Exhibit 10.1
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PREFERRED STOCK PURCHASE AGREEMENT
by and among
▇▇▇▇▇▇▇ WASTE SYSTEMS, INC.
and
the Persons listed on Schedule 1 attached hereto
Dated as of June 28, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.........................................................1
1.1 DEFINITIONS.............................................................1
1.2 ACCOUNTING TERMS........................................................7
ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK...............................8
2.1 PURCHASE AND SALE OF THE PREFERRED STOCK................................8
2.2 CLOSING.................................................................8
ARTICLE III CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE...........9
3.1 REPRESENTATIONS AND WARRANTIES.........................................9
3.2 COMPLIANCE WITH THIS AGREEMENT.........................................9
3.3 OFFICER'S CERTIFICATE..................................................9
3.4 SECRETARY'S CERTIFICATE, GOOD STANDING CERTIFICATES....................9
3.5 TRANSACTION DOCUMENTS.................................................10
3.6 PURCHASE PERMITTED BY APPLICABLE LAWS.................................10
3.7 OPINIONS OF COUNSEL...................................................10
3.8 HSR CLEARANCE.........................................................10
3.9 CERTIFICATE OF DESIGNATION............................................10
3.10 PREFERRED STOCK CERTIFICATE ..........................................10
3.11 REQUIRED CONTRACTUAL CONSENTS ........................................10
3.12 REQUIRED GOVERNMENTAL CONSENTS .......................................10
3.13 AMENDMENT OF BYLAWS ..................................................10
3.14 REGISTRATION RIGHTS AGREEMENT ........................................11
3.15 LISTING OF SHARES ....................................................11
3.16 AUDITED FINANCIALS ...................................................11
ARTICLE IV CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE..............11
4.1 REPRESENTATIONS AND WARRANTIES TRUE...................................11
4.2 COMPLIANCE WITH THIS AGREEMENT........................................11
4.3 ISSUANCE PERMITTED BY REQUIREMENTS OF LAWS............................11
4.4 HSR CLEARANCE.........................................................11
4.5 TRANSACTION DOCUMENTS.................................................11
4.6 REQUIRED CONTRACTUAL CONSENTS.........................................11
4.7 DELIVERY OF PURCHASE PRICE............................................12
4.8 REQUIRED GOVERNMENTAL CONSENTS........................................12
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................12
5.1 ORGANIZATION AND QUALIFICATION........................................12
5.2 AUTHORITY AND AUTHORIZATION...........................................12
5.3 EXECUTION AND BINDING EFFECT..........................................12
5.4 GOVERNMENTAL AUTHORIZATIONS...........................................13
5.5 REGULATORY AUTHORIZATIONS.............................................13
5.6 AGREEMENTS AND OTHER DOCUMENTS........................................13
5.7 ABSENCE OF CONFLICTS..................................................13
5.8 FINANCIAL STATEMENTS..................................................13
5.9 COMPLIANCE WITH MATERIAL AGREEMENTS...................................14
5.10 LABOR MATTERS ........................................................14
5.11 LITIGATION ...........................................................15
5.12 RIGHTS TO PROPERTY ...................................................15
5.13 TAXES ................................................................15
5.14 NO MATERIAL ADVERSE CHANGE ...........................................16
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5.15 NO BROKERAGE FEES.....................................................16
5.16 ERISA.................................................................16
5.17 INTELLECTUAL PROPERTY.................................................16
5.18 ENVIRONMENTAL.........................................................17
5.19 SUBSIDIARIES..........................................................17
5.20 TRANSACTIONS WITH AFFILIATES..........................................17
5.21 CAPITALIZATION........................................................17
5.22 COMMISSION FILINGS....................................................18
5.23 INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY....................18
5.24 SECURITIES ACT........................................................18
5.25 CERTAIN PAYMENTS......................................................19
5.26 YEAR 2000 COMPLIANCE..................................................19
5.27 TRADE RELATIONS.......................................................19
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..................19
6.1 AUTHORIZATION; NO CONTRAVENTION.......................................19
6.2 BINDING EFFECT........................................................20
6.3 ACCREDITED INVESTOR; PURCHASE FOR OWN ACCOUNT.........................20
6.4 GOVERNMENTAL AUTHORIZATIONS...........................................21
6.5 NO BROKERS OR FINDERS.................................................21
6.6 OWNERSHIP OF COMPANY SECURITIES; VOTING AND OTHER AGREEMENTS..........21
6.7 SUFFICIENT FUNDS......................................................21
ARTICLE VII COVENANTS........................................................21
7.1 HSR CLEARANCE.........................................................21
7.2 RESERVATION OF SHARES.................................................21
7.3 DELIVERY OF FINANCIAL AND BUSINESS INFORMATION........................22
7.4 ACCESS TO PROPERTIES..................................................22
7.5 PRE-CLOSING COVENANTS.................................................22
7.6 EXCLUSIVITY...........................................................22
7.7 TAX MATTERS...........................................................23
7.8 CONFIDENTIALITY.......................................................23
7.9 SCHEDULE 13D AND 13G..................................................23
7.10 ELECTION OF DIRECTORS ................................................24
7.11 STANDSTILL ...........................................................24
7.12 TRANSFER RESTRICTIONS ................................................25
7.13 USE OF PROCEEDS ......................................................25
7.14 LISTING OF SHARES ....................................................25
ARTICLE VIII INDEMNIFICATION; TERMINATION....................................25
8.1 INDEMNIFICATION.......................................................25
8.2 NOTIFICATION..........................................................26
8.3 TERMINATION...........................................................27
ARTICLE IX MISCELLANEOUS.....................................................27
9.1 CLAIMS AND SUITS UNDER SECTION 8.1....................................27
9.2 NOTICES...............................................................27
9.3 SUCCESSORS AND ASSIGNS................................................28
9.4 DETERMINATIONS, REQUESTS OR CONSENTS..................................28
9.5 COUNTERPARTS..........................................................29
9.6 HEADINGS..............................................................29
9.7 GOVERNING LAW.........................................................29
9.8 SEVERABILITY..........................................................29
9.9 RULES OF CONSTRUCTION.................................................29
9.10 ENTIRE AGREEMENT......................................................29
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9.11 CERTAIN EXPENSES......................................................29
9.12 PUBLICITY.............................................................30
9.13 FURTHER ASSURANCES....................................................30
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SCHEDULES
Schedule 1 - Closing Purchasers
Schedule 5.4 - Governmental Authorizations
Schedule 5.6 - Agreements and Other Documents
Schedule 5.7 - Absence of Conflicts
Schedule 5.8 - Financial Statements
Schedule 5.9 - Compliance with Material Agreements
Schedule 5.10 - Labor Matters
Schedule 5.11 - Litigation
Schedule 5.13 - Taxes
Schedule 5.14 - No Material Adverse Change
Schedule 5.16 - List of Plans Subject to Title IV of ERISA
Schedule 5.18(a) - Notice of Environmental Matters
Schedule 5.18(b) - Liability for Environmental Matters
Schedule 5.19 - Subsidiaries
Schedule 5.20 - Transactions with Affiliates
Schedule 5.21 - Capitalization
Schedule 5.27 - Trade Relations
EXHIBITS
Exhibit A - Bylaws
Exhibit B - Form of Certificate of Designation
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Officer's Certificate
Exhibit E - Form of Secretary's Certificate
Exhibit F - Form of Legal Opinion
Exhibit G - Form of Preferred Stock Certificate
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PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT is dated as of June 28, 2000, by
and among ▇▇▇▇▇▇▇ Waste Systems, Inc., a Delaware corporation (the "Company"),
and the Persons whose names are set forth on Schedule 1 attached hereto, as such
schedule is updated from time to time (individually, a "Purchaser" and
collectively, the "Purchasers").
STATEMENT OF PURPOSE
WHEREAS, the Company will designate a new series of its preferred stock,
par value $0.01 per share, which shall be called the Company's Series A
Convertible Preferred Stock (the "Preferred Stock"), which shall be convertible
into shares of the Company's Class A common stock, par value $0.01 per share, in
accordance with the terms of the Company's Certificate of Designation amending
the Company's Certificate of Incorporation;
WHEREAS, the Purchasers wish to purchase at the Closing (as defined
below), upon the terms and conditions stated in this Agreement, an aggregate of
55,750 shares of the Preferred Stock to be purchased by the Purchasers; and
WHEREAS, the Company and the Purchasers have reached certain agreements
with regard to the foregoing transactions, all upon the terms and conditions
more particularly described herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Accredited Investor" means any "accredited investor" within the meaning
of Rule 501(a) under the Securities Act.
"Affiliate" means, with respect to a Person, any Person (other than a
Subsidiary) which directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such Person. The
term "control" means (i) the power to vote 25% or more of the securities or
other equity interests of a Person having ordinary voting power (on a fully
diluted basis), or (ii) the possession, directly or indirectly, of any other
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise; provided, however, that, for purposes of Section 7.12 (transfer
restrictions), the percentage contained in clause (i) of the definition of
"control" shall be "50%" instead of "25%."
"Agreement" means this Preferred Stock Purchase Agreement, as amended or
supplemented from time to time.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in Boston, Massachusetts are authorized or required by
law or executive order to close.
"Bylaws" means the Bylaws of the Company as amended pursuant to Section
3.13 on or prior to the Closing Date and attached hereto as Exhibit A.
"Certificate of Designation" means the Certificate of Designation of the
Company relating to the Preferred Stock filed with the Secretary of State of the
State of Delaware on or prior to the Closing Date and attached hereto as Exhibit
B, as subsequently amended, supplemented or otherwise modified.
