with, or to secure payment of, worker's compensation, unemployment
insurance, old age pension programs mandated under applicable Legal Requirements
or other social security and (v) statutory or common law liens in favor of
carriers, warehousemen, mechanics and materialmen, statutory or common law liens
to secure claims for labor, materials, equipment or supplies and other like
liens, which secure obligations to the extent that payment thereof is not in
arrears or otherwise due.
1.52. "Material Adverse Effect" means any change in or effect on the
business, operations, assets, prospects or condition (financial or otherwise) of
the Company or any of its Subsidiaries which, when considered either singly or
in the aggregate together with all other adverse changes or effects with respect
to which such phrase is used in this Agreement, is, or poses a material risk of
being, materially adverse to the business, operations, assets, prospects or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole.
1.53. "MCP" means Monitor Clipper Partners, Inc., a Delaware
corporation.
1.54. "MCP Investors" means Monitor Clipper Equity Partners, Inc. and
Monitor Clipper Equity Partners (Foreign), L.P., each a Delaware limited
partnership.
1.55. "Members of the Immediate Family" means, with respect to any
natural person, (a) each spouse, parent, brother, sister or child of such
natural person; (b) each spouse of any Person described in clause (a) above; (c)
each child of any Person described in clauses (a) or (b) above; (d) each trust
created solely for the benefit of one or more of the Persons described in
clauses (a) through (c) above; and (e) each custodian or guardian of any
property of one or more
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of the Persons described in clauses (a) through (d) above in his or her capacity
as such custodian or guardian.
1.56. "MRJ" is defined in the Recitals.
1.57. "Ordinary Course of Business" means the ordinary course of
business of the Company and its Subsidiaries consistent with past custom and
practice for the applicable business operations of the Company and its
Subsidiaries, including past practice with respect to quantity and frequency,
the standard employment and payroll policies and practices of the Company and
its Subsidiaries, and the practice with respect to management of working capital
of the Company and its Subsidiaries.
1.58. "Person" means any natural person, corporation, association,
partnership, limited liability company, joint venture, joint stock or other
company, business trust, trust, organization, business or government or any
governmental agency or political subdivision thereof.
1.59. "Post-Closing Tax Period" means any Tax period (or portion
thereof) ending after the Closing Date.
1.60. "Pre-Closing Tax Period" means any Tax period (or portion
thereof) ending on or before the Closing Date.
1.61. "Preferred Stock Financing" is defined in the Recitals.
1.62. "Preferred Stock Investors" is defined in the Recitals.
1.63. "RCRA" means the federal Resource Conservation and Recovery Act,
42 U.S.C. Section 690, et seq.
1.64. "Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Closing Date, in the Form of Exhibit D hereto, as
amended and in effect from time to time, among the Company and the Investors.
1.65. "Securities" is defined in Section 4.1.2.
1.66. "Shares" is defined in Section 2.2.
1.67. "Stockholders Agreement" means the Stockholders Agreement dated
as of the Closing Date, in the form of Exhibit C hereto, as amended and in
effect from time to time, among the Company, the Investors and certain other
stockholders of the Company party thereto.
1.68. "Subsidiary" means any Person of which the Company (or other
specified Person) shall at the time, directly or indirectly through one or more
Subsidiaries, (a) own at least 50% of the outstanding capital stock (or other
shares of beneficial interest) entitled to vote generally,
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(b) hold at least 50% of the partnership, limited liability company, joint
venture or similar interests or (c) be a general partner, managing member or
joint venturer; provided, that none of Trident, MRJ or ERIM shall be considered
a Subsidiary of the Company for purposes of Section 3 hereof.
1.69. "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Section 59A of
the Code), customs duties, capital stock, franchise, profits, withholding,
social security (or similar taxes, including FICA), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not.
1.70. "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto and any amendment thereof.
1.71. "Third-Party Claim" is defined in Section 9.3.
1.72. "Transaction Documents" means each of (a) this Agreement, (b) the
Certificate of Incorporation, (c) the Stockholders Agreement, (d) the
Registration Rights Agreement, (e) the Company's By-laws, (f) Contractual
Obligations relating to the Preferred Stock Financing and the Debt Financing
Transactions, (g) the Acquisition Documents, (h) the Voting Agreements between
the Company, Monitor Clipper Equity Partners, L.P. ("MCEP"), Monitor Clipper
Equity Partners (Foreign), L.P. ("MCEP(F)") and each of CIBC WG Argosy Merchant
Fund 2, L.L.C. and Co-Investment Merchant Fund 3, LLC, (i) the Assignment
Agreement among MCEP, MCEP(F), the Company, Monitor Company, Inc., and Monitor
Consulting, L.P. and (j) any other Contractual Obligation entered into or
otherwise executed and delivered by the Company pursuant to any Contractual
Obligation or other document listed in clauses (a) through (i) above.
1.73. "Trident" is defined in the Recitals.
1.74. "Welfare Plan" means a welfare benefit plan within the meaning of
Section 3(1) of ERISA.
2. Authorization, Sale and Purchase of Class A Common Stock.
2.1. Authorization of Class A Common Stock. The Company has authorized
the sale and issuance of up to 5,500,000 shares of Class A Common Stock pursuant
to this Agreement. The rights, powers, privileges, and preferences of the Class
A Common Stock are (or will be prior to the closing) as set forth in the
Certificate of Incorporation attached hereto as Exhibit B.
2.2. Sale and Purchase of Class A Common Stock. Subject to the terms
and conditions of this Agreement and on the basis of the representations,
warranties, covenants and
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indemnities set forth herein, the Company agrees to sell to each Investor, and
each Investor agrees to purchase from the Company at the Closing, the number of
shares of Class A Common Stock (collectively, the "Shares") set forth opposite
such Investor's name on Exhibit A for a purchase price of $20.00 per share of
Class A Common Stock.
2.3. The Closing. The purchase and sale of the Shares will take place
at a closing (the "Closing") at 11:00 A.M. Washington, D.C. time on September 7,
1999 (the "Closing Date") at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or at such other
place and time as the parties shall mutually agree but in any event no later
than 3 Business Days following the satisfaction or waiver of all conditions
specified in Sections 6 and 7 of this Agreement. At the Closing, the Company
will deliver to each Investor a certificate or certificates, registered in such
Investor's name, representing the number of shares of Class A Common Stock to be
acquired by such Investor pursuant to this Agreement, against payment by such
Investor to the Company of the purchase price in lawful money of the United
States of America by wire transfer of immediately available funds to an account
of the Company specified by the Company by notice to the Investors received by
them no less than two Business Days prior to the Closing.
3. Representations and Warranties of the Company. In order to induce the
Investors to enter into this Agreement and to purchase the Shares hereunder, the
Company hereby represents and warrants, as of the Closing Date, to each Investor
that:
3.1. Organization and Corporate Power. The Company is a corporation (a)
duly organized, validly existing and in good standing under the laws of Delaware
and (b) qualified to do business as a foreign corporation in each jurisdiction
in which such qualification is required and in which the failure to so qualify
has had or could reasonably be expected to have a Material Adverse Effect. The
Company has all required corporate power and authority (i) to own its property,
(ii) to carry on its business as presently conducted or proposed to be conducted
and (iii) to carry out the transactions contemplated hereby and by the
Transaction Documents. The Company has made available to the Investors correct
and complete copies of the Charter and By-laws of the Company, as amended and in
effect.
3.2. Authorization. The execution, delivery and performance of each of
the Transaction Documents have been duly authorized by all necessary corporate
action of the Company and its Subsidiaries. Each of the Transaction Documents
has been duly executed and delivered by the Company, and is Enforceable against
the Company.
3.3. Capitalization. The entire authorized capital stock of the Company
consists of 1,000,000 shares of Preferred Stock, of which no such shares are
issued and outstanding, and 24,497,500 shares of Series B Common Stock, of which
6,192,844 shares are issued and outstanding. Schedule 3.3 sets forth each holder
of record of issued and outstanding shares of capital stock of the Company and
the number of such shares held by such holder as of the date hereof and
immediately prior to the Closing. The Company holds no shares of its capital
stock in
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its treasury. The Company has reserved (a) 5,500,000 shares of Class A Common
Stock for issuance hereunder, (b) 2,500 shares of Class A Common Stock for
issuance to the Monitor Company, (c) 740,946 shares of Class B Common Stock for
issuance upon exercise of stock options to be issued by the Company to
directors, officers and employees of the Company pursuant to the Company's stock
option plans and (d) 7,192,813 shares of Class B Common Stock for issuance upon
conversion of the Class A Common Stock into Class B Common Stock. All of the
issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and non-assessable. When issued in
accordance with the terms of this Agreement, the Shares will be duly authorized,
validly issued, fully paid and non-assessable. Upon issuance in accordance with
the terms of the Certificate of Incorporation, the Conversion Shares will be
duly authorized, validly issued, fully paid and non-assessable. Except as set
forth on Schedule 3.3: (a) there are no outstanding warrants, options or other
rights or Contractual Obligations to purchase or acquire from the Company, or
exchangeable for or convertible into, any securities of the Company; (b) there
are no preemptive or other similar rights with respect to the issuance or sale
by the Company of the Shares or the Conversion Shares of any other shares of its
capital stock; (c) except as provided in the Stockholders Agreement or imposed
by applicable securities laws, there are no Liens on, or other Contractual
Obligations relating to, the ownership, transfer or voting of any shares of
capital stock of the Company; and (d) there are no existing rights with respect
to registration under the 1933 Act of any securities of the Company or any of
its Subsidiaries. None of the Company or any of its Subsidiaries has violated
the 1933 Act, any state blue sky or securities laws or any other Legal
Requirement or the preemptive or other similar rights of any Person in
connection with the issuance of any of its securities. Except as set forth on
Schedule 3.3, there is no Contractual Obligation, or provision in the Charter or
By-laws, of the Company or any of its Subsidiaries which (A) obligates the
Company or any of its Subsidiaries to purchase or redeem, or make any payment in
respect of, any shares of capital stock, or any securities exchangeable for or
convertible into any shares of capital stock, or other equity interests of the
Company or any of its Subsidiaries, (B) provides for any stock appreciation or
similar right or (C) grants any right to share in the equity, income, revenues
or cash flow of the Company or any of its Subsidiaries other than pursuant to
the Veridian 1998 Stock Incentive Plan as in effect on the date hereof.
