SERIES F SENIOR VOTING CONVERTIBLE PREFERRED STOCK
PURCHASE AND REGISTRATION RIGHTS AGREEMENT
TABLE OF CONTENTS
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1. Definitions.................................................................................................. 1
2. Purchase and Sale of Shares.................................................................................. 5
(a) Authorization of Shares.................................................................... 5
(b) Sale and Purchase.......................................................................... 5
3. Closing, Delivery and Payment................................................................................ 5
(a) Closing.................................................................................... 5
(b) Delivery................................................................................... 6
4. Representations and Warranties of the Company................................................................ 6
(a) Organization, Good Standing and Qualification.............................................. 6
(b) Capitalization; Series F Preferred......................................................... 6
(c) Authorization; Binding Obligations......................................................... 7
(d) No Conflicts............................................................................... 7
(e) SEC Reports................................................................................ 7
(f) Litigation................................................................................. 8
(g) Offering Valid............................................................................. 8
(h) Financial Statements....................................................................... 8
(i) Absence of Liabilities..................................................................... 8
(j) Taxes...................................................................................... 8
(k) Title to Property and Assets............................................................... 9
(l) Employee Benefit Plans and Related Matters: ERISA.......................................... 10
(m) Accounts Receivable........................................................................ 11
(n) Material Contracts......................................................................... 11
(o) Consents................................................................................... 11
(p) Absence of Certain Changes................................................................. 11
(q) Compliance with Law........................................................................ 12
(r) Intellectual Property...................................................................... 12
(s) Delaware General Corporation Law Section 203............................................... 12
(t) Actions Regarding the Shareholder Rights Plan.............................................. 12
(u) No Further Claims.......................................................................... 12
(v) Information in Proxy Statement............................................................. 12
5. Representations and Warranties of the Questor Investors...................................................... 13
(a) Requisite Power and Authority.............................................................. 13
(b) Investment Representations................................................................. 13
(c) Information in Proxy Statement............................................................. 14
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6. Representations and Warranties of the Existing Investors..................................................... 14
(a) Requisite Power and Authority.............................................................. 14
(b) No Further Claims.......................................................................... 14
7. Required Registration........................................................................................ 14
8. Incidental Registration...................................................................................... 16
9. Registration Procedures...................................................................................... 17
10. Expenses.................................................................................................... 20
11. Indemnification............................................................................................. 21
12. Reporting Requirements Under the Exchange Act............................................................... 23
13. Stockholder Information..................................................................................... 23
14. Financial Information....................................................................................... 23
15. Stockholder Approval........................................................................................ 24
(a) Stockholder Meeting........................................................................ 24
(b) Proxy Statement............................................................................ 24
(c) No False or Misleading Statements.......................................................... 24
(d) Comfort Letter............................................................................. 25
16. Conduct of Business Pending Closing......................................................................... 25
(a) Organic Changes............................................................................ 25
(b) Indebtedness............................................................................... 25
(c) Disposition of Assets...................................................................... 25
(d) Capital Expenditures....................................................................... 25
(e) Other Actions.............................................................................. 25
17. Conditions to Closing....................................................................................... 26
(a) Conditions to the Questor Investors' Obligations at the Closing............................ 26
(b) Conditions to Obligations of the Company................................................... 27
18. Survival of Representations; Indemnity...................................................................... 28
(a) Survival of Representations................................................................ 28
(b) General Indemnity.......................................................................... 28
(c) Procedures for Indemnification............................................................. 29
(d) Limitation on Certain Indemnities.......................................................... 30
19. Inquiries and Negotiations.................................................................................. 30
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20. Use of Proceeds............................................................................................. 31
21. Termination................................................................................................. 31
22. General Provisions.......................................................................................... 31
(a) Forms...................................................................................... 31
(b) Integration................................................................................ 31
(c) Notices.................................................................................... 31
(d) Choice of Law.............................................................................. 32
(e) Severability............................................................................... 32
(f) Parties in Interest........................................................................ 32
(g) Counterparts............................................................................... 32
(h) Modification, Amendment and Waiver......................................................... 32
(i) Further Assurances......................................................................... 32
(j) Headings................................................................................... 32
(k) Gender and Number.......................................................................... 33
(l) Attorneys' Fees............................................................................ 33
(m) Broker's Fees.............................................................................. 33
(n) Confidentiality............................................................................ 33
(o) Expenses................................................................................... 33
(p) Public Announcements....................................................................... 33
(q) Additional Matters......................................................................... 33
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SERIES F SENIOR VOTING CONVERTIBLE PREFERRED STOCK
PURCHASE AND REGISTRATION RIGHTS AGREEMENT
THIS SERIES F SENIOR VOTING CONVERTIBLE PREFERRED STOCK PURCHASE AND
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is entered into as of
August 25, 1999, by and among Aegis Communications Group, Inc., a Delaware
corporation (the "COMPANY"), Questor Partners Fund II, L.P., a Delaware limited
partnership ("Fund II"), Questor Side-by-Side Partners II, L.P., a Delaware
limited partnership (the "SIDE-BY-SIDE FUND"), and Questor Side-by-Side Partners
II 3(c)(1), L.P., a Delaware limited partnership (the "3(C)(1) FUND" and
together with Fund II and the Side-by-Side Fund, the "QUESTOR INVESTORS"),
▇▇▇▇▇▇ Equity Investors III, L.P., a Delaware limited partnership ("▇▇▇▇▇▇
EQUITY"), TC Co-Investors, LLC, a Delaware limited liability company ("TC
CO-INVESTORS" and, together with ▇▇▇▇▇▇ Equity, "▇▇▇▇▇▇"), ITC Services Company
("ITC"), ▇▇▇▇▇▇ ▇▇▇▇▇ ("BLANK"), trusts created by ▇▇▇▇▇▇ ▇▇▇▇▇ as both grantor
and trustee under Article Fourth of The ▇▇▇▇▇▇ ▇▇▇▇▇ 1995 Grantor Retained
Annuity Trust, dated December 29, 1995, a trust organized under the laws of New
Jersey (the "BLANK TRUST," and, together with ▇▇▇▇▇▇, ITC and Blank the
"EXISTING INVESTORS").
RECITALS
1. The Company has authorized the sale and issuance of an aggregate of
Forty Six Thousand Seven Hundred Fifty (46,750) shares (the "SHARES") of its
Series F Senior Voting Convertible Preferred Stock (the "SERIES F PREFERRED");
2. The Questor Investors desire to purchase the Shares on the terms and
conditions set forth herein; and
3. The Company desires to issue and sell the Shares to the Questor
Investors on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS. Unless the context otherwise requires, the terms defined
in this Section 1 shall have the meanings herein specified for all purposes of
this Agreement, applicable to both the singular and plural forms of any of the
terms herein defined.
"ACTION" means any actual or threatened claim, action, suit,
arbitration, hearing, inquiry, proceeding, complaint, charge or
investigation by or before any Governmental Entity or arbitrator and any
appeal from any of the foregoing.
"AGREEMENT" means this Series F Senior Voting Convertible Preferred
Stock Purchase and Registration Rights Agreement.
"BANK APPROVAL" means all consents or amendments under the Credit
Agreement needed (i) to consummate the transactions contemplated by this
Agreement, including, without limitation, the use of proceeds contemplated
by Section 20, and (ii) to secure as of the Closing at least $15,000,000 of
immediately available funds under the revolving credit facility under the
Credit Agreement after taking account of all limitations on borrowing under
such Credit Agreement, including, without limitation, the borrowing base,
and after giving effect to the transactions contemplated by this Agreement,
including, without limitation, such use of proceeds.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock, $.01 par value, of the Company.
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"CONVERSION SHARES" means Common Stock issued or issuable upon exercise
or conversion of the Shares issued pursuant to this Agreement.
"CREDIT AGREEMENT" means the Second Amended and Restated Credit
Agreement, dated as of July 9, 1998, among IQI, Inc., Aegis Communications
Group, Inc. The Bank of Nova Scotia, Credit Suisse First Boston and the
other parties enumerated therein, as amended.
"EQUITY SECURITY" means any stock or similar security of the Company or
any security (whether stock or indebtedness for borrowed money) convertible
or exchangeable, with or without consideration, into or for any such stock
or similar security, or any security (whether or not indebtedness for
borrowed money) carrying any warrant or right to subscribe to or purchase
any such stock or similar security, or any such warrant or right.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any Person which is (or at any relevant time
was) a member of a controlled group of corporations within the meaning of
Code Section 414(b), all trades or businesses under common control within
the meaning of Code Section 414(c), and all affiliated service group within
the meaning of Code Section 414(m), of which the Company is (or at any
relevant time was) a member.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GOVERNMENTAL ENTITY" means any local, state, federal or foreign
(i) court, (ii) government or (iii) governmental department, commission,
instrumentality, board, agency or authority, including the IRS and other
taxing authorities.
"HOLDER" of any security means the record or beneficial owner of such
security.
"HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES" means the Person
or Persons who are the Holders of greater than 50% of the shares of
Registrable Securities then outstanding.
"HSR ACT" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"INDEBTEDNESS" means, when used with reference to any Person, without
duplication, (i) any liability of such Person created or assumed by such
Person, or any Subsidiary thereof, (A) for borrowed money, (B) evidenced by
a bond, note, debenture or similar instrument (including a purchase money
obligation, deed of trust or mortgage) given in connection with the
acquisition of, or exchange for, any property or assets (other than
inventory or similar property acquired and consumed in the ordinary course
consistent with past practice), including securities and other Indebtedness,
(C) in respect of letters of credit issued for such Person's account and
interest rate swap agreements and currency exchange rate agreements (and
other interest and currency exchange rate hedging agreements) to which such
Person is a party or (D) for the payment of money as lessee under leases
that should be, in accordance with generally accepted accounting principals,
recorded as capital leases for financial reporting purposes; (ii) any
liability of others described in the preceding clause (i) guaranteed as to
payment of principal or interest by such Person or in effect guaranteed by
such Person through an agreement, contingent or otherwise, to purchase,
repurchase or pay the related Indebtedness or to acquire the security
therefor; (iii) all liabilities or obligations secured by a Lien (other than
a Permitted Lien) upon property owned by such person and upon which
liabilities or obligations such person customarily pays interest or
principal, whether or not such Person has not assumed or become liable for
the payment of such liabilities or obligations; and (iv) any amendment,
renewal, extension, revision or refunding of any such liability or
obligations; provided, however, that Indebtedness shall not include any
liability for compensation of such Person's employees or for inventory of
similar property acquired and consumed in the ordinary course consistent
with past practice or for services.
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"INITIATING HOLDERS" means either (i) in the case of the Questor
Holders, the Questor Holders of greater than 50% of the shares of
Registrable Securities then outstanding and owned, beneficially or of
record, by the Questor Holders, or (ii) in the case of the Existing
Investors, the Holders of greater than 50% of the shares of Registrable
Securities then outstanding and owned, beneficially or of record, by the
Existing Investors.
"INTELLECTUAL PROPERTY" means all intellectual property or proprietary
rights owned or used by the Company and its Subsidiaries, including all
franchises, permits, licenses, software, trademarks, service marks, domain
names, trade rights, trade dress, patents, patent applications, copyrights,
inventions, know-how and other confidential information.
"IRS" means the United States Internal Revenue Service.
"LEGAL REQUIREMENT" means any statute, law, ordinance, rule, regulation,
permit, order, writ, judgment, injunction, decree or award issued, enacted
or promulgated by any Governmental Entity or any arbitrator.
"LIEN" means any mortgage, pledge, security interest, encumbrance,
community property interest, trust, option, lien or charge of any kind,
including, without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction and including any lien or charge arising by statute or other
law.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, financial condition, properties, profitability or operations of
the Company and its Subsidiaries taken as a whole.
"NASD" means the National Association of Securities Dealers, Inc.
"NASDAQ" means the Nasdaq National Market.
"OPTIONS" means all outstanding options, warrants and other rights to
acquire Common Stock.
"ORIGINAL STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated
July 9, 1998 by and among ATC Communications Group, Inc. and the other
parties enumerated therein.
"PERMITTED LIENS" means (a) Liens for ad valorem real or personal
property taxes or assessments not at the time due and (b) Liens in respect
of pledges or deposits under workers' compensation laws or similar
legislation, carriers', warehousemen's, mechanics', laborers' and
materialmen's, landlord's and similar liens, if the obligations secured by
such Liens are not then delinquent.
"PERSON" includes any natural person, corporation, trust, association,
company, partnership, limited liability company, joint venture and other
entity and any government, governmental agency, instrumentality or political
subdivision.
"PLAN" means any "employee benefit plan" within the meaning of Section
3(3) of ERISA and any other written or oral employee benefit plan,
arrangement, practice, contract, policy, or program (other than arrangements
merely involving the payment of wages) which are or at any time have been
established, maintained, or contributed to by the Company or any of its
Subsidiaries or any ERISA Affiliate for the benefit of current or former
employees, with respect to which the Company or any of its Subsidiaries or
an ERISA Affiliate has or may in the future have any liability or obligation
to contribute or make payments of any kind.
"PREFERRED STOCK" means Series B Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Series F Preferred Stock.
"QUESTOR HOLDERS" means the Questor Investors and any Person that
acquires Registrable Securities from the Questor Investors.
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The terms "REGISTER", "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRABLE SECURITIES" means: (1) shares of Common Stock issued or
issuable on exercise or conversion of the Shares issued pursuant to this
Agreement, (2) shares of Common Stock issued or issuable upon exercise of
the Warrants, so long as they are owned by any of the Existing Investors,
any limited partner of ▇▇▇▇▇▇ or any affiliate (as defined in the Securities
Act) of any Existing Investor or ▇▇▇▇▇▇'▇ general partner, (3) shares of
Common Stock issued or issuable upon conversion of the Subordinated Notes,
so long as they are owned by any of the Existing Investors, any limited
partner of ▇▇▇▇▇▇ or any affiliate (as defined under the Securities Act) of
any Existing Investor or ▇▇▇▇▇▇'▇ general partner, and (4) the 24,814,509
shares of Common Stock owned by the Existing Investors as of the date hereof
so long as they are owned by any of the Existing Investors, any limited
partner of ▇▇▇▇▇▇ or any affiliate (as defined under the Securities Act) of
any Existing Investor or ▇▇▇▇▇▇'▇ general partner, (5) any securities issued
or issuable with respect to any of the securities referred to in clauses
(1) through (4) above by way of a stock dividend or stock split or in
connection with a combination of shares, reclassification, recapitalization,
merger or consolidation, reorganization or other similar event; provided,
however, that such shares of Common Stock shall only be treated as
Registrable Securities if and so long as they have not been (i) sold to or
through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (ii) sold (other than to a partner or
affiliate (as defined under the Securities Act) of the Existing Investors or
Questor Investors or to a Questor Holder) in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act
under Section 4(l) thereof so that all transfer restrictions and restrictive
legends with respect to such Common Stock are removed upon the consummation
of such sale and the seller and purchaser of such Common Stock receive an
opinion of counsel for the Company, which shall be in form and content
reasonably satisfactory to the seller and buyer and their respective
counsel, to the effect that such Common Stock in the hands of purchaser is
freely transferable without restriction or registration under the Securities
Act in a public or private transaction.
"RIGHTS PLAN" means the Rights Agreement, dated as of December 16, 1998,
between the Company and ▇▇▇▇▇▇ Trust and Savings Bank.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES B PREFERRED STOCK" means Series B Preferred Stock, $.01 par
value per share, of the Company.
"SERIES D PREFERRED STOCK" means Series D Preferred Stock, $.01 par
value per share, of the Company.
"SERIES E PREFERRED STOCK" means Series E Preferred Stock, $.01 par
value per share, of the Company.
"SERIES F PREFERRED STOCK" means Series F Preferred Stock, $.01 per
share, of the Company, to be issued pursuant to the Certificate.
"SHAREHOLDER" means an owner of the issued and outstanding shares of
Common Stock or Preferred Stock.
"STOCK PLANS" means all stock option plans and other stock or
equity-related plans of the Company.
"SUBSIDIARY" of a Person means any corporation, partnership, association
or other business entity at least 50% of the outstanding voting power of
which is at the time owned or controlled directly or indirectly by such
Person or by one or more of such Subsidiary entities, or both.
4
"TAX" shall mean any Federal, state, local or foreign income, gross
receipts, license, payroll, unemployment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including, without
limitation, taxes under Code Section 59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), employment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated tax or
other tax, assessment or charge of any kind whatsoever, including, without
limitation, any interest, fine, penalty or addition thereto, whether
disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund or
information, or statement relating to Taxes, and any exhibit, schedule,
attachment or amendment thereto.
"VOTING AGREEMENT" means the Stockholders and Voting Agreement, dated as
of the date hereof, among the Questor Investors and the stockholders of the
Company listed therein.
"WARRANTS" mean (a) Warrant to Purchase One Million One Hundred Thousand
(1,100,000) Shares of Common Stock, $.01 Par Value, dated April 7, 1998, at
the price of $1.96 per share, held by ▇▇▇▇▇▇ Equity Investors III, L.P.;
(b) Warrants to purchase 350,000 shares of Common Stock issued pursuant to a
commitment letter from ▇▇▇▇▇▇ to the Company at an exercise price of $2.375;
(c) Series Four Warrant to Purchase Nine Hundred Seven Thousand Nine Hundred
Eighty-Four (907,984) Shares of Common Stock, $.01 Par Value, dated
June 30, 1999, at the price of $.90625 per share, held by ▇▇▇▇▇▇ Equity
Investors III, L.P.; (d) Series Four Warrant to Purchase Forty-Two Thousand
Ninety-One (42,091) Shares of Common Stock, $.01 Par Value, dated June 30,
1999, at the price of $.90625 per share, held by ▇▇▇▇▇▇ ▇▇▇▇▇;
(e) Series Four Warrant to Purchase Nine Thousand Nine Hundred Seventy-Eight
(9,978) Shares of Common Stock, $.01 Par Value, dated June 30, 1999, at the
price of $.90625 per share, held by ▇▇▇▇▇▇ ▇▇▇▇▇ 1995 Grantor Retained
Annuity Trust; (f) Series Four Warrant to Purchase Thirty-Nine Thousand Nine
Hundred Forty-Seven (39,947) Shares of Common Stock, $.01 Par Value, dated
June 30, 1999, at the price of $.90625 per share, held by ITC Service
Company; or (g) Stock Purchase Warrant, dated as of December 17, 1997, from
IQI, Inc. to ▇▇▇▇▇▇ ▇▇▇▇▇, to purchase 25,403 shares for $808,600 and the
Stock Purchase Warrant, dated as of December 17, 1997, from IQI, Inc., to
purchase 6,013 shares for $191,400 (such two Stock Purchase Warrants to
purchase IQI, Inc. shares having been converted into warrants to purchase
306,347 shares, in aggregate, of Common Stock at an exercise price of $3.26
per share).
2. PURCHASE AND SALE OF SHARES. (a) AUTHORIZATION OF SHARES. The Company
has authorized (a) the sale and issuance to the Questor Investors of the Shares
and (b) the issuance, upon conversion of the Series F Preferred in accordance
with the terms of Certificate of Designation of the Series F Preferred, in the
form attached hereto as EXHIBIT A (the "CERTIFICATE"), of the Conversion Shares.
The Shares shall have the rights, preferences and privileges set forth in the
Certificate.
(b) SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the Closing (as hereinafter defined) the Company hereby agrees to issue and
sell to the Questor Investors and the Questor Investors agree to purchase
from the Company the Shares at a purchase price of One Thousand Dollars
($1,000) per share, or the aggregate purchase price of Forty Six Million
Seven Hundred and Fifty Thousand Dollars ($46,750,000) (the "PURCHASE
PRICE").
3. CLOSING, DELIVERY AND PAYMENT. (a) CLOSING. The closing of the sale
and purchase of the Shares under this Agreement (the "CLOSING") shall take place
three business days following the satisfaction of the conditions to closing in
Section 17(a)(xi) (Proxy Statement), the conditions to closing in Section
17(a)(xv) (HSR) and the conditions to closing in Section 17(a)(x) (Lender
Agreements), at the offices of ▇▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or at such other time or place as the Company
and the Questor Investors may mutually agree (such date is hereinafter referred
to as the "CLOSING DATE").
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(b) DELIVERY. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to the Questor Investors certificates
representing the 46,750 shares of the Series F Preferred being purchased by
the Questor Investors, in the name of the Questor Investors (each Questor
Investor to receive a certificate for that portion of the aggregate number
of Shares as is specified in writing by the Questor Investors), against
payment to the Company of the Purchase Price therefor by wire transfer to
such accounts specified in writing by the Company.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Questor Investors as of the date of this
Agreement as follows:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the Company
and its Subsidiaries is a corporation validly existing and in good standing
under the laws of its jurisdiction of organization with all requisite
corporate power and authority to own and operate its properties and assets
and to carry out its business as presently conducted. The Company has the
corporate power and authority to execute and deliver this Agreement, to
issue and sell the Shares and the Conversion Shares, and to carry out the
provisions of this Agreement and the Certificate. Each of the Company and
its Subsidiaries has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
jurisdiction in which the nature of its business or location of its
properties requires such qualification, except where the failure to so
qualify would not reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.
(b) CAPITALIZATION; SERIES F PREFERRED. As of the date hereof, the
authorized capital stock of the Company, consists of 100,000,000 shares of
Common Stock, 52,492,616 shares of which are issued and outstanding, 29,778
shares of Series B Preferred Stock, of which 29,778 are issued and
outstanding, 231,902 shares of Series D Preferred Stock, of which 77,300
shares are issued and outstanding and 132,053 shares of Series E Preferred
Stock, of which 44,018 shares are issued and outstanding. Section (b) of the
Disclosure Schedules attached hereto (the "DISCLOSURE SCHEDULES") sets forth
a complete and accurate list of (i) all holders of Options, indicating the
type and number of shares of Common Stock subject to each Option, the name
of the plan and the vesting schedule and the exercise price thereof, and
(ii) all of the Stock Plans. All of the issued and outstanding shares of
Common Stock and Preferred Stock are, and all shares of Common Stock that
may be issued upon exercise of Options after the date hereof and prior to
the Closing Date will be, duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. Other than as set forth on
Section (b) of the Disclosure Schedules (i) there are no existing options,
warrants, rights, calls or commitments of any character relating to shares
of Common Stock, (ii) there are no outstanding securities or other
instruments convertible into or exchangeable for shares of the Company's
capital stock and no commitments to issue such securities or instruments and
(iii) no Person has any right of first refusal, preemptive right,
subscription right or similar right with respect to any shares of the
Company's capital stock either pursuant to any agreement or arrangement with
the Company, or, to the Company's knowledge, pursuant to any agreement or
arrangement with any other party. The offer, issuance and sale of all issued
and outstanding shares of Common Stock and Preferred Stock were
(i) registered under, or exempt from the registration and prospectus
delivery requirements of, the Securities Act, (ii) registered or qualified
(or exempt from registration or qualification) under the registration or
qualification requirements of all applicable state securities laws and
(iii) accomplished in conformity with all other Legal Requirements. Except
for the Original Stockholders Agreement, there are no voting agreements,
voting trusts or similar arrangements or understandings to which the Company
or any of its Subsidiaries is a party or is bound with respect to the voting
of the capital stock of the Company or its Subsidiaries. None of the awards,
grants or other agreements pursuant to which Options were issued have
provisions which accelerate the vesting or right to exercise such Options or
warrants upon the execution of this Agreement or the consummation of the
transactions contemplated hereby. Except as set forth on Section (b) of the
Disclosure Schedules, the Company is not under any obligation to register
any securities of the Company. The rights, preferences, privileges and
6
restrictions of the Shares are as stated in the Certificate. The rights,
preferences, privileges and restrictions of the other series of Preferred
Stock are as stated in their respective Certificates of Designation. The
Company's previously designated Series A Preferred Stock and Series C
Preferred Stock are no longer outstanding and such designated preferred
stock has resumed the status of authorized but unissued preferred stock. The
Shares are duly authorized and, when issued and paid for in accordance with
the terms hereof, will be duly authorized, validly issued, fully paid and
nonassessable, free and clear of all Liens and restrictions, other than
Liens that might have been created by the Questor Investors and restrictions
imposed by the Securities Act and the Stockholders Agreement (as hereinafter
defined). The Conversion Shares have been duly and validly reserved for
issuance and, when issued in compliance with the provisions of the
Certificate, will be validly issued, fully paid and nonassessable, free and
clear of all Liens and other restrictions, other than Liens that might have
been created by the Questor Investors and restrictions imposed by the
Securities Act and the Stockholders Agreement.
(c) AUTHORIZATION; BINDING OBLIGATIONS. Subject to obtaining
Stockholder Approval (as hereinafter defined), all corporate action on the
part of the Company, its officers, directors and stockholders necessary for
the authorization of this Agreement, the performance of all obligations of
the Company hereunder and thereunder at the Closing and the authorization,
sale, issuance and delivery of the Shares pursuant hereto and the Conversion
Shares pursuant to the Certificate has been taken. Subject to obtaining
Stockholder Approval, this Agreement, when executed and delivered, will be
the valid and binding obligation of the Company, enforceable in accordance
with its terms. The sale of the Shares contemplated hereby and the
subsequent conversion of the Shares into Conversion Shares in accordance
with the Certificate are not subject to any preemptive rights or rights of
first refusal.
(d) NO CONFLICTS. Subject to compliance with the applicable
requirements of the Securities Act, the Exchange Act, any applicable state
securities laws and the HSR Act, obtaining Stockholder Approval and the Bank
Approval, filing of the Certificate as required by the Delaware General
Corporation Law and the amended Certificate of Incorporation as contemplated
by Section 17(a)(xvi) hereof, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
by the Company will not (a) conflict with or result in a breach or violation
of any term or provision of, or constitute a default under (with or without
notice or passage of time, or both), or otherwise give any Person a basis
for accelerated or increased rights or termination or nonperformance under,
any indenture, mortgage, deed of trust, loan or credit agreement, lease,
license or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound or affected or to which any of the property or assets of the
Company or any of its Subsidiaries is bound, (b) result in the violation of
the provisions of the Certificate of Incorporation or Bylaws of the Company
or any of its Subsidiaries or any Legal Requirement applicable to or binding
upon the Company or any of its Subsidiaries, (c) result in the creation or
imposition of any Lien upon any property or asset of the Company or any of
its Subsidiaries or (d) otherwise adversely affect the contractual or other
legal rights or privileges of the Company or any of its Subsidiaries except
in the case of clauses (a), (c) and (d) above where such conflict, breach,
violation, default, rights, termination, non-performance, Lien or adverse
effect would not reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect or have a material adverse effect
upon the consummation of the transactions contemplated hereby. Section
(d) of the Disclosure Schedules sets forth a list of all agreements to which
the Company or any of its Subsidiaries is a party requiring the consent of
any party thereto to any of the transactions contemplated hereby.
(e) SEC REPORTS. The Company has timely filed all forms, reports,
statements and schedules required to be filed with the Commission since
January 1, 1998. The Company has made available to the Questor Investors
copies of its Annual Report on Form 10-K under the Exchange Act, for the
year ended December 31, 1998, and all other reports filed by the Company
under the Exchange Act since
7
January 1, 1999 (collectively, the "SEC FILINGS"). As of their respective
dates, the SEC Filings did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The audited
financial statements and unaudited interim financial statements of the
Company included in the SEC Filings comply as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the Commission with respect thereto. The SEC
Filings, as of the respective dates of filing, complied as to form with the
requirements of the Exchange Act and the Rules and Regulations thereunder.
The Company's disclosure regarding "Year 2000" issues in its Form 10-Q for
the quarter ended June 30, 1999 is an accurate description of the Company's
and its Subsidiaries' status regarding those issues, and such disclosure
does not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(f) LITIGATION. Except as disclosed in Section (f) of the Disclosure
Schedules, there is no action, suit, proceeding or investigation pending or
to the Company's knowledge currently threatened against the Company or any
of its Subsidiaries or their respective properties, assets, businesses,
officers, shareholders, directors or employees, that questions the validity
of this Agreement or the right of the Company to enter into this Agreement,
or to consummate the transactions contemplated hereby, or that could
reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect.
(g) OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Questor Investors contained in Section 5(b) hereof, the
offer, sale and issuance of the Shares will be exempt from the registration
requirements of the Securities Act, and from any registration or filing
requirement under applicable state securities laws.