"Certificate of Incorporation" means the Amended and Restated Certificate
of Incorporation of the Company as in effect on the date hereof and as amended
by the Certificate of Designation.
"Class B Common Stock" means the Company's Class B common stock, par value
$0.01 per share, or any other capital stock of the Company into which such stock
is reclassified or reconstituted.
"Closing" has the meaning assigned thereto in Section 2.2.
"Closing Date" has the meaning assigned thereto in Section 2.2.
"Closing Failure" has the meaning assigned thereto in Section 8.3(a).
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the Company's Class A common stock, par value $0.01
per share, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Company" has the meaning assigned thereto in the Preamble.
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"Company Indemnified Party" has the meaning assigned thereto in Section
8.1.
"Company Liabilities" has the meaning assigned thereto in Section 8.1.
"Contractual Obligations" means, with respect to a Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument to which such
Person is a party or by which it or any of its property is bound.
"Current SEC Reports" has the meaning assigned thereto in Section 5.22.
"DGCL" has the meaning assigned thereto in Section 2.1.
"Environmental Law" means any federal, state, foreign or local statute,
law, rule, regulation, ordinance, code or rule of common law now in effect and
in each case as amended, and any applicable judicial interpretation thereof,
including any legally binding judicial or administrative order, consent decree
or judgment, relating to the environment, employee, health and safety or
Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss. 9601 et seq.; the Resource Conservation and Recovery Act, as amended,
42 U.S.C. ss. 6901 et seq.; the Federal Water Pollution Control Act, as amended,
33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601
et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water
Act, 42 U.S.C. ss. 201 & 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C.
ss. 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of
1986, 42 U.S.C. ss. 11001 et seq.; the Hazardous Material Transportation Act, 49
U.S.C. ss. 1801 et seq. and the Occupational Safety and Health Act, 29 U.S.C.
ss. 651 et seq.; and any state and local or foreign counterparts or equivalents,
in each case as amended from time to time.
"Equity Securities" has the meaning assigned thereto in Section 7.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Statements" has the meaning assigned thereto in Section 5.8.
"GAAP" means generally accepted United States accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination.
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"Governmental Authority" means the government of any nation, state, city,
locality or other political subdivision of any thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Hazardous Materials" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, polychlorinated biphenyls, and radon gas; and (ii) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous substances", "restricted hazardous wastes", "toxic substances" or
"toxic pollutants" under any applicable Environmental Law.
"Indebtedness" means as to any Person, at a particular time, (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which such
Person otherwise assures a creditor against loss, (b) obligations under leases
which shall have been or should be, in accordance with GAAP, recorded as capital
leases in respect of which obligations such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person assures a creditor against loss, (c) obligations of such
Person to purchase or repurchase accounts receivable, chattel paper or other
payment rights sold or assigned by such Person, (d) indebtedness or obligations
of such Person under or with respect to letters of credit, notes, bonds or other
debt instruments (other than letters of credit that are cash collateralized) and
(e) all obligations of such Person under any interest rate swap, cap or collar
agreement or other similar agreement or arrangement designed to alter the risks
of that Person arising from fluctuations in interest rates, in each case whether
contingent or matured.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), priority or other security
agreement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under the Uniform Commercial Code or any other similar
recording or notice statute, and any lease having substantially the same effect
as any of the foregoing).
"Material Adverse Change" means a material adverse change in (i) the
business, operations, assets, condition (financial or otherwise) or properties
of the Company and its Subsidiaries, taken as a whole or (ii) the ability of the
Company to perform its obligations, taken as a whole, under the Transaction
Documents.
"Material Adverse Effect" means a material adverse effect upon (i) the
business, operations, assets, condition (financial or otherwise) or properties
of the Company and its Subsidiaries, taken as a whole, or (ii) the ability of
the Company to perform its obligations, taken as a whole, under the Transaction
Documents.
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"Material Controversy" means a controversy that arises among the Company
and any of the holders of the Company's outstanding Common Stock in respect of
the purchase of the Preferred Stock pursuant to this Agreement.
"Multiemployer Plan" means any "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate makes,
is making or is obligated to make contributions or has made or been obligated to
make contributions.
"Notices" has the meaning assigned thereto in Section 9.2.
"Organizational Documents" means with respect to a corporation, the
articles of incorporation and by-laws of such corporation; with respect to a
partnership, the certificate of partnership (or limited partnership, as
applicable) and partnership agreement, together with the analogous documents for
any corporate or partnership general partner; and in any case, any other
document governing the formation and conduct of business by such entity.
"Other Proposal" has the meaning assigned thereto in Section 7.6.
"PBGC" means the Pension Benefit Guaranty Corporation established under
Title IV of ERISA or any other governmental agency, department or
instrumentality succeeding to its functions.
"Permitted Transferee" means any Person to whom a Purchaser or Permitted
Transferee has transferred Preferred Stock in accordance with Section 7.12.
"Person" means any individual, firm, corporation, partnership, trust,
limited liability company, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other entity of any
kind, and shall include any successor (by merger or otherwise) of such entity.
"Plan" means (i) an "employee pension plan" as defined in Section 3(2) of
ERISA, (ii) an "employee welfare benefit plan" as defined in Section 3(1) of
ERISA or (iii) any other employee benefit or fringe benefit plan or program,
whether established by Requirements of Law, a written agreement or other
instrument, or custom or informal understanding.
"Preferred Stock" means the Series A Convertible Preferred Stock of the
Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Purchaser(s)" has the meaning assigned thereto in the Preamble and their
successors and permitted assigns.
"Purchaser Director" means any person nominated or designated by the
Purchasers to serve as a director of the Company pursuant to this Agreement.
"Purchaser Observer" means any person designated by the Purchasers to
serve as an observer at meetings of the Board of Directors pursuant to this
Agreement.
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"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Closing Date among the Company and the Purchasers listed on the
signature pages thereto and attached hereto as Exhibit C.
"Regulation D" means Rule 506 of Regulation D as promulgated by the
Commission.
"Regulatory Authorizations" means all approvals, authorizations, licenses,
filings, notices, registrations, consents, permits, exemptions, registrations,
qualifications, designations, declarations, or other actions or undertakings
made by, to or in respect of any Governmental Authority, including any of the
foregoing under any Environmental Law necessary in order to enable the Company
or its Subsidiaries to provide waste management service of the type provided or
proposed to be provided by such entity as of the date hereof.
"Reportable Event" has the meaning assigned thereto in ERISA for which
notice has not been waived by regulation.
"Representatives" has the meaning assigned thereto in Section 7.8.
"Required Holders" has the meaning assigned thereto in Section 9.4.
"Requirements of Law" means, with respect to a Person, the Organizational
Documents of such Person, and any law, treaty, rule, regulation, right,
privilege, qualification, license, permit or franchise or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject or pertaining to any or all of the transactions
contemplated or referred to herein, including all applicable common law, all
provisions of all applicable material state and federal constitutions, statutes,
rules, regulations and orders of all governmental bodies, all Regulatory
Authorizations issued to the Company or its Subsidiaries, and all Environmental
Laws.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Loan Agreement" means the Amended and Restated Revolving Credit
and Term Loan Agreement dated as of August 6, 1997 to which the Company is a
party as a borrower, as amended from time to time in accordance with the terms
thereof.
"Senior Loan Documents" means the Senior Loan Agreement and each other
Loan Document as defined and referred to in the Senior Loan Agreement, as
amended from time to time in accordance with the terms thereof.
"Standstill Period" has the meaning assigned thereto in Section 7.11.
"Stock Option Plan" means the 1997 Stock Incentive Plan of the Company as
in effect on the date hereof, as it may be amended from time to time, and any
and all stock options and other stock-based awards issued pursuant thereto.
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"Subsidiary" means, as to any Person, (i) any corporation more than fifty
percent (50%) of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person and/or
one or more Subsidiaries of such Person has more than a 50% equity interest at
the time.
"Taxes" means all taxes, assessments, fees and other charges levied upon
the properties of the Company and its Subsidiaries as shown upon all federal,
state and local tax returns and reports, U.S. and non-U.S., required to be filed
by such entity.
"Tax Return" means any return (including any information return), report,
statement, form or other document required to be filed with or submitted to any
Governmental Authority in connection with the determination, assessment,
collection or payment of any Taxes.
"Transaction Documents" means, collectively, this Agreement and the
Registration Rights Agreement.
"Underlying Common Stock" means all shares of Common Stock issued or
issuable upon conversion of the Preferred Stock issued pursuant to this
Agreement as of the date of any determination (which number shall be determined,
with respect to any given date, based upon the conversion price with respect to
the Preferred Stock in effect as of such date).
"United States" and "U.S." shall mean the United States of America.
"Year 2000 Compliant" means that the computer systems and switches and
related equipment and software (i) are capable of recognizing, processing,
managing, representing, interpreting, and manipulating correctly date-related
data for dates earlier and later than January 1, 2000, (ii) have the ability to
provide date recognition for any data element without limitation (including, but
not limited to, date-related data represented without a century designation,
date-related data whose year is represented by only two digits and date fields
assigned special values), (iii) have the ability to automatically function into
and beyond the year 2000 without human intervention and without any change in
operations associated with the advent of the year 2000, (iv) have the ability to
correctly interpret data, dates and time into and beyond the year 2000, (v) have
the ability not to produce noncompliance in existing information, nor otherwise
corrupt such data into and beyond the year 2000, (vi) have the ability to
correctly process after January 1, 2000 data containing dates before that date,
and (vii) have the ability to recognize all "leap years," including February 29,
2000.