3.4. Subsidiaries. Schedule 3.4 sets forth for each of the Company's
Subsidiaries, its name and jurisdiction of organization. Except as disclosed on
Schedule 3.4, the Company owns all of the capital stock or other equity
interests in each of its Subsidiaries, free and clear of all Liens and
Contractual Obligations of any kind. Each such Subsidiary is (a) duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
organization and (b) qualified to do business in each jurisdiction in which such
qualification is required and in which the failure to so qualify has had or
could reasonably be expected to have a Material Adverse Effect. Each such
Subsidiary has full power and authority and all licenses, permits, and
authorizations necessary to (i) own its property and (ii) to carry on its
business as presently conducted or proposed to be conducted. The Company has
delivered to the Investors correct and complete copies of the Charter and
By-laws of each such Subsidiary, as amended and in effect. All of the issued and
outstanding shares of capital stock or other equity interests of each such
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Subsidiary have been duly authorized and are validly issued, fully paid, and
nonassessable. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other Contractual Obligations that could require the Company or any of its
Subsidiaries to sell, transfer, or otherwise dispose of any capital stock or
other equity interests of any of such Subsidiaries or that could require any
such Subsidiary to issue, sell, or otherwise cause to become outstanding any of
its own capital stock or other equity interests. There are no voting trusts,
proxies, or other agreements or understandings with respect to the ownership,
transfer or voting of any capital stock or equity interests of any such
Subsidiary. None of such Subsidiaries is in default under or in violation of any
provision of its Charter or By-laws. None of the Company and its Subsidiaries
controls directly or indirectly or has any direct or indirect equity
participation in or ownership interest in any Person which is not a Subsidiary
of the Company.
3.5. Financial Statements. The Company has delivered the Financials to
the Investors. Except as disclosed on Schedule 3.5, the Financials (a) are
complete and correct in all material respects and are in accordance with the
books and records of the Company and its Subsidiaries, (b) have been prepared in
accordance with GAAP, consistently applied, and (c) fairly present, in all
material respects, the consolidated and consolidating financial position of the
Company and its Subsidiaries as at the respective dates thereof and the
consolidated and consolidating results of the operations of the Company and its
Subsidiaries and changes in financial position for the respective periods
covered thereby; provided, however, that the 1999 Financials are subject to
normal year-end audit adjustments (none of which, to the Knowledge of the
Company, will be material) and lack the footnotes required by GAAP.
3.6. Absence of Undisclosed Liabilities. Except as, and to the extent,
reserved against in the Financials or as disclosed in the notes to the 1998
Financials or on Schedule 3.6, and except for liabilities arising in the
Ordinary Course of Business since December 31, 1998 (none of which has had or
could reasonably be expected to have a Material Adverse Effect), none of the
Company or any of its Subsidiaries has incurred any material accrued or
contingent liability arising out of any transaction or state of facts existing
prior to the date hereof, and, to the Knowledge of the Company, there is no
Basis for any such material liability.
3.7. Absence of Certain Developments. Except for the matters disclosed
on Schedule 3.7 (which matters have not had and could not reasonably be expected
to have a Material Adverse Effect), the Acquisitions, the issuance of Class A
Common Stock pursuant to this Agreement, the Preferred Stock Financing and the
Debt Financing Transactions, since December 31, 1998:
(a) the business of the Company and its Subsidiaries has been
conducted in all material respects only in the Ordinary Course of
Business;
(b) none of the Company or its Subsidiaries has become liable in
respect of any Guarantee or has incurred or otherwise become liable in
respect of any Debt, except
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for borrowings, leases, letters of credit and bankers' acceptances in
the Ordinary Course of Business under credit and lease facilities in
existence on December 31, 1998;
(c) none of the Company or any of its Subsidiaries has mortgaged,
pledged or subjected to any Lien any of their respective property,
business or assets, except for purchase money or similar security
interests granted in connection with the purchase of equipment or
supplies in the Ordinary Course of Business in an amount not exceeding
$500,000 in the aggregate;
(d) none of the Company or any of its Subsidiaries has made any
declaration, setting aside or payment of any dividend or other
distribution with respect to, or repurchase of, any of their respective
capital stock or other equity interests;
(e) none of the Company or any of its Subsidiaries has (i)
acquired or leased from any other Person any material assets, or sold
or leased to any other Person or otherwise disposed of any material
assets (in each case except for assets acquired or sold in the Ordinary
Course of Business in connection with goods and services provided to
customers); (ii) entered into any Contractual Obligation relating to
(A) the purchase or sale of any capital stock, partnership interest or
other equity interest in any Person, (B) the purchase of assets
constituting a business or (C) any merger, consolidation or other
business combination; (iii) entered into or amended any lease of real
property or material personal property (whether as lessor or lessee);
(iv) canceled or compromised any Debt or claim other than accounts
receivable in the Ordinary Course of Business; (v) sold, transferred,
licensed or otherwise disposed of any material intangible assets other
than in the Ordinary Course of Business; (vi) waived or released any
right of substantial value; (vii) instituted, settled or agreed to
settle any material Action; or (viii) entered into or consummated any
transaction with any Affiliate in an amount in excess of $20,000;
(f) to the Knowledge of the Company, there has been no event which
poses a material risk that the Company and its Subsidiaries will not be
able to operate after the Closing in accordance with the financial
projections previously furnished to the Investors;
(g) there has been no loss, destruction or damage to any material
item of property of the Company or any of its Subsidiaries, whether or
not insured, which has had or could reasonably be expected to have a
Material Adverse Effect;
(h) none of the Company or any of its Subsidiaries has made any
material changes in the rate of Compensation payable or paid, or agreed
or orally promised to pay, conditionally or otherwise, any extra
Compensation, or severance or vacation pay, to any director, officer,
employee, consultant or agent of the Company or any of its Subsidiaries
whose Compensation exceeded $200,000 in the fiscal year ended December
31, 1998;
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(i) there has been no material labor trouble (including any work
slowdown, stoppage or strike) involving the Company or any of its
Subsidiaries or any material change in any of their respective
personnel or the terms and conditions of the employment of such
personnel;
(j) none of the Company or any of its Subsidiaries has made any
change in (x) its methods of accounting or accounting practices, except
as required by GAAP, or (y) its pricing policies or payment or credit
practices or failed to pay any creditor any amount owed to such
creditor when due or granted any extensions of credit other than in the
Ordinary Course of Business;
(k) none of the Company or any of its Subsidiaries has terminated
or closed any material facility, business or operation;
(l) other than in the Ordinary Course of Business, none of the
Company or any of its Subsidiaries has made any loan, advance or
capital contributions to, or any other investment in, any Person;
(m) none of the Company or any of its Subsidiaries has adopted or
increased any benefits under any Employee Plan in any material manner;
(n) none of the Company or any of its Subsidiaries has written up
or written down any of its respective material assets;
(o) none of the Company or any of its Subsidiaries has terminated
or amended, or failed in any material respect to perform obligations or
suffered the occurrence of any default under any material Contractual
Obligation, which default has not been cured;
(p) none of the Company or any of its Subsidiaries has entered
into any Contractual Obligation to do any of the things referred to
elsewhere in this Section 3.7; and
(q) to the Knowledge of the Company, nothing has occurred which
has had or could reasonably be expected to have a Material Adverse
Effect.
3.8. Title to Properties. Except as disclosed on Schedule 3.8A, the
Company and its Subsidiaries have good and marketable title to (i) all
properties (other than leased properties) and assets reflected on the audited
balance sheet contained in the 1998 Financials or acquired after the date
thereof and (ii) all of its properties and assets, free and clear of all Liens.
All material machinery and equipment included in such properties which is
necessary to the business of the Company or any of its Subsidiaries is in good
condition and repair in all material respects except for reasonable wear and
tear. Schedule 3.8A lists all real property owned by the Company or any of its
Subsidiaries. Schedule 3.8B (i) lists, and summarizes the material terms of, all
leases
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of real property of the Company and its Subsidiaries and (ii) lists all leases
of personal property having a cost or capital lease obligation in excess of
$500,000, in each case to which the Company or any of its Subsidiaries is a
party (whether as lessor or lessee). The Company has made available to the
Investors correct and complete copies of all leases listed on Schedule 3.8B, in
each case as amended and in effect. All leases of real or personal property to
which the Company or any of its Subsidiaries is a party are fully effective and
afford the party thereto peaceful and undisturbed possession of the subject
matter of the lease. To the Knowledge of the Company, the counterparties to such
leases are not in breach of or in default of any of such leases and no Basis
exists that with the lapse of time or the giving of notice, or both, could give
rise to a breach or default under any of such leases, in each case which has had
or could reasonably be expected to have a Material Adverse Effect. To the
Knowledge of the Company, neither the Company nor any of its Subsidiaries is in
violation of any Legal Requirement applicable to the operation of owned or
leased properties that is likely to impede the normal operation of the business
of the Company or any of its Subsidiaries, and neither the Company nor any of
its Subsidiaries has received any written notice of violation with which it has
not complied, in each case which has had or could reasonably be expected to have
a Material Adverse Effect.
3.9. Tax Matters. Except as disclosed on Schedule 3.9:
(a) The provision made for Taxes (as opposed to any provision
established to reflect timing differences between book and tax income)
on the face of the consolidated balance sheet (rather than in any notes
thereto) included in the 1999 Financials is sufficient for the payment
of all Taxes for all years and periods ending on or prior to June 30,
1999. Since December 31, 1998, the Company and its Subsidiaries have
not incurred any Taxes, except for Taxes incurred in the Ordinary
Course of Business which have been properly reflected in the books and
records of the Company and its Subsidiaries.
(b) All Tax Returns which were required to be filed prior to the
date hereof by or on behalf of the Company or any of its Subsidiaries
were timely filed and were true and correct in all material respects at
the time of filing. All Taxes owed by the Company or any of its
Subsidiaries (whether or not shown on any Tax Return) have been paid or
adequately accrued and will be paid or adequately accrued through the
Closing Date. None of the Company or any of its Subsidiaries has
received any notice of any claim by any taxing authority in any
jurisdiction where the Company or any of its Subsidiaries does not file
Tax Returns that it is or may be subject to taxation by such
jurisdiction. To the Company's Knowledge, there are no Liens on any of
the assets or properties of the Company or any of its Subsidiaries that
have arisen in connection with any failure (or alleged failure) to pay
any Tax.
(c) Except as set forth on Schedule 3.9, no income Tax Returns of
the Company or any of its Subsidiaries have been audited by the
Internal Revenue Service
-15-
(the "IRS") with respect to a taxable year for which the period for
assessment is still open. Except as set forth on Schedule 3.9, none of
the Company or any of its Subsidiaries has received from the IRS or any
other authority (a) any notice of underpayment of Taxes or other
deficiency which has not been paid or (b) any objection to any Tax
Return filed by the Company or any of its Subsidiaries for any period
which has not been fully resolved, and the Company has no Knowledge of
any other audit, dispute, investigation or claim concerning any
liability with respect to Taxes of the Company or any of its
Subsidiaries which has not been resolved and any deficiency paid.
Except as set forth on Schedule 3.9, there are no agreements or waivers
outstanding which extend the statutory period of limitations applicable
to any Tax Return required to be filed by the Company or any of its
Subsidiaries, and there are no agreements outstanding which extend the
period of time with respect to any Tax assessment or deficiency.