(h) FINANCIAL STATEMENTS. The Company has furnished to the Questor
Investors a complete and correct copy of the following financial statements
(collectively, including all notes thereto, the "FINANCIAL STATEMENTS"):
(i) the Company's audited balance sheet, statements of operations, changes
in stockholders' equity and cash flows for the fiscal year ended
December 31, 1998 and for the twelve-month period then ended, and (ii) the
Company's unaudited balance sheet (the "BALANCE SHEET") as of June 30, 1999
(the "BALANCE SHEET DATE") and statements of operations and cash flow for
the six months period ended as of the Balance Sheet Date (the "MOST RECENT
FINANCIAL STATEMENTS"). The Financial Statements have been prepared from the
books and records of the Company and present fairly the financial condition,
results of operations, changes in stockholders equity and cash flows of the
Company, as of the dates and for the periods indicated, and have been
prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied, except that the Most Recent Financial
Statements lack footnotes and other presentation items and are subject to
normal year-end audit adjustments, which are not reasonably expected to be
material in the aggregate.
(i) ABSENCE OF LIABILITIES. Except as disclosed in Section (i) of the
Disclosure Schedules, at the Balance Sheet Date, neither the Company nor its
Subsidiaries had any liabilities of any type that in the aggregate exceeded
$500,000, whether absolute or contingent, which were not fully reflected on
the Balance Sheet, and since the Balance Sheet Date the Company and its
Subsidiaries have not incurred or otherwise become subject to any such
liabilities or obligations except in the ordinary course of business.
(j) TAXES. (i) All material Tax Returns required to be filed through
and including the date hereof by, or in connection with the operations of,
the Company and its Subsidiaries are true, complete and correct in all
respects and have been properly and timely filed. Neither the Company nor
any Subsidiary has requested any extension of time within which to file any
Tax Return, which Tax Return has not since been filed. Questor has
heretofore been granted access by the Company to true, correct and complete
copies of each Tax Return of the Company and each material Tax Return of
each Subsidiary with respect to the past three taxable years, and of all
reports of, and communications from, any Governmental Entities relating to
such Tax Returns.
8
(ii) All material Taxes required to be paid or withheld and deposited
through and including the date hereof by, or in connection with the
operations of, the Company and its Subsidiaries have been duly and timely
paid or deposited by the Company or its Subsidiaries. The Company and its
Subsidiaries have properly withheld or collected all amounts required by
law for material income Taxes, employment Taxes and withholding Taxes
relating to its employees, creditors, independent contractors and other
third parties, and for all material Taxes on sales, and has properly and
timely remitted such withheld or collected amounts to the appropriate
Governmental Entity.
(iii) The Company and its Subsidiaries have made adequate provisions
on their respective books of account for all material Taxes with respect
to their respective businesses, properties and operations through Balance
Sheet Date, and the accruals for Taxes in the Balance Sheet are adequate
to cover all material liabilities for Taxes of the Company and its
Subsidiaries for all periods ending on or before the Closing Date.
(iv) Neither the Company nor any Subsidiary has heretofore (i) had a
material tax deficiency proposed, asserted or assessed against it,
(ii) executed any waiver of any statute of limitations on the assessment
or collection of any material Taxes, or (iii) been delinquent in the
payment of any material Taxes.
(v) Except as set forth in Section (j) of the Disclosure Schedules,
no material Tax Return of the Company or any Subsidiary for which the
applicable statute of limitations (taking into account any waivers or
extensions) has not expired has been audited or the subject of other
Action by any Governmental Entity. Neither the Company nor any Subsidiary
has received any notice from any Governmental Entity of any pending
examination or any material proposed deficiency, addition, assessment,
demand for payment or adjustment relating to or affecting the Company or
any Subsidiary or its respective assets or properties, and neither the
Company nor any Subsidiary has any reason to believe that any
Governmental Entity may assess (or threaten to assess) any material taxes
for any periods ending on or prior to the Closing Date.
(vi) Neither the Company nor any Subsidiary (i) has filed any consent
or agreement pursuant to Code Section 341(f), and no such consent or
agreement will be filed at any time on or before the Closing Date;
(ii) has made any payments, is obligated to make any payments or is a
party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Code
Section 280G; (iii) is a United States real property holding corporation
within the meaning of Code Section 897(c)(2); (iv) is a party to a tax
allocation or sharing agreement; (v) has any liability for Taxes of
another Person because it is or was a member of an affiliated group
(other than any group of which the Company is currently the common
parent) within the meaning of Code Section 1504(a) (or similar or
analogous provision of state or local income Tax law); (vi) has within
the preceding six years applied for a tax ruling from a Governmental
Entity; (vii) has ever filed or been the subject of an election under
Code Section 338(g) or Code Section 338(h)(10) or caused or been the
subject of a deemed election under Code Section 338(e); (viii) has
participated in, or cooperated with, an international boycott within the
meaning of Section 999 of the Code; and (ix) has issued or assumed any
acquisition indebtedness as defined in Section 279(b) of the Code.
(vii) Set forth in Section (j) of the Disclosure Schedule is the
amount, as of the most recent practicable date, of any net operating
loss, net capital loss, unused investment or other credit, unused foreign
tax credits or excess charitable contribution of the Company and its
Subsidiaries.
(k) TITLE TO PROPERTY AND ASSETS. The Company and its Subsidiaries
have good title to or a valid leasehold interest in all of their respective
properties and assets, which comprise all of the properties and assets
reflected in the Balance Sheet (except those disposed of since the Balance
Sheet Date in the ordinary course of business) and all of the properties and
assets necessary or useful for the
9
conduct of their respective businesses, and none of such properties or
assets is subject to any Lien of any nature whatsoever, other than those the
material terms of which are described in the Financial Statements or
Section (k) of the Disclosure Schedules.
(l) EMPLOYEE BENEFIT PLANS AND RELATED MATTERS: ERISA. (i) EMPLOYEE
BENEFIT PLANS. Section (l) of the Disclosure Schedule sets forth a complete
and correct list of each Plan (other than any Plan that has been filed with
the Commission as a material contract). Except as set forth on Section (l)
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries
has communicated to any current or former employee, officer or director of
the Company or any of its Subsidiaries, or the beneficiaries or dependents
of any such persons (collectively, the "EMPLOYEES") any intention or
commitment to modify any Plan or to establish or implement any other
material employee or retiree benefit or compensation plan or arrangement.
(ii) QUALIFICATION. Except to the extent that failure to meet the
requirements of section 401(a) of the Code would not result in any
material liability as to which adequate reserves have not been
established, each Plan intended to be qualified under section 401(a) of
the Code, and the trust (if any) forming a part thereof, (A) has received
a favorable determination letter from the IRS as to its qualification
under the Code and to the effect that each such trust is exempt from
taxation under section 501(a) of the Code, and nothing has occurred since
the date of such determination letter that could adversely affect such
qualification or tax-exempt status or (B) a timely application for such a
favorable determination letter was filed or will be filed prior to the
expiration of the "remedial amendment period" (as defined under Treasury
Regulation Section 1.401(b)-1) and the Company has no reason to believe
that such a favorable determination letter will not be granted.
(iii) COMPLIANCE; LIABILITY. (A) No liability has been or is
reasonably expected to be incurred under or pursuant to Title I or IV of
ERISA or the penalty, excise Tax or joint and several liability
provisions of the Code relating to employee benefit plans that is or
would be material to the Company and its Subsidiaries, taken as a whole.
(B) Each of the Plans has been operated and administered in all
respects in compliance with its terms, all applicable laws and all
applicable collective bargaining agreements, except for any failures
so to comply that, individually and in the aggregate, could not
reasonably be expected to result in a material liability or
obligation on the part of the Company or any of its Subsidiaries that
would be material to the Company and its Subsidiaries, taken as a
whole. There are no pending or threatened claims by or on behalf of
any of the Plans, by any Employee or otherwise involving any such
Plan or the assets of any Plan (other than routine claims for
benefits, all of which have been fully reserved for on the regularly
prepared balance sheets of the Company) which would reasonably be
expected to result in any liability to the Company or any of its
Subsidiaries.
(C) Each Plan that is subject to the minimum funding standards of
ERISA or the Code satisfies such standards under sections 412 and 302
of the Code and ERISA, respectively, and no such Plan has incurred an
"accumulated funding deficiency" within the meaning of such sections,
whether or not waived.
(D) No Employee is or will become entitled to any material
post-employment benefits of any kind by reason of employment with the
Company or any of its Subsidiaries, including, without limitation,
death or medical benefits (whether or not insured), other than (x)
coverage mandated by section 4980B of the Code, (y) retirement
benefits payable under any Plan qualified under section 401(a) of the
Code or (z) deferred compensation accrued as a liability on the
regularly prepared balance sheets of the Company. The consummation of
the transactions contemplated by this Agreement will not result in a
material increase in the
10
amount of compensation or benefits or the acceleration of the vesting
or timing of payment of any compensation or benefits payable to or in
respect of any Employee.
(m) ACCOUNTS RECEIVABLE. All accounts receivable of the Company and
its Subsidiaries reflected in the Balance Sheet (on a net basis) and all
accounts receivable of the Company and its Subsidiaries that have arisen
since the Balance Sheet Date, were valid and enforceable claims against the
account debtor at the date recorded, and the goods and services sold and
delivered that gave rise to such accounts were sold and delivered in
conformity with all applicable express and implied warranties, purchase
orders, agreements and specifications.
(n) MATERIAL CONTRACTS. All material contracts, leases, agreements and
arrangements to which the Company or any of its Subsidiaries is a party are
legally valid, binding and enforceable in accordance with their terms and in
full force and effect, and the Company has provided the Questor Investors
with the opportunity to review and copy all such documents. The Company and,
to the knowledge of the Company, all other parties to such contracts,
leases, agreements and arrangements have complied in all material respects
with the provisions of such contracts, leases, agreements and arrangements,
and neither the Company nor any of its Subsidiaries and, to the knowledge of
the Company, no other party is, in default thereunder, and no event has
occurred which, but for the passage of time or the giving of notice or both,
would constitute a default thereunder that could reasonably be expected to
have a Material Adverse Effect thereunder. Set forth in Section (n) of the
Disclosure Schedules is a list of all such material contracts, leases,
agreements and arrangements to which the Company or any of its Subsidiaries
is a party which either are not included as an exhibit to the SEC Filings,
cannot be terminated or do not terminate within 12 months or less without
cause, or obligate the Company or any of its Subsidiaries for amounts in
excess of $100,000. Except as set forth in Section (n) of the Disclosure
Schedules, none of such contracts, leases, agreements or arrangements will,
by its terms, terminate as a result of the transactions contemplated hereby
or require any consent from any obligor thereto in order to remain in full
force and effect following the consummation of the transactions contemplated
by this Agreement, including the issuance of the Shares or the Conversion
Shares.
(o) CONSENTS. Subject to compliance with the applicable requirements
of the Securities Act and any applicable state securities laws, the HSR Act
and the filing of the Certificate as required by the Delaware General
Corporation Law and the amended Certificate of Incorporation as contemplated
by Section 17(a)(xvi) hereof and the Bank Approval, no consent, approval,
authorization, license, permit or other action by, or filing with, any
governmental or regulatory authority is required in connection with the
execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions contemplated hereby, including the
issuance of the Shares or the Conversion Shares, except for such consents,
approvals, authorizations, licenses, permits, actions or filings as will
have been obtained, taken or filed at or prior to the Closing.
(p) ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, neither
the Company nor any of its Subsidiaries has made or suffered any change in,
or condition affecting, their respective condition (financial or otherwise),
properties, profitability or operations other than changes, events or
conditions in the ordinary course, none of which, individually or in the
aggregate, has had, or which the Company can reasonably foresee will have, a
Material Adverse Effect; PROVIDED, HOWEVER, that, subject to the immediately
succeeding proviso, any such change resulting from the loss of (i) any
customer or client or customer or client program since the Balance Sheet
Date will be viewed in the aggregate after taking into account any customer
or client or customer or client programs gained since the Balance Sheet
Date; PROVIDED FURTHER that the loss of (i) any customer or client set forth
on Section (p) of the Disclosure Schedules, or (ii) any program of any such
customer or client the loss of which program in itself could reasonably be
expected to have a Material Adverse Effect, will in each case be deemed to
constitute a Material Adverse Effect.
11
(q) COMPLIANCE WITH LAW. The Company and its Subsidiaries are in
compliance in all material respects with all Legal Requirements in
connection with the operation of their businesses and the ownership and
maintenance of their assets and properties. To the Company's knowledge, all
filings and notices required to be made by the Company and its Subsidiaries
with any Governmental Entity in connection with the operation of their
businesses or the ownership and maintenance of their assets or properties
have been made or given in a timely fashion.
(r) INTELLECTUAL PROPERTY. The Company or its Subsidiaries are the
exclusive owner of all right, title and interest in and/or have the valid
and legal right to use all Intellectual Property necessary to conduct their
businesses as now being conducted. Such use of Intellectual Property owned
by the Company, and to the knowledge of the Company and its Subsidiaries,
such use of Intellectual Property licensed to the Company and its
Subsidiaries, does not conflict with or infringe upon any valid rights of
others except for infringements or conflicts which could not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received
any written notice that the conduct of its business infringes upon or
conflicts with the asserted intellectual property or proprietary rights of
others and has no knowledge that any person is infringing upon or in
conflict with its asserted rights.
(s) DELAWARE GENERAL CORPORATION LAW SECTION 203. The Board has taken
such action as necessary to approve for purposes of Section 203 of the
Delaware General Corporation Law this Agreement and the transactions
contemplated hereby and any future sales by the Questor Investors,
including, without limitation, all action necessary to prevent the Questor
Investors or any transferee of the Questor Investors from being deemed an
interested person as defined in such Section 203.
(t) ACTIONS REGARDING THE SHAREHOLDER RIGHTS PLAN. The Company has
taken all actions to amend the Rights Plan (i) as necessary to ensure that
this Agreement and the consummation of any of the transactions contemplated
hereby and any future issuance or purchase of shares of capital stock of the
Company by the Questor Investors or their Affiliates or transferees,
including without limitation the issuance of the Shares and the Conversion
Shares and the subsequent sale of any such Shares and Conversion Shares,
will not result in the distribution of separate rights certificates, the
occurrence of a "Distribution Date" or in any such person being deemed to be
an "Acquiring Person" under the Rights Plan, and (ii) subject to the
Closing, to provide that the "Final Expiration Date" thereunder will be the
Closing Date.
(u) NO FURTHER CLAIMS. As of the Closing Date, neither the Company nor
any of its Subsidiaries shall have any claims outstanding against any of the
Existing Investors pursuant to any indemnity provision or otherwise,
including any indemnity claim pursuant to the Agreement and Plan of Merger,
dated as of April 7, 1998, by and among IQI, Inc., ATC Communications
Group, Inc. and ATC Merger Sub, Inc.
(v) INFORMATION IN PROXY STATEMENT. None of the information supplied
by the Company for inclusion or incorporation by reference in the Proxy
Statement will, and the Proxy Statement (or any amendment thereof or
supplement thereto) will not, at the date it becomes effective and at the
time of the Special Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading , except that no
representation is made by the Company with respect to statements made
therein based on information supplied by the Questor Investors in writing
for inclusion in the Proxy Statement. The Proxy Statement will comply as to
form and otherwise in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
(w) REQUIRED VOTE. The voting power listed in Annex A to the Voting
Agreement besides the names of the stockholders of the Company who are
parties to such Voting Agreement is sufficient to
12
adopt and approve this Agreement, the Amended and Restated Certificate of
Incorporation, the election of directors and the other transactions
contemplated by this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE QUESTOR INVESTORS. The Questor
Investors, jointly and severally, hereby represent and warrant to the Company as
of the date of this Agreement as follows:
(a) REQUISITE POWER AND AUTHORITY. Each of the Questor Investors has
all necessary power and authority under all applicable provisions of law to
execute and deliver this Agreement and to carry out its provisions. All
action on each of the Questor Investors' part required for the lawful
execution and delivery of this Agreement have been taken. Upon its execution
and delivery, this Agreement will be valid and binding against the Questor
Investors, enforceable in accordance with its terms.
(b) INVESTMENT REPRESENTATIONS. The Questor Investors understand that
neither the Shares nor the Conversion Shares have been registered under the
Securities Act. The Questor Investors also understand that the Shares are
being offered and sold pursuant to an exemption from registration contained
in the Securities Act based in part upon the Questor Investors'
representations contained in this Agreement. The Questor Investors hereby
represent and warrant as follows:
(i) THE QUESTOR INVESTORS BEAR ECONOMIC RISK. The Questor
Investors have substantial experience in evaluating and investing in
private placement transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own
interests. The Questor Investors must bear the economic risk of this
investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from
registration is available. The Questor Investors also understand that
there is no assurance that any exemption from registration under the
Securities Act will be available and that, even if available, such
exemption may not allow the Questor Investors to transfer all or any
portion of the Shares or the Conversion Shares under the circumstances,
in the amounts or at the times the Questor Investors might propose.
(ii) ACQUISITION FOR OWN ACCOUNT. The Questor Investors are
acquiring the Shares and the Conversion Shares for their own account for
investment only, and not with a view towards their distribution, provided
the Questor Investors may resell the Conversion Shares in a transaction
registered under the Securities Act or exempt from the registration
requirements of the Securities Act.
(iii) THE QUESTOR INVESTORS CAN PROTECT THEIR INTEREST. The Questor
Investors represent that by reason of their, or of their management's,
business or financial experience, the Questor Investors have the capacity
to protect their own interests in connection with the transactions
contemplated in this Agreement.
(iv) ACCREDITED INVESTOR. Each of the Questor Investors is either
(i) an accredited investor as such term is defined in Rule 501
promulgated under the Securities Act, or (ii) by reason of its business
or financial experience, a sophisticated investor who has the capacity to
protect its interest in connection with the transactions contemplated
hereunder and has both appropriate knowledge and experience with the
current business operations and prospects of the Company and its
Subsidiaries and in financial business matters to evaluate the merits and
risks of the Series F Preferred Stock and the Common Stock and the
related transactions contemplated hereunder.
(v) COMPANY INFORMATION. The Questor Investors have received and
read the SEC Filings and have had an opportunity to discuss the Company's
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the
Company's operations and facilities. The Questor Investors have also had
the
13
opportunity to ask questions of, and receive answers from, the Company
and its management regarding the terms and conditions of this investment.
(c) INFORMATION IN PROXY STATEMENT. None of the information supplied
in writing by any of the Questor Investors for inclusion or incorporation by
reference in the Proxy Statement will, at the date mailed to shareholders
and at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
6. REPRESENTATIONS AND WARRANTIES OF THE EXISTING INVESTORS. Each of the
Existing Investors severally hereby represent and warrant to the Questor
Investors as of the date of this Agreement as follows:
(a) REQUISITE POWER AND AUTHORITY. Each of Existing Investors has all
necessary power and authority under all applicable provisions of law to
execute and deliver this Agreement and to carry out its provisions. All
action required of each Existing Investor for the lawful execution and
delivery of this Agreement have been taken. Upon its execution and delivery,
this Agreement will be valid and binding against each of the Existing
Investors, enforceable in accordance with its terms.
(b) NO FURTHER CLAIMS. None of the Existing Investors have any claims
outstanding against the Company or its Subsidiaries pursuant to any
indemnity provision or otherwise, including any indemnity claim pursuant to
the Agreement and Plan of Merger, dated as of April 7, 1998, by and among
IQI, Inc., ATC Communications Group, Inc. and ATC Merger Sub, Inc.
7. REQUIRED REGISTRATION. (a) Commencing after the filing of the
Certificate, if and whenever the Company shall receive a written request
therefor from Initiating Holders, the Company agrees to prepare and file
promptly a registration statement under the Securities Act covering the shares
of Registrable Securities which are the subject of such request and agrees to
use its best efforts to cause such registration statement to become effective as
expeditiously as possible. Upon the receipt of such request (which request will
specify the intended method or methods of distribution of Registrable
Securities), the Company agrees to give prompt written notice to all Holders of
Registrable Securities that such registration is to be effected. The Company
agrees to include in such registration statement such shares of Registrable
Securities for which it has received written requests to register such shares by
the Holders thereof within thirty (30) days after the receipt of written notice
from the Company.
(b) The Company shall be obligated to prepare, file and cause to become
effective upon request of the Initiating Holders a total of 2 registrations
on a form other than S-3 (one initiated by the Existing Investors and one
initiated by the Questor Holders) and 6 registrations on form S-3 (three
initiated by the Existing Investors and three initiated by the Questor
Holders), which may be in respect of a shelf registration pursuant to
Commission Rule 415 (a "SHELF REGISTRATION") if so requested by the
Initiating Holders; provided, however, that if the Company is not eligible
to effect a registration on form S-3 at the time of any request for
registration due to any failure by the Company to timely make any required
filings with the Commission, the Company shall be obligated to prepare, file
and cause to become effective upon the request of the Initiating Holders a
registration statement on form S-1 (or form S-2 if available) in lieu of the
registrations on form S-3 provided for in the preceding clause. A
registration statement which becomes effective pursuant to a request for
registration under this Section 7 shall not be counted for purposes of such
limitations, (i) if, within 120 days after the registration relating to any
such request has become effective, such registration is interfered with by
any stop order, injunction or other order or requirement of the Commission
or other governmental agency or court for any reason and the Company fails
to have such stop order, injunction or other order or requirement removed,
withdrawn or resolved to the Initiating Holder's reasonable satisfaction
within 30 days, (ii) the conditions to closing specified in the underwriting
agreement or purchase agreement entered into in connection with the
registration relating to any such registration statement are not satisfied
(other than as a result of a default or breach thereunder by such Initiating
Holder), or (iii) as otherwise provided in Section 7(f) below.
14
(c) If the Holders initiating a request for the registration of
Registrable Securities pursuant to this Section 7 intend to distribute the
Registrable Securities covered by their request by means of any
underwriting, they will so notify the Company as a part of their request
made pursuant to this Section 7(a), and the Company agrees to include such
information in its written notice referred to in Section 7(a). In such event
the right of any Holder to registration pursuant to this Section 7 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the
Initiating Holders initiating such request for registration and such Holder
with respect to such participation and inclusion) to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting agree to enter into (together with the Company) an underwriting
agreement with the underwriter or underwriters selected for such
underwriting, in the manner set forth above, provided that such underwriting
agreement is in customary form and is reasonably acceptable to the Company
and the Holders of a majority of the shares of Registrable Securities to be
included in such registration. The Holders of Registrable Securities to be
distributed by such underwriter may, at their option, require that any or
all of the representations and warranties by, and the agreements on the part
of, the Company to and for the benefit of such underwriters be made to and
for the benefit of such holders of Registrable Securities and that any or
all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement shall also be conditions precedent to the
obligations of such holders of Registrable Securities. No underwriting
agreement (or other agreement in connection with such offering) shall
require any Holders of Registrable Securities, in their respective
capacities as stockholders and/or controlling persons, to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
such Holder, the ownership of such Holder's Registrable Securities and such
Holder's intended method or methods of disposition and any other
representation required by law or to furnish any indemnity to any Person
which is broader than the indemnity furnished by such Holder pursuant to
Section 11(b).
(d) Whenever a registration requested pursuant to this Section 7 is for
an underwritten offering, the managing underwriter who will be selected to
administer the offering shall be selected jointly by the Questor Holders and
the Existing Investors in any registration in which both are participating
and otherwise by the Initiating Holder, and such underwriter shall be
reasonably satisfactory to the Company; PROVIDED, that at any time in which
either the Questor Holders or the Existing Investors own Registrable
Securities constituting less than 5% of the Common Stock of the Company on a
fully diluted basis, they will not have a right to participate in the
selection of the managing underwriter unless they are the Initiating Holder.
(e) Notwithstanding any other provision of this Section 7, if the
managing underwriter of an underwritten distribution advises the Company and
the Holders of Registrable Securities participating in such registration in
writing that in its good faith judgment the number of shares of Registrable
Securities requested to be included in such registration exceeds the number
of shares of Registrable Securities which can be sold in such offering, then
(i) the number of shares of Registrable Securities so requested to be
included in such registration shall be reduced to that number of shares
which in the good faith judgment of the managing underwriter can be sold in
such offering and (ii) this reduced number of shares shall be allocated
among all Holders thereof in proportion, as nearly as practicable, to the
respective number of shares of Registrable Securities held by such Holders
at the time of filing the registration statement.
(f) To the extent all shares of Registrable Securities of the
Initiating Holders are not included in the registration statement due to the
underwriter cutbacks described above, such registration shall not count as a
demand registration to which the Initiating Holders are entitled pursuant to
subparagraph (b) of this Section 7.
15
(g) If the managing underwriter has not limited the number of
Registrable Securities to be underwritten, the Company may include
securities for its own account in such registration if the managing
underwriter so agrees and if the number of Registrable Securities which
would otherwise have been included in such registration and underwriting
will not thereby be limited.
(h) Notwithstanding any of the foregoing, if the Company shall at any
time furnish to each seller of Registrable Securities a certificate signed
by the President of the Company (a "DEFERRAL CERTIFICATE") stating that the
Company has pending or in process a material transaction (including a
financing transaction), the disclosure of which would, in the good faith
judgment of the Board, materially and adversely affect the Company, the
Company may defer the filing (but not the preparation) of a registration
statement to be filed pursuant to this Section 7 for up to 60 days (but the
Company shall use its best efforts to complete the transaction and file the
registration statement as soon as possible) PROVIDED that the Company shall
not be permitted to defer the filing of registration statements pursuant to
this clause (h) more than once in any 120-day period. If, after a
registration statement becomes effective, the Company advises the holders of
the registered shares that the Company considers it appropriate for the
registration statement to be amended, the holders of such shares shall
suspend any further sales of their registered shares until the Company
advises them that the registration statement has been amended, and the
Company will prepare and promptly file with the Commission any required
amendment.
(i) After receipt of notice of a requested registration pursuant to
this Section 7, the Company shall not initiate, without the consent of the
Initiating Holder, a registration of any of its securities for its own
account until 90 days after such registration has been effected or such
registration has been terminated. Further, the Company agrees not to effect
any public sale or distribution or any sale or distribution pursuant to
Rule 144A or Regulation S under the Securities Act of its equity securities
or securities convertible into or exchangeable or exercisable for any of
such securities within seven days prior to and 90 days (unless advised in
writing by the managing underwriter that a longer period, not to exceed 180
days, is required, or such shorter period as the managing underwriter for
any underwritten offering may agree) after the effective date of any
registration statement filed pursuant to Section 7 (except as part of such
registration or pursuant to a registration on Form S-4 or S-8 or any
successor form). In addition, the Company shall use its commercially
reasonable efforts to cause each holder of its equity securities or any
securities convertible into or exchangeable or exercisable for any of such
securities, issued by the Company at any time after the date of this
Agreement (other than any such securities issued to the public in a
registration or pursuant to Rule 144A under the Exchange Act), to agree not
to effect any such public sale or distribution of such securities during
such period, except as part of any such registration if permitted, and to
cause each such holder to enter into a similar agreement to such effect with
the Company, and each of the parties to this Agreement hereby so agrees.
8. INCIDENTAL REGISTRATION. (a) Each time the Company shall determine to
file a registration statement under the Securities Act (other than (i) pursuant
to Section 7 hereof, (ii) on Form S-8 or a registration statement on Form S-1
covering solely an employee benefit plan and (iii) on Form S-4) in connection
with the proposed offer and sale for money of any of its securities either for
its own account or on behalf of any other security holder, the Company agrees to
give promptly written notice of its determination to all Holders of Registrable
Securities. Upon the written request of a Holder of any shares of Registrable
Securities given within thirty (30) days after the receipt of such written
notice from the Company, the Company agrees to cause all such Registrable
Securities, the Holders of which have so requested registration thereof, to be
included in such registration statement and registered under the Securities Act,
all to the extent requisite to permit the sale or other disposition by the
prospective seller or sellers of the Registrable Securities to be so registered.
16
(b) If the registration of which the Company gives written notice
pursuant to Section 8(a) is for a public offering involving an underwriting,
the Company agrees to so advise the Holders as a part of its written notice.
In such event the right of any Holder to registration pursuant to this
Section 8 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. All Holders proposing to
distribute their Registrable Securities through such underwriting agree to
enter into (together with the Company and the other holders distributing
their securities through such underwriting) an underwriting agreement with
the underwriter or underwriters selected for such underwriting by the
Company, provided that such underwriting agreement is in customary form and
is reasonably acceptable to the Holders of a majority of the shares of
Registrable Securities requested to be included in such registration. The
Holders of Registrable Securities to be distributed by such underwriter may,
at their option, require that any or all of the representations and
warranties by, and the agreements on the part of, the Company to and for the
benefit of such underwriters be made to and for the benefit of such holders
of Registrable Securities and that any or all of the conditions precedent to
the obligations of such underwriters under such underwriting agreement shall
also be conditions precedent to the obligations of such holders of
Registrable Securities. No underwriting agreement (or other agreement in
connection with such offering) shall require any Holders of Registrable
Securities, in their respective capacities as stockholders and/or
controlling persons, to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, the ownership of such
Holder's Registrable Securities and such Holder's intended method or methods
of disposition and any other representation required by law or to furnish
any indemnity to any Person which is broader than the indemnity furnished by
such Holder pursuant to Section 11(b).