1.2 Accounting Terms. All accounting terms used herein not expressly
defined in this Agreement shall have the respective meanings given to them in
accordance with sound accounting practice. The term "sound accounting practice"
shall mean such accounting practice as, in the opinion of the independent
certified public accountants regularly retained by the
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Company, conforms at the time to GAAP applied on a consistent basis except for
changes with which such accountants concur.
ARTICLE II
PURCHASE AND SALE OF PREFERRED STOCK
2.1 Purchase and Sale of the Preferred Stock. Subject to the terms and
conditions hereof, the Company agrees to issue to the Purchasers, and each
Purchaser agrees severally and not jointly to purchase from the Company, on the
Closing Date, the number of shares of the Preferred Stock allocated by Berkshire
Fund V Investment Corp. to such Purchaser for a purchase price of $1,000 per
share for an aggregate purchase price of $55,750,000. Notwithstanding the
foregoing, in the event any Purchaser (other than Berkshire Fund V Investment
Corp.) fails to purchase any of the shares of Preferred Stock allotted to such
Purchaser, Berkshire Fund V Investment Corp. shall purchase such shares, subject
to the terms and conditions hereof. Between the date hereof and the Closing
Date, Berkshire Fund V Investment Corp. shall have the right to allocate up to
2,000 shares of the Preferred Stock to additional Purchasers that are not
currently listed on Schedule 1, subject to the prior written approval of the
Company in its sole discretion; provided, however, that (i) Berkshire Fund V
Investment Corp. shall offer such shares of Preferred Stock only to Accredited
Investors and (ii) each such additional Purchaser shall sign a joinder to this
Agreement pursuant to which such additional Purchaser shall agree to be bound by
the terms and conditions of this Agreement, including without limitation those
terms and conditions set forth in Articles 6 and 7 hereof. Upon the execution of
such joinder by the additional Purchaser and the acceptance of such joinder by
the Company, Schedule 1 hereto shall be updated to reflect such allocation and
such additional Purchaser shall be deemed for all purposes hereof to be a
"Purchaser." The Preferred Stock shall have the powers, rights and preferences
as set forth in the Certificate of Designation, which Certificate of Designation
will be duly adopted by the Board of Directors prior to the Closing Date in
accordance with the provisions of Section 151 of the Delaware General
Corporation Law of the State of Delaware (the "DGCL") and will be filed with the
Secretary of State of the State of Delaware prior to or contemporaneously with
the Closing Date pursuant to the DGCL. A true and correct copy of the
Certificate of Incorporation of the Company as currently in effect prior to the
adoption and filing of the Certificate of Designation has heretofore been
furnished to the Purchasers by the Company.
2.2 Closing. Subject to the terms and conditions of this Agreement, the
issuance and purchase of the Preferred Stock shall take place at the closing
(the "Closing") to be held at the offices of Ropes & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, as soon as reasonably practicable after all
necessary approvals and consents, if any, have been obtained and after all
applicable waiting periods have expired (the "Closing Date"). At the Closing,
the Company shall deliver to the Purchasers certificates representing the 55,750
shares of the Preferred Stock against delivery to the Company by the Purchasers
of the purchase price therefor by wire transfer of immediately available funds.
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ARTICLE III
CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE
The obligation of Berkshire Fund V Investment Corp. and any other
Purchaser to purchase the shares of Preferred Stock at the Closing, to pay the
purchase price therefor at the Closing and to perform any other obligations
hereunder shall be subject to the reasonable satisfaction as determined by each
Purchaser of the following conditions on or before the Closing Date:
3.1 Representations and Warranties. The representations and warranties of
the Company contained in Article 5 hereof shall be true and correct (i) when
made and (ii) on and as of the Closing Date as if made on and as of such date
(except for representations and warranties that speak as of a specific date in
which case the representation or warranty only need be true and correct as of
the specified date).
3.2 Compliance with this Agreement. The Company shall have performed and
complied in all material respects with all of the agreements, obligations,
covenants and conditions set forth in this Agreement or any other Transaction
Document or contemplated herein or therein that are required to be performed or
complied with by the Company on or before the Closing Date.
3.3 Officer's Certificate. Each Purchaser shall have received a
certificate dated as of the Closing Date from the chief executive officer and
chief financial officer of the Company, substantially in the form of Exhibit D,
to the effect that (a) all representations and warranties of the Company
contained in this Agreement are true and correct, (b) the Company is not in
violation in any material respect of any of the covenants contained in this
Agreement, (c) all conditions precedent to the Closing to be performed by the
Company have been duly performed in all material respects, and (d) no Material
Controversy has occurred prior to Closing.
3.4 Secretary's Certificate, Good Standing Certificates. Each Purchaser
shall have received a certificate from the Company dated the Closing Date and
signed by the Secretary or an Assistant Secretary of the Company, substantially
in the form of Exhibit E, certifying (a) that the attached copies of the
Certificate of Incorporation, Bylaws or other applicable governance documents
and resolutions of the Board of Directors of the Company (i) authorizing the
issuance of the Preferred Stock pursuant to this Agreement, the issuance of any
Common Stock upon conversion thereof, the Certificate of Designation and the
Bylaws and (ii) approving this Agreement, each of the other Transaction
Documents and the transactions contemplated hereby and thereby to which it is a
party, are all true, complete and correct and remain unamended and in full force
and effect, (b) as to the incumbency and specimen signature of each officer of
the Company executing this Agreement and the other Transaction Documents to
which it is a party and any other document delivered in connection herewith or
therewith on behalf of the Company and (c) as to the good standing of the
Company and its Subsidiaries in each such entity's state of organization.
9
3.5 Transaction Documents. Each Purchaser shall have received and approved
true, complete and correct copies of the executed Transaction Documents, each of
which will be in full force and effect as of the Closing Date.
3.6 Purchase Permitted by Applicable Laws. The acquisition of and payment
for the Preferred Stock to be acquired by each Purchaser at the Closing and the
consummation of the transactions contemplated hereby at the Closing (a) shall
not be prohibited by any Requirements of Law, and (b) shall not subject any
Purchaser to any penalty or, in its reasonable judgment, other adverse condition
under or pursuant to any Requirements of Law.
3.7 Opinions of Counsel. The Purchasers shall have received from ▇▇▇▇ and
▇▇▇▇ LLP, special legal counsel for the Company, an opinion substantially in the
form of Exhibit F, dated as of the Closing Date.
3.8 HSR Clearance. Any required clearance under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
to sell the Preferred Stock upon the terms of this Agreement shall have been
obtained.
3.9 Certificate of Designation. On or prior to the Closing, the
Certificate of Designation shall have been duly filed with the Secretary of
State of the State of Delaware, all in accordance with the applicable provisions
of the DGCL, and the Certificate of Designation shall constitute a legal and
valid amendment of the Certificate of Incorporation and, as of the Closing, the
Certificate of Incorporation shall not have been otherwise amended.
3.10 Preferred Stock Certificate. Each Purchaser shall have received from
the Company a duly executed preferred stock certificate, substantially in the
form of Exhibit G, dated the Closing Date representing the number of shares of
Preferred Stock purchased by it at the Closing.
3.11 Required Contractual Consents. The Company shall have received any
consents required pursuant to the terms of the Senior Loan Agreement or any
other material Contractual Obligation in connection with the execution and
delivery by the Company of this Agreement and the other Transaction Documents
and the consummation of the transactions to be performed by the Company
contemplated by the Transaction Documents.
3.12 Required Governmental Consents. The Company shall have received all
Regulatory Authorizations and other Governmental Authority approvals or consents
required in connection with the execution and delivery by the Company of this
Agreement and the other Transaction Documents and the consummation of the
transactions to be performed by the Company contemplated by the Transaction
Documents.
3.13 Amendment of Bylaws. The Bylaws shall have been amended (i ) to
require regular meetings of the Company's board of directors to be held at least
once during each of the Company's fiscal quarters and (ii) to provide that no
amendment to the preceding provisions of the Bylaws shall be effective without
the approval of holders of a majority of the outstanding shares of the Preferred
Stock issued to the Purchasers under this Agreement. The Bylaws as so
10
amended shall be in full force and effect as of the Closing and shall not have
been further amended.
3.14 Registration Rights Agreement. The Purchasers shall have received a
Registration Rights Agreement, substantially in the form of Exhibit C, dated the
Closing Date duly executed by all parties thereto.
3.15 Listing of Shares. The Company shall have listed with The Nasdaq
Stock Market the maximum number of shares of Common Stock issuable upon
conversion of the Preferred Stock pursuant to the terms of the Certificate of
Designation.
3.16 Audited Financials. The Company shall have delivered to the
Purchasers the audited financial statements of the Company for the fiscal year
ended April 30, 2000 together with a "clean" audit report of the Company's
certified public accountants.
ARTICLE IV
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE
The obligations of the Company to issue and sell the Preferred Stock at
the Closing and to perform its other obligations hereunder at the Closing shall
be subject to the satisfaction as determined by the Company of the following
conditions on or before the Closing Date:
4.1 Representations and Warranties True. The representations and
warranties of each of the Purchasers contained in Article 6 hereof shall be true
and correct (i) when made and (ii) on and as of the Closing Date as if made on
and as of such date.
4.2 Compliance with this Agreement. Each of the Purchasers shall have
performed and complied in all material respects with all of its agreements and
conditions set forth or contemplated herein that are required to be performed or
complied with by each of the Purchasers on or before the Closing Date.