(d) Except as set forth on Schedule 3.9, none of the Company or
any of its Subsidiaries is a party to any Tax allocation or sharing
agreement, and none of the Company or any of its Subsidiaries has been,
a member of an affiliated group filing a consolidated federal income
Tax Return. None of the Company or any of its Subsidiaries has any
liability for the Taxes of any other Person under Treasury Regulation
Section 1502-6 (or similar Legal Requirement), whether as a transferee
or successor, by contract, or otherwise.
(e) The Company and its Subsidiaries have made available to the
Investors true, correct and complete copies of all federal income Tax
Returns, and has made available to the Investors true, correct and
complete copies of all other Tax Returns, filed by them and their
predecessor entities with taxing authorities since December 31, 1994
and all requests for extensions or waivers and notices or claims given
or received with respect thereto.
(f) The Company and its Subsidiaries have complied in all
material respects with all rules of the IRS and each appropriate state,
local and foreign taxing authority with respect to the reporting of
tips and other wages of the employees of the Company or any of its
Subsidiaries under state law and the applicable provisions of the Code.
The Company and its Subsidiaries have withheld and paid to, or will
cause to be paid to, the IRS or the appropriate state, local or foreign
taxing authority all amounts required to be withheld from the wages of
the employees of the Company or any of its Subsidiaries under state law
and the applicable provisions of the Code, and any payments made to any
independent contractors, creditors, stockholders or other third
parties, and the Company and its Subsidiaries will continue to do so
with respect to all wages and other payments paid by them.
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(g) Neither the Company nor any Subsidiary of the Company nor any
other Person on behalf of the Company or any of its Subsidiaries has
entered into any agreement or consent pursuant to Section 341(f) of the
Code.
(h) Neither the Company nor any Subsidiary of the Company will be
required to include any adjustment in taxable income for any
Post-Closing Tax Period under Section 481(c) of the Code (or any
similar Legal Requirement) as a result of any change in method of
accounting for a Pre-Closing Tax Period or pursuant to the provisions
of any agreement entered into with any Governmental Authority with
regard to the Tax liability of the Company or any of its Subsidiaries
for any Pre-Closing Tax Period.
3.10. Contracts and Commitments. Except for the Contractual Obligations
listed on Schedule 3.10, copies of which have been made available to the
Investors, none of the Company or any of its Subsidiaries has (a) any
Contractual Obligation (other than the Transaction Documents) which involves by
its terms obligations of or to the Company or any of its Subsidiaries in excess
of $1,000,000 annually or $5,000,000 in the aggregate over the period for which
such Contractual Obligation is effective or (b) any employment contracts
(including contracts with any common law employee, agent or independent
contractor), noncompetition agreements, management agreements, partnership
agreements, joint venture agreements, limited liability company agreements,
stock redemption or purchase agreements, financing agreements, distribution
right agreements, royalty agreements, franchise agreements, marketing
agreements, licenses under which the Company or any of its Subsidiaries is
licensee or licensor, leases of real or personal property or pension,
profit-sharing, retirement or stock option plans, in each case which involves by
its terms a commitment in excess of $500,000 or is otherwise material to the
business of the Company and its Subsidiaries.
3.11. No Defaults. Except as disclosed on Schedule 3.11, none of the
Company or any of its Subsidiaries is in default (a) under its Charter or
By-laws, or (b) if such default has had or could reasonably be expected to have
a Material Adverse Effect, any Contractual Obligation or Legal Requirement to
which it is a party or by which it or any of its property is bound or affected
or with respect to any Government Order. Except as disclosed on Schedule 3.11,
to the Knowledge of the Company, there does not exist any Basis which after
notice, lapse of time, or both, could constitute a default by the Company or any
of its Subsidiaries under any of the foregoing which could reasonably be
expected to have a Material Adverse Effect. Except as disclosed on Schedule
3.11, none of the Company or any of its Subsidiaries is in breach of any
warranty agreements, which breach could reasonably be expected to have a
Material Adverse Effect. To the Knowledge of the Company, no third party is in
default under any Contractual Obligation to which the Company or any of its
Subsidiaries is a party or by which any of their respective property is
affected, which default could reasonably be expected to have a Material Adverse
Effect.
-17-
3.12. Intellectual Property.
(a) The Company and its Subsidiaries own or have the right to use
pursuant to license, sublicense, agreement or permission all
Intellectual Property that is material to the operation of the business
of the Company and its Subsidiaries as now conducted and proposed to be
conducted. Except as disclosed on Schedule 3.12A, the Company and each
of its Subsidiaries have taken all action which it has determined to be
reasonably necessary to maintain and protect each such item of
Intellectual Property that the Company or its Subsidiaries own or use,
including maintaining any registrations thereof.
(b) Except as disclosed on Schedule 3.12B, to the Knowledge of
the Company, none of the Company or any of its Subsidiaries has
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with, any Intellectual Property rights of any third
party, and none of the Company or any of its Subsidiaries or any of
their respective directors and officers (and employees with
responsibility for Intellectual Property matters) has ever received any
charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation (including
any claim that the Company or any of its Subsidiaries must license, or
refrain from using, any Intellectual Property rights of any third
party). Except as disclosed on Schedule 3.12B, to the Knowledge of the
Company, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with, any Intellectual
Property rights of the Company or any of its Subsidiaries.
(c) Schedule 3.12C identifies (i) each registration which has
been issued to the Company or any of its Subsidiaries with respect to
any of their respective Intellectual Property, (ii) each pending
application for registration which the Company or any of its
Subsidiaries has made with respect to any of their respective
Intellectual Property and (iii) each Contractual Obligation which the
Company or any of its Subsidiaries has granted to any third party with
respect to any of their respective Intellectual Property (together with
any exceptions), other than Intellectual Property rights granted
pursuant to Government Contracts that are required or permitted by
standard, published government clauses. The Company and its
Subsidiaries have made available to the Investors correct and complete
copies of all such registrations, applications and Contractual
Obligations, in each case as amended and in effect, and have made
available to the Investors correct and complete copies of all other
written documentation evidencing ownership and prosecution (if
applicable) of each such item. Schedule 3.12C also identifies each
trade name or unregistered trademark and service ▇▇▇▇ used by the
Company or any of its Subsidiaries in connection with its business.
With respect to each item of Intellectual Property identified on
Schedule 3.12C:
(A) the Company or its Subsidiaries possess all right, title,
and interest in and to such item, free and clear of any Lien or
license, other than licenses
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granted pursuant to Government Contracts; to Governmental
Authorities that are required or permitted by standard, published
government clauses;
(B) such item is not subject to any outstanding Government
Order, and no Action is pending or, to the Knowledge of the
Company, is threatened, which challenges the legality, validity,
enforceability, use or ownership of such item; and
(C) none of the Company or any of its Subsidiaries has agreed
to indemnify any Person for or against any interference,
infringement, misappropriation or other conflict with respect to
such item.
(d) Schedule 3.12D identifies each item of Intellectual
Property that any third party owns and that the Company or any of
its Subsidiaries uses pursuant to any Contractual Obligation other
than (A) Intellectual Property consisting of commercially
available, over-the counter, "shrink-wrap" software used in the
Ordinary Course of Business and (B) Intellectual Property rights
granted pursuant to Government Contracts to Governmental
Authorities that are required or permitted by standard, published
government clauses. Except as disclosed on Schedule 3.12D, none of
the Company or any of its Subsidiaries pays royalties for the use
of such Intellectual Property. The Company and its Subsidiaries
have made available to the Investors complete copies of all such
Contractual Obligations, in each case as amended and in effect.
With respect to each item of Intellectual Property required to be
identified on Schedule 3.12D:
(i) each license, sublicense, agreement or permission
covering such item is Enforceable;
(ii) as to any license, sublicense, agreement or
permission with the Company or any of its Subsidiaries, neither
the Company or any of its Subsidiaries, nor, to the Knowledge of
the Company, any other party thereto is in breach or default, and
no Basis exists which, with notice or lapse of time or both,
would constitute a breach or default or permit termination,
modification or acceleration thereunder;
(iii) to the Knowledge of the Company, no party to any
license, sublicense, agreement or permission covering such item
has repudiated any provision thereof;
(iv) such item is not subject to any outstanding
Government Order, and no Action is pending or, to the Knowledge
of the Company, threatened, which challenges the legality,
validity or enforceability of such item; and
(v) none of the Company or any of its Subsidiaries has
granted any sublicense or similar right with respect to any
license, sublicense, agreement or
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permission covering such item, other than licenses granted
pursuant to Government Contracts to Governmental Authorities that
are required or permitted by standard, published government
clauses.
3.13. Effect of Transactions. Except as disclosed on Schedule 3.13,
each of (a) the execution, delivery and performance of each of the Transaction
Documents by the Company, (b) the issuance, sale and delivery of the Shares and
the Conversion Shares by the Company and (c) the compliance with the provisions
of each of the Transaction Documents by the Company do not and will not, with or
without the passage of time or the giving of notice or both, (i) violate any
provision of any Legal Requirement or Government Order or (ii) conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any Lien, upon any of the
properties or assets of the Company or any of its Subsidiaries under, their
respective Charter, By-laws or any Contractual Obligation, permit or license to
which the Company or any of its Subsidiaries is a party or by which they or any
of their property is bound or affected.
3.14. No Governmental Consent or Approval Required. Except as disclosed
on Schedule 3.14 and except for (a) filings required by the HSR Act, if any, and
(b) federal or state securities law filings which have been made or which will
be made in a timely manner, no authorization, consent, approval or other order
of, declaration to, or filing with, any Governmental Authority or any other
Person is required for or in connection with the valid and lawful (i)
authorization, execution and delivery of any of the Transaction Documents by the
Company, (ii) authorization, issuance, sale and delivery of the Shares by the
Company or (iii) authorization, reservation, issuance, sale and delivery of the
Conversion Shares by the Company.
3.15. Litigation. Except as disclosed on Schedule 3.15, there is not
any Action pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries which questions the validity of any of the
Transaction Documents or the right of the Company to enter into any of the
Transaction Documents or to consummate the transactions contemplated hereby or
thereby, or which could reasonably be expected to result in a Material Adverse
Effect or any change in the current equity ownership of the Company or any of
its Subsidiaries, nor is the Company or any of its Subsidiaries aware that there
is any Basis for any of the foregoing. The foregoing includes, without
limitation, Actions pending or, to the Knowledge of the Company, threatened,
involving the prior employment of any of the employees of the Company or any of
its Subsidiaries, their use in connection with the business of the Company and
its Subsidiaries of any information, creations or techniques allegedly
proprietary to any of their former employers or other Persons or entities, or
their obligations under any agreements with prior employers or other Persons or
entities. Except as disclosed on Schedule 3.15, neither the Company nor any of
its Subsidiaries nor any of their respective directors or officers is a party
to, or subject to the provisions of, any Government Order. Except as disclosed
on Schedule 3.15,
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there is no Action by the Company or any of its Subsidiaries which is presently
pending or which the Company or any of its Subsidiaries presently intends to
initiate.