(c) Notwithstanding any other provision of this Section 8, if the
managing underwriter of an underwritten distribution advises the Company and
the Holders of the Registrable Securities participating in such registration
in writing that in its good faith judgment the number of shares of
Registrable Securities exceeds the number of shares of Registrable
Securities which can be sold in such offering, then (i) the number of shares
of Registrable Securities so requested to be included in the offering shall
be reduced to that number of shares which in the good faith judgment of the
managing underwriter can be sold in such offering (except for shares to be
issued by the Company in an offering initiated by the Company, which shall
have priority over the shares of Registrable Securities), and (ii) such
reduced number of shares shall be allocated among all participating Holders
of Registrable Securities in proportion, as nearly as practicable, to the
respective number of shares of Registrable Securities held by such Holders
at the time of filing the registration statement.
9. REGISTRATION PROCEDURES. If and whenever the Company is required by the
provisions of Section 7 or 8 hereof to effect the registration of Registrable
Securities under the Securities Act, the Company, at its expense and as
expeditiously as possible, agrees to:
(a) In accordance with the Securities Act and all applicable rules and
regulations and the intended method or methods of distribution specified in
the Initiating Holders' registration request, prepare and, as soon as
practicable but in any event within 75 days thereafter, file with the
Commission a registration statement with respect to such securities, make
all required filings with the NASD, and use its best efforts to cause such
registration statement to become and remain effective until the securities
covered by such registration statement have been sold, and prepare and file
with the Commission such amendments and supplements to such registration
statement and the prospectus contained therein as may be necessary to keep
such registration statement effective and such registration statement and
prospectus accurate and complete until the securities covered by such
registration statement have been sold; PROVIDED that in no event shall the
Company be required to maintain the effectiveness of any registration
statement for more than 4 months (or such longer period of time as may be
requested by the managing underwriter in the case of an underwritten
17
offering), except that the Company shall be required to maintain the
effectiveness of a Shelf Registration for a period of one year (which period
shall be extended for as long as sales of Registrable Securities have been
suspended pursuant to Section 9(l) if sales of Registrable Securities have
been suspended pursuant to Section 9(l));
(b) Furnish to the Holders of securities participating in such
registration and to the underwriters of the securities being registered
without charge such number of copies of the registration statement and each
amendment and supplement thereto (in each case including all exhibits and
documents filed therewith), preliminary prospectus, final prospectus and
such other documents as such underwriters and Holders may reasonably request
in order to facilitate the public offering of such securities;
(c) Use its best efforts to register or qualify the securities covered
by such registration statement under such state securities or blue sky laws
of such jurisdictions as such participating Holders and underwriters may
reasonably request, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in any jurisdiction where it is not so
qualified;
(d) Notify the Holders participating in such registration, promptly
after it shall receive notice thereof, of the date and time when such
registration statement and each post-effective amendment thereto has become
effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(e) Notify such Holders promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus
or for additional information;
(f) Prepare and file with the Commission, promptly upon the request of
any such Holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such Holders,
is required under the Securities Act or the rules and regulations thereunder
in connection with the distribution of the Registrable Securities by such
Holders;
(g) Prepare and file promptly with the Commission, and promptly notify
such Holders of the existence of circumstances giving rise to the filing of,
such amendments or supplements to such registration statement or prospectus
as may be necessary to correct any statements or omissions if, at the time
when a prospectus relating to such securities is required to be delivered
under the Securities Act, any event has occurred as the result of which any
such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading;
(h) In case any of such Holders or any underwriter for any such Holders
is required to deliver a prospectus at a time when the prospectus then in
circulation is not in compliance with the Securities Act or the rules and
regulations of the Commission, prepare promptly upon request such amendments
or supplements to such registration statement and such prospectus as may be
necessary in order for such prospectus to comply with the requirements of
the Securities Act and such rules and regulations;
(i) Advise such Holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued;
(j) Furnish copies of all documents proposed to be filed with the
Commission in connection with such registration to (i) in the case of a
registration in which any Questor Holder but no Existing Investor is
participating, counsel selected by the Questor Holders, (ii) in the case of
a registration in which any Existing Investor but no Questor Holders are
participating, counsel selected by the Existing
18
Investor, and (iii) in the case of a registration in which at least one
Questor Holder and at least one Existing Investor is participating, counsel
selected jointly by the participating Questor Holders and Existing
Investors, and such documents shall be subject to the review of such
counsel, the participating Questor Holders and the participating Existing
Investors, as the case may be, and the Company shall not file any
registration statement or prospectus or any amendment or supplement to such
registration statement or prospectus to which any such Person reasonably
objected on the grounds that such registration statement or prospectus or
amendment or supplement thereto does not comply in all material respects
with the requirements of the Securities Act or the rules and regulations
thereunder, after having been furnished with a copy thereof, together with
all other documents proposed to be filed in connection therewith, at least
five (5) business days prior to the filing thereof; provided, however, that
the failure of such Holders or their counsel to review or object to any
registration statement or prospectus or any amendment or supplement to such
registration statement or prospectus shall not affect the rights of such
Holders their respective officers, directors, partners, legal counsel,
accountants or controlling Persons or any underwriter or any controlling
Person of such underwriter under Section 9 hereof;
(k) In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act, the
Company will give the Holders of such Registrable Securities so to be
registered and their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will make
available for inspection upon request by any such Person and by any
attorney, accountant or other agent retained by any such Holder or any such
underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause all of the Company's officers,
directors and employees to supply all information reasonably requested by
any such Holder, underwriter, attorney, accountant or agent in connection
with such registration statement;
(l) Provide in accordance with Section 22(c) hereof a Deferral
Certificate to each seller of any Registrable Securities covered by a Shelf
Registration at any time that the Company has a pending or in process
material transaction (including a financing transaction) or other material
development, the disclosure of which would, in the good faith judgment of
the Board, materially and adversely affect the Company, whereupon the
holders of Registrable Securities being sold pursuant to such Shelf
Registration shall suspend sales of such Registrable Securities beginning on
the date of receipt of such Deferral Certificate and expiring on the date
upon which such information is disclosed to the public or ceases to be
material, as evidenced by a notice from the Company to such holders to that
effect; PROVIDED, HOWEVER, that such deferral shall in no event be for a
period of more than 75 days (but the Company shall use its best efforts to
complete the transaction as soon as possible), and no more than one Deferral
Certificate relating to a Shelf Registration may be filed in any 180-day
period;
(m) At the request of any Holder of Registrable Securities covered by
such registration statement, furnish to such Holder on the effective date of
the registration statement or, if such registration includes an underwritten
public offering, at the closing provided for in the underwriting agreement,
(i) an opinion dated such date of the counsel representing the Company for
the purposes of such registration, addressed to the underwriters, if any,
and to the Holder or Holders making such request, covering such matters with
respect to the registration statement, the prospectus and each amendment or
supplement thereto, proceedings under state and federal securities laws,
other matters relating to the Company, the securities being registered and
the offer and sale of such securities as are customarily the subject of
opinions of issuer's counsel provided to underwriters in underwritten public
offerings, and such opinion of counsel shall additionally cover such legal
matters with respect to the registration as such requesting Holder or
Holders may reasonably request, and (ii) letters dated each of such
effective date and such closing date, from the independent certified public
accountants of the
19
Company, addressed to the underwriters, if any, and to the Holder or Holders
making such request, stating that they are independent certified public
accountants within the meaning of the Securities Act and dealing with such
matters as the underwriters may request, or if the offering is not
underwritten that in the opinion of such accountants the financial
statements and other financial data of the Company included in the
registration statement or the prospectus or any amendment or supplement
thereto comply in all material respects with the applicable accounting
requirements of the Securities Act, and additionally covering such other
accounting and financial matters, including information as to the period
ending not more than five (5) business days prior to the date of such letter
with respect to the registration statement and prospectus, as such
requesting Holder or Holders may reasonably request;
(n) Use its commercially reasonable efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies, authorities or self-regulatory
bodies as may be necessary by virtue of the business and operations of the
Company to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(o) Otherwise comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement of the Company (in form
complying with the provisions of Rule 158 under the Securities Act) covering
the period of at least 12 months, but not more than 18 months, beginning
with the first month after the effective date of such registration
statement;
(p) Use its commercially reasonable efforts (i) (A) to list such
Registrable Securities on any securities exchange on which the equity
securities of the Company are then listed or, if no such equity securities
are then listed, on an exchange selected by the Company, if such listing is
then permitted under the rules of such exchange, or (B) if such listing is
not practicable, to secure designation of such securities as a NASDAQ
"national market system security" within the meaning of Rule 11Aa2-1 under
the Exchange Act or, failing that, to secure NASDAQ authorization for such
Registrable Securities, and, without limiting the foregoing, to arrange for
at least two market makers to register as such with respect to such
Registrable Securities with the NASD, and (ii) to provide a transfer agent
and registrar for such Registrable Securities not later than the effective
date of such registration statement and to instruct such transfer agent
(A) to release any stop transfer order with respect to the certificates with
respect to the Registrable Securities being sold and (B) to furnish
certificates without restrictive legends representing ownership of the
shares being sold, in such denominations requested by the sellers of the
Registrable Securities or the lead underwriter;
(q) Enter into such agreements and take such other actions as the
sellers of Registrable Securities or the underwriters reasonably request in
order to expedite or facilitate the disposition of such Registrable
Securities, including, without limitation, preparing for, and participating
in, such number of "road shows" and all such other customary selling efforts
as the underwriters reasonably request in order to expedite or facilitate
such disposition; and
(r) Use its commercially reasonable efforts to take all other steps
necessary to effect the registration of such Registrable Securities
contemplated hereby.
10. EXPENSES. (a) With respect to each inclusion of shares of Registrable
Securities in a registration statement pursuant to Section 7 or 8 hereof, the
Company agrees to bear all fees, costs and expenses of and incidental to such
registration and the public offering in connection therewith; provided, however,
that security holders participating in any such registration agree to bear all
underwriting discounts and commissions and transfer taxes with respect to their
Registrable Securities included in such registration.
(b) The fees, costs and expenses of registration to be borne by the
Company, as provided in paragraph (a) above, shall include all expenses
incurred by the Company to comply with Sections 7
20
and 8, including, without limitation, all registration, filing and NASD
fees, printing expenses, fees and disbursements of counsel and accountants
for the Company, fees and disbursements of counsel for the underwriter or
underwriters of such securities (if the Company and/or selling security
holders are otherwise required to bear such fees and disbursements),
reasonable fees and disbursements not to exceed $50,000 of one counsel for
all of the selling Holders of Registrable Securities, all legal fees and
disbursements and other expenses of complying with state securities or blue
sky laws of any jurisdictions in which the securities to be offered are to
be registered or qualified, and the premiums and other costs of policies of
insurance against liability arising out of such public offering.
11. INDEMNIFICATION. (a) The Company hereby agrees to indemnify and hold
harmless each Holder of Registrable Securities which are included in a
registration statement pursuant to the provisions of this Agreement and each of
such Holder's officers, directors, partners, stockholders, members, legal
counsel and accountants, and each Person who controls such Holder within the
meaning of the Securities Act and any underwriter (as defined in the Securities
Act) for such Holder, and any Person who controls such underwriter within the
meaning of the Securities Act, from and against, and agrees to reimburse such
Holder, its officers, directors, partners, stockholders, members, legal counsel,
accountants and controlling Persons and each such underwriter and controlling
Person of such underwriter with respect to, any and all claims, actions (actual
or threatened), demands, losses, damages, liabilities, costs and expenses to
which such Holder, its officers, directors, partners, stockholders, legal
counsel, accountants or controlling Persons, or any such underwriter or
controlling Person of such underwriter may become subject under the Securities
Act or otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse each such indemnified party for any legal or any other expenses
reasonably incurred by them in connection with enforcing its rights hereunder or
under the underwriting agreement entered into in connection with such offering
or investigating, preparing, pursuing or defending any such loss, claim, damage,
liability, action or proceeding, except insofar as any such loss, claim, damage,
liability, action, proceeding or expense arises out of or is based upon an
untrue statement or omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such seller expressly for use in the preparation thereof. The
Company and the Holders of Registrable Securities hereby acknowledge and agree
that for all purposes of this Agreement the only information furnished or to be
furnished to the Company for use in any such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement are
statements specifically relating to (a) transactions between such Holder and its
Affiliates, on the one hand, and the Company, on the other hand, (b) the
beneficial ownership of shares of Common Stock by such Holder and its
Affiliates, (c) the name and address of such Holder, and (d) the intended method
of distribution of such Holder. Such indemnity shall remain in full force and
effect, regardless of any investigation made by such indemnified party and shall
survive the transfer of such Registrable Securities by such seller.
(b) Each Holder of shares of Registrable Securities which are included
in a registration statement pursuant to the provisions of this Agreement
hereby severally agrees to indemnify and hold harmless the Company, its
officers, directors, legal counsel and accountants and each Person who
controls the Company within the meaning of the Securities Act, from and
against, and agrees to reimburse the Company, its officers, directors, legal
counsel, accountants and controlling Persons with respect to, any and all
claims, actions, demands, losses, damages, liabilities, costs or expenses to
which the Company, its officers, directors, legal counsel, accountants or
such controlling Persons may become subject under the Securities Act or
otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any
21
amendment or supplement thereto, or are caused by the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and
in strict conformity with written information furnished by such Holder
specifically for use in the preparation thereof. The Company and the holders
of Registrable Securities hereby acknowledge and agree that for all purposes
of this Agreement the only information furnished or to be furnished to the
Company for use in any such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement are statements
specifically relating to (a) transactions between such holder and its
Affiliates, on the one hand, and the Company, on the other hand, (b) the
beneficial ownership of shares of Common Stock by such Holder and its
Affiliates, (c) the name and address of such Holder, and (d) the intended
method of distribution of such Holder. The indemnity provided by each seller
of Registrable Securities under this Section 11(b) shall be limited in
amount to the net amount of proceeds actually received by such seller from
the sale of Registrable Securities pursuant to such registration statement.
(c) Promptly after receipt by a party indemnified pursuant to the
provisions of subsection (a) or (b) of this Section 11 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim therefor is to
be made against the indemnifying party pursuant to the provisions of
subsection (a) or (b), notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 11 and shall not relieve the indemnifying
party from liability under this Section 11 unless such indemnifying party is
prejudiced by such omission. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying parties similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, that if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel (in which case the indemnifying party shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties). Upon the permitted assumption by the indemnifying party
of the defense of such action, and approval by the indemnified party of
counsel, the indemnifying party shall not be liable to such indemnified
party under subsection (a) or (b) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof (other than reasonable costs of investigation) unless
(i) the indemnified party shall have employed separate counsel in connection
with the assertion of legal defenses in accordance with the proviso to the
next preceding sentence, (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time, (iii) the indemnifying party and its counsel
do not actively and vigorously pursue the defense of such action, or
(iv) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. No indemnifying
party shall be liable to an indemnified party for any settlement of any
action or claim without the consent of the indemnifying party and no
indemnifying party may unreasonably withhold its consent to any such
settlement. No indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of
a release from all liability with respect to such claim or litigation.
(d) If the indemnification provided for in subsection (a) or (b) of
this Section 11 is held by a court of competent jurisdiction to be
unavailable to a party to be indemnified with respect to any
22
claims, actions, demands, losses, damages, liabilities, costs or expenses
referred to therein, then each indemnifying party under any such subsection,
in lieu of indemnifying such indemnified party thereunder, hereby agrees to
contribute to the amount paid or payable by such indemnified party as a
result of such claims, actions, demands, losses, damages, liabilities, costs
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified party
on the other in connection with the statements or omissions which resulted
in such claims, actions, demands, losses, damages, liabilities, costs or
expenses, as well as any other relevant equitable considerations. If,
however, the allocation provided by the immediately preceding sentence is
unavailable or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified
party as a result of such losses, claims, damages, liabilities, actions,
proceedings or expenses in such proportion as is appropriate to reflect the
relative benefits to the indemnifying party on the one hand and the
indemnifying party on the other in connection with the offering of
Registrable Securities (taking into account the portion of the proceeds of
the offering realized by such party). The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. Notwithstanding the foregoing, the amount any Holder of
Registrable Securities shall be obligated to contribute pursuant to this
subsection (d) shall be limited to an amount equal to the per share public
offering price (less any underwriting discount and commissions) multiplied
by the number of shares of Registrable Securities sold by such Holder
pursuant to the registration statement which gives rise to such obligation
to contribute (less the aggregate amount of any damages which such Holder
has otherwise been required to pay in respect of such claim, action, demand,
loss, damage, liability, cost or expense or any substantially similar claim,
action, demand, loss, damage, liability, cost or expense arising from the
sale of such Registrable Securities). No party shall be liable for
contribution under this Section 11d except to the extent as such party would
have been liable to indemnify under this Section 11d if such indemnification
were enforceable under applicable law.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
hereunder from any person who was not guilty of such fraudulent
misrepresentation.
12. REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT. The Company shall
timely file such information, documents and reports as the Commission may
require or prescribe under Section 13 of the Exchange Act. The Company
acknowledges and agrees that the purposes of the requirements contained in this
Section 12 are (a) to enable the Holders of Registrable Securities to comply
with the current public information requirement contained in paragraph (c) of
Rule 144 should any such Holder ever wish to dispose of any of the Registrable
Securities without registration under the Securities Act in reliance upon Rule
144 (or any other similar exemptive provision) and (b) to qualify the Company
for the use of registration statements on Form S-3.
13. STOCKHOLDER INFORMATION. The Company may request each Holder of
Registrable Securities as to which any registration is to be effected pursuant
to this Agreement to furnish the Company with such information with respect to
such Holder and the distribution of such Registrable Securities as the Company
may from time to time reasonably request in writing and as shall be required by
law or by the Commission in connection therewith, and each Holder of Registrable
Securities as to which any registration is to be effected pursuant to this
Agreement agrees to furnish the Company with such information.
14. FINANCIAL INFORMATION. From and after the Closing for so long as the
Questor Investors beneficially own at least 5% of the fully diluted Common Stock
of the Company, including securities convertible into such Common Stock, the
Company will deliver to the Questor Holders annual audited and monthly unaudited
financial statements and an annual budget prior to the beginning of each fiscal
year as approved by the Board.
23
15. STOCKHOLDER APPROVAL. (a) STOCKHOLDER MEETING. In order to consummate
the transactions contemplated hereby, the Company, acting through its Board,
shall, in accordance with applicable law, duly call, set a record date for, give
notice of, convene and hold a special meeting of its stockholders (the "SPECIAL
MEETING"), as soon as practicable, for the purpose of voting upon the adoption
and approval of this Agreement, the Amended and Restated Certificate of
Incorporation, the election of directors, and the other transactions
contemplated by this Agreement (the "Stockholder Approval"). The Company shall
include in the Proxy Statement (as hereinafter defined) the recommendation of
the Board that stockholders of the Company vote in favor of the adoption and
approval of this Agreement, the Amended and Restated Certificate of
Incorporation and the other transactions contemplated by this Agreement. The
Existing Investors agree to vote all shares of capital stock of the Company that
they own and that may vote on such matters in favor of the adoption and approval
of this Agreement, the Amended and Restated Certificate of Incorporation and the
other transactions contemplated by this Agreement.
(b) PROXY STATEMENT. In connection with the solicitation of the
Stockholder Approval, the Company shall as promptly as practicable prepare
and file with the Commission a preliminary proxy statement relating to this
Agreement, the Amended and Restated Certificate of Incorporation and the
other transactions contemplated by this Agreement and use all reasonable
efforts to obtain and furnish the information required to be included by the
Commission in the Proxy Statement (as hereinafter defined). The Company
shall consult with the Questor Investors and provide the Questor Investors
and their counsel a reasonable opportunity to review all filings with and
responses from the Commission. The Company shall respond as promptly as
reasonably practicable to any comments made by the Commission with respect
to the preliminary proxy statement and shall cause a definitive proxy
statement to be filed with the Commission and mailed to its stockholders at
the earliest reasonably practicable date (such proxy statement is referred
to herein as the "PROXY STATEMENT"). The Questor Investors shall furnish all
information concerning the Questor Investors and any new directors to be
nominated by Questor for election to the Board as may reasonably be
requested by the Company in connection with such filings. The Existing
Investors shall furnish all information concerning the Existing Investors
and any new directors to be nominated by ▇▇▇▇▇▇ for election the Board as
may reasonably be requested by the Company in connection with such filings.
The Company, after consultation with Questor, shall also take any action
required to be taken, and make any other filings required, under the
Securities Act, the Exchange Act and applicable state securities laws in
connection with the issuance of the Shares, including, without limitation,
any filing or statement or report to stockholders required by Rule 14f-1
under the Exchange Act, and the Questor Investors shall furnish all
information concerning the Questor Investors as may be reasonably requested
by the Company in connection with such actions and filings.
(c) NO FALSE OR MISLEADING STATEMENTS. The information provided and to
be provided by each of the Questor Investors and the Company specifically
for use in the Proxy Statement and any other filings with the Commission
shall not, with respect to the information supplied by such party, in the
case of the Proxy Statement, on the date the Proxy Statement is cleared by
the Commission, and, in the case of the Proxy Statement and any other
filings with the Commission, on the date upon which the Proxy Statement is
mailed to the stockholders of the Company or on the date upon which
Stockholder Approval is obtained, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
Questor Investors and the Company agrees to correct as promptly as
reasonably practicable any such information provided by it that shall have
become false or misleading in any material respect. The Company shall as
promptly as practicable take all steps reasonably necessary to file with the
Commission and have cleared by the Commission any amendment or supplement to
the Proxy Statement so as to correct the same and to cause the Proxy
Statement as so corrected to be disseminated to the Company's stockholders
to the extent required by applicable law. The Proxy Statement shall comply
as to form
24
and otherwise in all material respects with the provisions of the Exchange
Act, the rules and regulations thereunder and other applicable law.
(d) COMFORT LETTER. The Company shall use all reasonable efforts to
cause PricewaterhouseCoopers, LLP, the Company's independent accountants to
deliver to the Questor Investors and the Existing Investors a letter dated
as of the date of the Proxy Statement and addressed to the Questor Investors
and the Existing Investors, in form and substance reasonably satisfactory to
Questor, in connection with the procedures undertaken by them with respect
to the financial statements and other financial information of the Company
and its Subsidiaries contained in the Proxy Statement and the other matters
contemplated by AICPA Statement No. 72 and customarily included in comfort
letters relating to transactions similar to the transactions contemplated
hereby.
16. CONDUCT OF BUSINESS PENDING CLOSING. During the period commencing on
the date hereof and continuing through the Closing Date, the Company will, and
the Company will cause each of its Subsidiaries to, use commercially reasonable
efforts to conduct their businesses in, and only in, the ordinary course
consistent with past practice (including without limitation to preserve their
relationship with customers). By way of explication and without limiting the
foregoing, except as expressly contemplated by this Agreement or to the extent
that the other party shall otherwise expressly consent in writing:
(a) ORGANIC CHANGES. Neither the Company nor any of its Subsidiaries
will (a) amend its Certificate of Incorporation or Bylaws (or equivalent
documents), other than to increase the number of authorized shares of Common
Stock and to create the Shares in order to enable the Company to consummate
the transactions contemplated by this Agreement, (b) acquire by merging or
consolidating with, or agreeing to merge or consolidate with, or purchase
substantially all of the stock or assets of, or otherwise acquire any
business or any corporation, partnership, association or other business
organization or division thereof, (c) declare, set aside, make or pay any
dividend or other distribution in respect of its capital stock or purchase
or redeem, directly or indirectly, any shares of its capital stock, other
than regularly scheduled dividends on the Series B Preferred and
payment-in-kind dividends on the Series D and Series E Preferred, and except
for the planned redemption of the Series B, Series D or Series E Preferred
(in each case on terms reasonably satisfactory to the Questor Investors), or
(d) issue any shares of its capital stock other than upon exercise of
Options or conversion of Preferred Stock issued and outstanding on the date
hereof or as payment-in-kind dividends pursuant to the certificates of
designation of the Preferred Stock.
(b) INDEBTEDNESS. Other than in the ordinary course consistent with
past practice, the Company and each of its Subsidiaries will not incur any
Indebtedness, sell any debt securities, lend money to or guarantee the
Indebtedness of any Person or restructure or refinance their existing
Indebtedness.
(c) DISPOSITION OF ASSETS. The Company and each of its Subsidiaries
will not sell, transfer, license, lease or otherwise dispose of, or suffer
or cause the encumbrance by any Lien (other than Permitted Liens) upon any
of, their properties or assets, tangible or intangible, or any interest
therein, except in the ordinary course consistent with past practice.
(d) CAPITAL EXPENDITURES. Except for capital expenditures in an amount
of which shall not exceed $3 million in the aggregate for the Company and
its Subsidiaries, the Company and each of its Subsidiaries will not purchase
or enter into any contract to purchase any capital assets.
(e) OTHER ACTIONS. The Company shall not, and shall not permit any
Subsidiary, to (i) take, or agree or commit to take, any action that would
make any representation and warranty of the Company hereunder inaccurate in
any material respect at, or as of the Closing Date, (ii) omit, or agree or
commit to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect at
any such time, or (iii) take, or agree or commit to take, any action that
would result in, or is reasonably likely to result in, any of the conditions
set forth in
25
Section 17(a) not being satisfied, provided, however, that the Company shall
have the right to cure any noncompliance with subsections (i) or (ii) above
until the shorter of either (A) 30 days from the date of notice thereof or
(B) until the date of termination of this Agreement pursuant to Section 21
hereof.
17. CONDITIONS TO CLOSING. (a) CONDITIONS TO THE QUESTOR INVESTORS'
OBLIGATIONS AT THE CLOSING. The Questor Investors' obligations to purchase the
Shares at the Closing are subject to the satisfaction, at or prior to the
Closing Date, of the following conditions:
(i) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 4 and by the Existing Investors in Section 6 hereof shall be true
and correct in all material respects (or, for any representation or
warranty that is qualified as to materiality, true and correct in all
respects) as of the date hereof and as of the Closing Date with the same
force and effect as if they had been made as of the Closing Date, and the
Company and the Existing Investors shall have performed in all material
respects all obligations and conditions herein required to be performed
or observed by them on or prior to the Closing.
(ii) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement (except
for such as may and will be properly obtained subsequent to the Closing).
(iii) FILING OF CERTIFICATE. The Certificate shall have been filed
with the Secretary of State of the State of Delaware and shall continue
to be in full force and effect as of the Closing Date.
(iv) CORPORATE DOCUMENTS. The Company shall have delivered to the
Questor Investors or their counsel, copies of all corporate documents of
the Company as the Questor Investors shall reasonably request.
(v) RESERVATION OF CONVERSION SHARES. The Conversion Shares issuable
upon conversion of the Shares shall have been duly authorized and
reserved for issuance upon such conversion.
(vi) COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Questor Investors a Compliance Certificate, executed by the President of
the Company, dated the Closing Date, to the effect that the conditions
specified in subsection (i) of this Section 15 have been satisfied.
(vii) LEGAL OPINION. The Questor Investors shall have received from
legal counsel to the Company an opinion addressed to it, dated as of the
Closing Date, in form and substance reasonably satisfactory to the
Questor Investors.
(viii) DELIVERY OF SHARES. Certificates representing the Shares shall
have been delivered to the Questor Investors.
(ix) STOCKHOLDERS AGREEMENT. A Stockholders Agreement in the form
attached hereto as EXHIBIT B (the "STOCKHOLDERS AGREEMENT") shall have
been executed and delivered by the parties thereto and the Original
Stockholders Agreement shall have been terminated.
(x) LENDER AGREEMENTS. The Company shall have obtained the Bank
Approval, or the Company shall have consummated the refinancing of the
Credit Agreement (the "REFINANCING"), in each case on terms reasonably
satisfactory to the Questor Investors.
(xi) PROXY STATEMENT. The definitive Proxy Statement shall have been
filed with the Commission and mailed to the stockholders of the Company.