4.3 Issuance Permitted by Requirements of Laws. The issuance of the
Preferred Stock to be issued by the Company hereunder at the Closing and the
consummation of the transactions contemplated hereby at the Closing (a) shall
not be prohibited by any Requirements of Law and (b) shall not subject the
Company to any penalty or, in its reasonable judgment, other adverse condition
under or pursuant to any Requirements of Law.
4.4 HSR Clearance. Any required clearance under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
to acquire the Preferred Stock upon the terms of this Agreement shall have been
obtained.
4.5 Transaction Documents. The Company shall have received copies of each
of the Transaction Documents duly executed by all parties thereto.
4.6 Required Contractual Consents. The Company shall have received any
consents required pursuant to the terms of the Senior Loan Agreement or any
other material
11
Contractual Obligation in connection with the execution and delivery by the
Company of this Agreement and the other Transaction Documents and the
consummation of the transactions to be performed by the Company contemplated by
the Transaction Documents.
4.7 Delivery of Purchase Price. The Company shall have received payment
for the Preferred Stock by wire transfer in immediately available funds.
4.8 Required Governmental Consents. The Company shall have received all
Regulatory Authorizations and other Governmental Authority approvals or consents
required in connection with the execution and delivery by the Company of this
Agreement and the other Transaction Documents and the consummation of the
transactions to be performed by the Company contemplated by the Transaction
Documents.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers as follows:
5.1 Organization and Qualification. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of its state of organization. Each of the Company and its Subsidiaries is
duly qualified to do business and in good standing in each jurisdiction in which
the failure to receive or retain such qualification would reasonably be expected
to have a Material Adverse Effect.
5.2 Authority and Authorization. Each of the Company and its Subsidiaries
has all requisite corporate right, power, authority and legal right to carry on
its business, to own or lease its properties and to execute and deliver and
perform its obligations under this Agreement, and, in the case of the Company,
to execute and deliver and to perform its obligations under the Transaction
Documents and consummate the transactions contemplated by the Transaction
Documents. The Company's execution, delivery and performance of the Transaction
Documents and any other documents or instruments to be delivered pursuant
thereto to which it is a party have been duly and validly authorized by all
necessary corporate proceedings on the part of the Company. Upon issuance, the
Preferred Stock will be validly issued, fully paid and nonassessable, and will
not have been issued in violation of or subject to any preemptive rights, and
the shares of Common Stock issuable upon conversion of the Preferred Stock will
be reserved for issuance, and upon issuance will be validly issued, fully paid
and nonassessable, and will not have been issued in violation of or be subject
to any preemptive rights.
5.3 Execution and Binding Effect. This Agreement and all other Transaction
Documents to which the Company is a party have been or will be duly and validly
executed and delivered by the Company, and constitute or, when executed and
delivered, will constitute, the legal, valid and binding obligations of the
Company enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws affecting creditors' rights generally.
12
5.4 Governmental Authorizations. Except as set forth on Schedule 5.4, no
authorization, consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing with, any
Governmental Authority is or will be necessary in connection with the execution
and delivery of this Agreement or any other Transaction Documents by the
Company, consummation by the Company of the transactions herein or therein
contemplated, performance of or compliance by the Company with the terms and
conditions hereof or thereof or the legality, validity and enforceability hereof
or thereof.
5.5 Regulatory Authorizations. Each of the Company and its Subsidiaries
holds all Regulatory Authorizations material for the conduct of its business as
now conducted and has conducted its business in substantial compliance with such
Regulatory Authorizations except where the failure to possess or comply with
such Regulatory Authorizations would not reasonably be expected to have a
Material Adverse Effect. All such Regulatory Authorizations are in full force
and effect, are subject to no further administrative or judicial review and are
therefore final.
5.6 Agreements and Other Documents. As of the date hereof, the Company has
provided or made available to the Purchasers, accurate and complete copies (or
summaries) of all of the following agreements or documents to which the Company
or any of its Subsidiaries is subject and each of which is listed on Schedule
5.6: (a) instruments or documents evidencing Indebtedness of the Company or its
Subsidiaries and any security interest granted by the Company or its
Subsidiaries with respect thereto; and (b) instruments and agreements evidencing
the issuance of any equity securities, warrants, rights or options to purchase
equity securities of the Company or its Subsidiaries.
5.7 Absence of Conflicts. The execution and delivery of this Agreement and
the other Transaction Documents to which the Company is a party, the
consummation by the Company of the transactions herein or therein contemplated
and the performance of or compliance with the terms and conditions hereof or
thereof by the Company will not, directly or indirectly (and with or without
notice or the passage of time or both), (a) violate any material Requirements of
Law material to the Company or its Subsidiaries; (b) conflict with or result in
a breach of or a default under the Organizational Documents of the Company or
its Subsidiaries or any material Contractual Obligation to which the Company or
its Subsidiaries is a party or by which such entity or its properties are bound;
(c) result in the creation or imposition of any Lien upon any property (now
owned or hereafter acquired); or (d) violate or conflict with, or give any
Governmental Authority the right to challenge the transactions contemplated by
the Transaction Documents or revoke, withdraw, suspend, cancel, terminate or
modify, any Regulatory Authorization issued to or held by the Company or any
Subsidiary (other than as set forth on Schedule 5.7).
5.8 Financial Statements. The Company has furnished to the Purchasers the
most recent annual financial statements (the "Financial Statements"), certified
by the Chief Financial Officer, including balance sheets and related statements
of income, retained earnings and cash flow, as described on Schedule 5.8. Such
Financial Statements (including the notes thereto) present fairly in all
material respects the financial condition of the Company and its Subsidiaries
13
on a consolidated basis as of the end of such fiscal period and the results of
its operations and the changes in its financial position for the fiscal period
then ended, all in conformity with GAAP applied on a basis consistent with that
of the preceding fiscal period. Neither the Company nor its Subsidiaries has
incurred any obligation or liability (absolute, contingent, liquidated or
unliquidated) material to the Company and its Subsidiaries, taken as a whole ,
except for (i) those reflected in the Financial Statements on Schedule 5.8, (ii)
those that have been incurred or have arisen in the ordinary course of business
since ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) those disclosed in the Company's filings with the
Commission, (iv) those listed on schedules attached to this Agreement and (v)
those permitted or arising under this Agreement and the other Transaction
Documents. The Company and each of its Subsidiaries have made and kept books,
records and accounts which, in reasonable detail, accurately and fairly reflect
their respective transactions and dispositions of their assets in all material
respects.
5.9 Compliance with Material Agreements. As of the date hereof, except as
set forth on Schedule 5.9, neither the Company nor any of its Subsidiaries or,
to the Company's knowledge, any other party is in violation of any term of any
material Contractual Obligation that is required to be filed with the Commission
(a "Material Contractual Obligation") to which it is a party or by which it or
its properties are bound that would reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 5.9, no event has occurred or
circumstance exists that (with or without notice or the passage of time or both)
would result in a default in a material respect under a Material Contractual
Obligation or would give any party to a Material Contractual Obligation the
right to exercise any remedy under such Contractual Obligation or to cancel,
terminate or modify such Material Contractual Obligation which would reasonably
be expected to have a Material Adverse Effect. Except as set forth on Schedule
5.9, neither the Company nor any Subsidiary has given notice to or received
notice from any other Person relating to an alleged, possible or potential
default under any Material Contractual Obligation which would reasonably be
expected to have a Material Adverse Effect.
5.10 Labor Matters. As of the date hereof, the Company represents that, to
the best of its knowledge, and except as set forth in Schedule 5.10, (a) no
strikes against either the Company or its Subsidiaries are pending or, to the
Company's knowledge, threatened, and no other labor disputes that could
reasonably be expected to have a Material Adverse Effect are pending or, to the
Company's knowledge, threatened; (b) hours worked by and payment made to
employees of the Company or any of its Subsidiaries comply with the Fair Labor
Standards Act and each other federal, state, local or foreign law applicable to
such matter; (c) all payments due from either the Company or its Subsidiaries
for employee health and welfare insurance have been paid or accrued as a
liability on the books of such entity; (d) neither the Company nor any of its
Subsidiaries is a party to or bound by any collective bargaining agreement or
any employment agreement (e) there is no organizing activity involving either
the Company or its Subsidiaries pending or, to either the Company or its
Subsidiaries' knowledge, threatened by any labor union or group of employees;
(f) there are no representation proceedings pending or, to the Company's
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of either the Company or its Subsidiaries has
made a pending demand for recognition; and (g) there are no complaints or
charges against either the Company or its Subsidiaries pending or, to the
knowledge of the executive officers of the Company, threatened to be filed with
any Governmental Authority or arbitrator based on, arising
14
out of, in connection with, or otherwise relating to the employment or
termination of employment by either the Company or its Subsidiaries of any
individual which, if adversely determined, would reasonably be expected to have
a Material Adverse Effect.
5.11 Litigation.
(a) Except as set forth in Schedule 5.11, there is no pending action, suit
or, to the Company's knowledge, threatened proceeding by or before any
Governmental Authority against the Company or any of its Subsidiaries or
affecting any of its properties, rights or licenses which if adversely decided
would reasonably be expected to have a Material Adverse Effect. There is no
pending or, to the Company's knowledge, threatened action, suit or proceeding
that challenges the transactions contemplated by the Transaction Documents or
that would have the effect of preventing, delaying, making illegal or otherwise
interfering with the transactions contemplated by the Transaction Documents.
(b) Neither the Company nor any Subsidiary is in violation of any
applicable Requirements of Law the consequences of the violation of which would
reasonably be expected to have a Material Adverse Effect .