3.16. Securities Laws. Assuming that the Investors' representations and
warranties contained in Section 4 are true and correct, the offer, issuance and
sale of the Shares and the Conversion Shares by the Company to the Investors
are, and will be as of the Closing, exempt from the registration and prospectus
delivery requirements of the 1933 Act, and have been, or will be as of the
Closing, registered or qualified (or are, or will be as of the Closing, exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state blue sky and securities laws
and all other Legal Requirements.
3.17. Business. The Company and its Subsidiaries have all necessary
franchises, permits, licenses, approvals and other rights and privileges
necessary to permit it to own their property and to conduct their present
businesses. None of the Company or any of its Subsidiaries is in violation of
any Legal Requirement relevant to the ownership of its properties or the
carrying on of its present business which has had or could reasonably be
expected to have a Material Adverse Effect.
3.18. Brokerage. Except as disclosed in Schedule 3.18, there are no
claims for brokerage commissions or finder's fees or similar compensation
payable by the Company or any of its Subsidiaries to any Person in connection
with the transactions contemplated by this Agreement based on any Contractual
Obligation made by or on behalf of the Company or any of its Subsidiaries, and
the Company and its Subsidiaries agree to pay any such brokerage commissions,
finder's fees or similar compensation and to indemnify and hold the Investors
harmless against any damages incurred as a result of any such claim.
3.19. Employees.
(a) There have been and are no material controversies or labor
troubles (including any work slowdown, stoppage or strike) pending, or
to the Knowledge of the Company, threatened between the Company or any
of its Subsidiaries and their respective employees during the last
three years.
(b) To the Knowledge of the Company:
(i) no employee of the Company or any of its Subsidiaries is
in violation of any term of any Contractual Obligation relating
to the right of any such employee to be employed by the Company
or any of its Subsidiaries because of the nature of the business
conducted or proposed to be conducted by the Company or any of
its Subsidiaries or for any other reason, and the continued
employment by the Company or any of its Subsidiaries of their
respective present employees will not result in any such
violation, in each case which has had or could reasonably be
expected to have a Material Adverse Effect;
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(ii) no officer or key employee of the Company or any of its
Subsidiaries has any present intention of terminating his or her
employment therewith, and none of the Company or any of its
Subsidiaries has any present intention of terminating any such
employment; and
(iii) except as disclosed on Schedule 3.19, the Company and
its Subsidiaries have complied in all material respects with all
applicable Legal Requirements respecting employment and
employment practices, terms and conditions of employment, wages
and hours and other laws related to employment, and there are no
arrears in the payments of wages, withholding or social security
taxes, unemployment insurance premiums or other similar
obligations.
(c) Except as disclosed on Schedule 3.10, none of the Company or
any of its Subsidiaries is a party to any Contractual Obligation with
any of its Affiliates or other employees with respect to such
individual's employment which involves annual total compensation in
excess of $200,000. Schedule 3.19 sets forth in reasonable detail the
amount and form of annual Compensation of each Affiliate or other
employee of the Company or any of its Subsidiaries whose aggregate
compensation (including salary, commissions and bonus) during the
fiscal year ending on December 31, 1998 exceeded $200,000 or which is
expected to exceed $200,000 during the fiscal year ending on December
31, 1999.
3.20. Insurance. The Company and its Subsidiaries maintain in full
force and effect with financially sound and reputable insurers insurance with
respect to their respective business and properties, in such amounts and against
such losses and risks as is customarily carried by Persons engaged in the same
or similar businesses. Except as disclosed on Schedule 3.20, to the Knowledge of
the Company, no insurer (a) has disputed any material claim pending under any
such insurance policy or (b) has threatened to cancel any such insurance policy.
None of the Company or any of its Subsidiaries is in breach or default of, and
no Basis exists that with notice or lapse of time or both, would constitute a
breach or default of any insurance policy, or would permit modification,
termination or acceleration thereof. Except as disclosed on Schedule 3.20, to
the Knowledge of the Company, no insurer plans to raise the premiums for any
material insurance policy under which the Company or any of its Subsidiaries is
currently insured.
3.21. Environmental Regulation. Except as set forth on Schedule 3.21:
(a) The Company and its Subsidiaries are in compliance with the
Clean Air Act, the Federal Water Pollution Control Act, the Marine
Protection Research and Sanctuaries Act, RCRA, CERCLA and any other
Environmental Law in effect in any jurisdiction in which any properties
of the Company or any of its Subsidiaries are located or where any of
them conducts their respective business, and with all applicable
published rules and regulations (and applicable standards and
requirements) of the
-22-
federal Environmental Protection Agency and of any similar agencies in
states in which the Company or any of its Subsidiaries conducts their
respective business, in each case other than those instances of
noncompliance which in the aggregate have not had, and could not
reasonably be expected to have, a Material Adverse Effect.
(b) No Action of which the Company or any of its Subsidiaries has
been given notice or otherwise has Knowledge is now pending before any
Governmental Authority, or to the Knowledge of the Company, threatened
by any Person (nor to the Knowledge of the Company does any Basis exist
therefor) for, and none of the Company or any of its Subsidiaries has
received written correspondence from any Governmental Authority with
respect to:
(i) noncompliance by the Company or any of its Subsidiaries
with any Environmental Law;
(ii) personal injury, wrongful death or other tortious
conduct relating to materials, commodities or products used,
generated, sold, transferred or manufactured by the Company or
any of its Subsidiaries (including products made of, containing
or incorporating asbestos, lead or other hazardous materials,
commodities or toxic substances); or
(iii) the release into the environment by the Company or any
of its Subsidiaries of any Hazardous Material generated by the
Company or any of its Subsidiaries whether or not occurring at or
on a site owned, leased or operated by the Company or any of its
Subsidiaries.
(c) None of the properties owned or leased by the Company or any
of its Subsidiaries has been used as a treatment, storage or disposal
site, other than as disclosed on Schedule 3.21. No Hazardous Material
is present in any real property currently or formerly owned or operated
by the Company or any of its Subsidiaries except that which has not
had, and could not reasonably be expected to have, a Material Adverse
Effect. The Company and its Subsidiaries have made available to the
Investors true, correct and complete copies of all environmental
audits, surveys and other reports relating to any of the properties now
or formerly owned or leased by the Company or any of its Subsidiaries.
3.22. Employee Benefit Plans.
(a) Schedule 3.22 lists all Employee Plans to which the Company
or any of its Subsidiaries contributes or is obligated to contribute,
or under which the Company or any of its Subsidiaries has or may have
any liability, or which benefits any employee, former employee,
director, consultant or independent contractor of the Company or any of
its Subsidiaries or the beneficiaries of any such Person (each a
"Company Plan"). With respect to each Company Plan, the Company and its
Subsidiaries have made
-23-
available to the Investors correct and complete copies of each of the
following: (i) if the plan has been reduced to writing, the plan
document together with all amendments; (ii) if the plan has not been
reduced to writing, a written summary of all material plan terms; (iii)
if applicable, copies of any trust agreements, custodial agreements,
insurance policies, administration agreements and similar agreements,
and investment management or investment advisory agreements; (iv)
copies of any summary plan descriptions, employee handbooks or similar
employee communications; (v) in the case of any plan that is intended
to be qualified under Section 401(a) of the Code, a copy of the most
recent determination letter from the IRS and any related
correspondence, and a copy of any pending request for such
determination; (vi) in the case of any funding arrangement intended to
qualify as a VEBA under Section 501(c)(9) of the Code, a copy of the
IRS letter determining that it so qualifies; and (vii) in the case of
any plan for which Forms 5500 are required to be filed, a copy of the
two most recently filed Forms 5500, with schedules attached.
(b) No defined benefit plan (as defined in Section 3(35) of
ERISA) maintained by the Company or any of its Subsidiaries or any
corporation, trust, partnership or other entity that would be
considered a single employer with the Company or any of its
Subsidiaries has incurred an "accumulated funding deficiency" (within
the meaning of Section 302 of ERISA or Section 412 of the Code) whether
or not waived. There are not any facts or circumstances that would
materially adversely change the funded status of any such defined
benefit plan since the date of the most recent actuarial report for
such plan. Except as set forth on Schedule 3.22, none of the Company or
any of its Subsidiaries has ever maintained or been required to
contribute to any "multiemployer plan" as defined in Section 4001(a)(8)
of ERISA.
(c) Each Company Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified. Each Company Plan,
including any associated trust or fund, has been administered in
accordance with its terms and with applicable law, and nothing has
occurred with respect to any Company Plan that has subjected or could
subject the Company or any of its Subsidiaries to a penalty under
Section 502 of ERISA or to a tax under Sections 4972, 4975, 4976, 4978,
4979A or 4979 of the Code, or that has subjected or could subject any
participant in or beneficiary of a Company Plan to a tax under Section
4973 of the Code.
(d) All required contributions to and premium payments on account
of each Company Plan have been made.
(e) Schedule 3.22 sets forth each and every pending or, to the
Knowledge of the Company, threatened lawsuit, claim or other
controversy relating to a Company Plan, other than claims for benefits
provided for by the Company Plans. No Company Plan is the subject of an
examination or audit by a Government Authority, or is the subject of an
-24-
application or filing under a government-sponsored amnesty, voluntary
compliance, or similar program.
(f) Except as required under Section 601 et seq. of ERISA, no
Company Plan provides benefits or coverage in the nature of health,
life or disability insurance following retirement or other termination
of employment.
3.23. Transactions with Affiliates. Except as disclosed on Schedule
3.23, no Affiliate of the Company or any of its Subsidiaries is a party to any
transaction with the Company or any of its Subsidiaries, including any
Contractual Obligation providing for the rental of real or personal property
from, or otherwise requiring payments in an amount greater than $20,000 annually
to, any such Affiliate. Except as disclosed on Schedule 3.23, no employee or
Affiliate of the Company or any of its Subsidiaries is indebted in an amount
greater than $1,000 to the Company or any of its Subsidiaries, and none of the
Company or any of its Subsidiaries owes any Debt to any of its employees or
Affiliates. Except as disclosed on Schedule 3.23, no transaction between the
Company or any of its Subsidiaries and any Affiliates of the Company or any of
its Subsidiaries has been on other than an arms-length basis, and no such
transaction has resulted in any overstatement or understatement of the Company's
or any of its Subsidiaries' income, revenues, expenses, assets, liabilities or
equity compared to what would have occurred had such transaction been with a
Person that was not an Affiliate of the Company and subject to arms-length
negotiations.
3.24. [Intentionally Omitted.]