(xii) LEGAL PROCEEDINGS. No preliminary or permanent injunction or
other order, decree or ruling issued by any court of competent
jurisdiction nor any statute, rule, regulation or order entered,
promulgated or enacted by any governmental, regulatory or administrative
agency or
26
authority, or national securities exchange shall be in effect that would
prevent the consummation of the transactions contemplated by this
Agreement.
(xiii) BY-LAW AMENDMENT. The By-Laws of the Company shall have been
amended and restated as set forth in EXHIBIT C.
(xiv) HSR. Any waiting period applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act shall have
expired or been terminated, and no action shall have been instituted by
the Department of Justice or Federal Trade Commission and still pending
which challenges or seeks to enjoin the consummation of such
transactions.
(xv) CERTIFICATE. The Certificate of Incorporation of the Company
shall have been amended (A) to increase the authorized shares of capital
stock of the Company from 100,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock to 200,000,000 shares of Common Stock
and 2,000,000 shares of Preferred Stock and (B) to delete Article Sixth
thereof to the extent that it provides for classification of the Board of
Directors into three separate classes.
(xvi) PREFERRED STOCK. Holders of all outstanding shares of Series D
and Series E Preferred Stock shall have consented to the repurchase at
the Closing by the Company of such shares and shall have tendered such
shares to the Company for repurchase at the Closing in each case on terms
reasonably satisfactory to the Questor Investors.
(xvii) RESIGNATIONS. The Company shall have received resignations from
all of the directors on the Board and six directors designated by the
Questor Investors and six directors designated by ▇▇▇▇▇▇ shall have been
elected or otherwise validly appointed by the stockholders of the
Company.
(xviii) REGISTRATION RIGHTS. The Registration Rights Agreement, dated
as of July 9, 1998, by and among the Company and the Existing Investors,
as amended, and the Registration Rights Agreement, dated May 4, 1998,
between ATC Communications Group, Inc. and ▇▇▇▇▇▇ shall have been
terminated without the imposition of any liability upon, or the granting
of any consideration by, the Company or its Subsidiaries.
(xix) RIGHTS PLAN. The Company shall have terminated the Rights Plan
without the imposition of any liability upon, or the granting of any
consideration by, the Company or its Subsidiaries.
(xx) WARRANTS. The Series Five Warrant to Purchase Up To Eight
Hundred Thousand (800,000) Shares of Common Stock, $.01 Par Value, dated
August 6, 1999, at the Common Stock's Fair Market Value per share, held
by ▇▇▇▇▇▇ Equity Investors III, L.P. shall have been terminated without
exercise or the imposition of any liability upon, or the granting of any
consideration by, the Company or its Subsidiaries.
(xxi) STOCKHOLDER APPROVAL. This Agreement, the Amended and Restated
Certificate of Incorporation and the transactions contemplated by this
Agreement shall have been adopted and approved by the requisite vote of
the stockholders of the Company in accordance with the applicable
provisions of the Delaware General Corporation Law.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to issue and sell the Shares at each Closing is subject to the satisfaction,
on or prior to such Closing, of the following conditions:
(i) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties in Section 5 made by the Questor Investors shall be true and
correct in all material respects (or, for any representation or warranty
that is qualified as to materiality, true and correct in all respects) as
of
27
the date hereof and as of the Closing Date, with the same force and
effect as if they had been made on and as of said date.
(ii) PERFORMANCE OF OBLIGATIONS. The Questor Investors shall have
performed and complied in all material respects with all agreements and
conditions herein required to be performed or complied with by the
Questor Investors on or before the Closing.
(iii) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement.
(iv) STOCKHOLDERS AGREEMENT. The Stockholders Agreement shall have
been executed and delivered by the parties thereto.
(v) LENDER AGREEMENTS. The Company shall have obtained the Bank
Approval or the Company shall have consummated the Refinancing, in each
case on terms reasonably satisfactory to the Company.
(vi) PAYMENT FOR SHARES. The Company shall have received a wire
transfer in the amount of the Purchase Price.
(vii) PROXY STATEMENT. The definitive Proxy Statement shall have been
filed with the Commission and mailed to the stockholders of the Company.
(viii) LEGAL PROCEEDINGS. No preliminary or permanent injunction or
other order, decree or ruling issued by any court of competent
jurisdiction nor any statute, rule, regulation or order entered,
promulgated or enacted by any governmental, regulatory or administrative
agency or authority, or national securities exchange shall be in effect
that would prevent the consummation of the transactions contemplated by
this Agreement.
(ix) HSR. Any waiting period applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act shall have
expired or been terminated, and no action shall have been instituted by
the Department of Justice or Federal Trade Commission and still pending
which challenges or seeks to enjoin the consummation of such
transactions.
(x) PREFERRED STOCK. Holders of all outstanding shares of Series B,
Series D and Series E Preferred Stock shall have consented to the
repurchase at the Closing by the Company of such shares and shall have
tendered such shares to the Company for repurchase at the Closing.
(xi) STOCKHOLDER APPROVAL. This Agreement, the Amended and Restated
Certificate of Incorporation and the transactions contemplated by this
Agreement shall have been adopted and approved by the requisite vote of
the stockholders of the Company in accordance with the applicable
provisions of the Delaware General Corporation Law.
18. SURVIVAL OF REPRESENTATIONS; INDEMNITY. (a) SURVIVAL OF
REPRESENTATIONS. Subject as set forth below, (i) all representations and
warranties (other than representations and warranties as to tax matters and as
to the matters set forth in the last three sentences of Section 4(b) and in
Section 4(c)) made by any party hereto in this Agreement or pursuant hereto
shall survive for the period commencing on the date hereof and ending on the
date thirty days after delivery to the Questor Investors of the Company's
audited consolidated financial statements for the fiscal year ended
December 31, 2000, (ii) the representations and warranties as to tax matters
made by any party hereto in this Agreement or pursuant thereto shall survive for
the applicable tax statute of limitation period, including any extensions
thereof, and (iii) the representations and warranties as to the matters set
forth in the last three sentences of Section 4(b) and in Section 4(c) shall
survive indefinitely.
(b) GENERAL INDEMNITY. (i) Subject to the terms and conditions of
this Section 18, the Company hereby agrees to indemnify, defend and hold the
Questor Investors harmless from and
28
against all demands, claims, actions or causes of action, assessments,
losses (including diminution in value of the Common Stock or the Shares),
damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' fees and expenses
(collectively, "DAMAGES"), asserted against, arising out of, imposed upon or
incurred by the Questor Investors by reason of or resulting from (x) a
breach of any representation, warranty, agreement or covenant of the Company
contained in or made pursuant to this Agreement or (y) the matters set forth
on Schedule 18(b).
(ii) Subject to the terms and conditions of this Section 18, the
Questor Investors hereby agree to indemnify, defend and hold the Company
harmless from and against all Damages asserted against, arising out of,
imposed upon or incurred by the Company by reason of or resulting from a
breach of any representation, warranty, agreement or covenant of the
Questor Investors contained in or made pursuant to this Agreement.
(iii) Subject to the terms and conditions of this Section 18, the
Existing Investors severally hereby agree to indemnify, defend and hold
the Questor Investors harmless from and against all Damages asserted
against, resulting to, imposed upon or incurred by the Company by reason
of or resulting from a breach of any representation, warranty or covenant
of the Existing Investors contained in or made pursuant to this
Agreement.
(c) PROCEDURES FOR INDEMNIFICATION. The respective obligations and
liabilities of the Questor Investors, on the one hand, and the Company and
the Existing Investors, on the other hand (the "INDEMNIFYING PARTY"), to the
other (the "PARTY TO BE INDEMNIFIED") under Section 18(b) hereof with
respect to claims resulting from the assertion of liability by third parties
shall be subject to the following procedures:
(A) within 20 days after receipt of notice of commencement of any
action or the assertion in writing of any claim by a third party, the
party to be indemnified shall give the indemnifying party written
notice thereof together with a copy of such claim, process or other
legal pleading, and the indemnifying party shall have the right to
undertake the defense thereof by representatives of its own choosing;
provided that the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to an indemnified
party otherwise than under this Section 18(c) and shall not relieve
the indemnifying party from liability under this Section
18(c) unless such indemnifying party is prejudiced by such omission;
(B) in the event that the indemnifying party, by the 30th day
after receipt of notice of any such claim (or, if earlier, by the
tenth day preceding the day on which an answer or other pleading must
be served in order to prevent judgment by default in favor of the
person asserting such claim), does not elect to defend against such
claim, the party to be indemnified will (upon further notice to the
indemnifying party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the
account and risk of the indemnifying party, subject to the right of
the indemnifying party to assume the defense of such claim at any
time prior to settlement, compromise or final determination thereof,
provided that the indemnifying party shall be given at least 15 days
prior written notice of the effectiveness of any such proposed
settlement or compromise;
(C) anything in this Section 18(c) to the contrary
notwithstanding (i) if there is a reasonable probability that a claim
may materially and adversely affect the indemnifying party other than
as a result of money damages or other money payments, the
indemnifying party shall have the right, at its own cost and expense,
to compromise or settle such claim, but (ii) the indemnifying party
shall not, without the prior written consent of the party to be
indemnified, settle or compromise any claim or consent to the entry
of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the party to
be indemnified a release from all liability in respect of such claim;
and
29
(D) in connection with any such indemnification, the indemnified
party will cooperate in all reasonable requests of the indemnifying
party.
(d) LIMITATION ON CERTAIN INDEMNITIES. Notwithstanding anything in
this Section 18 to the contrary:
(i) the Company shall not be obligated to indemnify, defend and hold
harmless the Questor Investors pursuant to Section 18(b) hereof unless
and to the extent that the aggregate amount of such Damages exceeds
$450,000; and
(ii) the Company's aggregate liability and obligation to indemnify,
defend and hold harmless the Questor Investors pursuant to said Section
18(b) shall in no event exceed $15,000,000.
PROVIDED that the limitations set forth in clauses (i) and (ii) above shall
not apply in respect of any breach of Sections 7 through 11.
(e) Following Closing, the indemnity provided for in this Section 18
shall be the sole and exclusive remedy of the Questor Investors or the
Company, as the case may be, for the breach of this Agreement PROVIDED that
nothing herein shall limit in any way any party's remedies in respect of any
intentional breach of this Agreement, any breach of any other agreement
among the parties hereto, any fraud or intentional misrepresentation or
omission, or any breach of Sections 7 through 11 hereof; PROVIDED, FURTHER
that no party shall be entitled to be compensated more than once for the
same Damages (including, without limitation, that the Questor Investors
shall not be entitled to indemnification under this Section 18 to the extent
that the Questor Investors have been compensated for damages that might
otherwise give rise to a right of indemnification under this Section 18 as a
result of any adjustment to the Series F Preferred Stock Conversion Price
made pursuant to Section 7(d) of the Certificate).
19. INQUIRIES AND NEGOTIATIONS. (a) Prior to the earlier of the
termination of this Agreement pursuant to Section 21 hereof or the Closing Date,
neither the Company nor any of its Subsidiaries, nor the Existing Investors, nor
any of their respective affiliates, directors, officers, employees,
representatives, advisors or agents, shall, directly or indirectly, solicit,
respond to or initiate any discussions, submissions of proposals or offers or
negotiations with, participate in any negotiations or discussions with, or
provide any information or data of any nature whatsoever to, or otherwise
cooperate in any other way with, or assist or participate in facilitate or
encourage any effort or attempt by, any person, other than the Questor Investors
and its affiliates, representatives and agents, concerning any transaction or
series of transactions with a third party of parties concerning any merger,
consolidation, sale of substantial assets, sale or exchange of shares of capital
stock or other equity securities or sale of debt securities (including without
limitation any of the foregoing effected by way of recapitalization, debt
restructuring or other similar transaction), involving the Company or any
Subsidiary, or any division of the Company or any of its Subsidiaries (such
transactions being hereinafter referred to as "ALTERNATIVE TRANSACTIONS"). Upon
execution of this Agreement, the Company and the Existing Investors shall
immediately cease any existing discussions or negotiations with any parties
relating to an Alternative Transaction. The Company or the Existing Investors,
as the case may be, shall immediately notify the Questor Investors if any bona
fide proposal, offer or other contact is received by, any material information
is requested from, or any discussions or negotiations are sought to be initiated
or continued with, the Company or the Existing Investors in respect of an
Alternative Transaction, and shall, in any such notice to the Questor Investors
indicate the identity of the offeror and the terms and conditions of any
proposals or offers or the nature of any inquiries or contacts, and thereafter
shall keep the Questor Investors informed of the status and terms of any such
proposals or offers and the status of any such discussions or negotiations. The
Company shall not release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party.
30
20. USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Shares exclusively for (a) the reduction of outstanding indebtedness,
provided that immediately following such reduction as of the Closing Date, there
shall remain at least $15,000,000 of immediately available funds under the
revolving credit facility under the Credit Agreement or any credit agreement
entered into in connection with the Refinancing after taking account of all
limitations on borrowing under the Credit Agreement or other credit agreement
entered into in connection with the Refinancing, including, without limitation,
the borrowing base, (b) the repurchase on the Closing Date of each share of the
Company's Preferred Stock issued and outstanding prior to Closing Date and
(c) the payment of fees and expenses in connection therewith and the
transactions contemplated by this Agreement.
21. TERMINATION. Notwithstanding anything contained herein to the
contrary, this Agreement may be terminated at any time prior to the Closing
Date:
(a) by the mutual written consent of the Questor Investors and the
Company; or
(b) by the Questor Investors or the Company if the Closing has not
occurred on or before December 31, 1999, and this Agreement has not
previously been terminated; PROVIDED, that the right to terminate the
Agreement under this Section 21(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Closing to occur on or before such
date.
(c) In the event that this Agreement shall be terminated pursuant to
this Section 21, all further obligations of the parties under this
Agreement, other than the obligations set forth in Sections 22(b), 22(d),
22(e), 22(f), 22(h), 22(l), 22(m), 22(n), 22(o), 22(p) and this Section
21(c), shall be terminated without further liability of any party to any
other party, provided that nothing herein shall relieve any party from
liability for its willful breach of this Agreement.
22. GENERAL PROVISIONS. (a) FORMS. All references in this Agreement to
particular forms of registration statements are intended to include, and shall
be deemed to include, references to all successor forms which are intended to
replace, or to apply to similar transactions as, the forms herein referenced.
All references in this Agreement to Sections of or Rules under the Securities
Act or the Exchange Act are intended to include, and shall be deemed to include,
references to all successor Sections and Rules which are intended to replace the
Sections and Rules herein referenced.
(b) INTEGRATION. This Agreement, including the Disclosure Schedules
and the exhibits and other attachments hereto and other documents referred
to herein, constitutes the entire agreement of the parties with respect to
the subject matter hereof, and supercedes all prior and contemporaneous
agreements and understandings, oral and written, between the parties with
respect to such subject matter; without limitation, this
Section 22(b) terminates Sections 1(iii), 2, 9 and 13 of the Letter
Agreement, dated May 10, 1999, between Questor Management Company and the
Company (the "CONFIDENTIALITY LETTER"), provided that the remainder of the
Confidentiality Letter shall survive until the Closing Date, at which time
the entire Confidentiality Letter shall be superceded by this Agreement.
(c) NOTICES. All notices and other communications which are required
or permitted to be given pursuant to the terms of this Agreement shall be in
writing and shall be personally delivered, mailed first class, postage
prepaid, registered or certified mail (return receipt requested), or
telecopied with confirmed receipt to the person for whom they are intended
at the address shown on the signature pages of this Agreement for such
party. Each notice or other communication shall for all purposes of this
Agreement be treated as being effective or having been given when delivered,
if delivered personally, or when confirmed if telecopied, or, if sent by
mail, at the earlier of actual receipt or five (5) days after the same has
been deposited in the United States mail, addressed and postage paid as
aforesaid. The addresses for the purposes of this Section 22(c) may be
changed by giving written notice to all parties of such change in the manner
provided herein for giving notice. Unless and until
31
such written notice is received, the addresses as provided herein shall be
deemed to continue in effect for all purposes hereunder. All notices
required to be given to Holders of Registrable Securities pursuant to
Sections 7, 8 and 9 hereof shall be deemed given to (i) the Questor Holders
if given to Questor or such other Person or Persons as may be designated
from time to time by Questor, (ii) the Existing Investors, any limited
partner of ▇▇▇▇▇▇ or any affiliate (as defined under the Securities Act) of
any Existing Investor or ▇▇▇▇▇▇'▇ general partner if given to ▇▇▇▇▇▇ or such
other Person or Persons as may be designated by ▇▇▇▇▇▇.
(d) CHOICE OF LAW. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts of law)
of the State of Delaware.
(e) SEVERABILITY. The parties hereto agree that the terms and
provisions in this Agreement are reasonable and shall be binding and
enforceable in accordance with the terms hereof and, in any event, that the
terms and provisions of this Agreement shall be enforced to the fullest
extent permissible under law. In the event that any term or provision of
this Agreement shall for any reason by adjudged to be unenforceable or
invalid, then such unenforceable or invalid term or provision shall not
affect the enforceability or validity of the remaining terms and provisions
of this Agreement, and the parties hereto hereby agree to replace such
unenforceable or invalid term or provision with an enforceable and valid
arrangement which, in its economic effect, shall be as close as possible to
the unenforceable or invalid term or provision.
(f) PARTIES IN INTEREST. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective permitted successors and assigns of the
parties hereto, whether so expressed or not and, in particular, shall inure
to the benefit of and be enforceable by the Holder or Holders at the time of
any of the Registrable Securities. Subject to the immediately preceding
sentence, this Agreement shall not run to the benefit of or be enforceable
by any Person other than a party to this Agreement and its successors and
assigns.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties in separate counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(h) MODIFICATION, AMENDMENT AND WAIVER. This Agreement may be amended
only in writing with the written consent of a majority in interest of the
Questor Investors and a majority in interest of the Existing Stockholders
and the Company; PROVIDED that any amendment which adversely affects the
rights and obligations of any party hereunder may be amended only with the
written consent of such party. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally or by course
of dealing, but only by a statement in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is sought,
except to the extent provided in this Section 22. Specifically, but without
limiting the generality of the foregoing, the failure of the Questor
Investors at any time or times to require performance of any provision
hereof by the Company shall in no manner affect its right at a later time to
enforce the same. No waiver by any party of the breach of any term or
provision contained in this Agreement, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of the breach of any other term or covenant contained in
this Agreement.
(i) FURTHER ASSURANCES. The parties agree to execute such further
instruments and to take such further action, if any, as may reasonably be
necessary to carry out the intent of this Agreement, and the Company
specifically agrees to cooperate affirmatively with ▇▇▇▇▇▇ or Questor, to
the extent reasonably requested by ▇▇▇▇▇▇ or Questor, to enforce the rights
of ▇▇▇▇▇▇ or Questor and their assignees hereunder.
(j) HEADINGS. The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
32
(k) GENDER AND NUMBER. As used in this Agreement, the masculine,
feminine or neuter gender, and the singular or plural, shall be deemed to
include the others whenever and wherever the context so requires.
Additionally, unless the context requires otherwise, "or" is not exclusive.
(l) ATTORNEYS' FEES. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party
in such dispute shall be entitled to recover from the losing party all fees,
costs and expenses of enforcing any right of such prevailing party under or
with respect to this Agreement, including without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall
include, without limitation, all fees, costs and expenses of appeals.
(m) BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or
under the authority of such party hereto is or will be entitled to any
broker's or finder's fee or any other commission directly or indirectly in
connection with the transactions contemplated herein, except for fees owed
to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. and Questor Management Company pursuant to the
Fee Agreement dated August 25, 1999, in each case to be paid by the Company.
(n) CONFIDENTIALITY. Each party hereto agrees that, except with the
prior written consent of the other party, or to the extent required by law,
court order or the NASDAQ rules, it shall at all times keep confidential and
not disclose, divulge, furnish or make accessible to any other Person any
information, knowledge or data concerning or relating to the business or
financial affairs of the other parties that is not currently in the public
domain, or does not come into the public domain other than by a breach by
any party hereto of this Agreement, and to which such party has been or
shall become privy by reason of this Agreement or any draft or final
documentation, letters of intent, term sheets, correspondence, discussions
or negotiations relating to this Agreement or the transactions contemplated
hereby, the performance of its obligations or the exercise of its rights
hereunder or the ownership of the Shares purchased hereunder.
(o) EXPENSES. The Company shall bear its own expenses, fees, charges
and disbursements incurred on its behalf with respect to this Agreement and
the transactions contemplated hereby and the expenses, fees, charges and
disbursements incurred by the Questor Investors in connection with this
Agreement and the transactions contemplated hereby up to a maximum of
$350,000, excluding all fees payable in accordance with Section 22(m)
herein.
(p) PUBLIC ANNOUNCEMENTS. The Company and the Existing Stockholders on
the one hand, and the Questor Investors, on the other hand, agree that they
will not issue any press release or otherwise make any public statement with
respect to this Agreement or the transactions contemplated hereby without
the prior approval of the other party (which approval will not be
unreasonably withheld or delayed), except as may be required by applicable
law.
(q) ADDITIONAL MATTERS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including using all reasonable efforts to obtain all necessary
waivers, consents and approvals and to effect all necessary registrations
and filings.
(r) ACCESS TO INFORMATION. The Company shall afford to the Questor
Investors and their authorized representatives access upon reasonable notice
and during normal business hours throughout the period prior to the Closing
to all of the books, records, properties, plants and personnel of the
Company and its Subsidiaries and, during such period, shall furnish as
promptly as practicable to the Questor Investors (a) a copy of each report,
schedule and other document filed or received by it pursuant to the
requirements of federal securities laws, and (b) all other information as
such other party reasonably may request.
(s) SERIES B PREFERRED STOCK. The Company shall use its best efforts
to repurchase and retire all outstanding shares of Series B Preferred Stock
at or prior to Closing on terms reasonably satisfactory to the Questor
Investors.
33
[SIGNATURE PAGE OF SERIES F CONVERTIBLE PREFERRED STOCK
PURCHASE AND REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or
caused this Agreement to be duly executed on their behalf, as of the day and
year first above written.
COMPANY:
AEGIS COMMUNICATIONS GROUP, INC.,
a Delaware corporation
By:
--------------------------------------
Name:
Title:
Address: ATC Communications Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
QUESTOR:
QUESTOR PARTNERS FUND II, L.P.
a Delaware limited partnership
By: Questor General Partner II, L.P.,
its General Partner
By: Questor Principals II, Inc.,
its General Partner
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: c/o Organization Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
Questor Management Company
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
34
QUESTOR SIDE-BY-SIDE
PARTNERS II, L.P.
a Delaware limited partnership
By: Questor Principals II, Inc.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: c/o Organization Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
Questor Management Company
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
QUESTOR SIDE-BY-SIDE
PARTNERS II 3(C)(1), L.P.
a Delaware limited partnership
By: Questor Principals II, Inc.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: c/o Organization Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
Questor Management Company
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
35
TC CO-INVESTORS, LLC
a Delaware limited liability company
By: TC Management Partners, LLC
a Delaware limited liability
company, its General Partner
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇ EQUITY INVESTORS III, L.P.
a Delaware limited partnership
By: TC Equity Partners, LLC
a Delaware limited liability
company, its General Partner
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
ITC SERVICES COMPANY
a Delaware corporation
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address:
--------------------------------------
--------------------------------
--------------------------------
36
▇▇▇▇▇▇ ▇▇▇▇▇
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address:
--------------------------------------
--------------------------------
--------------------------------
TRUSTS CREATED BY ▇▇▇▇▇▇ ▇▇▇▇▇ AS BOTH
GRANTOR AND TRUSTEE UNDER ARTICLE
FOURTH OF THE ▇▇▇▇▇▇ ▇▇▇▇▇ 1995
GRANTOR RETAINED ANNUITY TRUST
a New Jersey trust
By:
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Trustee
Address:
--------------------------------------
--------------------------------
--------------------------------
37
EXHIBIT A
SERIES F PREFERRED STOCK
CERTIFICATE OF DESIGNATION
OF
------------------------
AEGIS COMMUNICATIONS GROUP, INC.
(A DELAWARE CORPORATION)
------------------------
(PURSUANT TO SECTION 151(g) OF THE GENERAL CORPORATION LAW OF THE STATE OF
DELAWARE)
Aegis Communications Group, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "CORPORATION"), DOES HEREBY CERTIFY THAT:
WHEREAS, pursuant to authority conferred upon the Board of Directors of the
Corporation (the "BOARD") by the Amended and Restated Certificate of
Incorporation of the Corporation (the "CERTIFICATE") and Section 151 of the
General Corporation Law of the State of Delaware (the "DGCL"), the following
resolutions were duly adopted by unanimous written consent of the Board dated
August , 1999, which resolutions are still in full force and effect and are
not in conflict with any provisions of the Certificate or Bylaws of the
Corporation or any certificate of designation filed by the Corporation pursuant
to Section 151 of the DGCL;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to authority vested in the
Board by the Certificate and Section 151 of the DGCL a series of Preferred Stock
of the Corporation to be known as "SERIES F PREFERRED STOCK" is hereby
established and provided for and the Board of Directors hereby fixes, states and
expresses the powers, designation, preferences and relative, participating,
optional and other special rights of such series and the qualifications,
limitations or restrictions of such series, as follows:
I. DESIGNATION. The Board does hereby provide for the issuance of a new
series of Preferred Stock of the Corporation, to be designated and known as
Series F Preferred Stock.
II. NUMBER OF SHARES. The number of shares constituting the Series F
Preferred Stock shall be and the same is hereby fixed at 46,750.
III. CAPITAL. For the purpose of Section 154 of the DGCL the amount to be
represented as capital for each share of Series F Preferred Stock is and shall
at all times be $1,000.00.
Section 1. DEFINITIONS. (a) For purposes of this Certificate of
Designation, the following definitions shall apply:
"ADJUSTED EBITDA" means, for the year ended December 31, 1999, the sum
(without duplication), derived from the Corporation's audited consolidated
statement of operations for such period, of (a) Net Income; (b) the amount
deducted, in determining Net Income, representing amortization, provided
that in no event shall such amount include more than $1,469,000 in respect
of the period beginning January 1, 1999 and ended June 30, 1999 (the "STUB
PERIOD"); (c) the amount deducted, in determining Net Income, of all income
taxes (whether paid or deferred), provided that in no event shall such
amount include more than ($3,982,000) in respect of the Stub Period;
(d) the amount deducted, in determining Net Income, representing Interest
Expense, provided that in no event shall more than $3,580,000 be included as
Interest Expense in respect of the Stub Period; (e) the amount deducted, in
determining Net Income, representing depreciation of assets, provided that
in no event shall such amount include more than $6,206,000 in respect of the
Stub Period; (f) the amount deducted, in determining Net Income,
representing the goodwill writeoff in the amount of $20,399,000
1
recorded in the Stub Period; (g) the amount deducted, in determining Net
Income, representing the restructuring charge in the amount of $541,000
recorded in the Stub Period; and (h) fees and expenses relating to the
issuance of the Series F Preferred Stock and related transactions deducted
in determining Net Income consisting of (i) the transaction fees and
expenses of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and Questor Management Company, (ii) the
transaction legal and accounting fees and expenses of the Corporation,
(iii) extraordinary bank fees incurred during the period beginning July 1,
1999 and ending December 31, 1999 (the "SECOND STUB PERIOD"), (iv) the
transaction expenses of TC Management Partners, LLC, and (v) consulting
fees, executive severance costs (including in respect of non-cash charges in
connection with the acceleration of employee stock options), executive
search and relocation costs, any increases in the salary of the Chairman of
the Corporation, and other non-recurring charges incurred during the Second
Stub Period, net of related savings, in each case with respect to this
clause (v) as mutually agreed by a Majority of the Series F Preferred Stock
and the Corporation.
"AFFILIATES" shall mean any person that directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, the Person specified. No Person shall be deemed to be an
Affiliate of another Person solely as a consequence of the Purchase
Agreement or the Stockholders Agreement or the transactions contemplated
thereby.
"BOARD" means the board of directors of the Corporation.
"BUSINESS DAY" shall mean a day which is not a Saturday, Sunday or legal
holiday on which banking institutions in New York are authorized to close.