5.12 Rights to Property. Each of the Company and its Subsidiaries has good
and marketable title, subject only to the encumbrances permitted under the
Senior Loan Agreement, to all personal property purported to be owned by it and
to all property reflected in the most recent balance sheet referred to in
Section 5.8 (except as sold or otherwise disposed of in the ordinary course of
business as no longer used or useful in the conduct of the business). Each lease
of real and personal property to which the Company or any of its Subsidiaries is
a party is in full force and effect and, except for such defaults as would not
have a Material Adverse Effect, is not subject to termination because of default
or otherwise.
5.13 Taxes.
(a) Except as set forth in Schedule 5.13, all material Tax Returns
required to be filed by each of the Company and its Subsidiaries have been
properly prepared, executed and filed and were correct and complete in all
material respects, and all Taxes upon such entity or upon any of its respective
properties, incomes, sales or franchises which are shown to be due and payable
thereon have been paid, other than Taxes or assessments the validity or amount
of which such entity is contesting in good faith. The Tax reserves and
provisions for Taxes on the books of each of the Company and its Subsidiaries
are adequate for all open years and for its current fiscal period. Except as set
forth on Schedule 5.13, none of these Tax Returns is currently under audit or
examination, and neither the Company nor any Subsidiary has received notice from
any Governmental Authority that (i) any Tax Return that it filed will be audited
or examined or that (ii) it is or may be liable for additional Taxes in respect
of any Tax Return or for payment of Taxes in respect of a Tax Return that it did
not file (because, for example, it believed that it was not subject to taxation
by the jurisdiction in question).
(b) Except as set forth on Schedule 5.13, the Company and its Subsidiaries
have withheld and paid to the proper Governmental Authorities all Taxes that
they were required to withhold and pay in respect of compensation or other
amounts paid to any employee or
15
independent contractor except for amounts as to which the failure to withhold
would not have a Material Adverse Effect.
(c) Except as set forth on Schedule 5.13, neither the Company nor any
Subsidiary has extended the time in which to file any Tax Return, waived the
statute of limitations for any Tax or agreed to any extension of time for a Tax
assessment or deficiency.
5.14 No Material Adverse Change. Since January 31, 2000, (i) except as set
forth on Schedule 5.14, there has been no Material Adverse Change and (ii)
except as set forth on Schedule 5.14 and the transactions contemplated by this
Agreement and the other Transaction Documents, the Company and its Subsidiaries
have operated their business in the ordinary course of business in all material
respects.
5.15 No Brokerage Fees. No brokerage or other fee, commission or
compensation is to be paid by the Company or any Subsidiary to any Person in
connection with the transactions hereunder except as contemplated herein.
5.16 ERISA.
(a) Except for such defaults as would not have a Material Adverse Effect,
in the case of each Plan that the Company or any Subsidiary maintains or
contributes to (or ever maintained or contributed to): (i) the Plan (and each
related trust or insurance policy) complies (or complied) in form and in
operation in all material respects with the applicable requirements of ERISA and
the Code, as the case may be; (ii) all required contributions to or premiums or
other payments in respect of the Plan have been paid, and all required reports
and descriptions have been filed with the proper Governmental Authority or
distributed to participants as appropriate; (iii) there have been no "prohibited
transactions" (as defined in Section 406 of ERISA and Section 4975 of the Code)
in respect of the Plan; (iv) no action, suit, proceeding, arbitration, hearing
or investigation in respect of the administration of the Plan or the investment
of Plan assets is pending or, to the Company's knowledge, threatened, and to the
Company's knowledge, there is no basis for any such action, suit, proceeding,
arbitration, hearing or investigation; and (v) except as set forth on Schedule
5.16, no Plan is subject to Title IV of ERISA.
(b) Except to the extent required by Section 4980B of the Code, neither
the Company nor any Subsidiary provides health or other welfare benefits to any
retired or former employee or is obligated to provide health or other welfare
benefits to any active employee following his or her retirement or other
termination of service.
5.17 Intellectual Property. Each of the Company and its Subsidiaries owns
or possesses the right to use all patents, trademarks, service marks, trade
names, copyrights, know-how, franchises, software and software licenses used in
or necessary for the operation of its business as currently conducted, free from
burdensome restrictions except where such failure to own or possess the right to
use would not reasonably be expected to have a Material Adverse Effect. Each
executive officer and senior manager of the Company and its Subsidiaries has
executed and delivered to the Company a confidentiality agreement. To the
Company's knowledge, no present or former executive officer or senior manager
has breached any such agreement.
16
5.18 Environmental. Each of the Company and its Subsidiaries is in
compliance with all Environmental Laws applicable to such entity or its business
except for such non-compliances as in the aggregate would not reasonably be
expected to have a Material Adverse Effect. Except as set forth in Schedule
5.18(a), neither the Company nor any of its Subsidiaries has received written
notice of, or is aware of, any violation or alleged violation, or any liability
or asserted liability, under any Environmental Law, with respect to such entity
or its business or its premises which would reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 5.18(b), neither the
Company nor any of its Subsidiaries has any liability for environmental
clean-up, removal, remediation, or damages, except for such environmental
clean-up, removal, remediation, or damages, as in the aggregate would not
reasonably be expected to have a Material Adverse Effect.
5.19 Subsidiaries. Neither the Company nor its Subsidiaries has any
Subsidiaries, other than the Subsidiaries listed on Schedule 5.19 and, except as
set forth on such schedule, all such Subsidiaries are wholly-owned, directly or
indirectly, by the Company.
5.20 Transactions with Affiliates. No Affiliate and no employee, officer
or director of either the Company or any of its Subsidiaries or any individual
related by blood, marriage, adoption or otherwise to any such Affiliate,
employee, officer or director, or any Person in which any such Affiliate,
employee, officer, director or individual related thereto owns any material
beneficial interest, is a party to any material agreement, contract, commitment
or transaction with the Company or any of its Affiliates or has any material
interest in any material property used by the Company or any of its Affiliates,
except as set forth on Schedule 5.20.
5.21 Capitalization. As of the date hereof, the authorized capital stock
of the Company and its Subsidiaries is as described on Schedule 5.21. As of June
23, 2000, the issued and outstanding shares of the Company and its Subsidiaries
are as described on Schedule 5.21. As of the Closing Date, the authorized
capital stock of the Company and its Subsidiaries is as described on Schedule
5.21 and the issued and outstanding shares of the Company and its Subsidiaries
are not materially different than as described on Schedule 5.21. As of the
Closing Date, all outstanding shares of capital stock of the Company and its
Subsidiaries will be duly authorized and validly issued, fully paid,
nonassessable and free and clear of any Lien created by the Company or any
Subsidiary thereof (other than Liens under the Senior Loan Documents). Except as
described in Schedule 5.21, no other class of capital stock or other ownership
interests of the Company or its Subsidiaries are authorized or outstanding.
Except as described in Schedule 5.21, neither the Company nor any Subsidiary is
subject to any obligation (contingent or otherwise) to repurchase, redeem or
otherwise acquire its capital stock or any warrants, options or other rights to
acquire its capital stock. The Company does not have any outstanding securities
convertible into capital stock of the Company (other than the Class B Common
Stock and, as of the Closing, the Preferred Stock and outstanding options); and
except for shares of Common Stock reserved for issuance upon the exercise of
outstanding warrants or in connection with the Company Stock Option Plan, the
Company does not have any shares of capital stock reserved for issuance (other
than shares of Common Stock reserved for issuance upon conversion of the Class B
Common Stock and, as of the Closing, upon conversion of the Preferred Stock).
Except as set forth on Schedule 5.21 and other than the Company's outstanding
warrants and
17
stock options and this Agreement, the Company does not have any commitment to
authorize, issue or sell any of its capital stock or securities convertible into
or exchangeable for any of its capital stock. Neither the Company nor any of its
Subsidiaries is a party to any "phantom stock", employee stock option plan,
other equity-based incentive plan or similar agreement, other than the Company
Stock Option Plan. Schedule 5.21 sets forth the number of shares of capital
stock reserved for issuance upon the exercise of options granted or available to
be granted under the Company Stock Option Plan. Schedule 5.21 also lists all of
the Company's outstanding warrants to purchase capital stock. Except as set
forth on Schedule 5.21, there are no preemptive or similar rights to purchase or
otherwise acquire equity securities of, or interests in, the Company or any of
its Subsidiaries pursuant to any Requirements of Law or Contractual Obligations
applicable to the Company or any of its Subsidiaries. Except as set forth on
Schedule 5.21 there are no existing rights with respect to registration or sale
or resale under the Securities Act or the securities or blue sky laws of any
state or jurisdiction of any securities of the Company or any of its
Subsidiaries. The shares of Preferred Stock to be issued to each Purchaser on
the Closing Date, upon issuance to such Purchaser, have the designations,
preferences, qualifications, limitations, restrictions and such special and
relevant rights as are set forth in the Certificate of Designation and the DGCL.
5.22 Commission Filings. Since November 1997 (the date of the Company's
initial public offering), the Company has filed with the Commission, on a timely
basis, all registration statements, reports on Form 10-K, 10-Q and 8-K, proxy
statements and information statements, and other documents that it was required
to file under the Securities Act or the Exchange Act. As of the respective dates
of such filings, none of the Company's filings with the Commission contained
(and those reports filed with the Commission on or after the date on which the
Company filed its Annual Report on Form 10-K for the fiscal year ended April 30,
1999, including such Annual Report (the "Current SEC Reports") do not contain)
an untrue statement of a material fact or omitted (and the Current SEC Reports
do not omit) to state any material fact necessary to make any statement of a
material fact that it contained, in light of the circumstances in which made,
not misleading; and when filed with the Commission, each of such filings with
the Commission complied in all material respects with the applicable
requirements of the Securities Act or Exchange Act, as applicable. The Company
has taken all actions which would be required to permit sales of its securities
under Rule 144 under the Securities Act.