3.25. Books and Records. The Company and its Subsidiaries maintain
minute books which contain records of all meetings and other corporate actions
of its stockholders, its Board of Directors and all committees, if any,
appointed by its Board of Directors, which minute books are accurate and
complete in all material respects. The Company and its Subsidiaries maintain a
stock ledger which is complete and reflects all issuances, transfers,
repurchases and cancellations of shares of its capital stock. The Company and
its Subsidiaries maintain books of account, ledgers, order books, records and
documents which reflect all material information relating to their respective
business, the nature, acquisition, maintenance, location and collection of their
respective assets and the nature of all transactions giving rise to its
obligations and accounts receivable and which are accurate and complete in all
material respects.
3.26. Customer and Supplier Relations. The relationships of the Company
and its Subsidiaries with their respective customers and suppliers are good
commercial working relationships and none of the Company's or any of its
Subsidiaries' material suppliers or customers has canceled, terminated or
otherwise materially altered or notified the Company or any of its Subsidiaries
of any intention or otherwise threatened to cancel, terminate or materially
alter its relationship with the Company or any of its Subsidiaries. As of the
date hereof, the Company has no reason to believe that there will be any change
in relations with material customers or suppliers of the Company or any of its
Subsidiaries or as a result of the transactions
-25-
contemplated by this Agreement that could reasonably be expected to have a
Material Adverse Effect.
3.27. No Illegal Payments, Etc. In the conduct of the business of the
Company and its Subsidiaries, none of the Company or any of its Subsidiaries nor
any of their directors, officers, employees or agents, has (a) directly or
indirectly given or agreed to give any illegal gift, contribution, payment or
similar benefit to any supplier, customer, governmental official or employee or
other Person who was, is or may be in a position to help or hinder the Company
or any of its Subsidiaries (or assist in connection with any actual or proposed
transaction) or made or agreed to make any illegal contribution, or reimbursed
any illegal political gift or contribution made by any other Person, to any
candidate for federal, state, local or foreign public office (i) which might
subject the Company or any of its Subsidiaries to any damage or penalty in any
civil, criminal or governmental litigation or proceeding or (ii) the
non-continuation of which has had or could have a Material Adverse Effect or (b)
established or maintained any unrecorded fund or asset or made any false entries
on any books or records for any purpose.
3.28. Year 2000 Compliance. The Information Technology (as defined
below) of the Company and its Subsidiaries is Year 2000 compliant (so long as
any other Information Technology, used in combination with the Company's or its
Subsidiaries' Information Technology, properly exchanges date/time data with
it). The Company and its Subsidiaries have undertaken an investigation of all
material suppliers and vendors relating to all Information Technology products
purchased, leased, licensed or used by or in connection with the Company or its
Subsidiaries, or their respective Information Technology, and have no reason to
believe that any of such Information Technology is not Year 2000 compliant. For
purposes of this Agreement, "Year 2000 compliant" means that the Information
Technology is designed to be used prior to, during and after the calendar Year
2000 A.D. and the Information Technology used during each such time period will
accurately receive, provide and process date/time data (including, but not
limited to, calculating, comparing and sequencing) from, into and between the
20th and 21st centuries, including the years 1999 and 2000, and leap-year
calculations and will not malfunction, cease to function, or provide invalid or
incorrect results as a result of date/time data. For purposes of this Agreement,
"Information Technology," includes, but is not limited to computer software,
computer hardware including, without limitation, all central processing units,
terminals, disk drives, tape drivers, electronic memory units, printers,
keyboards, screens, peripheral (and other input/output devices), modems and
other communication controllers, and any and all parts and appurtenances
thereto, together with all intellectual property used in the operation of such
computer equipment and hardware, and other similar or related items of
automated, computerized, or software system(s) that are used or relied on by a
Party or its Subsidiaries in the conduct of their business.
3.29. Offering Memorandum. The Offering Memorandum of the Company to be
distributed in connection with the Debt Financing Transactions does not contain
and will not contain any untrue statement of a material fact or omit to state
any material fact necessary in
-26-
order to make the statements and information contained therein not misleading in
light of the circumstances in which they were made.
3.30. Disclosure. The representations and warranties contained in this
Section 3 (including any other schedules and exhibits required to be delivered
by the Company to the Investors pursuant to this Agreement) and any certificate
furnished or to be furnished by the Company to the Investors do not contain and
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
4. Representations, Warranties and Certain Other Agreements of the
Investors.
4.1. Representations, Warranties and Covenants. Each Investor
severally, and not jointly, hereby represents, warrants and covenants to the
Company that:
4.1.1. Authorization. Such Investor has full power and
authority (a) to execute, deliver and perform each Transaction Document
to which such Investor is a party and (b) to acquire the Shares to be
acquired by such Investor. Each Transaction Document to which such
Investor is a party is Enforceable against such Investor.
4.1.2. Purchase Entirely for Own Account. The Shares to be
acquired by such Investor and the Conversion Shares to be received by
such Investor upon conversion of such Shares (collectively, the
"Securities") will be acquired for investment for such Investor's own
account and not with a view to the distribution of any part thereof in
violation of the 1933 Act.
4.1.3. Restricted Securities. Such Investor understands that
any Securities to be acquired by such Investor may not be sold or
transferred, or otherwise disposed of, without registration under the
1933 Act, or an exemption therefrom, and that in the absence of an
effective registration statement covering such Securities or an
available exemption from registration under the 1933 Act, such
Securities must be held indefinitely. In the absence of an effective
registration statement covering such Securities, such Investor will
sell or transfer, or otherwise dispose of, such Securities only in a
manner consistent with its representations and agreements set forth
herein and the terms and conditions set forth in the Stockholders
Agreement.
4.1.4 Suitability. Such Investor represents that it was not
organized for the purpose of making an investment in the Company. Such
Investor is an "accredited investor" (as defined in Rule 501(a)
promulgated under the 1933 Act). Such Investor's financial condition is
such that it is able to bear the risk of holding the Securities to be
acquired by such Investor for an indefinite period of time and can bear
the loss of its entire investment in the Securities to be acquired by
such Investor. Such Investor has such knowledge and experience in
financial and business matters and in making high-risk
-27-
investments of this type that it is capable of evaluating the merits and
risks of the purchase of the Securities to be acquired by such Investor.
4.1.5. Brokerage. Except as disclosed on Schedule 4.1.5, there are
no claims for brokerage commissions or finder's fees or similar
compensation payable by such Investor to any Person in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of such Investor, and such Investor agrees
to indemnify and hold the Company and the other Investors harmless against
any damages incurred as a result of any such claims other than such
finders' fee.
4.1.6. U.S. Citizens. Except as disclosed on Schedule 4.1.6, such
Investor and its Affiliates are citizens of the United States of America
or entities organized under the laws of the United States or any state or
political subdivision thereof. For so long as the Investors own any of the
Securities, such Investor hereby covenants and agrees to inform the
Company in writing within ten Business Days if such representation is no
longer true.
4.2 Legends. It is understood that the certificates evidencing the
Securities may bear substantially the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO
THESE SECURITIES UNDER SUCH ACT AND LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAW
EXCEPTIONS."
(b) Any legends required by (i) the Stockholders Agreement,
(ii) the Registration Rights or (iii) the laws of any applicable
jurisdiction.
5. Certain Covenants and Representations and Warranties.
5.1. General. Each of the parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
and the other Transaction Documents (including satisfaction, but not waiver, of
the closing conditions set forth in Sections 6 and 7 below).
5.2. Notices and Consents. The Company will (and will cause its
Subsidiaries to) give any notices to third parties, and the Company will use its
best efforts to obtain any third party consents, that are required to consummate
the transactions contemplated by this Agreement and the other Transaction
Documents and any other consent that the Investors may reasonably
-28-
request. The Company will deliver copies of any such notices and consents to the
Investors. Without limiting the generality of the foregoing, each of the parties
has filed or will file Notification and Report Forms and related material that
may be required to be filed with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act, and will
make any further filings pursuant thereto that may be necessary in connection
therewith.
5.3. Operation of Business. Other than to consummate the Acquisitions and
the transactions specifically contemplated by this Agreement, from the date
hereof until the Closing Date, the Company will not (and will cause its
Subsidiaries not to) engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Company (i) will not engage in any practice,
take any action, or enter into any transaction that would cause the
representations and warranties in Section 3 to be untrue at the date made or any
future date when they are to be made, and (ii) will (A) make reasonably
available to the Investors the officers, employees, agents and independent
contractors of the Company and its Subsidiaries in connection with the
Investors, diligence investigations of the Company, (B) preserve the goodwill of
the customers, suppliers and landlords of the Company and its Subsidiaries and
others having business relations with them and (C) consult with the Investors
prior to taking any action or entering into any transaction that may be of
strategic importance to the Company or any of its Subsidiaries.
5.4. Preservation of Business. From the date hereof until the Closing
Date, the Company will (and will cause its Subsidiaries to) keep each of its
business and properties substantially intact, including its present operations,
physical facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.
5.5. Full Access. From the date hereof until the Closing Date, the Company
will (and will cause its Subsidiaries to) permit the Investors and their
representatives to have reasonable access to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Company or any of its Subsidiaries and consent to any
reasonable request by the Investors and their representatives to contact the
Company's or any of its Subsidiaries' customers and suppliers. The foregoing
access shall be subject in all instances to two (2) days' prior notice,
compliance with all applicable limitations imposed by Governmental Authorities,
and execution and delivery to the Company of such non-disclosure and
non-solicitation agreements which are reasonably requested by the Company; no
such access may be afforded any non-U.S. citizens without the Company's prior
written consent, which, with respect to access by any non-U.S. citizen, may be
withheld in its absolute discretion.
5.6. Notice of Developments. From the date hereof until the Closing Date,
each party will give prompt written notice to the other party of any development
causing a breach of any of its own representations and warranties in Sections 3
and 4 above. No disclosure by any party pursuant to this Section 5.6, however,
shall be deemed to amend or supplement the Schedules or to prevent or cure any
misrepresentations, breach of warranty, or breach of covenant.
-29-
5.7. Exclusivity. Except for the issuance of Class A Common Stock pursuant
to this Agreement, the Preferred Stock Financing and the Debt Financing
Transactions, from the date hereof until the Closing Date, the Company will not
(and the Company will not permit any of the Company's or any of its
Subsidiaries' officers, directors, agents or Affiliates to) (i) solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to or enter into or consummate any transaction relating to the
acquisition of any capital stock or other voting securities, or any of the
Company's assets (other than sales of equipment, inventory and other assets in
the Ordinary Course of Business), including any acquisition structured as a
merger, consolidation, or share exchange, in each case which is intended to be,
or may result in being, in whole or in part, directly or indirectly, in
substitution for the issuance of the Class A Common Stock to the Investors as
contemplated by this Agreement, or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. The Company will notify the Investors
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
5.8. The Acquisitions.
(a) The Company has informed the Investors that it is engaged in
negotiations concerning the acquisition by the Company (each an
"Acquisition") of all of the outstanding equity interests in each of
Trident (the "Trident Acquisition"), ERIM (the "ERIM Acquisition"), and
MRJ (the "MRJ Acquisition"). Each of Trident, ERIM and MRJ is sometimes
referred to herein as an "Acquisition Candidate".