"CHANGE IN CONTROL TRANSACTION" means any of the following:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than
the Corporation, or any of its Subsidiaries or any Investor or Excluded
Group (an "ACQUIRING PERSON"), of beneficial ownership (within the
meaning of Rule 13d-5 promulgated under the Exchange Act) of 35% or more
of the combined voting power or economic interests of the then
outstanding voting securities of the Corporation entitled to vote
generally in the election of directors; provided, however, that any
transfer from any Investor or Excluded Group will not result in a Change
in Control if such transfer was part of one or a series of related
transactions the effect of which, absent the transfer to such Acquiring
Person by the Investor or Excluded Group, would not have resulted in the
acquisition by such Acquiring Person of 35% or more of the combined
voting power or economic interests of the then outstanding voting
securities; or
(b) the individuals who at the beginning of any 12 consecutive month
period following the Original Issue Date that constituted a majority of
the directors of the Corporation (the "INCUMBENT MAJORITY") cease for any
reason to constitute at least a majority of such directors; provided that
(i) any individual becoming a director whose election, or nomination for
election by the Corporation's stockholders was approved by a vote of the
stockholders having the right to designate such director in accordance
with the Stockholders Agreement, and (ii) any director whose election to
the Board or whose nomination for election by the stockholders of the
Corporation was approved by the Incumbent Majority, shall, in each such
case, be considered as though such individual were a member of the
Incumbent Majority, but excluding, as a member of the Incumbent Majority,
any such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of
the directors of the Corporation (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) and further
excluding any person who is an affiliate or associate of an Acquiring
Person having or proposing to acquire beneficial ownership of 25% or more
of the combined voting power of the then outstanding voting securities of
the Corporation entitled to vote generally in the election of directors;
or
2
(c) the approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were
the respective beneficial owners of the voting securities of the
Corporation immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than 51% of
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
Corporation resulting from such reorganization, merger or consolidation;
or
(d) the sale or other disposition of assets representing 50% or more
of the assets of the Corporation and its Subsidiaries in one transaction
or a series of related transactions.
"COMMON STOCK" shall mean the common stock, par value $.01 per share, of
the Corporation.
"COMMON STOCK'S FAIR MARKET VALUE" shall mean, as of any date, the fair
market value of a share of Common Stock on such date. Such fair market value
on a date shall mean (i) if shares of the Common Stock are listed on a
national securities exchange, the average of the closing prices as reported
for composite transactions during the 30 consecutive trading days preceding
the trading day immediately prior to such date or, if no sale occurred on a
trading day, then the mean between the closing bid and asked prices on such
exchange on such trading day; (ii) if shares of the Common Stock are traded
on the Nasdaq National Market ("NMM"), the average of the closing prices as
reported on the NMM during the 30 consecutive trading days preceding the
trading day immediately prior to such date or, if no sale occurred on a
trading day, then the mean between the highest bid and lowest asked prices
as of the close of business on such trading day, as reported on the NMM;
(iii) if the shares of the Common Stock are not traded on a national
securities exchange or the NMM but are otherwise traded over-the-counter,
the arithmetic average (for consecutive trading days) of the mean between
the highest bid and lowest asked prices as of the close of business during
the 30 consecutive trading days preceding the trading day immediately prior
to such date as quoted on the National Association of Securities Dealers
Automated Quotation system or an equivalent generally accepted reporting
service; or (iv) if there is no active market for the Common Stock, the fair
market value thereof as mutually determined by the Corporation and the
holders of a Majority of the Series F Preferred Stock.
"DEFAULT RATE" means 15% per annum.
"DIVIDEND RATE" means 9.626% per annum.
"EQUITY SECURITY" means any stock or similar security of the Corporation
or any security (including indebtedness for borrowed money) convertible or
exchangeable, with or without consideration, into or for any such stock or
similar security, or any security (including indebtedness for borrowed
money) carrying any warrant or right to subscribe to or purchase any such
stock or similar security, or any such warrant or right.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED GROUP" means a "GROUP" (as such term is used in Rule 13d-5 of
the Exchange Act) that includes one or more of the Investors, including,
without limitation, for purposes of this definition only, any party to the
Stockholders Agreement.
"INTEREST EXPENSE" means, for any period, the aggregate consolidated
cash interest expense of the Corporation for such period, determined in
accordance with generally accepted accounting principles consistently
applied.
"INVESTMENT VALUE" of any share of Series F Preferred Stock, means, as
of any date, the sum of (i) the Per Share Amount for such Series F Preferred
Stock, plus (ii) the amount of any unpaid dividends on such share added to
the Investment Value of such share on any Dividend Reference Date
3
pursuant to Section 2(a); and in the event of any liquidation, dissolution
or winding up of the Corporation, within the meaning of Section 3, or a
Change in Control Transaction, or the redemption or conversion of such
share, unpaid dividends on such share, whether or not earned or declared,
will be added to the Investment Value of such share on the payment or
distribution date under Section 3 or 4, as the case may be, or on the
Optional Redemption Date (as defined in Section 5), or on the Conversion
Date (as defined in Section 7), as the case may be, calculated cumulatively
on a daily basis to the close of business on such payment date, distribution
date, or Conversion Date or Optional Redemption Date, as the case may be.
"INVESTORS" means Questor, Questor Side-by-Side Partners II, L.P.,
Questor Side-by-Side Partners II (3)(c)(1), L.P., ▇▇▇▇▇▇, ▇▇ Co-Investors,
LLC and their respective Affiliates (including for this purpose any of their
limited or general partners).
"JUNIOR STOCK" shall mean the Common Stock and all other shares of
capital stock of the Corporation, whether presently outstanding or hereafter
issued other than the Series F Preferred Stock.
"MAJORITY OF THE SERIES F PREFERRED STOCK" shall mean more than 50% of
the outstanding shares of Series F Preferred Stock.
"NET INCOME" means, for the year ended December 31, 1999, the
consolidated net income of the Corporation for such period, determined in
accordance with generally accepted accounting principles consistently
applied, provided that for purposes of determining the Corporation's
Adjusted EBITDA, in no event shall the Net Income of the Corporation for the
Second Stub Period used in such determination exceed ($28,278,000) and
further provided that for purposes of determining the Corporation's Adjusted
EBITDA, in no event shall the Net Income of the Corporation for the Second
Stub Period include extraordinary or nonrecurring gains except to the extent
included in the Revised 1999 Operating Plan--Summary with Regional Detail,
dated July 13, 1999, and specifically disclosed to Questor prior to
August , 1999.
"ORIGINAL ISSUE DATE" shall mean the first date on which shares of
Series F Preferred Stock are issued.
"OUTSTANDING OPTIONS" shall mean options granted under the Corporation's
1992 Stock Option Plan, rights granted under the 1996 Stock Exchange Rights
Plan, options granted under the Corporation's 1996 Stock Option and
Restricted Stock Plan and options granted under the Corporation's 1998 Stock
Option Plan.
"OUTSTANDING WARRANTS" shall mean: (i) Warrant to Purchase One Million
One Hundred Thousand (1,100,000) Shares of Common Stock, $.01 Par Value,
dated April 7, 1998, at the price of $1.96 per share, held by ▇▇▇▇▇▇ Equity
Investors III, L.P.; (ii) Warrants to purchase 350,000 shares of Common
Stock issued pursuant to a commitment letter from ▇▇▇▇▇▇ to the Company at
an exercise price of $2.375; (iii) Series Four Warrant to Purchase Nine
Hundred Seven Thousand Nine Hundred Eighty-Four (907,984) Shares of Common
Stock, $.01 Par Value, dated June 30, 1999, at the price of $.90625 per
share, held by ▇▇▇▇▇▇ Equity Investors III, L.P.; (iv) Series Four Warrant
to Purchase Forty-Two Thousand Ninety-One (42,091) Shares of Common Stock,
$.01 Par Value, dated June 30, 1999, at the price of $.90625 per share, held
by ▇▇▇▇▇▇ ▇▇▇▇▇; (v) Series Four Warrant to Purchase Nine Thousand Nine
Hundred Seventy-Eight (9,978) Shares of Common Stock, $.01 Par Value, dated
June 30, 1999, at the price of $.90625 per share, held by ▇▇▇▇▇▇ ▇▇▇▇▇ 1995
Grantor Retained Annuity Trust; (vi) Series Four Warrant to Purchase
Thirty-Nine Thousand Nine Hundred Forty-Seven (39,947) Shares of Common
Stock, $.01 Par Value, dated June 30, 1999, at the price of $.90625 per
share, held by ITC Service Company; or (vii) Stock Purchase Warrant, dated
as of December 17, 1997, from IQI, Inc. to ▇▇▇▇▇▇ ▇▇▇▇▇, to purchase 25,403
shares for $808,600 and the Stock Purchase Warrant, dated as of
December 17, 1997, from IQI, Inc., to purchase 6,013 shares for $191,400
(such
4
two Stock Purchase Warrants to purchase IQI, Inc. shares having been
converted into warrants to purchase 306,347 shares, in aggregate, of Common
Stock at an exercise price of $3.26 per share).
"PER SHARE AMOUNT" means $1,000.00 (appropriately adjusted for
subdivisions or combinations of the Series F Preferred Stock).
"PERSON" means an individual, corporation, partnership, association,
trust, limited liability company or any other entity or organization,
including a government or political subdivision or an agency, unit or
instrumentality thereof.
"PREFERRED STOCK" means Preferred Stock, $.01 par value per share, of
the Corporation.
"PURCHASE AGREEMENT" means the Series F Senior Voting Convertible
Preferred Stock Purchase and Registration Rights Agreement, dated as of
August 25, 1999, by and among the Corporation, Questor Partners Fund II,
L.P., Questor Side-by-Side Partners II, L.P., Questor Side-by-Side
Partners II 3(c)(1), L.P., ▇▇▇▇▇▇, ▇▇ Co-Investors LLC, ITC Services
Company, ▇▇▇▇▇▇ ▇▇▇▇▇ and trusts created by ▇▇▇▇▇▇ ▇▇▇▇▇ as both grantor and
trustee under Article Fourth of The ▇▇▇▇▇▇ ▇▇▇▇▇ 1995 Grantor Retained
Annuity Trust.
"QUESTOR" means Questor Partners Fund II, L.P.
"SERIES F CERTIFICATE OF DESIGNATION" means this Certificate of
Designation of the Series F Preferred Stock filed with the Delaware
Secretary of State on [ , 1999].
"SERIES F PREFERRED STOCK" shall mean the Series F Preferred Stock, par
value $.01 per share, of the Corporation.
"SPECIAL CONVERSION PRICE" shall mean $1.661.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated as of
, 1999 among the Corporation, Questor Partners Fund II, L.P., Questor
Side-by-Side Partners II, L.P., Questor Side-by-Side Partners II 3(c)(1),
L.P., ▇▇▇▇▇▇ and TC Co-Investors III, L.P.
"SUBSIDIARY" shall mean, with respect to the Corporation, any Person of
which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the
Corporation or a Subsidiary of the Corporation.
"▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇ Equity Investors III, L.P., a Delaware
limited partnership.
"VOTING STOCK" shall mean any shares having general voting power in
electing the Board (irrespective of whether or not at the time stock of any
other class or classes has or might have voting power by reason or the
happening of any contingency). The Common Stock is Voting Stock.
Section 1. DEFINITIONS. (a) For purposes of this Certificate
Section 2. DIVIDENDS. (a) RIGHT TO DIVIDENDS. (i) Each of the holders of
record of the Series F Preferred Stock shall be entitled to receive, when and as
declared by the Board, and out of any funds legally available therefor,
cumulative dividends at the rate and in the manner provided herein in preference
to the payment of dividends on any Junior Stock. Dividends on each share of the
Series F Preferred Stock shall accumulate and accrue on each such share from the
date of its original issue and shall accumulate and accrue from day to day
thereafter, whether or not earned or declared. Dividends shall accumulate and
accrue on each share of Series F Preferred Stock from the Original Issue Date
and shall not be affected by the transfer of shares of Series F Preferred Stock
thereafter or the cancellation and issuance or reissuance of certificates
evidencing such shares.
(ii) Dividends will be calculated cumulatively on a daily basis on each
share of Series F Preferred Stock at the Dividend Rate (or, pursuant to
Section 4(c)(ii) at the Default Rate) per annum on the
5
Investment Value thereof. To the extent not paid on any March 31, June 30,
September 30 or December 31 of any year (each a "DIVIDEND REFERENCE DATE"),
commencing , 1999, all dividends which have been calculated on each
share of Series F Preferred Stock then outstanding during the three-month
period (or other period in the case of the first Dividend Reference Date)
ending on such Dividend Reference Date, whether or not earned or declared,
will be added to the Investment Value of such share on such Dividend
Reference Date and will remain a part thereof until such share of Preferred
Stock is converted, redeemed, repurchased or otherwise retired in accordance
with the terms hereof. If any Dividend Reference Date is not a Business Day,
the dividend otherwise due on such date shall be paid on the next following
Business Day (and this extension shall be included in the determination of
such dividend payment).
(b) ADDITIONAL DIVIDENDS. After cumulative dividends on the Series F
Preferred Stock for all past dividend periods and the then current dividend
period shall have been declared and paid or set apart, or added to the
Investment Value of each share of Series F Preferred Stock as provided in
Section 2(a)(ii) hereof, if the Board shall elect to declare additional
dividends, such additional dividends shall be declared in equal amounts per
share on all shares of Series F Preferred Stock and Common Stock, but with
each share of Series F Preferred Stock being entitled to dividends based
upon the number of shares of Common Stock into which such share of Series F
Preferred Stock could be converted, in accordance with provisions of this
Series F Certificate of Designation, at the record date for the
determination of stockholders entitled to receive such dividend or, if no
such record date is established, on the date such dividend is declared.
Section 3. LIQUIDATION RIGHTS OF SERIES F PREFERRED STOCK.
(a) SERIES F PREFERRED STOCK PREFERENCE. Upon any liquidation,
dissolution or winding up of the Corporation, the holders of the Series F
Preferred Stock shall be entitled to be paid, out of the assets of the
Corporation available for distribution to its stockholders, whether such
assets are capital, surplus, or earnings, before any payment or declaration
and setting apart for payment of any amount shall be made in respect of any
Junior Stock, an amount equal to the Investment Value per share with respect
to the Series F Preferred Stock on the date of payment. If upon any
liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, the assets to be distributed to the holders of the Series F
Preferred Stock under this Section 3(b) shall be insufficient to permit the
payment to such stockholders of the full preferential amounts therein, then
all of the assets of the Corporation to be distributed shall be distributed
ratably to the holders of the Series F Preferred Stock on the basis of the
number of shares of Series F Preferred Stock held.
(b) REMAINING ASSETS. After the payment or distribution to the holders
of the Series F Preferred Stock of the full preferential amounts aforesaid,
the holders of the Common Stock and the holders of the Preferred Stock shall
be entitled to receive ratably all remaining assets of the Corporation to be
distributed, but with all holders of shares of Preferred Stock, treated (for
this purpose only) as if they had converted their shares of the Preferred
Stock into Common Stock in accordance with the conversion provisions of the
certificate of designation or other instrument governing such Preferred
Stock.
Section 4. CHANGE IN CONTROL TRANSACTION. (a) In the event there occurs a
Change in Control Transaction, the Company will offer to purchase from each
holder of the Series F Preferred Stock, in cash or in securities (including,
without limitation, debt securities) received from the acquiring corporation, if
any, or a combination thereof, at the closing of any such transaction, each
share of Series F Preferred Stock held by such holder, for an amount equal to
the Investment Value per share thereof, as of the date of full payment therefor
(the "CHANGE IN CONTROL REDEMPTION PRICE") by delivery of a notice of such offer
(a "CHANGE IN CONTROL REDEMPTION NOTICE"), and each holder of Series F Preferred
Stock shall have the right (but not the obligation) to require the Corporation
to purchase any or all of the Series F Preferred Stock held by such holder for
the Change in Control Redemption Price. Each holder of Series F Preferred Stock
6
shall also be permitted, until the fifteenth business day following delivery of
the Change in Control Notice, to convert any or all of the shares of Series F
Preferred Stock held by such holder pursuant to Section 7 below, and any shares
of Common Stock issuable upon conversion of any Series F Preferred Stock
converted pursuant to this sentence after a Change in Control Transaction has
occurred shall be entitled to receive the same amount of cash, securities and
other property in connection with such Change in Control Transaction as the
Common Stock outstanding prior to the Change in Control Transaction.
(b) Any securities or other property to be delivered to the holders of
the Series F Preferred Stock or Junior Stock pursuant to Section
4(a) hereof shall be valued as follows:
(i) Securities not subject to investment letter or other similar
restrictions on free marketability:
(A) If traded on a securities exchange, the value shall be deemed
to be the average of the closing prices of the securities on such
exchange over the 10-day period ending three (3) days prior to the
closing of any Change in Control Transaction;
(B) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid prices over the 10-day
period ending three (3) days prior to the closing of any Change in
Control Transaction; and
(C) If there is no active public market, the value shall be the
fair market value thereof, as mutually determined by the Corporation
and the holders of a Majority of the Series F Preferred Stock.
(ii) The method of valuation of securities subject to investment
letter or other restrictions on free marketability shall be to make
appropriate discount from the market value determined as above in
paragraph (i)(A), (B) or (C) to reflect the approximate fair market value
thereof, as mutually determined by the Corporation and the holders of a
Majority of the Series F Preferred Stock.
(iii) All other securities or other property shall be valued at the
fair market value thereof, as mutually determined by the Corporation and
the holders of a Majority of the Series F Preferred Stock.
(iv) If the holders of a Majority of the Series F Preferred Stock and
the Corporation are unable to reach agreement on any valuation matter,
such valuation shall be submitted to and determined by a nationally
recognized independent investment banking firm selected by the Board and
the holders of a Majority of the Series F Preferred Stock (or, if such
selection cannot be made, by a nationally recognized independent
investment banking firm selected by the American Arbitration Association
in accordance with its rules).
(c) In the event the requirements of Section 4(a) hereof are not
complied with, or provision has not been made therefor by the setting apart
of cash and securities sufficient to permit the Corporation to comply with
such requirements:
(i) with respect to any Change in Control Transaction as to which the
Corporation is a party,
(A) the Corporation will cause the closing of such Change in
Control Transaction to be postponed until such time as the
requirements of this Section 4 have been complied with or adequate
provision therefor has been made; or
(B) the Corporation will cancel such transaction, in which event
the rights, preferences and privileges of the holders of the
Series F Preferred Stock shall revert to and be the same as such
rights, preferences and privileges existing immediately prior to the
date of the first notice referred to in Section 4(d) hereof; and
(ii) with respect to any Change in Control Transaction as to which
the Company is not a party, Dividends will be calculated at the Default
Rate until such time as the requirements of Section 4(a) are complied
with or adequate provision therefor has been made.
7
(d) The Corporation shall give each holder of record of Series F
Preferred Stock written notice of an impending Change in Control
Transaction, if known to the Corporation, not later than the earlier of
(i) thirty (30) days prior to the stockholders' meeting called to approve
such transaction, and (ii) thirty (30) days prior to the closing of such
transaction. Such notice shall describe the material terms and conditions of
the impending transaction and the provisions of this Section 4. No later
than five business days following the occurrence of a Change in Control
Transaction, the Corporation shall deliver a Change in Control Redemption
Notice to each holder of Series F Preferred Stock, which notice shall set
forth (A) each holder's right to require the Corporation to redeem all or
any portion of the shares of Series F Preferred Stock held by it at the
Change in Control Redemption Price, (B) a date upon which such redemption is
offered to take place (which date shall be no more than 30 business days
following the date of such Change in Control Redemption Notice), and
(C) the procedures to be followed by such holder in exercising its right to
cause such redemption. In the event a holder of shares of Series F Preferred
Stock shall elect to require the Corporation to redeem any or all such
shares of Series F Preferred Stock pursuant to Section 4(a), such holder
shall deliver within 15 business days of delivery of the Corporation's
Change in Control Notice, a written notice to the Corporation so stating,
specifying the number of shares to be redeemed pursuant to Section 4(a). The
Corporation shall, in accordance with the terms hereof, redeem the number of
shares so specified on the date fixed for redemption. Failure of the
Corporation to give any notice shall not prejudice the rights of any holders
of such of Series F Preferred Stock to cause the Corporation to redeem all
such shares held by them.
(e) The provisions of this Section 4 are in addition to the protective
provisions of Section 8 hereof.
Section 5. REDEMPTION. (a) RESTRICTION ON REDEMPTION AND PURCHASE.
Except as expressly provided in this Section 5, the Corporation shall not
have the right to purchase, call, redeem or otherwise acquire for value any
or all of the Series F Preferred Stock.
(b) OPTIONAL REDEMPTION. At any time after the fifth but before the
eighth anniversary of the Original Issue Date, the Corporation may, at its
option, redeem not less than 60% of all of the then issued and outstanding
Series F Preferred Stock (the "OPTIONAL REDEMPTION"), at the Redemption
Price hereinafter specified; PROVIDED, HOWEVER, that the Corporation shall
not be entitled to redeem the Series F Preferred Stock or give notice of any
redemption unless the Corporation has sufficient and lawful funds to redeem
all of the then outstanding Series F Preferred Stock. The date on which the
Series F Preferred Stock is to be redeemed pursuant to this
Section 5(b) is herein called the "OPTIONAL REDEMPTION DATE."
(c) REDEMPTION PRICE. The Redemption Price per share of the Series F
Preferred Stock (the "REDEMPTION PRICE"), shall be the Investment Value per
share thereof as of the Optional Redemption Date. In connection with an
Optional Redemption, the Corporation shall pay the Redemption Price for the
Series F Preferred Stock to be redeemed in cash.
(d) REDEMPTION NOTICE. The Corporation shall, not less than thirty
(30) days nor more than sixty (60) days prior to the Optional Redemption
Date give written notice ("REDEMPTION NOTICE") to each holder of record of
Series F Preferred Stock to be redeemed. The Redemption Notice shall state:
(i) That not less than 60% of the outstanding shares of Preferred
Stock are to be redeemed and the total number of shares being redeemed;
(ii) The number of shares of Series F Preferred Stock held by the
holder which the Corporation will redeem (which will be determined PRO
RATA based on the number of shares of Series F Preferred Stock held by
each holder);
(iii) The Optional Redemption Date and the aggregate Redemption Price
for the shares of Series F Preferred Stock held by such holder;
8
(iv) That the holder's right to convert the Series F Preferred Stock
will terminate on the Optional Redemption Date; and
(v) The time, place and manner in which the holder is to surrender to
the Corporation the certificate or certificates representing the shares
of Series F Preferred Stock to be redeemed.
(e) PAYMENT OF REDEMPTION PRICE AND SURRENDER OF STOCK. On the
Optional Redemption Date, the Redemption Price of the Series F Preferred
Stock scheduled to be redeemed or called for redemption shall be payable to
the holders of the Series F Preferred Stock. On or before the Optional
Redemption Date, each holder of Series F Preferred Stock to be redeemed,
unless the holder has exercised its right to convert the shares as provided
in Section 7, shall surrender the certificate or certificates representing
such shares to the Corporation, in the manner and at the place designated in
the Redemption Notice, and thereupon the Redemption Price for such shares
shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired.
(f) TERMINATION OF RIGHTS. If the Redemption Notice is duly given, and
if at least ten (10) days prior to the Optional Redemption Date the
Redemption Price per share of Series F Preferred Stock to be redeemed is
either paid or made available for payment, then notwithstanding that the
certificates evidencing any of the shares of Series F Preferred Stock so
called or scheduled for redemption have not been surrendered, all rights
with respect to such shares shall forthwith after the Optional Redemption
Date cease and terminate, except only (i) the right of the holders to
receive the Redemption Price per share of such Series F Preferred Stock
without interest upon surrender of their certificates therefor or (ii) the
right to receive Common Stock plus dividends upon exercise of the conversion
rights provided in Section 7 on or before the Optional Redemption Date.
Section 6. VOTING RIGHTS. In addition to any voting rights provided by
law, the holders of shares of Series F Preferred Stock shall have the following
voting rights:
(a) So long as any shares of the Series F Preferred Stock are
outstanding, each share of Series F Preferred Stock shall entitle the holder
thereof to vote, in person or by proxy or written consent, at a special or
annual meeting of stockholders or in any written consent of stockholders, on
all matters voted on by holders of Common Stock voting together as a single
class with other shares entitled to vote thereon. With respect to any such
vote, each share of Series F Preferred Stock shall entitle the holder
thereof to cast that number of votes per share as is equal to the number of
votes that such holder would be entitled to cast had such holder converted
his number of Series F Preferred Stock into Common Stock pursuant to
Section 7 on the record date for determining the stockholders of the
Corporation eligible to vote on any such matters.
(b) For so long as these are shares of Series F Preferred Stock issued
and outstanding with an aggregate Investment Value of at least $15 million,
if at any time or from time to time holders of a Majority of the Series F
Preferred Stock shall so request, then the number of directors constituting
the Board of Directors shall, without further action, be increased by two,
and the holders of a Majority of the Series F Preferred Stock shall have, in
addition to the other voting rights set forth herein, the exclusive right,
voting together as a single class without regard to series, to elect the two
directors (the "ADDITIONAL DIRECTORS") of the Corporation to fill such
newly-created directorships. Notwithstanding the foregoing, no member of the
Excluded Group shall be permitted to elect, pursuant to the preceding
sentence, more than the number of directors that such member of the Excluded
Group has a right to designate for nomination and election to the Board of
Directors pursuant to the Stockholders Agreement.
9
Section 7. CONVERSION. The holders of Series F Preferred Stock shall have
the following conversion rights:
(a) RIGHT TO CONVERT. Each share of Series F Preferred Stock shall be
convertible, at any time prior to the eighth anniversary of the Original
Issue Date at the option of the holder thereof, into fully paid and
nonassessable shares of Common Stock and shall convert without any further
action on the part of the holder thereof, on the eighth anniversary of the
Original Issue Date.
(b) CONVERSION PRICE. The Series F Preferred Stock shall be
convertible into the number of shares of Common Stock which results from
dividing the Conversion Price (as hereinafter defined) in effect at the time
of conversion, or if the holders of Series F Preferred Stock convert prior
to the issuance of the Final EBITDA Certificate (as hereinafter defined),
the Special Conversion Price, into the Investment Value of each share of
Series F Preferred Stock being converted as of the Conversion Date (as
hereinafter defined). The Conversion Price shall be $1.506, subject to
adjustment from time to time as provided below (the "CONVERSION PRICE").
(c) MECHANICS OF CONVERSION. Each holder of Series F Preferred Stock
who desires to convert the same into shares of Common Stock shall surrender
the certificate or certificates therefor, duly endorsed, at the office of
the Corporation or of any transfer agent for the Series F Preferred Stock or
Common Stock, and shall give written notice to the Corporation at such
office that such holder elects to convert the same and shall state therein
the number of shares of Series F Preferred Stock being converted. Thereupon
the Corporation shall promptly issue and deliver to such holder a
certificate or certificates for the number of shares of Common Stock to
which such holder is entitled. Such conversion shall be deemed to have been
made (i) immediately prior to the close of business on the date of such
surrender of the certificate representing the shares of Series F Preferred
Stock to be converted, or (ii) on the eighth anniversary of the Original
Issue Date in the case of mandatory conversion (such date referred to in
clauses (i) and (ii), the "CONVERSION DATE"), and the Person entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such shares of Common Stock
on such date. Any holder of Series F Preferred Stock mandatorily converted
on the eighth anniversary of the Original Issue Date shall be entitled, upon
surrender of the certificate or certificates therefor, duly endorsed at the
office of the Corporation or of any transfer agent for the Series F
Preferred Stock or Common Stock, to promptly receive from the Corporation
certificates representing the shares of Common Stock to which such holder is
entitled.
(d) EBITDA ADJUSTMENT. The Conversion Price shall be adjusted to the
extent that the Corporation's Adjusted EBITDA is less than or more than
$17,000,000. For each $500,000 (and/or fraction thereof) that the
Corporation's Adjusted EBITDA is greater than $17,000,000, the Conversion
Price will be increased by $0.031. For each $500,000 (and/or fraction
thereof) that the Corporation's Adjusted EBITDA is less than $17,000,000,
the Conversion Price will be decreased by $0.031 (and/or fraction thereof).