5.23 Investment Company; Public Utility Holding Company. Neither the
Company nor any of its Subsidiaries is an "investment company" or a "company
controlled by an investment company" or an "affiliated person" or "promoter" or
"principal underwriter" for, an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
5.24 Securities Act. Based upon the representations and warranties of each
Purchaser in Article 6 of this Agreement, (i) the Preferred Stock to be issued
pursuant to the terms of this Agreement and the Common Stock issuable upon
conversion of such Preferred Stock and (ii) the issuance by the Company thereof,
are not required to be registered under the Securities Act or under the
securities or blue sky laws of any state or jurisdiction.
18
5.25 Certain Payments. Other than discounts, rebates and incentives
provided to customers and commissions and similar compensation paid to sales
agents in the ordinary course of business, neither the Company nor any
Subsidiary nor any officer, director, employee or agent of the Company or any
Subsidiary or, to the Company's knowledge, any other Person associated with or
acting for or on behalf of the Company or any Subsidiary, has directly or
indirectly made or paid any contribution, gift, bribe, rebate, payoff, kickback
or other payment (whether in money, property or services or any other form) to
any Person (i) in order to gain or pay for favorable treatment in obtaining
business or special concessions or (ii) in violation of any Requirements of Law
(including Section 30A of the Exchange Act).
5.26 Year 2000 Compliance. To the knowledge of the Company and except as
set forth in the Company's Quarterly Report on Form 10-Q for the quarter ended
January 31, 2000, the computer systems and switches of the Company (including
all software, hardware, workstations and related components, automated devices,
embedded chips and other date sensitive equipment) are Year 2000 Compliant
except where the failure to be Year 2000 Compliant would not have a Material
Adverse Effect.
5.27 Trade Relations. Except as set forth on Schedule 5.27, there exists
no actual or, to the knowledge of the Company, threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between the Company or any of its Subsidiaries and any customer or
supplier that would reasonably be expected to have a Material Adverse Effect or
to prevent the Company or any of its Subsidiaries from conducting their business
after the consummation of the transactions contemplated by this Agreement in
substantially the same manner as it is currently being conducted or is proposed
to be conducted.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser as to itself and not as to any other Purchaser hereby
severally represents and warrants to the Company, as appropriate, as follows:
6.1 Authorization; No Contravention. Such Purchaser (unless an individual)
is duly organized, validly existing and in good standing as a corporation,
limited liability company or general or limited partnership under the laws of
the state of its incorporation or formation. The execution, delivery and
performance by such Purchaser of this Agreement (a) is within the such
Purchaser's power and authority and has been duly authorized by all necessary
partnership, company or corporate action, (b) does not contravene the terms of
such Purchaser's Organizational Documents or any amendment thereof and (c) will
not violate, conflict with or result in any breach or contravention of any
material Contractual Obligation of such Purchaser, or any material Requirement
of Law directly relating to such Purchaser. Any Purchaser which is a
corporation, partnership or trust represents that it has not been organized,
reorganized or recapitalized specifically for the purpose of investing in the
Company.
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6.2 Binding Effect. This Agreement has been duly executed and delivered by
such Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of such Purchaser enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws affecting the enforcement of creditors' rights generally or by general
equitable principles relating to enforceability.
6.3 Accredited Investor; Purchase for Own Account. Such Purchaser is
acquiring the Shares, and the shares of Common Stock into which the Shares may
be converted, for his, her or its own account for investment and not with a view
to, or for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling the same; and, except as
contemplated by this Agreement, such Purchaser has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for the disposition thereof. Such Purchaser is an Accredited Investor.
If such Purchaser should in the future decide to dispose of such Preferred Stock
or any shares of Common Stock issued upon conversion of the Preferred Stock,
such Purchaser understands and agrees that it may do so only in compliance with
the Securities Act and applicable state securities laws as then in effect. Such
Purchaser agrees to the imprinting, so long as required by law, of a legend on
certificates representing such Preferred Stock or any shares of Common Stock
issued upon conversion of the Preferred Stock to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR IF AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED."
The requirement to include the legend set forth above shall cease and
terminate as to any particular shares of Preferred Stock or Common Stock (a)
when, in the opinion of Ropes & ▇▇▇▇, or other counsel reasonably acceptable to
the Company, such legend is no longer required in order to assure compliance by
the Company with the Securities Act or (b) when such shares have been
effectively registered under the Securities Act or transferred pursuant to Rule
144. Whenever (x) such requirement shall cease and terminate as to any such
shares or (y) such shares shall be transferable under paragraph (k) of Rule 144,
the holder thereof shall be entitled to receive from the Company, without
expense, new certificates not bearing the legend set forth above.
Such Purchaser also agrees to the imprinting, so long as required by law,
of a legend on certificates representing its shares of Preferred Stock:
"THESE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS, INCLUDING CERTAIN TRANSFER
20
RESTRICTIONS, OF THAT CERTAIN PREFERRED STOCK PURCHASE AGREEMENT, DATED AS
OF JUNE 28, 2000, AMONG THE COMPANY AND CERTAIN OF THE COMPANY'S
STOCKHOLDERS. A COPY OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST TO THE COMPANY MADE BY THE HOLDER OF THIS CERTIFICATE."
6.4 Governmental Authorizations. Except for clearance under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, no notice to, consent of, or registration, filing or
declaration with, any Governmental Authority is required in connection with such
Purchaser's execution, delivery and performance of this Agreement and the
Transaction Documents and consummation of the contemplated transactions.
6.5 No Brokers or Finders. No agent, broker, finder, or investment or
commercial banker or other Person or firm engaged by or acting on behalf of such
Purchaser in connection with the negotiation, execution or performance of this
Agreement or the transactions contemplated herein is or will be entitled to any
brokerage or finder's or similar fee or other commission as a result of this
Agreement or such transaction.
6.6 Ownership of Company Securities; Voting and Other Agreements.
Immediately following the Closing, such Purchaser will not beneficially own any
securities of the Company other than the Preferred Stock. Such Purchaser does
not have any agreements, arrangements or understandings with any other Person
(other than with other Purchasers who are Affiliates of such Purchaser) with
regard to acquiring, holding, voting or disposing of the securities of the
Company other than as set forth in this Agreement and in the other Transaction
Documents to which such Purchaser is a party.
6.7 Sufficient Funds. Such Purchaser shall have available funds sufficient to
purchase its allocation of Shares in accordance with the terms of this Agreement
and to perform its obligations hereunder.
ARTICLE VII
COVENANTS
7.1 HSR Clearance. The Company and each of the Purchasers shall cooperate
with and provide each other, respectively, with any information that each party
reasonably requires to file such notices and responses as may be necessary to
enable each party to obtain any required clearance under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act. Each such Purchaser required to obtain such clearance agrees to use all
reasonable best efforts to obtain such clearance as promptly as practicable on
or prior to the Closing Date.
7.2 Reservation of Shares. The Company shall at all times reserve and keep
available out of the aggregate of its authorized but unissued shares, free of
preemptive rights,
21
such number of its duly authorized shares of Common Stock as shall be sufficient
to enable the Company to issue Common Stock upon conversion of all such
Preferred Stock.
7.3 Delivery of Financial and Business Information. The Company shall
deliver promptly upon becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Company or any Subsidiary to
public securities holders generally to (i) each Purchaser and (ii) each
Permitted Transferee (holding at least 5% of the Underlying Common Stock), so
long as at least 25% of the Underlying Common Stock continues to be beneficially
owned by the Purchasers and Permitted Transferees.
7.4 Access to Properties. Prior to Closing, the Company shall permit
representatives designated by the Purchasers upon reasonable notice, during
normal business hours and at such other times as such Purchasers reasonably may
request, and without unreasonable interference with the Company's operations, to
visit and inspect, at their expense, any of the properties, offices, personnel,
accountants and advisors of the Company and its Subsidiaries with respect to any
of the businesses and assets of the Company and its Subsidiaries, and the
transactions contemplated by the Transaction Documents, and to examine the
corporate and financial records of the Company and its Subsidiaries.
7.5 Pre-Closing Covenants. At all times after execution of this Agreement
and prior to the Closing (unless and until this Agreement is terminated in
accordance with its terms), the Company shall not, without the prior written
consent of the Purchasers (except as otherwise expressly permitted or required
by this Agreement or any of the Transaction Documents), directly or indirectly
take or commit to take any action that would cause an adjustment to the
Conversion Price under Section 4 of the Certificate of Designation if the
Certificate of Designation had been duly filed and in effect as of the date of
this Agreement.
7.6 Exclusivity.
(a) The Company shall not, and shall cause its Affiliates, employees,
investment bankers, attorneys, accountants and other agents not to, initiate,
solicit or encourage any inquiries relating to, or the making of any Other
Proposal or engage in negotiations or discussions with, or furnish any
information to, any third party relating to any Other Proposal. As used in this
Section 7.6, "Other Proposal" means any proposal made by any Person, other than
the Purchasers, as a group, to acquire from the Company or any of its Affiliates
for cash, any convertible preferred stock, any other capital stock or any
securities having equity or profit participation features ("Equity Securities"),
or any debt securities in lieu of, or substitution for, any Equity Securities
(other than grants or exercises of stock awards pursuant to the Company's Stock
Option Plan or as otherwise approved by the Company's Board of Directors).