(b) With respect to each Acquisition, the Company shall use all
reasonable efforts to provide representatives of the Investors and their
advisors, including consulting, legal, accounting and other
representatives, with such access to each Acquisition Candidate's
personnel, records, operations and other information as they may
reasonably request, and to facilitate such access, and also to provide
such access to the Company's representatives and advisors to provide the
Investors and their representatives with the benefit of the diligence
investigations conducted by or on behalf of the Company, all to the extent
reasonably requested by the Investors in connection with their diligence
review of such Acquisition and Acquisition Candidate.
(c) Prior to the Company or any of its Subsidiaries entering into any
documentation with respect to an Acquisition, the Company will provide the
Investors and their representatives a reasonable opportunity to comment on
such documentation, and shall make all reasonable efforts to have any such
comments reflected appropriately in such documentation. Prior to the
Closing, the Company shall furnish to each Investor true, correct and
complete copies of all documentation relating to any Acquisition which has
been executed by the Company or any of its respective Subsidiaries,
together with any and all amendments thereto, modifications thereof or
waivers granted thereunder (collectively, the "Acquisition Documents").
References to any one of the Acquisition
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Documents shall mean such Acquisition Document in the form so furnished to
the Investors, without regard to any amendment, modification, waiver,
change, limitation or termination of such documents which is made or
otherwise becomes effective after the Closing, unless such amendment,
modification, waiver, change, limitation or termination has been consented
to in writing by the Investors, and shall include other documents, exhibits
and schedules which are attached thereto or incorporated therein by
reference.
(d) If, at the time the Company or any of its Subsidiaries enters into
definitive documentation with respect to an Acquisition, the Investors are,
in good faith, satisfied with their diligence review of such Acquisition
and the documentation relating thereto, the Investors will so notify the
Company in writing and the conditions specified in Section 6.5(b) shall be
deemed to have been satisfied to the extent set forth in such notice.
(e) The Company makes the following representations and warranties to
the Investors on and as of the Closing Date:
(i) The Company has furnished or caused to be furnished to each
Investor true, correct and complete executed or conformed copies
of each Acquisition Document and all amendments thereto.
(ii) Each of the representations and warranties made by any
Acquisition Candidate in any of the Acquisition Documents or in any
document delivered pursuant thereto is incorporated herein by
reference with the same force and effect as if fully set forth herein
together with the definitions of the defined terms used therein,
mutatis mutandis, so that references to the recipient of any such
representations and warranties shall be deemed to be references to the
Investors. Each such representation and warranty so incorporated
herein by reference is true and correct both on the date made in the
applicable Acquisition Document and, subject to the applicable
materiality standard set forth in such Acquisition Document, on the
Closing Date and is hereby confirmed directly by the Company to the
Investors. The Company does not have any reason to believe that any of
the representations and warranties made by any Person in any of the
Acquisition Documents and in any documents delivered pursuant thereto
at the Closing or otherwise is not true and correct in all material
respects.
6. Conditions to the Investors' Obligations at the Closing. The obligations of
each Investor under Section 2 to purchase the Shares to be acquired by such
Investor at the Closing are subject to the fulfillment of each of the following
conditions (unless waived by the Investors in accordance with Section 15):
6.1. Representations and Warranties. The representations and warranties of
the Company, contained or incorporated by reference in Sections 3 and 5.8(e)
shall be true and correct on and as of the Closing Date.
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6.2. Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it at or prior to the Closing.
6.3. Compliance Certificate. The Company shall have delivered to the
Investors at the Closing a certificate signed by the President of the Company,
certifying that the conditions specified in Sections 6.1, 6.2, 6.4, 6.5(a), 6.6
and 6.10 through 6.16 have been fulfilled.
6.4. Certificate of Incorporation; By-laws. The Certificate of
Incorporation shall be in the form of Exhibit B; and the By-laws of the Company
shall be amended in form and substance satisfactory to the Investors and shall
provide that the vote of at least one Class A Director (as such term is defined
in the Certificate of Incorporation attached hereto as Exhibit B) shall be
required to elect or appoint any successor or replacement to the President of
the Company.
6.5. Acquisitions.
(a) Each of (i) the Trident Acquisition, (ii) the ERIM Acquisition and
(iii) the MRJ Acquisition shall be consummated simultaneously with the
Closing. Each Acquisition Document relating to each Acquisition occurring
on the Closing Date shall have been duly authorized, executed and delivered
by each party thereto and shall be in full force and effect in the form
thereof referred to in Section 5.8(e) with no term or condition thereof
having been amended, modified or waived without the Investors' prior
written consent; and all material covenants and agreements contained in
such Acquisition Document which are to be performed or complied with at or
prior to the consummation of such Acquisition shall have been performed,
complied with or (subject to the first clause of this sentence) waived
prior thereto.
(b) The Investors shall be satisfied, in their sole and absolute
discretion, with (i) their diligence investigation (including business,
accounting, legal, tax and environmental) of each Acquisition occurring on
the Closing Date and the related Acquisition Candidate and (ii) the form,
terms and conditions of all Acquisition Documents related to each such
Acquisition.
(c) All legal opinions being rendered in connection with the Debt
Financing Transactions and each Acquisition occurring on the Closing Date
shall have been confirmed directly to each Investor.
6.6. Qualifications. All authorizations, approvals or permits (including
any authorizations, approvals or permits required by the HSR Act), if any, of
any Governmental Authority that are required in connection with the lawful
issuance and sale of the Shares to the Investors pursuant to this Agreement
(other than those which are not required to be obtained prior to the Closing)
shall have been duly obtained and shall be effective on and as of the Closing
Date.
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6.7. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investors and to the special counsel for the Investors, and they shall have
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
6.8. Secretary's Certificate. The Company shall have delivered to the
Investors a certificate dated the Closing Date and signed by the Secretary of
the Company certifying: (a) that attached thereto is a true and complete copy of
the By-laws of the Company as in effect on the Closing Date; (b) that attached
thereto is a true and complete copy of all resolutions adopted by the Board of
Directors and the stockholders of the Company authorizing (i) the execution,
delivery and performance of each of the Transaction Documents, (ii) the
issuance, sale and delivery of the Shares and (iii) the reservation, issuance
and delivery of the Conversion Shares, and that all such resolutions are in full
force in effect and are all the resolutions adopted in connection with the
transactions contemplated by the Transaction Documents; (c) that attached
thereto is a true and complete copy of the Certificate of Incorporation, as
amended and in effect on the Closing Date; and (d) as to the incumbency and
specimen signature of certain officers of the Company.
7.9. Legal Opinion. The Investors shall have received from ▇▇▇▇▇▇▇ & ▇▇▇▇▇
L.L.P., counsel for the Company, its opinion with respect to the transactions
contemplated by the Transaction Documents, which opinion shall be in form and
substance reasonably satisfactory to the Investors.
7.10. Financial Projections. Nothing shall have occurred that poses a
material risk that the Company and its Subsidiaries will not be able to operate
after the Closing substantially in accordance with the financial projections
previously furnished to the Investors.
7.11. Stockholders Agreement. The Company and certain stockholders of the
Company, including Argotyche, L.P. and each officer and director of the Company
and each of its Subsidiaries, shall have executed and delivered to the Investors
the Stockholders Agreement.
7.12. Registration Rights Agreement. The Company shall have executed and
delivered to the Investors the Registration Rights Agreement.
7.13. Payment of Fees and Expenses. Contemporaneously with the Closing, the
Company shall have paid to MCP a fee in the amount of $1,600,000 and all
reasonable expenses of the Investors (including all reasonable out-of-pocket
expenses and the reasonable fees and disbursements of counsel, accountants and
other advisors to the Investors) incurred prior to the Closing in connection
with the discussion, evaluation, negotiation and documentation of the
transactions contemplated by this Agreement, the other Transaction Documents and
the Acquisition Documents.
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6.14. Debt Financing and Preferred Stock Financing. The Company shall have
consummated each of the Debt Financing Transactions and the Preferred Stock
Financing on terms and conditions acceptable to the Investors.
6.15. Issuance of Shares to Monitor Company, Inc. The Company shall have
issued 2,500 shares of Class A Common Stock and paid $50,000 in cash to Monitor
Company, Inc. for services provided by Monitor Company, Inc.
7. Conditions to the Company's Obligations at the Closing. The obligations of
the Company under Section 2 to sell and issue the Shares at the Closing are
subject to the fulfillment of each of the following conditions (unless waived by
the Company in accordance with Section 15):
7.1. Representations and Warranties. The representations and warranties of
the Investors contained in Section 4 shall be true and correct on and as of the
Closing Date.
7.2. Payment of Purchase Price. The Investors shall have paid to the
Company the aggregate purchase price of their Shares as set forth in Section
2.3.
7.3. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Company and to counsel for the Company, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
7.4. Qualifications. All authorizations, approvals or permits (including
any authorizations, approvals or permits required by the HSR Act), if any, of
any Governmental Authority that are required in connection with the lawful
issuance and sale of the Shares to the Investors pursuant to this Agreement
(other than those which are not required to be obtained prior to the Closing)
shall have been duly obtained and shall be effective on and as of the Closing
Date.
7.5. Stockholders Agreement. The Investors shall have executed and
delivered to the Company a stockholders agreement substantially in the form of
Exhibit C.
7.6. Acquisitions. Each of (i) the Trident Acquisition, (ii) the ERIM
Acquisition and (iii) the MRJ Acquisition shall be consummated substantially
contemporaneously with the Closing in accordance with the terms of the
applicable Acquisition Documents.
8. Affirmative Covenants of the Company and its Subsidiaries. The Company
shall comply with each of the following covenants applicable to it:
8.1. Financial and Other Information.
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8.1.1. Accounts and Reports. The Company will (and will cause its
Subsidiaries to) maintain books and records in accordance with GAAP,
consistently applied.
8.1.2. Annual Financial Statements. The Company will deliver to each
Investor:
(a) within 90 days after the end of each fiscal year of the
Company and its Subsidiaries, a copy of the audited consolidated and
unaudited consolidating balance sheets of the Company and its
Subsidiaries as at the end of such fiscal year and the audited
consolidated and unaudited consolidating statements of income, cash
flows and stockholder's equity of the Company and its Subsidiaries for
such fiscal year, all in reasonable detail, prepared in accordance
with GAAP, consistently applied, and certified in an audit report by
independent public accountants selected by the Board of Directors of
the Company; and
(b) copies of all financial statements and reports which the
Company or any of its Subsidiaries shall send to its stockholders
generally or file with the Securities and Exchange Commission or any
stock exchange on which any securities of the Company or any of its
Subsidiaries may be listed.