In no case, however, shall the resulting Conversion Price be less than
$1.351 or more than $1.661. For purposes of the adjustment described in this
clause (d), the Corporation and the Investors shall engage
PricewaterhouseCoopers, LLP ("PWC"), at the Corporation's expense, to
calculate the Adjusted EBITDA of the Corporation and to provide a
certificate (the "EBITDA CERTIFICATE") to the Corporation and each of the
Investors setting forth such calculation. Within 15 days after the issuance
of the Corporation's audited financial statements, PWC shall send a draft of
the EBITDA Certificate (the "DRAFT EBITDA CERTIFICATE") to the Investors and
the Corporation, each of whom shall have 30 days thereafter (the "OBJECTION
PERIOD") to make any objection thereto or suggest any changes in order to
conform the calculation therein to the terms of this Certificate of
Designation. Failure by any party to make any objection or suggest any such
changes within the Objection Period will be deemed to constitute acceptance
of the Draft EBITDA Certificate. The Corporation will use its best efforts
to cause PWC to issue the EBITDA Certificate (the "FINAL EBITDA
CERTIFICATE") as promptly as practicable, but in any event no later than 30
days following the
10
expiration of the Objection Period, and the Final EBITDA Certificate shall
be binding on all parties, including without limitation the Corporation and
the Investors and their successors and assigns.
(e) STOCK DIVIDENDS. In case the Corporation after the date hereof
shall pay a dividend or make a distribution to all holders of shares of
Common Stock in shares of Common Stock, then in any such case the Conversion
Price in effect at the opening of business on the day following the record
date for the determination of stockholders entitled to receive such dividend
or distribution shall be reduced to a price obtained by multiplying such
Conversion Price by a fraction of which (x) the numerator shall be the
number of shares of Common Stock outstanding at the close of business on
such record date and (y) the denominator shall be the sum of such number of
shares of Common Stock outstanding and the total number of shares of Common
Stock constituting such dividend or distribution, such reduction to become
effective immediately after the opening of business on the day following
such record date. For purposes of this subsection (e), the number of shares
of Common Stock at any time outstanding shall not include shares held in the
treasury of the Corporation but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock.
The Corporation will not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Corporation.
(f) STOCK SPLITS AND REVERSE SPLITS. In case after the date hereof
outstanding shares of Common Stock shall be subdivided into a greater number
of shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, in case after
the date hereof outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(g) OPTIONS, RIGHTS, AND WARRANTS. In case the Corporation after the
date hereof shall issue options, rights or warrants to holders of shares of
Common Stock entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Common Stock's Fair Market Value on
the record date for the determination of stockholders entitled to receive
such options, rights or warrants, the Conversion Price in effect at the
opening of business on the day following such record date shall be adjusted
to a price obtained by multiplying such Conversion Price by a fraction of
which (x) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on such record date plus the number of
shares of Common Stock that the aggregate offering price of the total number
of shares so to be offered would purchase at the Common Stock's Fair Market
Value and (y) the denominator shall be the number of shares of Common Stock
outstanding at the close of business on such record date plus the number of
additional shares of Common Stock so to be offered for subscription or
purchase, such adjustment to become effective immediately after the opening
of business on the day following such record date. For purposes of this
subsection (g), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Corporation but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. Options, rights or warrants issued by
the Corporation to all holders of Common Stock entitling the holders thereof
to subscribe for or purchase Equity Securities, which options rights or
warrants (i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, including shares of Common Stock issued upon
exercise of the Series F Preferred Stock, in each case in clauses
(i) through (iii) until the occurrence of a specified event or events (a
"TRIGGER EVENT"), shall for purposes of this subsection (g) not be deemed
issued until the occurrence of the earliest Trigger Event.
11
(h) SPECIAL DIVIDENDS. In case the Corporation after the date hereof
shall distribute to all holders of shares of Common Stock evidences of its
indebtedness or assets (excluding any regular periodic cash dividend),
Equity Securities (other than Common Stock) or rights to subscribe
(excluding those referred to in subsection (g) above) for Equity Securities
other than Common Stock, in each such case the Conversion Price in effect
immediately prior to the close of business on the record date for the
determination of stockholders entitled to receive such distribution shall be
adjusted to a price obtained by multiplying such Conversion Price by a
fraction of which (x) the numerator shall be the Common Stock's Fair Market
Value on such record date, less the then-current fair market value as of
such record date (as determined in accordance with Section 4(b)) of the
portion of assets or evidences of indebtedness or Equity Securities or
subscription rights so distributed applicable to one share of Common Stock,
and (y) the denominator shall be the Common Stock's Fair Market Value, such
adjustment to become effective immediately prior to the opening of business
on the day following such record date; PROVIDED, HOWEVER, that no adjustment
shall be made if the Corporation issues or distributes to each holder of
Series F Preferred Stock the subscription rights referred to above that each
holder of Series F Preferred Stock would have been entitled to receive had
the Series F Preferred Stock held by such holder been converted prior to
such record date. The Corporation shall provide any holder of Series F
Preferred Stock, upon receipt of a written request therefor, with any
indenture or other instrument defining the rights of the holders of any
indebtedness, assets, subscription rights or Equity Securities referred to
in this subsection (h). Rights, options or warrants issued by the
Corporation to all holders of Common Stock entitling the holders thereof to
subscribe for or purchase Equity Securities, which rights, options or
warrants (i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, including shares of Common Stock issued upon
exercise of the Series F Preferred Stock, in each case in clauses
(i) through (iii) until the occurrence of a Trigger Event, shall for
purposes of this subsection (h) not be deemed issued until the occurrence of
the earliest Trigger Event.
(i) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. In the
event that at any time or from time to time the Common Stock issuable upon
the conversion of the Series F Preferred Stock is changed into the same or a
different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets, provided for elsewhere in this Section 7),
then and in any such event each holder of Series F Preferred Stock shall
have the right thereafter to convert such stock into the kind and amount of
stock and other securities and property receivable upon such
recapitalization, reclassification or other change, by holders of the
maximum number of shares of Common Stock into which such shares of Series F
Preferred Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further
adjustment as provided herein.
(j) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If at
any time or from time to time there is a capital reorganization of the
Common Stock (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this
Section 7) or a merger or consolidation of the Corporation with or into
another corporation, or the sale of all or substantially all of the
Corporation and its subsidiaries' properties and assets to any other Person,
then, as a part of such reorganization, merger, consolidation or sale,
provision shall be made so that the holders of the Series F Preferred Stock
shall thereafter be entitled to receive upon conversion of the Series F
Preferred Stock the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such capital
reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 7 with respect to the rights of the holders of the Series F
Preferred Stock after the reorganization, merger, consolidation or sale to
the end that the provisions of this Section 7 (including adjustment of the
appropriate
12
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series F Preferred Stock) shall be applicable after that
event and be as nearly equivalent as may be practicable.
(k) If any event occurs as to which Sections 7(e), 7(f), 7(g), 7(h),
7(i) and 7(j) are not strictly applicable or, if strictly applicable, would
not fairly and adequately protect the conversion rights of the Series F
Preferred Stock in accordance with the essential intent and principles of
such provisions, then there shall be made such adjustments in the
application of such provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary to protect such conversion
rights as aforesaid.
(l) FURTHER ADJUSTMENT. The Conversion Price shall be reduced by $.005
on each of the first eight anniversaries of the Original Issue Date, which
adjustment shall be prorated on a daily basis during each twelve month
period between such anniversaries.
(m) WHEN ADJUSTMENT NOT REQUIRED. If the Corporation shall take a
record of the holders of its Common Stock for purposes of taking any action
that requires an adjustment of the Conversion Price under this Section 7,
and shall, thereafter and before the effective date of such action, legally
abandon its plan to take such action, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(n) ACCOUNTANTS' CERTIFICATE OF ADJUSTMENT. Except as provided in
Section 7(d), in each case of an adjustment or readjustment of the
Conversion Price or the number of shares of Common Stock or other securities
issuable upon conversion of the Series F Preferred Stock, the Corporation,
at its expense, shall cause independent public accountants of recognized
standing selected by the Corporation (who may be the independent public
accountants then auditing the books of the Corporation) to compute such
adjustment or readjustment in accordance with the provisions hereof and
prepare a certificate showing such adjustment or readjustment, and shall
mail such certificate, by first class mail, postage prepaid, to each
registered holder of the Series F Preferred Stock at the holder's address as
shown in the Corporation's books; PROVIDED that the Corporation shall be
required to deliver such a certificate to holders of Series F Preferred
Stock in connection with the adjustments required pursuant to Section 7(l)
only (i) once each year, within 45 days following the anniversary of the
Original Issue Date, which will reflect all adjustments made through such
anniversary, and (ii) no later than five days following the setting of any
record date to determine the stockholders of the Corporation entitled to
vote at any meeting of stockholders, which will reflect all adjustments made
through such record date. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based.
(o) NOTICES OF RECORD DATE. In the event of (i) any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, or (ii) any capital reorganization of the
Corporation, any reclassification or recapitalization of the capital stock
of the Corporation, any merger or consolidation of the Corporation with or
into any other corporation, or any transfer of all or substantially all of
the assets of the Corporation to any other person or any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of Series F Preferred Stock at least
thirty (30) days prior to the record date specified therein, a notice
specifying (1) the date on which any such record is to be taken for the
purpose of such dividend or distribution and a description of such dividend
or distribution, (2) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation
or winding up is expected to become effective, and (3) the date, if any,
that is to be fixed, as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock
(or other securities) for securities or other property deliverable upon such
reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up.
13
(p) FRACTIONAL SHARES. Fractional shares of Common Stock otherwise
issuable upon conversion of shares of Series F Preferred Stock held by a
single holder shall be aggregated into whole shares and issued to such
holder. Otherwise, no fractional shares of Common Stock shall be issued upon
conversion of the Series F Preferred Stock. Except as provided above, in
lieu of any fractional share to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to the product of such
fraction multiplied by the Common Stock's Fair Market Value on the date of
conversion.
(q) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series F Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Series F Preferred Stock;
and if at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series F Preferred Stock, the Corporation will
take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
(r) NOTICES. Any notice required or permitted by this Section 7 or any
other provision of this Certificate of Designation to be given to a holder
of Series F Preferred Stock or to the Corporation shall be in writing and be
deemed given upon the earlier of actual receipt or three (3) days after the
same has been deposited in the United States mail, by certified or
registered mail, return receipt requested, postage prepaid, and addressed
(i) to each holder of record at the address of such holder appearing on the
books of the Corporation, or (ii) to the Corporation at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or (iii) to the Corporation or any
holder, at any other address specified in a written notice given to the
other for the giving of notice.
(s) PAYMENT OF TAXES. The Corporation will pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed
with respect to the issue or delivery of shares of Common Stock upon
conversion of shares of Series F Preferred Stock, including without
limitation any tax or other charge imposed in connection with any transfer
involved in the issue and delivery of shares of Common Stock in a name other
than that in which the shares of Series F Preferred Stock, so converted were
registered.
(t) NO DILUTION OR IMPAIRMENT. The Corporation shall not amend its
certificate of incorporation or participate in any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action for the purpose of avoiding or seeking to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in carrying out all such action as may be reasonably necessary or
appropriate in order to protect the conversion rights of the holders of the
Series F Preferred Stock against dilution or other impairment.
Section 8. RESTRICTIONS AND LIMITATIONS. So long as any shares of
Series F Preferred Stock remain outstanding, the Corporation shall not, and
shall not permit any Subsidiary to, without the prior vote or written consent by
the holders of a Majority of the Series F Preferred Stock:
(a) Authorize, create or issue any new class or series of capital stock
or any other securities convertible into equity securities of the
Corporation (other than Common Stock) having a preference over, or being on
parity with, the Series F Preferred Stock with respect to voting, dividends,
redemption, liquidation or dissolution of the Corporation;
(b) Increase or decrease (other than by redemption or conversion) the
total number of authorized shares of Series F Preferred Stock;
(c) Increase or decrease the par value of the Series F Preferred Stock;
14
(d) Alter or change the powers, preferences or special rights of the
Series F Preferred Stock so as to affect them adversely;
(e) Engage in any transaction described in clauses (c) and (d) of the
definition of Change in Control, provided that, notwithstanding anything to
the contrary herein, the rights of the holders of Series F Preferred Stock
pursuant to this Section 8(e) shall terminate at such time as the aggregate
Investment Value of all the Series F Preferred Stock outstanding is less
than $5 million; or
(f) Declare or pay any dividend (whether in cash or in shares of Common
Stock or any other capital stock of the Corporation) on or declare or make
any other distribution, direct or indirect, on account of the Junior Stock
or set apart any sum for any such purpose.
Section 9. NO REISSUANCE OF SERIES F PREFERRED STOCK. No share or shares
of Series F Preferred Stock acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and, upon such event, all
such shares shall resume the status of authorized but unissued shares of
Preferred Stock.
Section 10. MISCELLANEOUS. Dollar amounts herein that appear within
parentheses represent negative numbers. All references in this Agreement to
Sections of or Rules under the Securities Act or the Exchange Act are intended
to include, and shall be deemed to include, references to all successor Sections
and Rules which are intended to replace the Sections and Rules herein
referenced.
15
[SIGNATURE PAGE OF CERTIFICATE OF DESIGNATION]
IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under penalty of perjury this
day of , 1999.
AEGIS COMMUNICATIONS GROUP, INC.,
a Delaware corporation
By: __________________________________
Name:
Title:
Attest:
By: __________________________________
Name:
Title:
16
EXHIBIT B
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STOCKHOLDERS AGREEMENT
AEGIS COMMUNICATIONS GROUP, INC.
Dated as of [ ], 1999
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TABLE OF CONTENTS
1. Sales to Third Parties.......................................................................................... 1
1.1 Sales to Third Parties........................................................................ 1
1.2 Right of First Offer.......................................................................... 1
1.3 Involuntary Transfers......................................................................... 2
2. Tag-Along Rights................................................................................................ 2
3. Election of Directors........................................................................................... 3
3.1 Board Make-up................................................................................. 3
3.2 Irrevocable Proxy............................................................................. 3
3.3 Major Decisions............................................................................... 3
4. Stock Certificate Legend........................................................................................ 5
5. Covenants; Representations and Warranties....................................................................... 5
5.1 No Other Arrangements or Agreements........................................................... 5
5.2 Additional Representations and Warranties..................................................... 6
6. Amendment and Modification...................................................................................... 6
7. Parties......................................................................................................... 6
7.1 Assignment by the Company..................................................................... 6
7.2 Assignment Generally.......................................................................... 6
7.3 Termination................................................................................... 7
7.4 Agreements to Be Bound........................................................................ 7
8. Recapitalizations, Exchanges, etc. ............................................................................. 7
9. Further Assurances.............................................................................................. 7
10. Governing Law.................................................................................................. 7
11. Invalidity of Provision........................................................................................ 7
12. Waiver......................................................................................................... 7
13. Notices........................................................................................................ 8
14. Headings; Execution in Counterpart............................................................................. 9
15. Counterparts................................................................................................... 9
16. Entire Agreement............................................................................................... 9
17. Injunctive Relief.............................................................................................. 9
18. Miscellaneous.................................................................................................. 9
19. Defined Terms.................................................................................................. 9
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of [ ], 1999, among Aegis
Communications Group, Inc., a Delaware corporation (the "COMPANY"), Questor
Partners Fund II, L.P., a Delaware limited partnership ("FUND II"), Questor
Side-by-Side Partners II, L.P., a Delaware limited partnership (the "SIDE-
BY-SIDE FUND"), Questor Side-by-Side Partners II 3(c)(1), L.P., a Delaware
limited partnership (the "3(c)(1) FUND" and together with Fund II and the
Side-by-Side Fund, "QUESTOR"), and ▇▇▇▇▇▇ Equity Investors III, L.P., a Delaware
limited partnership ("▇▇▇▇▇▇ EQUITY") and TC Co-Investors, LLC, a Delaware
limited liability company ("TC CO-INVESTORS" and, together with ▇▇▇▇▇▇ Equity,
"▇▇▇▇▇▇" or "EXISTING STOCKHOLDERS"). The Existing Stockholders and Questor are
herein referred to collectively as the "STOCKHOLDERS." Capitalized terms used
herein without definition are defined in Section 18.
The parties hereto agree as follows:
1. SALES TO THIRD PARTIES.
1.1 SALES TO THIRD PARTIES. Any Stockholder may Transfer all or a portion
of its Equity Securities to a third party, provided that such Transfer is made
in compliance with the provisions of Section 1.2 (Right of First Offer), Section
2 (Tag-Along Rights) and Section 7.4 (Agreements to Be Bound). Any Stockholder
may Transfer all or a portion of its Equity Securities to an Affiliate, provided
that such Transfer is made in compliance with Section 7.4 (Agreements to Be
Bound). For the purposes of Sections 1.2 and 2, a Transfer to a "third party"
shall not include a Transfer to any Existing Stockholder Assignee or Questor
Assignee or a Transfer in a Public Sale.
1.2 RIGHT OF FIRST OFFER. (a) PROCEDURE. If any Stockholder (the "SELLING
STOCKHOLDER") desires to Transfer any Equity Securities (other than any
Transfers referred to in the final sentence of Section 1.1), then prior to
Transferring such Equity Securities to any third party or parties, the Selling
Stockholder shall deliver to each of the other Stockholders a letter (the "SALE
NOTICE") signed by it setting forth:
(i) the number of Equity Securities such Selling Stockholder wishes
to Transfer;
(ii) the material terms and conditions on which such Selling
Stockholder wishes to Transfer such shares, including, without
limitation, the purchase price per security of Equity Securities; and
(iii) such Selling Stockholder's offer (irrevocable by its terms for
15 days following receipt) to Transfer to the other Stockholders all (but
not less than all) of such Equity Securities, for a purchase price and on
the other terms and conditions set forth in subparagraph (ii) of this
section 1.2(a).
Within 15 days of receipt of the Sale Notice, each of the other Stockholders
may agree to purchase in the aggregate, all of the Equity Securities covered by
the Sale Notice, and (i) individually, that portion of such Equity Securities
offered by the Selling Stockholder equal to their PRO RATA interest in the
Company relative to each other (based on the percentage of outstanding Common
Stock Equivalents owned by each of them on the date of the Sale Notice),
(ii) such other portion of such Equity Securities as the other Stockholders may
agree upon or (iii) in the event any of the other Stockholders does not exercise
such right, all of the Equity Securities offered to such declining Stockholders
by the Selling Stockholder in amounts determined pursuant to subclause (i) or
(ii) above without regard to such declining Stockholders, by delivering written
notice to such effect to the Selling Stockholder setting forth closing
arrangements and a closing date not less than 30 nor more than 90 days following
the delivery of such notice (or such later date as is necessary to obtain all
requisite governmental and regulatory approvals and consents).
1
(b) EFFECTING SALES. If, upon the expiration of 15 days following
receipt by the other Stockholders of the Sale Notice, none of the other
Stockholders shall have agreed to purchase the Equity Securities covered by
the Sale Notice, the Selling Stockholder may sell to a third party or
parties all, but not less than all, of the Equity Securities covered by the
Sale Notice for at least 95% of the price and upon the same other terms and
conditions as contained in the Sale Notice, PROVIDED that the Selling
Stockholder and the third party execute a binding purchase agreement
(subject to customary closing conditions) within 90 days after the
expiration of such 15 day period and consummate the closing thereunder
within 120 days (or such later date as is necessary to obtain all requisite
governmental and regulatory approvals and consents) from the execution of
the binding purchase agreement. If the other Stockholders shall have agreed
to purchase the Equity Securities covered by the Sale Notice, then the sale
of such Equity Securities shall be consummated as soon as practicable after
the delivery of a notice of acceptance by the Selling Stockholder, but in
any event within 90 days of the delivery of the Sale Notice (or such later
date as is necessary to obtain all requisite governmental and regulatory
approvals and consents). Questor and the Existing Stockholders shall have
the right to assign to one or more Questor Assignees or Existing Stockholder
Assignees, as the case may be, all or any of their rights to purchase Equity
Securities pursuant to this Section 1.2.
(c) Notwithstanding anything to the contrary herein, the rights granted
to and obligations imposed on Questor and the Questor Assignees, on the one
hand, and the Existing Stockholders and the Existing Stockholder Assignees,
on the other hand, pursuant to this Section 1.2 shall terminate if the
Second Break Point occurs.
1.3 INVOLUNTARY TRANSFERS. Any transfer of title or beneficial ownership
of Equity Securities upon default, foreclosure, forfeit, divorce, court order or
otherwise than by a voluntary decision on the part of a Stockholder (each, an
"INVOLUNTARY TRANSFER") shall be void unless the Stockholder complies with this
Section 1.3 and enables the Company to exercise in full its rights hereunder.
Upon any Involuntary Transfer, the Company shall have the right to purchase such
Equity Securities pursuant to this Section 1.3 and the person or entity to whom
such Equity Securities have been Transferred (the "INVOLUNTARY TRANSFEREE")
shall have the obligation to sell such Equity Securities in accordance with this
Section 1.3. Upon the Involuntary Transfer of any Equity Securities, such
Stockholder shall promptly (but in no event later than two days after such
Involuntary Transfer) furnish written notice (the "NOTICE") to the Company
indicating that the Involuntary Transfer has occurred, specifying the name of
the Involuntary Transferee, giving a detailed description of the circumstances
giving rise to, and stating the legal basis for, the Involuntary Transfer. Upon
the receipt of the Notice, and for 60 days thereafter, the Company shall have
the right to purchase, and upon exercise of such right the Involuntary
Transferee shall have the obligation to sell, all (but not less than all) of the
Equity Securities acquired by the Involuntary Transferee for a purchase price
equal to the Market Value of such Equity Securities.
2. TAG-ALONG RIGHTS. (a) If a Stockholder proposes to make a Transfer of
Common Stock that requires such Stockholder first to offer such Common Stock
pursuant to Section 1.2, the other Stockholders fail to agree to purchase the
Common Stock offered by the Selling Stockholder pursuant to Section 1.2 and the
Selling Stockholder shall have agreed to sell any Common Stock covered by the
Sale Notice to a third party, then such Selling Stockholder shall, in accordance
with the procedures set forth in Section 2(b), offer each of the other
Stockholders a right (a "TAG-ALONG RIGHT") to participate (each a "PARTICIPATING
PARTY") PRO RATA (based on the number of shares of Common Stock Equivalents
owned by each Participating Party and the Selling Stockholder) in such sale for
a purchase price for such Common Stock and on other terms and conditions no less
favorable to such Participating Party than those applicable to such Selling
Stockholder.
(b) Within three days after the Selling Stockholder has entered into an
agreement to sell the Common Stock covered by the Sale Notice to a third
party, the Selling Stockholder shall give each Participating Party, as the
case may be, written notice of its Tag-Along Right (the "TAG-ALONG NOTICE").
2
No later than 15 days after the receipt of the Tag-Along Notice (such date,
the "TAG-ALONG DETERMINATION DATE"), each Participating Party shall notify
the Selling Stockholder in writing whether it elects to participate in such
sale. The failure of any Participating Party to respond within such 15 day
period shall be deemed to be a rejection of the Selling Stockholder's offer
to participate in such sale and the Selling Stockholder shall be entitled to
consummate such sale on the terms set forth in such notice within the time
period specified in Section 1.2(b). If such sale is not consummated within
such period, the Selling Stockholder may not effect such sale unless it
again shall have complied with this Section 2.
(c) Notwithstanding anything to the contrary herein, the rights granted
to Questor and the Questor Assignees, on the one hand, and to the Existing
Stockholders and the Existing Stockholder Assignees, on the other hand,
pursuant to this Section 2 shall terminate if the Second Break Point occurs.
3. ELECTION OF DIRECTORS.
3.1 BOARD MAKE-UP. (a) Subject to Section 3.1(b), each Stockholder agrees
that from and after the Closing such Stockholder will use his, hers or its best
efforts to nominate and elect and will vote all of the Equity Securities owned
or held of record by him, her or it that have voting rights to elect and,
thereafter for such period, to continue in office a Board consisting of twelve
members, six of whom shall be designated by Questor (the "QUESTOR DESIGNEES")
and six of whom shall be designated by ▇▇▇▇▇▇ (the "EXISTING STOCKHOLDER
DESIGNEES"). The persons designated pursuant to this Section 3.1 by Questor and
by ▇▇▇▇▇▇ may be changed from time to time by Questor and by ▇▇▇▇▇▇,
respectively. If the directors are to be elected in staggered terms, the number
of nominees designated by Questor and by ▇▇▇▇▇▇ for each such term shall equal
the total number of Questor Designees or Existing Stockholder Designees,
respectively, divided by the number of such terms.
(b) The number of directors constituting the entire Board and the
number of Questor Designees and Existing Stockholder Designees will be
subject to reduction as provided in this Section 3.1(b). At the next annual
meeting of stockholders following the occurrence of the First Break Point,
the Board shall be reduced from twelve members to nine members. If, upon
occurrence of the First Break Point, (i) the Questor Parties own,
beneficially or of record, a smaller number of Common Stock Equivalents than
the Existing Stockholder Parties, then ▇▇▇▇▇▇ shall be entitled to designate
six directors and Questor shall be entitled to designate three directors
otherwise in accordance with Section 3.1(a), or (ii) the Existing
Stockholder Parties own a smaller number of Common Stock Equivalents than
the Questor Parties, then ▇▇▇▇▇▇ will be entitled to designate three
directors and Questor will be entitled to designate six directors otherwise
in accordance with Section 3.1(a). If, upon the occurrence of the Second
Break Point, (i) the Questor Parties own a smaller number of Common Stock
Equivalents than the Existing Stockholder Parties, then Questor will no
longer be entitled to designate any directors, and ▇▇▇▇▇▇ will be entitled
to designate six directors, or (ii) the Existing Stockholder Parties own a
smaller number of Common Stock Equivalents than the Questor Parties, then
▇▇▇▇▇▇ no longer will be entitled to designate any directors, and Questor
will be entitled to designate six directors otherwise in accordance with
Section 3.1(a). For the avoidance of doubt, except as explicitly indicated
in this Section 3.1(b), Section 3.1(a) shall remain in full force, including
the obligations of each party to vote for the directors that such other
party is entitled to designate.
3.2 IRREVOCABLE PROXY. In order to effectuate Section 3.1 and, in addition
to and not in lieu of Section 3.1, each Stockholder hereby grants to the
Secretary of the Company then in office an irrevocable proxy solely for the
purpose of voting all of the Equity Securities that have voting rights and owned
by the grantor of the proxy for the election of directors nominated only in
accordance with Section 3.1.
3.3 MAJOR DECISIONS. (a) Each Stockholder agrees that from and after the
Closing such Stockholder will use his, hers or its best efforts, and, where
applicable, will vote all of the Equity Securities owned or held of record by
him, her or it that have voting rights, to cause the By-laws of the Company to
require that (i) any Major Decision (as defined below) be approved by the
affirmative vote of not less than three
3
fourths (or in the event that the number of directors constituting the entire
Board is reduced to nine pursuant to Section 3.1(b), by the affirmative vote of
not less than two thirds) of the directors then serving on the Board, and
(ii) any committee of the Board be constituted so that the number of Questor
Designees and Existing Stockholder Designees on any such committee be as nearly
as possible in the same proportion as the number of Questor Designees and
Existing Stockholder Designees on the entire Board.
(b) The term "MAJOR DECISION" means any decision by the Board with
respect to any of the following matters (but, for the avoidance of doubt,
shall exclude any Board decision made pursuant to Section 3.3(c) hereof):
(i) issuing any shares or any security, including any indebtedness,
convertible into shares, or any other form of equity in the Company or
any subsidiary of the Company, other than (i) granting options to
directors or employees of the Company pursuant to any incentive or other
benefit plan adopted by the Board, (ii) issuing shares of Common Stock
pursuant to the exercise of such options, and (iii) issuing shares of
Common Stock or any security, including any indebtedness, convertible
into shares of Common Stock, or any other form of equity in the Company,
in one or more offerings (excluding any issuances referred to in (i) or
(ii) above) where the aggregate purchase price for all such issuances
does not exceed $500,000, provided that any such issuance shall be sold
at Market Value;
(ii) adoption of any stock-based employee benefit plan;
(iii) incurring indebtedness or entering into guarantees for borrowed
money (excluding trade payables incurred in the ordinary course of
business) in excess of $2,500,000 in any twelve consecutive month period,
provided, however, that the Board may approve pursuant to this Section
3.3(b)(iii) a revolving credit or similar borrowing facility together
with subsequent draw-downs under such facility without obtaining separate
Board approval for each such draw-down;
(iv) selling, leasing, pledging or granting a security interest or
encumbrance in all or substantially all of the Company's or any
subsidiary of the Company's assets, except in connection with the
incurrence of indebtedness for borrowed money that does not involve a
Major Decision under the preceding paragraph;
(v) acquiring (whether through an asset purchase, merger, equity
purchase or otherwise) any assets (excluding acquisitions of raw
materials and supplies in the ordinary course of business) having a
value, individually or in the aggregate for any series of related
transactions, in excess of $2,000,000;
(vi) selling or otherwise disposing of any assets (excluding sales or
other dispositions of inventory in the ordinary course of business)
having a value, individually or in the aggregate for any series of
related transactions, in excess of $2,000,000;
(vii) amending the By-laws or the Certificate of Incorporation of the
Company;
(viii) any Change of Control Transaction;
(ix) executing or delivering any assignment for the benefit of
creditors of the Company;
(x) filing any voluntary petition in bankruptcy or receivership with
respect to the Company; or
(xi) taking any action while there is a vacancy on the Board,
including without limitation the filling of such vacancy.