The Company shall advise the Purchasers in writing of (i) the receipt,
directly or indirectly, of any inquiries relating to an Other Proposal promptly
following such receipt and (ii) the status of any discussions or negotiations
with respect thereto. Following the receipt, directly or indirectly of any Other
Proposal (or any inquiry referred to in clause (i) above), the Company shall
furnish to the Purchasers either a copy of such Other Proposal (or such inquiry)
or a written summary of such Other Proposal (or such inquiry). In addition, the
Company shall not, and shall
22
cause its Affiliates, employees, investment bankers, attorneys, accountants and
other agents not to, actually consummate, or enter into any Contractual
Obligation or otherwise commit to consummate, any transaction that includes or
would include as any part thereof the acquisition by any Person, other than the
Purchasers, directly or indirectly, from the Company or any of its Affiliates,
any Equity Securities, or any debt securities in lieu of or substitution for any
Equity Securities (other than grants or exercises of stock awards pursuant to
the Company's Stock Option Plan or as otherwise approved by the Company's Board
of Directors).
(b) The restrictions on and obligations of the Company under Section
7.6(a) shall terminate on the earlier to occur of (i) the Closing Date or (ii)
the termination of this Agreement pursuant to Section 8.3(a).
7.7 Tax Matters. The Purchasers intend that any increase in the Accreted
Value (as defined in the Certificate of Designation) of the Preferred Stock
will, when paid or accrued, be includible in the Purchasers' gross income for
federal, state or local tax purposes. So long as the Company concludes in good
faith, with the assistance and advice of its accountants and counsel, that there
is a reasonable basis to make or file Tax Returns that are consistent with such
intention, all the Tax Returns that the Company shall make or file shall be
consistent with such intention.
7.8 Confidentiality. For one year after the Closing Date, each Purchaser
will hold, and will use its reasonable efforts to cause its Permitted
Transferees, and each Purchaser's and each Permitted Transferee's officers,
partners, directors, employees, accountants, counsel, consultants, advisors and
agents (the "Representatives") to hold, in confidence, at all times unless
compelled to disclose by judicial or administrative process or by other
Requirements of Law, all confidential documents and information concerning the
Company and it Affiliates that are furnished to such Purchaser and its Permitted
Transferees, except to the extent that such information can be shown to have
been (i) previously known on a nonconfidential basis by such Purchaser,
Permitted Transferee or such Representatives or (ii) in the public domain
through no fault of such Purchaser, such Permitted Transferee or such
Representative. If any Purchaser or Permitted Transferee, or any of their
respective Representatives is requested to disclose any confidential information
by judicial or administrative process or by other Requirements of Law, such
Person shall promptly notify the Company of such request so that the Company may
seek an appropriate protective order. Each Purchaser agrees that it will not,
and will use its reasonable best efforts to cause its Permitted Transferees and
the Representatives not to, use any confidential documents or information for
any purpose other than monitoring and evaluating its investment in the Company
and in connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each Purchaser will, and will use its reasonable best
efforts to cause its Representatives to, destroy or deliver to the Company all
documents and other materials, and all copies thereof, obtained by such
Purchaser, or on its behalf, from the Company in connection with this Agreement
and an investment in the Company.
7.9 Schedule 13D and 13G. Each Purchaser agrees to provide the Company
with a copy of any Schedule 13D or 13G that it intends to file at any time with
the Commission in connection with their purchase of Preferred Stock in advance
of such filing.
23
7.10 Election of Directors. (a) The Company represents and warrants that
there is one vacancy on the Board of Directors. Effective as of the Closing, the
Board of Directors shall appoint one Purchaser Director designated by the
holders of a majority of the Preferred Stock to fill the current vacancy and the
Purchasers shall designate one person to serve as the Purchaser Observer. The
Purchaser Director shall be appointed to each committee of the Board of
Directors. The Purchaser Observer shall execute a confidentiality agreement with
the Company in form and substance reasonably acceptable to the Company.
(b) So long as the Purchasers and the Permitted Transferees hold at least
20% of the Underlying Common Stock, the holders of a majority of the Preferred
Stock shall continue to have the right to nominate one person who shall be
included among the Company's nominees for election to the Board as the Purchaser
Director and, so long as they own at least 20% of the shares of Preferred Stock,
the Purchasers shall have the right to designate one person to serve as
Purchaser Observer. The Company shall nominate each person so designated as
Purchaser Director and shall use reasonable efforts to have the nominee of the
holders of a majority of the Preferred Stock elected to the Board of Directors.
(c) If at any time holders of Preferred Stock entitled to nominate a
director notify the Board of Directors of their wish to remove any incumbent
Preferred Director as a director, that incumbent Preferred Director shall
immediately resign from the Board or the Board shall vote to remove the
Purchaser Director (if his or her removal is permitted under the Bylaws and the
DGCL). Removal of an incumbent Preferred Director by the Board or the
resignation of an incumbent Purchaser Director otherwise than at the request of
the holders of a majority of the Preferred Stock require their prior written
consent unless the removal is based upon the Purchaser Director's willful
misconduct or gross negligence.
(d) If at any time a vacancy is created on the Board by reason of the
incapacity, death, removal or resignation of an incumbent Purchaser Director,
the holders of a majority of the Preferred Stock may designate a person to fill
the vacancy (who promptly shall be appointed by the incumbent directors). If at
any time an incumbent Purchaser Observer is unable to serve in that capacity by
reason of his or her incapacity, death or resignation, the Purchasers may
designate a person to fill the vacancy or may leave the position unfilled.
(e) At each meeting of stockholders of the Company at which directors are
elected, the nominees for directors proposed by the Company shall include the
Preferred Director required pursuant to this Agreement.
7.11 Standstill. During either (i) the period commencing on the date
hereof and ending on the seventh anniversary of the Closing Date or (ii) the
period commencing on the termination of this Agreement pursuant to Section 8.3
and ending on the first anniversary of such termination (the "Standstill
Period"), except as (a) specifically permitted by this Agreement or (b)
specifically approved in writing by the Board of Directors of the Company, the
Purchasers shall not, and shall cause any Affiliates to not, in any manner,
directly or indirectly, either individually or together with any person or
persons acting in concert of beneficial ownership (within the meaning of Rule
13d-3 of the Exchange Act), acquire, or offer or agree to acquire, or become the
beneficial owner of or obtain any rights in respect of any capital stock of the
24
Company, except (x) shares of Common Stock that may be issuable upon the
conversion of the Preferred Stock, (y) securities of the Company or any of its
successors issued as dividends or as a result of stock splits and similar
reclassifications or received in a consolidation, merger or other business
combination in respect of, in exchange for or upon conversion of Preferred Stock
or securities held by the Purchasers or any of their Affiliates at the time of
such dividend, split, reclassification, consolidation or merger or business
combination or (z) shares of Common Stock of the Company acquired in market or
privately negotiated transactions provided that the aggregate number of such
shares of Common Stock so acquired plus all shares of Underlying Common Stock
held by such Purchasers or their Affiliates do not exceed at the time of such
acquisition in excess of twenty-five (25%) of all the issued and outstanding
shares of Common Stock of the Company on a fully-diluted basis, assuming the
exercise of all securities exercisable into Common Stock and the conversion of
all securities convertible into Common Stock.
7.12 Transfer Restrictions. No Purchaser or Permitted Transferee shall
assign, pledge, sell or otherwise transfer any Preferred Stock, except (i) to an
Affiliate of a Purchaser, (ii) to any other Person with the prior written
consent of the Company's Board of Directors, (iii) to the Company in connection
with its redemption or conversion to Common Stock pursuant to the Certificate of
Designation, or (iv) in connection with a tender offer approved by the Company's
Board of Directors. No transfer otherwise permissible shall be effective unless
the Permitted Transferee agrees in writing expressly for the Company's benefit
to be bound by the provisions of this Agreement, and in this event, the
transferor shall not be liable for the transferee's performance of its
obligations under this Agreement.
7.13 Use of Proceeds. The Company shall use the proceeds from the sale of
the Preferred Stock (i) to fund acquisitions, (ii) subject to the limitations in
the Certificate of Designation, to repurchase outstanding shares of Common
Stock, (iii) to repay Indebtedness of the Company and/or (iv) for general
corporate purposes.
7.14 Listing of Shares. The Company shall take all actions necessary to
have listed with the Nasdaq Stock Market all shares of Common Stock which become
issuable upon conversion of the Preferred Stock.
ARTICLE VIII
INDEMNIFICATION; TERMINATION
8.1 Indemnification. Effective upon the Closing, the Company agrees to
indemnify and hold harmless the Purchasers and their Affiliates and their
officers, directors, agents, employees, subsidiaries, partners and controlling
Persons (each, a "Company Indemnified Party") to the fullest extent permitted by
law, from and against any and all losses, demands, actions, costs, claims,
damages, expenses (including reasonable fees, disbursements and other charges of
counsel) or other liabilities (collectively, "Company Liabilities") incurred or
suffered by such Company Indemnified Party resulting from or arising out of (i)
any misrepresentation or breach of any representation or warranty of the Company
in this Agreement, any other Transaction Document or any certificate or
instrument delivered pursuant thereto or (ii) any breach of any covenant or
obligation of the Company in this Agreement or any other Transaction Document;
provided that the Company shall be liable under this Section 8.1 in respect of
25
Company Liabilities only to the extent to which the aggregate of such Company
Liabilities incurred by such Company Indemnified Parties exceeds $250,000, in
which case the Company shall be liable under this Section 8.1 for the amount of
such Company Liabilities in excess of $250,000.