8.1.3. Quarterly Financial Statements. The Company will deliver to
each Investor, within 45 days after the end of each of the first three
quarterly accounting periods of each fiscal year of the Company and its
Subsidiaries, (a) a copy of the unaudited consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at the end of such
quarterly accounting period and the unaudited consolidated and
consolidating statements of income, cash flows and stockholder's equity of
the Company and its Subsidiaries for such quarterly accounting period and
for the portion of the fiscal year ending on the last day of such quarterly
accounting period, each of the foregoing balance sheets and statements (i)
to set forth in comparative form the corresponding figures for the same
period of the prior fiscal year, and actual versus budgeted amounts, (ii)
to be in reasonable detail, (iii) to be prepared in accordance with GAAP,
consistently applied, except that such financial statements may be subject
to normal year-end audit adjustments and the addition of footnotes, and
(iv) to be certified, subject to normal year-end audit adjustments and the
addition of footnotes, by the principal financial officer of the Company as
true and accurate in all material respects as of the date thereof.
8.1.4. Other Financial Statements. The Company will furnish to each
Investor, within 30 days after the end of each calendar month (except any
such month that is the last month of any quarterly accounting period, or of
the fiscal year, of the Company and its Subsidiaries), a copy of the
unaudited consolidated and consolidating balance sheets of the Company and
its Subsidiaries as at the end of such accounting period and the unaudited
consolidated and consolidating statements of income and of cash flows of
the Company and its Subsidiaries for such accounting period, each of the
foregoing balance
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sheets and statements shall be prepared in substantially the same form and
detail as set forth on Schedule 8.1.4 and shall (a) be prepared in
accordance with GAAP, consistently applied, except that such financial
statements may be subject to normal year-end audit adjustments and the
addition of footnotes, and (b) be certified, subject to normal year-end
audit adjustments and the addition of footnotes, by the principal financial
officer of the Company as true and accurate in all material respects as of
the date thereof.
8.1.5. Budgets. The Company will furnish to each Investor as soon as
practicable, but in any event no later than 45 days after the beginning of
each fiscal year, a budget, prepared on an accounting period-by-accounting
period basis, and an operating plan for such fiscal year, each approved by
the Board of Directors of the Company, including projected consolidated
balance sheets and consolidated statements of income and of cash flows and
changes in financial condition of the Company and its Subsidiaries for such
months.
8.1.6. Visits and Discussions. The Company will (and will cause its
Subsidiaries to) permit each Investor and the representatives of each such
Investor (but only if any such individual is a U.S. citizen), at all
reasonable times during normal business hours following reasonable notice
and as often as reasonably requested, to visit and inspect, at the expense
of the Company, any of the properties of the Company and its Subsidiaries,
including their respective books and records and, subject to reasonable
arrangements with any transfer agents of the Company or any of its
Subsidiaries, lists of securityholders, and to make extracts therefrom and
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with their respective officers. The foregoing access shall be
subject in all instances to two (2) days' prior notice, compliance with all
applicable limitations imposed by Governmental Authorities, and execution
and delivery to the Company of such non-disclosure and non-solicitation
agreements which are reasonably requested by the Company; no such access
may be afforded any non-U.S. citizens without the Company's prior written
consent, which, with respect to access by any non-U.S. citizen, may be
withheld in its absolute discretion.
8.1.7. Litigation; Adverse Change. The Company will promptly advise
each Investor in writing of (a) each suit or proceeding commenced or
threatened against the Company or any of its Subsidiaries which, if
adversely determined, would have a Material Adverse Effect and (b) any
facts that come to the attention of the Company which question the accuracy
or completeness of the representations and warranties contained herein when
made.
8.1.8. Other Information. The Company will also furnish to each
Investor with reasonable promptness such other information and data
(including weekly and monthly sales reports and other data used by
management of the Company to review the business and operations of the
Company and its Subsidiaries) with respect to the Company or any of its
Subsidiaries as such Investor may from time to time reasonably request; the
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foregoing shall include information and data with respect to the Debt
Financing Transactions, including with respect to the Company's Senior
Redeemable Exchangeable Preferred Stock, the Company's Senior Subordinated
Increasing Rate Notes and the Company's Revolving Credit Agreement dated as
of the date hereof.
8.2. Confidentiality. Each Investor covenants and agrees that such Investor
and any Person authorized or controlled by such Investor receiving information
under this Agreement or exercising rights of visitation or inspection granted
hereunder shall maintain the confidentiality of all financial, confidential and
proprietary information of the Company and any of its Subsidiaries acquired by
such Person in receiving such information and exercising such rights.
Notwithstanding the preceding sentence, each Investor or Person authorized or
controlled by such Investor may disclose such information (a) when required by
any Legal Requirement or any request, requirement or order (including a subpoena
or other process) of any Governmental Authority, provided that such Investor or
Person first (i) gives the Company prompt notice of such required disclosure and
(ii) at the expense of the Company, takes reasonable steps to assist the Company
in obtaining a protective order with respect to such required disclosure; (b) to
the extent necessary to enforce this Agreement and the transactions contemplated
hereby; (c) to its attorneys, accountants, consultants and other professionals
to the extent necessary to obtain their services in connection with its
investment in the Company; (d) as may be required by any prospective purchaser
of any Securities from such Investor, provided that such prospective purchaser
first agrees to keep such information confidential in accordance with the terms
of this Section 8.2; and (e) to any Affiliate, stockholder or partner of such
Investor, provided that such Affiliate, stockholder or partner first agrees to
keep such information confidential in accordance with the terms of this Section
8.2.
8.3. Expenses. The Company shall pay, on demand, all reasonable expenses
and costs of the Investors incurred in connection with the discussion,
evaluation, negotiation and documentation of the transactions contemplated by
this Agreement, the other Transaction Documents and the Acquisition Documents
and the operations hereunder or thereunder, (a) including the reasonable fees
and expenses of counsel to the Investors incurred in connection with the
preparation, negotiation and execution of this Agreement, the other Transaction
Documents and the Acquisition Documents and the consummation of the transactions
contemplated hereby and thereby; (b) the reasonable fees and expenses of
accountants, consultants and other professionals engaged by the Investors in
connection with the consummation of such transactions; (c) the reasonable
out-of-pocket expenses incurred by any Investor in connection with (i) the
consummation of the such transactions, or (ii) the attendance at any meeting of
the Board of Directors (or any committee thereof) of the Company or any of its
Subsidiaries; (d) all tax liabilities of the Investors (other than tax
liabilities based upon or measured by income or capital gains or similar
investment), including recording and filing fees and sales, transfer and
documentary stamp taxes and other similar tax liabilities, at any time payable
in respect of any Security, this Agreement, any other Transaction Document, any
Acquisition Document or any of the transactions contemplated hereby or thereby;
(e) all reasonable expenses incurred in respect of the exercise, performance,
preservation or
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enforcement of any right granted to any holder of any Security hereunder, under
any other Transaction Document or under any Acquisition Document (which shall
include reasonable attorneys' fees and expenses and expenses incurred in
connection with the investigation and review by the Investors and their advisors
of potential claims under any of such documents); and (f) all expenses
(including reasonable attorneys' fees and expenses) in connection with any
amendments or modifications to, or waivers or consents under, this Agreement,
any other Transaction Document or any Acquisition Document (whether or not such
amendment, modification, waiver or consent shall become effective).
8.4. Determination Event Fee. Upon the occurrence of a Determination Event,
as defined in the Certificate of Incorporation attached as Exhibit B to this
Agreement, the Company shall pay to MCP in immediately available funds a fee of
$1,600,000.
8.5. Investor Consent Rights. Without the affirmative approval of the
holders of a majority of the Class A Common Stock then outstanding, the Company
shall not change the primary business strategies or focus of the Company and its
Subsidiaries; provided, however, that the provisions of this Section 8.5 shall
not be applicable in the instances stated in Section 4.4.1 of the Certificate of
Incorporation attached as Exhibit B to this Agreement, including in connection
with the exercise of certain repurchase rights and the reduced percentage of
Class A Common Stock held by the Investors.
8.6. Redemption of Stock. The Company agrees to repurchase, within 45 days
following the Closing Date, 1,658,468 shares of its Class B Common Stock at a
price per share that does not exceed $14.23.
9. Provisions Relating to Indemnification.
9.1. Indemnification. In consideration of the execution and delivery by the
Investors of this Agreement, the Company will indemnify, exonerate and hold free
and harmless each of the Investors and their respective partners, advisory board
members, directors, officers, employees, representatives and agents (each an
"Investor Indemnified Person") from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses, including reasonable
attorneys' fees and expenses and any diminution in value of the Securities and
any securities issued in exchange or in substitution for the Securities held by
the Investors and their Affiliates (collectively, the "Investor Indemnified
Liabilities"), incurred by the Investor Indemnified Persons or any of them as a
result of, or arising out of, or relating to, any of (a) any breach of any
representation or warranty (as such representation and warranty would read if
all materiality qualifications were deleted therefrom, including without
limitation each such qualification relating to a Material Adverse Effect) made
by the Company or any of its Subsidiaries in this Agreement or any other
Transaction Document or incorporated by reference herein, (b) any breach of any
covenant or agreement made by the Company or any of its Subsidiaries in this
Agreement or any other Transaction Document, or (c) any action, suit or
proceeding between the Company or any of its Subsidiaries and any Investor with
respect to this
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Agreement or any other Transaction Document which is determined adversely to the
Company or such Subsidiary in a final nonappealable judgment, except for any
such Investor Indemnified Liabilities arising out of (i) the gross negligence or
willful misconduct of any Investor Indemnified Person, or (ii) any breach of any
representation, warranty, covenant or agreement made by any Investor in this
Agreement or any other Transaction Document; provided, that, the Company shall
be liable under this Section 9.1 in respect of Investor Indemnified Liabilities
only if the aggregate of such Investor Indemnified Liabilities exceeds $500,000
in which case the Company will be liable for all such Investor Indemnified
Liabilities; and, provided, further, that the foregoing limitations shall not
apply to breaches of the representations and warranties set forth in Sections
3.1, 3.2, 3.3, 3.8, 3.9, 3.18, 3.21 and 3.22 and breaches of any covenant or
agreement made by the Company in this Agreement or any other Transaction
Document. If, and to the extent that, the foregoing undertaking is unenforceable
against the Company for any reason, the Company will make the maximum
contribution to the payment and satisfaction of each of the Investor Indemnified
Liabilities which is permissible under applicable law.