(c) The Questor Parties agree that from and after the Closing they will
use their best efforts to cause the Questor Designees to abstain from voting
on any Board action in connection with an
4
optional redemption pursuant to Section 5(b) of the Series F Preferred Stock
Certificate of Designation of the Company. The Existing Stockholder Parties
agree that from and after the Closing they will use their best efforts to
cause the Existing Stockholder Designees to abstain from voting on any Board
action in connection with the repayment of the Promissory Note by and among
IQI, Inc. ▇▇▇▇▇▇ ▇▇▇▇▇, and The ▇▇▇▇▇▇ ▇▇▇▇▇ 1995 Grantor Retained Annuity
Trust dated April 16, 1998 in the original aggregate principal amount of
$1.0 million and the Promissory Note by and between IQI, Inc. and ▇▇▇▇▇▇
Equity Investors III, L.P. dated April 16, 1998 in the original principal
amount of $2.0 million or the redemption or repurchase of any or all of
either the Series D Preferred Stock or the Series E Preferred Stock.
4. STOCK CERTIFICATE LEGEND. A copy of this Agreement shall be filed with
the Secretary of the Company and kept with the records of the Company. Each
certificate representing shares of Common Stock owned by the Stockholders shall
bear upon its face the following legends, as appropriate:
(i) "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL
REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
UNLESS, IN THE OPINION OF COUNSEL TO THE STOCKHOLDER, WHICH COUNSEL MUST
BE, AND THE FORM AND SUBSTANCE OF WHICH OPINION ARE, SATISFACTORY TO THE
ISSUER, SUCH OFFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR
OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN
COMPLIANCE WITH THE ACT AND SUCH LAWS.".
(ii) "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON TRANSFER AND OTHER CONDITIONS, AS SPECIFIED IN THE
STOCKHOLDERS' AGREEMENT OF THE ISSUER DATED AS OF , 1999 (THE
"STOCKHOLDERS' AGREEMENT"), COPIES OF WHICH ARE ON FILE AT THE OFFICE OF
THE ISSUER AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH
SHARES UPON WRITTEN REQUEST AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS, IN
THE OPINION OF COUNSEL TO THE STOCKHOLDER, WHICH COUNSEL MUST BE, AND THE
FORM AND SUBSTANCE OF SUCH OPINION ARE, SATISFACTORY TO THE ISSUER, SUCH
OFFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER
DISPOSITION IS IN COMPLIANCE WITH THE STOCKHOLDERS' AGREEMENT. "
(iii) "THE ISSUER WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO
SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OR SERIES
OF SHARES AUTHORIZED TO BE ISSUED AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS."
In addition, certificates representing shares of Common Stock owned by residents
of certain states shall bear any legends required by the laws of such states.
All Stockholders shall be bound by the requirements of such legends.
5. COVENANTS; REPRESENTATIONS AND WARRANTIES.
5.1 NO OTHER ARRANGEMENTS OR AGREEMENTS. Each Stockholder hereby
represents and warrants to the Company and to each other Stockholder that he or
she has not entered into or agreed to be bound by any other arrangements or
agreements of any kind that conflict with this Agreement. Each Stockholder
agrees
5
that, except as expressly permitted under this Agreement, he will not enter into
any such other arrangements or agreements as he has represented and warranted to
above with any other party as long as any of the terms of this Agreement remain
in effect.
5.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES. Each Stockholder represents
and warrants to the Company and each other Stockholder that:
(i) such Stockholder has the power, authority and capacity (or, in
the case of any Stockholder that is a corporation, trust or limited
partnership, all corporate, trust or limited partnership power and
authority, as the case may be) to execute, deliver and perform this
Agreement;
(ii) in the case of a Stockholder that is a corporation, trust or
limited partnership, the execution, delivery and performance of this
Agreement by such Stockholder has been duly and validly authorized and
approved by all necessary corporate, trust or limited partnership action,
as the case may be;
(iii) this Agreement has been duly and validly executed and delivered
by such Stockholder and constitutes a valid and legally binding
obligation of such Stockholder, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally and
general principles of equity; and
(iv) the execution, delivery and performance of this Agreement by
such Stockholder does not and will not violate the terms of or result in
the acceleration of any obligation under (A) any material contract,
commitment or other material instrument to which such Stockholder is a
party or by which such Stockholder is bound or (B) in the case of a
Stockholder that is a corporation, trust or limited partnership, the
certificate of incorporation, certificate of limited partnership, by-
laws, limited partnership agreement or other organizational documents, as
the case may be.
6. AMENDMENT AND MODIFICATION. This Agreement may not be amended, modified
or supplemented except by a written instrument signed by the Company, Questor,
▇▇▇▇▇▇ and, in the case of an amendment, modification or supplement that would
materially and adversely effect any other Stockholder, any such other
Stockholder. The Company shall notify all Stockholders promptly after any such
amendment, modification or supplement shall have taken effect.
7. PARTIES.
7.1 ASSIGNMENT BY THE COMPANY. The Company shall have the right to assign
to Questor or the Existing Stockholders and/or the right to cause Questor or the
Existing Stockholders to assume, all or any portion of its rights and
obligations under Section 1.3, PROVIDED that any such assignment or assumption
is accepted by the proposed assignee or assignees. If the Company has not
exercised its right to purchase Equity Securities pursuant to such Section 1.3
within 15 days of receipt by the Company of the Notice giving rise to such
right, then Questor, in the case of an Involuntary Transfer by any Existing
Stockholder or Existing Stockholder Party and the Existing Stockholders, in the
case of an Involuntary Transfer by Questor or any Questor Party, shall have the
right to require the Company to assign to Questor or the Existing Stockholders,
respectively, such right to purchase those Equity Securities not being purchased
by the Company. Questor and the Existing Stockholders shall have the right to
assign to one or more of the Questor Parties or the Existing Stockholder
Parties, as the case may be, all or any of their rights to purchase Equity
Securities pursuant to this Section 7.1.
7.2 ASSIGNMENT GENERALLY. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns, PROVIDED that the Company
may not assign any of its rights or obligations hereunder without the consent of
Questor and the Existing Stockholders and PROVIDED, FURTHER, that no Stockholder
may assign any of its rights or obligations hereunder without the prior written
consent of Questor and the Existing Stockholders,
6
unless such assignment is in connection with a Transfer explicitly permitted by
this Agreement and, prior to such assignment, such assignee complies with the
requirements of Section 7.4.
7.3 TERMINATION. Any party to, or person who is subject to, this Agreement
which ceases to own Equity Securities or any interest therein, shall cease to be
a party to, or person who is subject to, this Agreement and thereafter shall
have no rights or obligations hereunder, PROVIDED, HOWEVER, that a Transfer of
Equity Securities not explicitly permitted under this Agreement shall not
relieve a Stockholder of any of his or her obligations hereunder.
Notwithstanding the foregoing, in connection with a Transfer to an Affiliate
explicitly permitted by this Agreement, prior to any such Person ceasing to be
an Affiliate of the Stockholder from whom such Person acquired its Equity
Securities, such Person shall be obligated to transfer such Equity Securities
back to such original Stockholder and such original Stockholder shall thereupon
again be subject to this Agreement. Notwithstanding any other provision in this
Agreement, this Agreement shall terminate and be of no further force or effect
at such time as either the Questor Parties or the Existing Stockholder Parties
beneficially own less than 5% of the outstanding Equity Securities.
7.4 AGREEMENTS TO BE BOUND. Notwithstanding anything to the contrary
contained in this Agreement, any Transfer of Equity Securities by a Stockholder
(other than pursuant to a Public Sale) shall be permitted under the terms of
this Agreement only if the transferee of such Stockholder shall agree in writing
to be bound by the terms and conditions of this Agreement pursuant to an
instrument of assumption reasonably satisfactory in substance and form to the
Company, and, in the case of a transferee who is an individual and who resides
in a state with a community property system, such transferee causes his or her
spouse, if any, to execute a Spousal Waiver in the form of Exhibit A attached
hereto. Upon the execution of the instrument of assumption by such transferee
and, if applicable, the Spousal Waiver by the spouse of such transferee, such
transferee shall have the rights and be subject to all of the restrictions and
obligations of his or her transferor hereunder, PROVIDED, HOWEVER, that Section
1.1 (Right of First Offer) and Section 2 (Tag-Along Rights) shall not apply to
any Involuntary Transferee.
8. RECAPITALIZATIONS, EXCHANGES, ETC. Except as otherwise provided herein,
the provisions of this Agreement shall apply to the full extent set forth herein
with respect to (a) the Equity Securities and (b) any and all shares of capital
stock of the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or in substitution for the Equity Securities by
reason of any stock dividend, split, reverse split, combination,
recapitalization, reclassification, merger, consolidation or otherwise. All
share numbers and percentages shall be proportionately adjusted to reflect any
stock split, stock dividend or other subdivision or combination effected after
the date hereof. Except as otherwise provided herein, this Agreement is not
intended to confer upon any person, except for the parties hereto, any rights or
remedies hereunder.
9. FURTHER ASSURANCES. Each party hereto shall do and perform or cause to
be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto or person subject hereto may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
10. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder and the persons subject hereto shall be governed by, and
construed and interpreted in accordance with, the laws of the State of Delaware,
without giving effect to the choice of law principles thereof.
11. INVALIDITY OF PROVISION. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction.
12. WAIVER. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived. No waiver of any provision of this Agreement shall be implied
7
from any course of dealing between the parties hereto or from any failure by
either party to assert its or his or her rights hereunder on any occasion or
series of occasions.
13. NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid,
(c) sent by next-day or overnight mail or delivery or (d) sent by fax, as
follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
(i) If to the Company, to it at:
Aegis Communications Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
with a copy to Questor and ▇▇▇▇▇▇ at their addresses set forth below.
(ii) If to ▇▇▇▇▇▇, to it at:
▇▇▇▇▇▇ Capital Management Partners
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
(iii) If to Questor, to it at:
c/o Organization Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
Questor Management Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
All such notices, requests, demands, waivers and other communications shall be
deemed to have been received (A) if by personal delivery on the day after such
delivery, (B) if by certified or registered mail, on the fifth business day
after the mailing thereof, (C) if by next-day or overnight mail or delivery, on
the day delivered, or (D) if by fax, on the next day following the day on which
such fax was sent, provided that a copy is also sent by certified or registered
mail.
8
14. HEADINGS; EXECUTION IN COUNTERPART. The headings to sections in this
Agreement are for the convenience of the parties only and shall not control or
affect the meaning or construction of any provision hereof.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. ENTIRE AGREEMENT. This Agreement, the Purchase and Registration Rights
Agreement and the Series F Certificate of Designation, constitute the entire
agreement and understanding of the parties hereto with respect to the matters
referred to herein. This Agreement and the agreements referred to in the
preceding sentence supersede all prior agreements and understandings among the
parties with respect to such matters.
17. INJUNCTIVE RELIEF. The parties hereto agree that the Company and the
Stockholders will be irreparably damaged in the event this Agreement is not
specifically enforced. Each of the parties therefore agrees that in the event of
a breach of any provision of this Agreement, the aggrieved party may elect to
institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of this
Agreement. Such remedies shall, however, be cumulative and not exclusive, and
shall be in addition to any other remedy which the Company or any Stockholder
may have. Each Stockholder hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts in New York for the purposes of any
suit, action or other proceeding arising out of or based upon this Agreement or
the subject matter hereof. Each Stockholder hereby consents to service of
process made in accordance with Section 13.
18. MISCELLANEOUS. Prior to such time as the Existing Stockholder Parties
are no longer entitled to designate any directors pursuant to Section 3 hereof,
the Questor Parties agree that they will not exercise their right to request the
election of two directors pursuant to the terms of the Series F Preferred Stock.
All references in this Agreement to Sections of or Rules under the Securities
Act or the Exchange Act are intended to include, and shall be deemed to include,
references to all successor Sections and Rules which are intended to replace the
Sections and Rules herein referenced.
19. DEFINED TERMS. As used in this Agreement, the following terms shall
have the meanings ascribed to them below:
AFFILIATE: person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified, and with regard to Questor or ▇▇▇▇▇▇, any partner or
member of Questor or ▇▇▇▇▇▇, respectively; provided that no Person shall be
deemed to be an Affiliate of another Person solely as a result of this
Agreement, the Purchase and Registration Rights Agreement or the other
agreements contemplated thereby, or solely as a result of the ownership of
Common Stock Equivalents.
"BENEFICIALLY OWN": the meaning given in Rule 13d-3 under the Exchange Act.
BOARD: the board of directors of the Company.
CHANGE IN CONTROL TRANSACTION: any of the following:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than the
Company, or any of its Subsidiaries or any Investor or Excluded Group (an
"ACQUIRING PERSON") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 35% or more of the combined
voting power or economic interests of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors;
provided, however, that any transfer from any Investor or Excluded Group
will not result in a Change in Control if such transfer was part of one or a
series of related transactions the effect of which, absent the transfer to
such Acquiring Person by the Investor or Excluded Group,
9
would not have resulted in the acquisition by such Acquiring Person of 35%
or more of the combined voting power or economic interests of the then
outstanding voting securities; or
(b) the individuals who at the beginning of any 12 consecutive month
period following the Closing constituted a majority of the directors of the
Company (the "INCUMBENT MAJORITY") cease for any reason to constitute at
least a majority of such directors; provided that (i) any individual
becoming a director whose election, or nomination for election by the
Company's stockholders pursuant to this Agreement, was approved by a vote of
the stockholders having the right to designate such director pursuant to
this Agreement and (ii) any director whose election to the Board or whose
nomination for election by the stockholders of the Company was approved by
the Incumbent Majority, shall, in each such case, be considered as though
such individual were a member of the Incumbent Majority, but excluding, as a
member of the Incumbent Majority, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) and further excluding any person who is an affiliate or
associate of an Acquiring Person having or proposing to acquire beneficial
ownership of 25% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors; or
(c) the approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which
all or substantially all of the individuals and entities who were the
respective beneficial owners of the voting securities of the Company or its
parent immediately prior to such reorganization, merger or consolidation do
not, following such reorganization, merger or consolidation, beneficially
own, directly or indirectly, more than 51% of the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors of the Company or its parent resulting from such
reorganization, merger or consolidation; or
(d) the sale or other disposition of assets representing 50% or more of
the assets of the Company and its subsidiaries in one transaction or series
of related transactions.
CLOSING: the "CLOSING" shall mean the date hereof.
COMMON STOCK: the common stock of the Company, par value $.01 per share.
COMMON STOCK EQUIVALENTS: the number of shares of Common Stock owned
beneficially or of record by Questor or the Existing Stockholders, as the case
may be, as of the date of this Agreement as adjusted (in the case of Questor)
pursuant to Sections 7(d) of the Series F Preferred Stock Certificate of
Designation, which at any date of determination are owned beneficially or of
record by a Questor Party or Existing Stockholder Party. In the event that any
Questor Party or Existing Stockholder Party acquires beneficial or record
ownership of any Equity Securities after the date of this Agreement which are
not Common Stock Equivalents pursuant to the immediately preceding sentence, any
Equity Securities thereafter Transferred by such Person shall be deemed to be
such after acquired Equity Securities until the number of such after acquired
Equity Securities owned beneficially or of record by such Person has been
reduced to 0.
EQUITY SECURITY: any stock or similar security of the Company or any
security (including indebtedness for borrowed money) convertible or
exchangeable, with or without consideration, into or for any such stock or
similar security, or any security (including indebtedness for borrowed money)
carrying any warrant or right to subscribe to or purchase any such stock or
similar security, or any such warrant or right.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended.
EXCLUDED GROUP: a "group" (as such term is used in Rule 13d-5 of the
Exchange Act) that includes one or more of the Investors, including, without
limitation, for the purpose of this definition only, any party to the
Stockholders' Agreement.
10
EXISTING STOCKHOLDER ASSIGNEE: the Existing Stockholders and any Affiliate
of the Existing Stockholders, and, in the case of any individual, such
individual's spouse, parents, immediate family or lineal descendants.
EXISTING STOCKHOLDER PARTIES: the Existing Stockholders, the Existing
Stockholder Assignees and any third party other than an Involuntary Transferee
or Questor Party who receives Equity Securities from any Existing Stockholder or
any Existing Stockholder Assignee pursuant to Section 1 or Section 2 of this
Agreement.
FIRST BREAK POINT: the time at which the Total Ownership Ratio for either
the Questor Parties or the Existing Stockholder Parties falls below 25%.
INVESTOR: Questor or ▇▇▇▇▇▇ or their respective Affiliates.
MARKET VALUE: shall mean, as of any date: (i) if any Equity Securities are
listed on a national securities exchange, the average of the closing prices as
reported for composite transactions during the 30 consecutive trading days
preceding the trading day immediately prior to such date or, if no sale occurred
on a trading day, then the mean between the closing bid and asked prices on such
exchange on such trading day; (ii) if any Equity Securities are traded on the
Nasdaq National Market ("NMM"), the average of the closing prices as reported on
the NMM during the 30 consecutive trading days preceding the trading day
immediately prior to such date or, if no sale occurred on a trading day, then
the mean between the highest bid and lowest asked prices as of the close of
business on such trading day, as reported on the NMM; (iii) if any Equity
Securities are not traded on a national securities exchange or the NMM but are
otherwise traded over-the-counter, the arithmetic average (for consecutive
trading days) of the mean between the highest bid and lowest asked prices as of
the close of business during the 30 consecutive trading days preceding the
trading day immediately prior to such date as quoted on the National Association
of Securities Dealers Automated Quotation system or an equivalent generally
accepted reporting service; or (iv) if there is no active market for any Equity
Securities, the market value thereof as mutually agreed by the Corporation and a
majority in interest (based on Common Stock Equivalents then owned) of the
Stockholders.
INVOLUNTARY TRANSFER: the meaning set forth in Section 2.3.
PERSON: an individual, corporation, partnership, limited liability company,
joint venture, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
PUBLIC SALE: Transfers (i) to the general public pursuant to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement, (ii) to or through a broker or dealer or underwriter in
a public distribution or a public securities transaction, or (iii) (other than
to a partner or affiliate (as defined under the Securities Act) of the Questor
Investors) in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect to such Common Stock
are removed upon the consummation of such Transfer and the transferor and
transferee of such Common Stock receive an opinion of counsel for the Company,
which shall be in form and content reasonably satisfactory to the transferor and
transferee and their respective counsel, to the effect that such Common Stock in
the hands of the transferee is freely transferable without restriction or
registration under the Securities Act in a public or private transaction, or
(iv) pursuant to Rule 144A under the Securities Act; provided that a Public Sale
shall not include Transfers of more than 10% of the Common Stock of the Company
on a fully diluted basis by any party in one or a series of related transactions
to any single Person or group (as defined in Rule 13d-5 under the Exchange Act).
PURCHASE AND REGISTRATION RIGHTS AGREEMENT: The Series F Senior Voting
Convertible Preferred Stock Purchase and Registration Rights Agreement, dated as
of the date hereof, between the Company, Questor,
11
the Existing Stockholders, ITC Services Company, ▇▇▇▇▇▇ ▇▇▇▇▇ and trusts created
by ▇▇▇▇▇▇ ▇▇▇▇▇ as both grantor and trustee under Article Fourth of The ▇▇▇▇▇▇
▇▇▇▇▇ 1995 Grantor Retained Annuity Trust.
QUESTOR ASSIGNEE: Questor and any Affiliate of Questor, and, in the case of
any individual, such individual's spouse, parents, immediate family or lineal
descendants.
QUESTOR PARTIES: Questor, any Questor Assignee and any third party other
than an Involuntary Transferee or Existing Stockholder Party who receives Equity
Securities from Questor or any Questor Assignee pursuant to a Transfer to which
Section 1.2 hereof applies.
SECOND BREAK POINT: the time at which the Total Ownership Ratio for either
the Questor Parties or the Existing Stockholder Parties falls below 10%.
SECURITIES ACT: the Securities Act of 1933, as amended.
SERIES D PREFERRED STOCK: the Series D Preferred Stock of the Company, par
value $.01 per share.
SERIES E PREFERRED STOCK: the Series E Preferred Stock of the Company, par
value $.01 per share.
SERIES F PREFERRED STOCK: the Series F Senior Voting Preferred Stock of the
Company, par value $.01 per share.
SERIES F CERTIFICATE OF DESIGNATION: the Certificate of Designation for the
Series F Preferred Stock.
TOTAL OWNERSHIP: the total Common Stock Equivalents owned beneficially or of
record by the Existing Stockholder Parties and the Questor Parties.
TOTAL OWNERSHIP RATIO: the total Common Stock Equivalents owned,
beneficially or of record, by either the Questor Parties or the Existing
Stockholder Parties, as the case may be, divided by Total Ownership;
TRANSFER: any direct or indirect sale, assignment, mortgage, transfer,
pledge, hypothecation or other disposal.
IN WITNESS WHEREOF this Agreement has been signed by each of the parties
hereto, and shall be effective as of the date first above written.
COMPANY:
AEGIS COMMUNICATIONS GROUP, INC.,
a Delaware corporation
By: __________________________________
Name:
Title:
Address: ATC Communications Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
12
QUESTOR:
QUESTOR PARTNERS FUND II, L.P.
a Delaware limited partnership
By: Questor General Partner II, L.P.,
its General Partner
By: Questor Principals II, Inc.,
its General Partner
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: c/o Organization Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
Questor Management Company
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
13
QUESTOR SIDE-BY-SIDE
PARTNERS II, L.P.
a Delaware limited partnership
By: Questor Principals II, Inc.
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: c/o Organization Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
Questor Management Company
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
14
QUESTOR SIDE-BY-SIDE
PARTNERS II 3(C)(1), L.P.
a Delaware limited partnership
By: Questor Principals II, Inc.
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: c/o Organization Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
Questor Management Company
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
15
TC CO-INVESTORS, LLC
a Delaware limited liability company
By: TC Management Partners, LLC
a Delaware limited liability company,
its General Partner
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇ EQUITY INVESTORS III, L.P.
a Delaware limited partnership
By: TC Equity Partners, LLC
a Delaware limited liability company,
its General Partner
By: __________________________________
Name: ________________________________
Title: _______________________________
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
16
EXHIBIT A
SPOUSAL WAIVER
[INSERT NAME] hereby waives and releases any and all equitable or legal
claims and rights, actual, inchoate or contingent, which she may acquire with
respect to the disposition, voting or control of the shares of Common Stock
subject to the Stockholders' Agreement of Aegis Communications Group, Inc.,
dated as of , 1999, as the same shall be amended from time to time,
except for rights in respect of the proceeds of any disposition of such Common
Stock.
--------------------------------------
Name:
EXHIBIT C
AMENDED AND RESTATED BYLAWS OF
AEGIS COMMUNICATIONS GROUP, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
1.1 REGISTERED OFFICE. The registered office of the corporation in the
State of Delaware shall be ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.2 PRINCIPAL OFFICE. The principal office of the corporation shall be in
the City of Dallas, County of Dallas, Texas.
1.3 OTHER OFFICES. The corporation may also have offices at such other
places, both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
STOCKHOLDERS
2.1 TIME AND PLACE OF MEETINGS. All meetings of the stockholders shall be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of meeting or in a duly executed waiver thereof.
2.2 ANNUAL MEETING--ELECTION OF DIRECTORS. An annual meeting of the
stockholders shall be held each year at a time on the third Thursday during the
month of April to be selected by the board of directors, or at such other date
and time as may be selected by the board of directors. If such day is a legal
holiday, then the meeting shall be held on the next secular day following. At
the meeting, the stockholders shall elect directors and transact such other
business as may properly be brought before the meeting.
2.3 SPECIAL MEETINGS. Special meetings of the stockholders, for any
purpose or purposes, described by the Act or by the articles of incorporation,
or by these bylaws, may be called by the chairman of the board, if any, the
president or secretary, and shall be called by the chairman of the board, the
president or secretary at the request in writing of a majority of the board of
directors or the holders of twenty-five percent (25%) or more of the shares
entitled to vote at such meeting. Such request shall state the purpose or
purposes of the proposed meeting. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice of the
meeting.
2.4 NOTICES. Written or printed notice of the annual or any special
meeting stating the place, day, and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be delivered to each stockholder of record entitled to vote not less than ten
nor more than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the chairman of the board, the president, the
secretary or the officer or person calling the meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the stockholder at the address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
2.5 VOTING LIST. The officer or agent who has charge of the stock transfer
books of the corporation shall make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at said
meeting or any adjournment thereof, arranged in alphabetical order, with address
of
1
and the number of voting shares held by each. Such list shall be kept on file at
the principal office of the corporation for a period of ten days prior to such
meeting and shall be subject to inspection by any stockholder at any time during
usual business hours. Such list shall also be produced and kept open at the time
and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting. The original stock transfer
books shall be prima facie evidence as to who are stockholders entitled to
examine such list or transfer books and to vote at any meeting of stockholders.
2.6 QUORUM. The holders of a majority of the issued and outstanding stock
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the stockholders for
the transaction of business except as otherwise provided by statute, by the
certificate of incorporation, or by these bylaws. If a quorum is not present or
represented at a meeting of the stockholders, the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present or represented. At such adjourned meeting at
which a quorum is present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
2.7 MAJORITY VOTE; WITHDRAWAL OF QUORUM. When a quorum is present at any
meeting, the vote of the holders of a majority of the shares having voting
power, present in person or represented by proxy, shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of the statutes or of the certificate of incorporation or of these
bylaws, a different vote is required in which case such express provision shall
govern and control the decision of such question. The stockholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
2.8 VOTING. (a) Each outstanding share entitled to vote thereon,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of stockholders, except to the extent that the voting rights
of the shares of any class or series are otherwise specified in the certificate
of incorporation. At any meeting of the stockholders, every stockholder having
the right to vote may vote either in person, or by proxy executed in writing by
the stockholder or by his duly authorized attorney in fact. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy or by written agreement. Each proxy shall be revocable
unless expressly provided therein or by written agreement to be irrevocable and
unless otherwise made irrevocable by law. Each proxy shall be filed with the
secretary of the corporation prior to or at the time of the meeting.
(b) Treasury shares, shares of stock owned by another corporation the
majority of the voting stock of which is owned or controlled by this
corporation, and shares of stock held by this corporation in its fiduciary
capacity shall not be voted, directly or indirectly, at any meeting and
shall not be counted in determining the total number of outstanding shares
at any given time.
(c) Directors shall be elected by plurality vote.
(d) Shares standing in the name of another corporation, domestic or
foreign, may be voted on by such officer, agent, or proxy as the bylaws of
such corporation may authorize or, in the absence of such authorization, as
the board of directors of such corporation may determine.
(e) Shares held by an administrator, guardian or conservator may be
voted by him so long as such shares forming part of an estate are in the
possession and forming a part of the estate being served by him, either in
person or by proxy, without a transfer of such shares into his name. Shares
standing in the name of a trustee maybe voted by him, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him without a
transfer of such shares into his name as trustee.
(f) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted
by such receiver without the transfer thereof into his
2
name if authority so to be contained in an appropriate order of the court by
which such receiver was appointed.
(g) A stockholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the
pledges, and thereafter the pledges shall be entitled to vote the shares so
transferred.
(h) Voting on any question or in any election at a meeting may be by
voice vote or show of hands unless the presiding officer shall order, or the
holders of at least ten percent of the shares entitled to vote shall demand,
that voting be by written ballot.
2.9 RECORD DATE; CLOSING TRANSFER BOOKS. The board of directors may fix in
advance a record date for the purpose of determining stockholders entitled to
notice of or to vote at a meeting of the stockholders, the record date to be not
less than ten (10) no more than sixty (60) days prior to the meeting. In the
absence of action by the board of directors, the date upon which the notice of
the meeting is mailed shall be the record date.
2.10 ACTION WITHOUT MEETING. Any action which may be taken at any annual
or special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
ARTICLE III
DIRECTORS
3.1 MANAGEMENT. The business and affairs of the corporation shall be
managed by the board of directors who may exercise all such powers of the
corporation and do all such lawful acts and things as are not (by statute or by
the articles of incorporation or by these bylaws) directed or required to be
exercised or done by the stockholders.