8.2 Notification. The Company Indemnified Party, under Section 8.1(iii)
will, promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Company Indemnified Party
in respect of which indemnity may be sought from the Company under Section
8.1(iii), notify the Company in writing of the commencement thereof stating a
brief summary of the facts known to the Company Indemnified Party giving rise to
such indemnity rights. The omission of any Company Indemnified Party so to
notify the Company of any such action shall not relieve the Company from any
liability which it may have to such Company Indemnified Party under Section
8.1(iii) unless, and only to the extent that, such omission results in prejudice
to the Company. In case any such action, claim or other proceeding shall be
brought against any Company Indemnified Party and it shall notify the Company of
the commencement thereof, the Company shall be entitled to assume the defense
thereof at its own expense, with counsel satisfactory to the Company Indemnified
Party; provided, that any Company Indemnified Party may, at its own expense,
retain separate counsel to participate in such defense. Notwithstanding the
foregoing, in any action, claim or proceeding in which both the Company, on the
one hand, and a Company Indemnified Party, on the other hand, is, or is
reasonably likely to become, a party, such Company Indemnified Party shall have
the right to employ separate counsel at the Company's expense and to control its
own defense of such action, claim or proceeding if, (a) the Company has failed
to assume the defense and employ counsel as provided herein, (b) the Company has
agreed in writing to pay such fees and expenses of separate counsel or (c) in
the reasonable opinion of counsel to such Company Indemnified Party, a conflict
or likely conflict exists between the Company, on the one hand, and such Company
Indemnified Party, on the other hand, that would make such separate
representation advisable, provided, however, that the Company shall not in any
event be required to pay the fees and expenses of more than one separate counsel
(and if deemed necessary by such separate counsel, appropriate local counsel who
shall report to such separate counsel). The Company agrees that it will not,
without the prior written consent of a Company Indemnified Party, settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated hereby (if such
Company Indemnified Party is a party thereto or has been actually threatened to
be made a party thereto) unless such settlement, compromise or consent includes
an unconditional release of such Company Indemnified Party from all liability
arising or that may arise out of such claim, action or proceeding. The Company
shall not be liable for any settlement of any claim, action or proceeding
effected against a Company Indemnified Party without the prior written consent
of the Company.
26
8.3 Termination.
(a) This Agreement may be terminated at any time prior to the Closing
Date: (i) by mutual written agreement of the Company and each Purchaser; (ii) by
the Company or the Purchasers if the Closing shall not have been consummated on
or before August 31, 2000 (iii) by the Company or the Purchasers if a
Governmental Authority shall have issued a nonappealable final order, decree or
ruling or taken any action having the effect of permanently restraining or
enjoining the transactions contemplated by this Agreement or (iv) by the Company
if Berkshire Fund V Investment Corp. defaults in its obligations under this
Agreement to purchase the Preferred Stock (a "Closing Failure").
(b) If this Agreement is terminated as permitted by Section 8.3(a), such
termination shall be without liability of any party hereto (or their respective
Affiliates) to any other party hereto; provided, however, that nothing shall
relieve any party from liability if such termination shall result from the (i)
willful failure by any party to fulfill a condition to the performance of the
obligations of the other parties, (ii) willful failure by any party to perform a
covenant of this Agreement, (iii) willful breach by any party hereto of any
representation or warranty contained in this Agreement or (iv) a Closing
Failure. The provisions of Sections 7.8, 7.11, 8.3, 9.2, 9.8 and 9.11 and 9.12
shall survive any termination hereof pursuant to Section 8.3.
ARTICLE IX
MISCELLANEOUS
9.1 Claims and Suits Under Section 8.1. No claim may be made or suit
instituted under Section 8.1 with respect to any breach of a representation or
warranty (except for claims based on fraud) after the date that is twelve (12)
months after the Closing Date or, as to the representations and warranties in
Section 5.13 after the expiration of applicable statutes of limitation with
respect to the subject matter of each such representation and warranty, unless
the Company Indemnified Party has given the indemnifying party written notice of
such claim or suit (describing with reasonable specificity the amount of and
basis for such claim or suit) on or prior to such date.
9.2 Notices. All notices, requests, claims, demands and other
communications ("Notices") provided for or permitted hereunder shall be made in
writing and shall be by registered or certified first class mail, return receipt
requested, telecopier, recognized overnight courier service or personal
delivery:
(a) if to the Company:
▇▇▇▇▇▇▇ Waste Systems, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
27
with a required copy to:
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Purchasers:
Berkshire Partners LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
All Notices shall be deemed to have been duly given: when delivered by
hand, if personally delivered; when delivered by courier, if delivered by
commercial overnight courier service; five Business Days after being deposited
in the mail, postage prepaid, if mailed; and when receipt is acknowledged by the
individual to whom the telecopy is sent, if telecopied.
9.3 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties hereto.
Subject to applicable securities laws and except as otherwise set forth in the
Transaction Documents, the Purchasers may assign any of their rights under this
Agreement, to any Person who is a Permitted Transferee. The Company may not
assign any of its rights under this Agreement without the prior written consent
of the Purchasers. Except as provided in Article 9, no Person other than the
parties hereto and their successors and permitted assigns is intended to be a
beneficiary of any of the Transaction Documents.
9.4 Determinations, Requests or Consents. Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure of the Company
from the terms of any provision of this Agreement, shall be effective (a) only
if it is made or given in writing and signed by the Company and the Required
Holders (as defined below) in accordance with this Section 9.4, and (b) only in
the specific instance and for the specific purpose for which made or given. All
determinations, requests, consents, waivers or amendments to be made by the
Purchasers in their
28
opinion or judgment or with their approval or otherwise pursuant to this
Agreement shall be made (i) at any time following the Closing, by the holders of
at least a majority of the then outstanding Preferred Stock or (ii) at any time
prior to the Closing, by Purchasers who have committed to purchase hereunder at
least a majority of the Preferred Stock (in either case, the "Required
Holders").
9.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of law of such state.
9.8 Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
9.9 Rules of Construction. Unless the context otherwise requires, "or" is
not exclusive, and references to sections or subsections refer to sections or
subsections of this Agreement. All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the context may
require.
9.10 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Documents, is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or therein. This Agreement, together with the exhibits
hereto, and the other Transaction Documents supersede all prior contemporaneous
agreements and understandings between the parties with respect to such subject
matter.
9.11 Certain Expenses.
(a) The Purchasers and the Company shall each pay their own fees and
expenses in connection with the negotiation and preparation of this Agreement
and consummation of the transactions contemplated herein with the exception that
the Company shall pay or reimburse the Purchasers for their fees and expenses
(including HSR filing fees, the fees and expenses of their counsel and
accountants, and the expenses incurred by representatives of the Purchasers) for
the
29
negotiation and preparation of the Transaction Documents and the consummation of
the purchase transactions contemplated thereby in the event that the Closing
occurs. The Company shall reimburse the Purchasers for the reasonable fees and
expenses which they incur from time to time in consulting with their counsel and
accountants with respect to any amendments, supplements, consents or waivers
with respect to the Transaction Documents (except if any such amendment,
supplement, consent or waiver is for the purpose of maintaining a particular tax
treatment of the Preferred Stock for the Purchasers). Reasonable documentation
shall be provided to the Company by the Purchasers for all fees and expenses
which the Company has agreed to reimburse pursuant to this Section 9.11(a).
(b) No party shall be required to pay or reimburse another party for any
of their fees and expenses in the event that the Closing does not occur;
provided, however, the Company shall be required to pay or reimburse the
Purchasers for their fees and expenses if the Closing does not occur due to the
failure of the Company to satisfy the closing conditions under Article 3 of this
Agreement (other than the closing conditions under Section 3.8 of this
Agreement); provided, further, that the Purchasers shall be required to pay or
reimburse the Company for its fees and expenses if the Closing does not occur
due to the failure of the Company to satisfy the closing conditions under
Article 4 of this Agreement (other than the closing conditions under Section 4.4
of this Agreement). Notwithstanding the foregoing, if the transactions
contemplated herein are not consummated because Section 4.6 is not satisfied,
the Company shall pay or reimburse the Purchasers for an amount equal to the
lesser of (i) twice their fees and expenses and (ii) $1,000,000.
9.12 Publicity. Except as may be required by applicable law, none of the
parties hereto shall issue a publicity release or announcement or otherwise make
any public disclosure concerning this Agreement or the transactions contemplated
hereby, without prior approval by the other parties hereto (which approval will
not be unreasonably withheld). If any announcement is required by law to be made
by any party hereto, prior to making such announcement such party will deliver a
draft of such announcement to the other parties and shall give the other parties
an opportunity to comment thereon. Notwithstanding the foregoing, the Company
may, in documents required to be filed by it with the Commission or other
regulatory bodies, make such statements with respect to the transactions
contemplated hereby as advised by counsel is legally necessary or advisable.
9.13 Further Assurances. Each of the parties shall execute such documents
and perform such further acts (including, without limitation, obtaining any
consents, exemptions, authorizations, or other actions by, or giving any notices
to, or making any filings with, any Governmental Authority or any other Person)
as may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement and/or the Certificate of Incorporation.
[Signature Pages To Follow]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
▇▇▇▇▇▇▇ WASTE SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Secretary
BERKSHIRE FUND V INVESTMENT CORP.
By: /s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: D. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
BERKSHIRE INVESTORS LLC
By: /s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: D. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
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SCHEDULE 1
Purchasers
Berkshire Fund V Investment Corp.
Berkshire Investors LLC
BancBoston Capital Inc.
RGIP, LLC
Squam Lake Investors IV, L.P.
32