9.2. Survival of Representations and Warranties. All of the representations
and warranties of the Company (except for those contained in Sections 3.1, 3.2,
3.3, 3.8, 3.9, 3.18, 3.21, 3.22, 3.24 and 5.8(e)) contained in this Agreement or
any other Transaction Document shall survive the Closing and continue in full
force and effect for a period of two years thereafter. The representations and
warranties of the Company contained in Section 3.18 and 3.21 shall survive the
Closing and continue in full force and effect for a period of six years
thereafter. The representations and warranties contained in Section 5.8(e)(ii)
shall survive the Closing and continue in full force and effect as follows: (a)
representations and warranties relating to broker/dealer and environmental
matters shall continue in full force and effect for a period of three years
after the Closing; (b) representations and warranties relating to organization
and corporate power, authorization of the transaction, capitalization, title to
property, tax matters and employee benefit plans and matters shall continue in
full force and effect without limit as to time (subject to any applicable
statutes of limitation and extensions or waivers thereof plus an additional 60
days); and (c) all other representations and warranties shall continue in full
force and effect for a period of two years after the Closing. The
representations and warranties of the Company contained in Sections 3.1, 3.2,
3.3, 3.8, 3.9, 3.22, 3.24 and 5.8(e)(i) shall survive the Closing and continue
in full force and effect without limit as to time (subject to any applicable
statutes of limitation and extensions or waivers thereof plus an additional 60
days). The termination of any representation and warranty of the Company,
however, shall not affect any claim for breaches of representations or
warranties if written notice thereof is given to the breaching party prior to
such termination date. All covenants and indemnities of any party to this
Agreement or any other Transaction Document shall, unless otherwise specifically
provided herein remain in full force and effect forever.
9.3. Matters Involving Third Parties.
(a) If any third party shall notify any party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for
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indemnification against any other party (the "Indemnifying Party") under
this Section 9, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Investor Indemnified Liabilities the
Indemnified Party may suffer resulting from, arising out of, relating to,
in the nature of, or caused by the Third Party Claim, (ii) the Indemnifying
Party provides the Indemnified Party with evidence acceptable to the
Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (iii) the Third Party Claim involves
only money damages and does not seek an injunction or other equitable
relief, (iv) settlement of, or an adverse judgment with respect to, the
Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively
and diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 9.3(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (which consent shall not
unreasonably be withheld), and (iii) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim unless written agreement is obtained
releasing the Indemnified Party from all liability thereunder.
(d) In the event any of the conditions in Section 9.3(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith), (ii) the
Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (iii) the
Indemnifying Party will remain responsible for any
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Investor Indemnified Liabilities the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this Section 9.
10. Termination.
10.1. Termination of Agreement. This Agreement may, by written notice given
prior to the Closing, be terminated:
(a) by mutual consent of the Company and the Investors;
(b) by the Investors (i) in the event the Company has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, the Investors have notified the Company of the breach,
and the breach has continued without cure for a period of 20 days after the
notice of breach or (ii) if the Closing shall not have occurred on or
before December 31, 1999, by reason of the failure of any condition
precedent under Section 6 hereof (unless the failure results primarily from
the Investors breaching any representation, warranty, or covenant contained
in this Agreement), provided that if the Investors are then prepared to
purchase the Shares on the terms and conditions specified herein and such
breach or failure shall have been the result, directly or indirectly, in
whole or in part, of an act or omission of the Company, any Subsidiary of
the Company, or any agent or representative of any of them, then the
Company shall pay the Investors all amounts required to be paid by the
Company to the Investors under Section 8.3;
(c) by the Company (i) in the event the Investors have breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, the Company has notified the Investors of the breach, and
the breach has continued without cure for a period of 20 days after the
notice of breach or (ii) if the Closing shall not have occurred on or
before December 31, 1999, by reason of the failure of any condition
precedent under Section 7 hereof (unless the failure results primarily from
the Company itself breaching any representation, warranty, or covenant
contained in this Agreement); and
(d) by the Company, if (i) the Board of Directors of the Company has
in good faith determined, upon the advice of outside, independent counsel
and after consultation with a financial advisor having a nationally
recognized reputation, that such Board of Directors is required to pursue a
transaction of the type described in Section 5.7 in order to fulfill the
fiduciary obligations of such Board of Directors to the stockholders of the
Company under applicable law, and (ii) no breach of the provisions of
Section 5.7 has occurred, provided that such notice shall not be effective
unless it is accompanied or preceded by a wire transfer of immediately
available funds paid by the Company to MCP in an amount equal to $1,600,000
plus all amounts required to be paid by the Company to the Investors under
Section 8.3.
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10.2. Effect of Termination. If any party terminates this Agreement
pursuant to Section 10.1 above, all rights and obligations of the parties
hereunder shall terminate without any liability of any party to any other party
(except for any liability of any party then in breach and except that the
provisions of Sections 8.2 and 9 hereof shall survive with respect to actions or
omissions prior to the date of such termination).
11. Amended and Restated Shareholders Agreement. In accordance with Section 13
of the Amended and Restated Shareholders Agreement dated as of September 1997,
among the Company and certain of its stockholders, the Company hereby waives the
requirement that any Investors become a party to such agreement as an additional
"Covered Shareholder."
12. Notices. Any notice required to be given pursuant to this Agreement shall
be given in writing. Any notice, consent, approval, demand and other
communication in connection with this Agreement shall be deemed to be given if
given in writing (including telex, telecopy or similar teletransmission)
addressed as provided below (or to the addressee at such other address as the
addressee shall have specified by notice actually received by the addressor),
and if either (a) actually delivered in fully legible form to such address
(evidenced in the case of a telex by receipt of the correct answerback) or (b)
in the case of a letter, four days shall have elapsed after the same shall have
been deposited in the United States mails (i) with first-class postage prepaid
and registered or certified, with return receipt requested, or (ii) with express
delivery postage prepaid, with receipt required for delivery.
If to the Company, to it at Suite 1200, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, to the attention of
Chief Executive Officer, with a copy to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, to the attention of ▇▇▇▇▇ ▇.
▇▇▇▇▇, Esq.
If to Monitor Clipper Equity Partners, L.P. or Monitor Clipper Equity
Partners (Foreign), L.P., to it at its address set forth on Exhibit A, with a
copy to Ropes & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, to the attention of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to CIBC WG Argosy Merchant Fund 2, L.L.C., or Co-Investment Merchant
Fund 3, LLC, to it at its address set forth on Exhibit A, with a copy to ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, telecopy number (212)
269-5420, to the attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
If to the Texas Growth Fund II - 1998 Trust, to it at its address set forth
on Exhibit A, with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇, to the attention of ▇▇▇▇ ▇▇▇,
Esq.
13. Reliance; Survival. All covenants, agreements, representations, warranties
and undertakings of the Company made in this Agreement (including the Exhibits
and Schedules), the other Transaction Documents or any other written information
delivered or furnished to any
-42-
Investor in connection herewith or therewith (a) shall be deemed material and to
have been relied upon by such Investor; (b) except as otherwise provided in this
Agreement, shall survive the delivery of the Shares; (c) shall bind the Company
and its successors and permitted assigns (whether so expressed or not); and (d)
shall inure to the benefit of the Investors and their respective successors and
assigns, including each transferee of any Securities (whether so expressed or
not).
14. Third Party Beneficiary. The parties hereto intend for MCP to be a third
party beneficiary under this Agreement with respect to Section 8.4 hereof.
15. Assignment. The Company shall not assign any of its rights and obligations
hereunder, or any of their interests herein, without the prior written consent
of the Investors. Prior to Closing, no Investor shall assign any of its rights
and obligations hereunder, or any of its interests herein, or any of the Shares
to be acquired by such Investor hereunder, to any other Person without the prior
written consent of the Company, which shall not be unreasonably withheld. All
covenants, agreements, representations, warranties and undertakings in this
Agreement made by and on behalf of any party hereto shall bind and inure to the
benefit of the successors and permitted assigns of such party (whether so
expressed or not).
16. Course of Dealing; Amendments, Waivers and Consents. No course of dealing
between any Investor, on one hand, and the Company, on the other hand, shall
operate as a waiver of any Investor's rights under this Agreement or any other
Transaction Document. The Company acknowledges that if any Investor, without
being required to do so by this Agreement or any other Transaction Document,
gives any notice or information to, or obtains any consent from, the Company,
the Investors shall not by implication have amended, waived or modified any
provision of this Agreement or any other Transaction Document, or created any
duty to give any such notice or information or to obtain any such consent on any
future occasion. No delay or omission on the part of any Investor in exercising
any right under this Agreement or any other Transaction Document shall operate
as a waiver of such right or any other right hereunder or thereunder. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion. No amendment, waiver or consent with respect to
this Agreement shall be binding unless it is in writing and signed by each of
the Company and the Investors.
17. General. All Exhibits and Schedules are hereby incorporated by reference
and made a part of this Agreement. If any provision of this Agreement shall be
found by any court of competent jurisdiction to be invalid or unenforceable, the
parties hereby waive such provision to the extent that it is found to be invalid
or unenforceable. Such provision shall, to the maximum extent allowable by law,
be modified by such court so that it becomes enforceable, and, as modified,
shall be enforced as any other provision hereof, all the other provisions hereof
continuing in full force and effect. The headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation hereof. This Agreement and the other Transaction Documents
constitute the entire understanding of the
-43-
parties with respect to the subject matter hereof and supersede any and all
prior understandings and agreements, whether written or oral, with respect to
such subject matter. This Agreement may be executed in counterparts, which
together shall constitute one and the same instrument. This Agreement shall be
governed by and construed in accordance with the domestic substantive laws of
the State of Delaware without giving effect to any choice or conflict of laws
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
an agreement under seal as of the date first above written.
COMPANY: Veridian Corporation
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Chief Executive Officer
INVESTORS: Monitor Clipper Equity Partners, L.P.
Monitor Clipper Equity Partners (Foreign), L.P.
Each By Monitor Clipper Partners, L.P.,
its general partner
By MCP GP, Inc.,
its general partner
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Authorized Signatory
The Board of Trustees of the Texas Growth Fund
II, as Trustee for the Texas Growth Fund II - 1998 Trust
By: TGF II Management, L.P., as Executive Director
By: TGF Management Corp., as general
partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
CIBC WG Argosy Merchant Fund 2, L.L.C.
By /s/ ▇▇▇ ▇▇▇▇▇▇
---------------------------------
Co-Investment Merchant Fund 3, LLC
By /s/ ▇▇▇ ▇▇▇▇▇▇
---------------------------------
-44-
Exhibit C
Exhibit A
INVESTORS
Investor Shares
Monitor Clipper Equity Partners, L.P. 3,364,110
c/o Monitor Clipper Partners, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Monitor Clipper Equity Partners (Foreign), L.P. 635,890
c/o Monitor Clipper Partners, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
CIBC WG Argosy Merchant Fund 2, L.L.C. 450,000
c/o CIBC World Markets Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Co-Investment Merchant Fund 3, LLC 50,000
c/o CIBC World Markets Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
The Texas Growth Fund II - 1998 Trust 1,000,000
c/o TGF Management Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-45-