3.2 NUMBER; QUALIFICATION: ELECTION; TERM. The board of directors shall
consist of not fewer than two nor more than twelve directors as shall be fixed
from time to time by resolution of the board of directors or by vote of the
stockholders. The first board after the adoption of these amended and restated
bylaws shall consist of twelve directors. At the next annual meeting of
stockholders following the occurrence of the First Break Point (as defined in
the Stockholders' Agreement), the number of directors on the board of directors
shall be reduced from twelve members to nine members. Directors need not be
residents of the State of Delaware or stockholders of the corporation. The
directors shall be elected at the annual meeting of the stockholders, except as
provided in Bylaws 3.3, 3.4 and 3.6. Each director shall hold office until his
successor shall be elected and shall qualify.
3.3 MAJOR DECISIONS. (a) Any Major Decision (as defined below) shall be
approved by the affirmative vote of not less than three fourths (or in the event
that the number of directors constituting the entire board is reduced to nine,
by the affirmative vote of not less than two thirds) of the directors then
serving on the board.
(b) The term "MAJOR DECISION" means any decision by the board with
respect to any of the following matters (but, for the avoidance of doubt,
shall exclude any Board action in connection with either (w) an optional
redemption pursuant to Section 5(b) of the Series F Preferred Stock
Certificate of Designation of the Company, (x) the repayment of the
Promissory Note by and among IQI, Inc. ▇▇▇▇▇▇ ▇▇▇▇▇, and The ▇▇▇▇▇▇ ▇▇▇▇▇
1995 Grantor Retained Annuity Trust dated April 16, 1998 in the original
aggregate principal amount of $1.0 million, (y) the repayment of the
Promissory Note by and between IQI, Inc. and ▇▇▇▇▇▇ Equity Investors III,
L.P. dated
3
April 16, 1998 in the original principal amount of $2.0 million, or (z) the
redemption or repurchase of any or all of the Series D Preferred Stock or
the Series E Preferred Stock):
(i) issuing any shares or any security, including any indebtedness,
convertible into shares, or any other form of equity in the corporation
or any subsidiary of the corporation, other than (i) granting options to
directors or employees of the corporation pursuant to any incentive or
other benefit plan adopted by the board, (ii) issuing shares of common
stock pursuant to the exercise of such options, and (iii) issuing shares
of common stock or any security, including any indebtedness, convertible
into shares of common stock, or any other form of equity in the
corporation, in one or more offerings (excluding any issuances referred
to in (i) or (ii) above) where the aggregate purchase price for all such
issuances does not exceed $500,000, provided that any such issuance shall
be sold at Market Value (as hereinafter defined);
(ii) adoption of any stock-based employee benefit plan;
(iii) incurring indebtedness or entering into guarantees for borrowed
money (excluding trade payables incurred in the ordinary course of
business) in excess of $2,500,000 in any twelve consecutive month period;
(iv) selling, leasing, pledging or granting a security interest or
encumbrance in all or substantially all of the corporation's or any
subsidiary of the corporation's assets, except in connection with the
incurrence of indebtedness for borrowed money that does not involve a
Major Decision under the preceding paragraph;
(v) acquiring (whether through an asset purchase, merger, equity
purchase or otherwise) any assets (excluding acquisitions of raw
materials and supplies in the ordinary course of business) having a
value, individually or in the aggregate for any series of related
transactions, in excess of $2,000,000;
(vi) selling or otherwise disposing of any assets (excluding sales or
other dispositions of inventory in the ordinary course of business)
having a value, individually or in the aggregate for any series of
related transactions, in excess of $2,000,000;
(vii) amending these bylaws or the articles of incorporation of the
corporation;
(viii) any Change in Control Transaction (as hereinafter defined);
(ix) executing or delivering any assignment for the benefit of
creditors of the corporation;
(x) filing any voluntary petition in bankruptcy or receivership with
respect to the corporation; or
(xi) taking any action while there is a vacancy on the board of
directors, including without limitation the filling of such vacancy.
3.4 CHANGE IN NUMBER. Subject to Bylaw 3.3(xi), the number of directors
may be increased or decreased from time to time by resolution of the board of
directors at any meeting, but no decrease shall have the effect of shortening
the term of any incumbent director.
3.5 REMOVAL. Any director may be removed with or without cause at any
special or annual meeting of stockholders, by the affirmative vote of a majority
in number of shares of the stockholders present in person or by proxy at such
meeting and entitled to vote for the election of such director if notice of
intention to act upon such matter shall have been given in the notice calling
such meeting.
3.6 VACANCIES. Any vacancy occurring in the board of directors (by death,
resignation, removal or otherwise) may be filled by affirmative vote of the
directors then in office pursuant to Bylaw 3.3(xi). A director elected to fill
such a vacancy shall be elected for the unexpired term of his predecessor in
office.
4
3.7 COMPENSATION. By resolution of the board of directors, the directors
may be paid their expenses, if any, of attendance at each meeting of the board
of directors and may be paid a fixed sum of attendance at each meeting of the
board of directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may,
by resolution of the board of directors, be allowed like compensation for
attending committee meetings.
3.8 MEETINGS OF THE BOARD OF DIRECTORS.
(a) PLACE. Meetings of the board of directors of the corporation,
regular or special, may be held either within or without the State of
Delaware.
(b) REGULAR MEETINGS. Regular meetings of the board of directors may
be held without notice at such time and at such place as shall from time to
time be determined by the board by resolution.
(c) SPECIAL MEETINGS. Special meetings of the board of directors may
be called by or at the request of the chairman of the board, the president
or the secretary and shall be called by the secretary on the written request
of two of the incumbent directors. The person or persons authorized to call
special meetings of the board of directors may fix the place for holding any
special meeting of the board of directors called by them. Notice of any
special meeting shall be given at least twenty-four (24) hours previous
thereto if given either personally (including written notice delivered
personally or notice by telephone) or by fax or telegram, and at least
seventy-two (72) hours previous thereto if given by written notice mailed to
each director at the address of his business and residence. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice or waiver
of notice of such meeting. If mailed, the notice shall be deemed to be
delivered when deposited in the United States mail addressed, in the
above-specified manner, with postage thereon prepaid. If notice be given by
fax or telegram, such notice shall be deemed to be delivered when the fax or
telegram is delivered to the telegraph company. Any director may waive
notice of any meeting, as provided in By-law 4.2.
(d) QUORUM: MAJORITY VOTE. At all meetings of the board of directors a
majority of the number of directors fixed by these bylaws shall constitute a
quorum for the transaction of business. The act of a majority of the
directors present at any meeting at which a quorum is present shall be the
act of the board of directors, except as otherwise specifically provided by
statute or by the certificate of incorporation or by these bylaws.
(e) PROCEDURE. The board of directors shall keep regular minutes of
its proceedings. The minutes shall be placed in the minute book of the
corporation.
3.9 ACTION WITHOUT MEETING. Any action required or permitted to be taken
at a meeting of the board of directors may be taken without a meeting if a
consent in writing, setting forth the action so taken, is signed by all the
members of the board of directors. Such consent shall have the same force and
effect as a unanimous vote at a meeting. The signed consent, or a signed copy,
shall be placed in the minute book.
3.10 TELEPHONE AND COMMUNICATION EQUIPMENT MEETINGS. Stockholders, members
of the board of directors, and members of any committee of the board of
directors may participate in meetings by means of conference telephone or other
communications equipment to the full extent permissible by Section 141(i) of the
General Corporation Law of the State of Delaware.
ARTICLE IV
NOTICES
4.1 METHOD. Whenever by statute or the certificate of incorporation or
these bylaws, notice is required to be given to director or stockholder, and no
provision is made as to how the notice shall be given, it shall not be construed
to mean personal notice, but any such notice may be given (a) in writing, by
5
mail, postage prepaid, addressed to the director or stockholder at the address
appearing on the books of the corporation, or (b) in any other method permitted
by law. Any notice required or permitted to be given by mail shall be deemed
given at the time when the same is thus deposited in the United States mails.
4.2 WAIVER. Whenever, by statute or the articles of incorporation or these
bylaws, notice is required to be given to a stockholder or director, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated in such notice, shall be equivalent to
the giving of such notice. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
for the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE V
COMMITTEES OF THE BOARD OF DIRECTORS
5.1 DESIGNATION. The board of directors may by resolution of a majority of
the whole board, designate an executive committee, and one or more other
committees including an audit committee, a compensation committee, and any such
other special committees as the board shall deem advisable.
5.2 NUMBER, QUALIFICATION; TERM. Each committee shall consist of one or
more directors who will serve at the pleasure of the board of directors. Each
committee of the board shall be constituted so that the number of Questor
Designees (as such term is defined in the Stockholders' Agreement) and Existing
Stockholder Designees (as such term is defined in the Stockholders' Agreement)
on any such committee is as nearly as possible in the same proportion as the
number of Questor Designees and Existing Stockholder Designees on the entire
board. The compensation committee, if any, may include the chief accounting and
financial officer of the corporation provided a majority of the committee are
not officers or full-time employees of the corporation.
5.3 AUTHORITY OF COMMITTEES.
(a) THE EXECUTIVE COMMITTEE. The executive committee, to the extent
provided in such resolution, shall have and may exercise all of the
authority of the board of directors in the management of the business and
affairs of the corporation, except where action of the full board of
directors is required by statute, the certificate of incorporation or these
bylaws, and shall have power to authorize the seal of the corporation to be
affixed to all papers which may require it. Without limiting the general
authority of the executive committee, it shall have the power subject to
Bylaw 3.3:
(1) to appoint officers and agents of the corporation and determine
their salaries (subject to recommendations of the compensation committee,
if any).
(2) to borrow money, and issue bonds, notes or other obligations and
evidences of indebtedness therefor.
(3) to authorize the corporate seal to be affixed to documents of
the corporation.
(4) to determine questions of general policy with regard to the
business of the corporation.
(5) to make recommendations as to declaration of dividends.
(b) AUDIT COMMITTEE. The audit committee, if any, shall nominate the
independent public accountants to report on the financial statements of the
corporation, and shall have such other powers, duties and authority as shall
be set forth in the resolutions of the board of directors appointing the
committee.
(c) COMPENSATION COMMITTEE. The compensation committee, if any, shall
have the responsibility of reviewing the remuneration-of the officers and
key employees of the corporation including stock
6
option and stock purchase rights and such other powers, duties and authority
as shall be set forth in the resolutions of the board of directors
appointing the committee.
(d) OTHER COMMITTEES. Any other committee or committees appointed by
the directors shall have and may exercise such powers of the board of
directors in the management of the business and affairs of the corporation
as shall be provided in the resolution(s) creating the committee. Such
committee or committees shall have such name or names as may be determined
from time to time by resolution of the board of directors.
5.4 CHANGE IN NUMBER. Subject to Bylaw 5.2, the number of members of any
committee may be increased or decreased from time to time by resolution adopted
by a majority of the whole board of directors.
5.5 REMOVAL. Subject to Bylaw 5.2, any member of a committee may be
removed by the board of directors by the affirmative vote of a majority of the
whole board, whenever in its judgment the best interests of the corporation will
be served thereby.
5.6 VACANCIES. A vacancy occurring in any committee (by death,
resignation, removal or otherwise) may be filled by the board of directors in
the manner provided for original designation in Bylaw 5.2.
5.7 MEETINGS. Time, place and notice (if any) of executive committee
meetings shall be determined by the committee.
5.8 QUORUM; MAJORITY VOTE. At meetings of each committee, all members
designated by the board of directors shall constitute a quorum for the
transaction of business. The act of a majority of the members present at any
meeting at which a quorum is present shall be the act of the committee, except
as otherwise specifically provided by statute or by the articles of
incorporation or by these bylaws. If a quorum is not present at a meeting of the
committee, the members present thereat may adjourn the meeting from time to
time, without notice other than an announcement at the meeting, until a quorum
is present.
5.9 COMPENSATION. See Bylaw 3.7.
5.10 PROCEDURE. Each committee shall keep regular minutes of its
proceedings and report the same to the board of directors when required. The
minutes of the proceedings of each committee shall be placed in the minute book
of the corporation.
5.11 ACTION WITHOUT MEETING. Any action required or permitted to be taken
at a meeting of any committee may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by all the members of the
committee. Such consent shall have the same force and effect as a unanimous vote
at a meeting. The signed consent, or a signed copy, shall be placed in the
minute book.
5.12 TELEPHONE AND COMMUNICATION. Meetings of committees may be held by
telephone as provided by Bylaw 3.10.
5.13 RESPONSIBILITY. The designation of a committee and the delegation of
authority to it shall not operate to relieve the board of directors, or any
member thereof, of any responsibility imposed upon it or him by law.
ARTICLE VI
OFFICERS AND AGENTS
6.1 NUMBER: QUALIFICATION; ELECTION: TERM.
(a) The corporation shall have:
(1) A president, a vice president, a secretary and a treasurer, and
7
(2) Such other officers (including a chairman of the board, an
executive vice president and additional vice presidents) and assistant
officers and agents as the board of directors may deem necessary.
(b) Officers named in Bylaw 6.1(a)(1) shall be elected by the board of
directors on the expiration of an officer's term or whenever a vacancy
exists. Officers and agents named in Bylaw 6. l(a)(2) may be elected by the
board at any meeting.
(c) Unless otherwise specified by the board at the time of election or
appointment, or in an employment contract approved by the board, each
officer's and agent's term shall end at the first meeting of directors after
the next annual meeting of stockholders. He shall serve until the end of his
term or, if earlier, his death, resignation, or removal.
(d) Any two or more offices may be held by the same person.
6.2 REMOVAL. Any officer or agent elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation will be served thereby. Such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
6.3 VACANCIES. Any vacancy occurring in any office of the corporation (by
death, resignation, removal or otherwise) may be filed by the board of
directors.
6.4 AUTHORITY. Officers and agents shall have such authority and perform
such duties in the management of the corporation as are provided in these bylaws
or as may be determined by resolution of the board of directors not inconsistent
with these bylaws.
6.5 COMPENSATION. The compensation of officers and agents shall be fixed
from time to time by the board of directors.
6.6 CHAIRMAN OF THE BOARD. If there be a chairman of the board of
directors, he shall be chosen from among the directors. He shall have the power
to call special meetings of the stockholders and of the directors for any
purpose or purposes, and he shall preside at all meetings of the stockholders
and of the board of directors, unless he shall be absent or unless he shall, at
his option, designate the president to preside in his stead at some particular
meeting. The chairman of the board shall have all of the powers granted by the
bylaws to the president including the power to make and sign contracts and
agreements in the name and on behalf of the corporation. He shall, in general,
have supervisory power over the president, the other officers and the business
activities of the corporation, subject to the approval or review of the board of
directors.
6.7 PRESIDENT. If there be a chairman of the board of directors, the
powers and duties of the president shall be subject to the powers and duties of
the chairman of the board of directors. If there be no chairman of the board,
the president shall have all the powers and duties provided for in Bylaw 6.6 as
well as those provided in this Bylaw 6.7. The president, who need not be chosen
from among the directors, shall, subject to the powers conferred upon the
chairman of the board under Bylaw 6.6 of this Article, be the chief executive
officer of the corporation; preside at all meetings of the stockholders and the
board of directors, shall have general and active management of the business and
affairs of the corporation, and shall see that all orders and resolutions of the
board are carried into effect. He shall perform such other duties and have such
other authority and powers as the board of directors may from time to time
prescribe.
6.8 EXECUTIVE VICE PRESIDENT. If there be an executive vice president, he
shall be the ranking vice president and shall be the chief operating officer of
the corporation unless the board of directors shall designate another officer as
chief operating officer. In the absence or disability of the president, the
executive vice president shall perform all the duties, exercise the powers and
assume all responsibilities of the president. He shall also generally assist the
president and exercise any other powers and perform such other duties as are
delegated to him by the president and as the board of directors shall prescribe.
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6.9 VICE PRESIDENTS. The vice presidents in the order of their seniority,
unless otherwise determined by the board of directors, shall, in the absence or
disability of the president, perform the duties and have the authority and
powers as the board of directors may from time to time prescribe or as the
president may from time to time delegate.
6.10 SECRETARY.
(a) The secretary shall attend all meetings of the board of directors
and all meetings of the stockholders and record all votes and the minutes of
all proceedings in a book to be kept for that purpose and shall perform like
duties for the executive committee when required.
(b) He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors.
(c) He shall keep in safe custody the seal of the corporation and, when
authorized by the board of directors or the executive committee, affix the
same to any instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of the treasurer or an
assistant secretary, which may be facsimile.
(d) He shall be under the supervision of the president. He shall perform
such other duties and have such other authority and powers as the board of
directors may from time to time prescribe or as the president may from time
to time delegate.
6.11 ASSISTANT SECRETARIES. The assistant secretaries in the order of
their seniority, unless otherwise determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and have the
authority and exercise the powers of the secretary. They shall perform such
other duties and have such other powers as the board of directors may from time
to time prescribe or as the president may from time to time delegate.
6.12 TREASURER.
(a) The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements of the corporation and shall deposit all monies and other
valuable effects in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
(b) He shall disburse the funds of the corporation as may be ordered by
the board of directors, taking proper vouchers for such disbursements, and
shall render to the president and directors, at the regular meetings of the
board, or whenever they may require it, an account of all his transactions
as treasurer and of the financial condition of the corporation.
(c) He shall perform such other duties and have such other authority
and powers as the board of directors may from time to time prescribe or as
the president may from time to time delegate.
6.13 ASSISTANT TREASURERS. The assistant treasurers in the order of their
seniority, unless otherwise determined by the board of directors, shall, in the
absence or disability of the treasurer, perform the duties and have the
authority and exercise the powers of the treasurer. They shall perform such
other -duties and have such other powers as the board of directors may from time
to time prescribe or the president may from time to time delegate.
6.14 BONDING OF OFFICERS. If required by the board of directors, all or
certain officers shall give the corporation a bond in such form, in such sum,
and with such surety or sureties as shall be satisfactory to the board for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
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ARTICLE VII
CERTIFICATES AND STOCKHOLDERS
7.1 CERTIFICATES. The corporation shall deliver certificates representing
all shares to which stockholders are entitled. Certificates shall be
consecutively numbered and shall be entered in the books of the corporation as
they are issued. Each certificate shall state on the face thereof the holder's
name, the number and class of shares, the par value of shares or a statement
that such shares are without par value, and such other matters as may be
required by law. They shall be signed by the president or a vice president and
such other officer or officers as the board of directors shall designate, and
may be sealed with the seal of the corporation or a facsimile thereof. The
signature of any such officer may be facsimile. In case any officer who has
signed, or whose facsimile signature has been used on such certificate, shall
cease to be such officer of the corporation before such certificate has been
delivered by the corporation or its agents, such certificate may nevertheless be
issued and delivered with the same effect as if he were still such officer at
the date of issue.
7.2 PAYMENT FOR SHARES.
(1) KIND. The consideration for the issuance of shares shall consist
of money paid, labor done (including services actually performed for the
corporation), or property (tangible or intangible) actually received.
Neither promissory notes nor the promise of future services shall constitute
payment for shares.
(2) VALUATION. In the absence of fraud in the transaction, the
judgment of the board of directors as to the value of consideration received
shall be conclusive.
(3) EFFECT. When consideration, as fixed by law, has been paid, the
shares shall be deemed to have been issued and shall be considered fully
paid and non-assessable.
(4) ALLOCATION OF CONSIDERATION. The consideration received for shares
shall be allocated by the board of directors, in accordance with law,
between stated capital and capital surplus accounts.
7.3 SUBSCRIPTIONS. Unless otherwise provided in the subscription
agreement, subscription of shares, whether made before or after organization of
the corporation, shall be paid in full at such time or in such installments and
at such times as shall be determined by the board of directors. Any call made by
the board of directors for payment on subscriptions shall be uniform as to all
shares of the same series, as the case may be. In case of default in the payment
on any installment or call when payment is due, the corporation may proceed to
collect the amount due in the same manner as any debt due to the corporation.
7.4 LIEN. For any indebtedness of a stockholder to the corporation, the
corporation shall have a first and prior lien on all shares of its stock owned
by him and on all dividends or other distributions declared thereon.
7.5 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation shall issue a
new certificate in place of any certificate for shares previously issued if the
registered owner of the certificate:
(a) CLAIM. Makes proof in affidavit form that it has been lost or
wrongfully taken or destroyed; and
(b) TIMELY REQUEST. Requests the issuance of a new certificate before
the corporation has notice that the certificate has been acquired by a
purchaser for value in good faith and without notice of an adverse claim;
and
(c) BOND. Gives a bond in such form, and with such surety or sureties,
with fixed or open penalty, as the corporation may direct, to indemnify the
corporation (and its transfer agent and registrar, if any) against any claim
that may be made on account of the alleged loss, destruction, or theft of
the certificate; and
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(d) OTHER REQUIREMENT. Satisfies any other reasonable requirements
imposed by the corporation. When a certificate has been lost, apparently
destroyed or wrongfully taken, and the holder of record fails to notify the
corporation within a reasonable time after he has notice of it, and the
corporation registers a transfer of the shares represented by the
certificate before receiving such notification, the holder of record is
precluded from making any claim against the corporation for the transfer or
for a new certificate.
7.6 REGISTRATION OF TRANSFER. The corporation shall register the transfer
of a certificate for shares presented to it for transfer if:
(a) ENDORSEMENT. The certificate is properly endorsed by the
registered owner or by his duly authorized attorney; and
(b) GUARANTY AND EFFECTIVENESS OF SIGNATURE. The signature of such
person has been guaranteed by a national banking association or member of
the New York Stock Exchange, and reasonable assurance is given that such
endorsements are effective; and
(c) ADVERSE CLAIMS. The corporation has no notice of an adverse claim
or has discharged any duty to inquire into such a claim; and
(d) COLLECTION OF TAXES. Any applicable law relating to the collection
of taxes has been complied with; and
(e) STOP TRANSFER ORDERS AND LEGENDS. The corporation has not issued a
stop-transfer order or placed a legend on such certificate restricting
transfer; or, if legended, the registered owner has complied with the
conditions for transfer provided for in the legend.
7.7 REGISTERED OWNER. Prior to due presentment for registration of
transfer of a certificate for shares, the corporation may treat the registered
owner as the person exclusively entitled to vote, to receive notices and
otherwise to exercise all the rights and powers of a stockholder.
ARTICLE VIII
INDEMNIFICATION; INSURANCE
8.1 PERSONS. The corporation shall indemnify, to the extent provided in
Bylaws 8.1, 8.2 and 8.4:
(a) Any person who is or was director, officer, agent or employee of
the corporation, and
(b) Any person who serves or served at the corporation's request as a
director, officer, agent, employee, partner or trustee of another
corporation or of a partnership, joint venture, trust or other enterprise.
8.2 EXTENT. Derivative Suits. In case of a suit by or in the right of the
corporation named in Bylaw 8.1 by reason of his holding a position named in
Bylaw 8.1, the corporation shall indemnify him if he satisfies the standard in
Bylaw 8.3 for expenses (including attorney's fees but excluding amounts paid in
settlement) actually and reasonably incurred by him in connection with the
defense or settlement of the suit.
8.3 STANDARD--DERIVATIVE SUITS. In case of a suit by or in the right of
the corporation, a person named in Bylaw 8.1 shall be indemnified only if:
(a) He is successful on the merits of otherwise; or
(b) He acted in good faith in the transaction which is the subject of
the suit, and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation. However, he shall not be
indemnified in respect of any claim, issue or matter as to which he has been
adjudged liable for negligence or misconduct in the performance of his duty
to the corporation unless, and only
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to the extent that, the court in which the suit was brought shall determine
upon application that, despite the adjudication but in view of all the
circumstances, such person is fairly and reasonably entitled to indemnity
for such expenses as the court shall deem proper.
8.4 EXTENT--NONDERIVATIVE SUITS. In case of a suit, action or proceeding
(whether civil, criminal, administrative or investigative)--other than a suit by
or in the right of the corporation--together thereafter referred to as a
nonderivative suit, against a person named in Bylaw 8.1 by reason of his holding
a position named in Bylaw 8.1, the corporation shall indemnify him if he
satisfies the standard in Bylaw 8.5 for amounts actually and reasonably incurred
by him in connection with the defense or settlement of the nonderivative suit
as:
(a) Expenses (including attorney's fees);
(b) Amount paid in settlement;
(c) Judgment; and
(d) Fines.
8.5 STANDARD--NONDERIVATIVE SUITS. In case of non-derivative suit, a
person named in Bylaw 8.1 shall be indemnified only if:
(a) He is successful on the merits or otherwise; or
(b) He acted in good faith in the transaction which is the subject of
the nonderivative suit, and in a manner reasonably believed to be in, or not
opposed to, the best interest of the corporation and, with respect to any
criminal action or proceeding, he has no reason to believe his conduct was
unlawful The termination of nonderivative suit by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent
shall not, of itself, create a presumption that the person failed to satisfy
the standard of this Bylaw 8.5(b).
8.6 DETERMINATION THAT STANDARD HAS BEEN MET. A determination that the
standard of Bylaws 8.3 or 8.5(b) (second sentence), the determination may be
made by:
(1) A majority of the directors of the corporation (whether or not a
quorum) who were not parties to the action, suit or proceeding, or;
(2) Independent legal counsel in a written opinion; or
(3) The stockholders of the corporation.
8.7 PRORATION. Anyone making a determination under Bylaw 8.6 may determine
that a person has met the standard as to some matters but not as to others, and
may reasonably prorate amounts to be indemnified.
8.8 ADVANCE PAYMENT. The corporation may pay in advance any expenses
(including attorney's fees) which may become subject to indemnification under
Bylaws 8.1-8.8 if (a)The board of directors authorizes the specific payment; and
(b) The person receiving the payment undertakes in writing to repay unless it is
ultimately determined that he is entitled to indemnification by the corporation
under Bylaws 8.1-8.8.
8.9 NONEXCLUSIVE. The indemnification provided by Bylaws 8.1-8.8 shall not
be exclusive of any other rights to which a person may be entitled by law,
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
8.10 CONTINUATION. The indemnification and advance payment provided by
Bylaws 8.1-8.8 shall continue as to a person who has ceased to hold a position
named in Bylaw 8.1 and shall inure to his heirs, executors and administrators.
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8.11 INSURANCE. The corporation may purchase and maintain insurance on
behalf of any person who holds or who has held any position named in Bylaw 8.1,
against any liability incurred by him in any such position, or arising out of
his status as such, whether or not the corporation would have power to indemnify
him against such liability under Bylaws 8.1-8.8.
8.12 REPORTS. Indemnification payments, advance payments and insurance
payments made under Bylaws 8.1-.11 shall be reported in writing to the
stockholders of the corporation with the next notice of annual meeting.
ARTICLE IX
GENERAL PROVISIONS
9.1 DIVIDENDS AND RESERVES.
(a) DECLARATION AND PAYMENT. Subject to statute and the certificate of
incorporation, dividends may be declared by the board of directors at any
regular or special meeting and may be paid in cash, in property, or in
shares of the corporation. Subject to Bylaw 3.3, the declaration and payment
shall be at the discretion of the board of directors.
(b) RECORD DATE. The board of directors may fix in advance a record
date for the purpose of determining stockholders entitled to receive payment
of any dividend, the record date to be not more than fifty days prior to the
payment date of such dividend, or the board of directors may close the stock
transfer books for such purpose for a period of not more than fifty days
prior to the payment date of such dividend. In the absence of any action by
the board of directors, the date upon which the board of directors adopts
the resolution declaring the dividend shall be the record date.
(c) RESERVES. By resolution the board of directors may create such
reserve or reserves out of the earned surplus of the corporation as the
directors from time to time, in their discretion, think proper to provide
for contingencies, or to equalize dividends, or to repair or maintain any
property of the corporation, or for any other purpose they think beneficial
to the corporation. The directors may modify or abolish any such reserve in
the manner in which it was created.
9.2 BOOKS AND RECORDS. The corporation shall keep correct and complete
books and records of account and shall keep minutes of the, proceedings of its
stockholders and board of directors, and shall keep at its registered office or
principal place of business, or at the office of its transfer agent, agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
9.3 ANNUAL STATEMENT. The board of directors shall mail to each
stockholder of record, at least ten days before each annual meeting a full and
clear statement of the business and condition of the corporation, including a
reasonably detailed balance sheet, income statement, and surplus statement, all
prepared in conformity with generally accepted accounting principles applied on
a consistent basis.
9.4 CHECKS AND NOTES. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
9.5 FISCAL YEAR. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
9.6 SEAL. The corporation seal (of which there may be one or more
exemplars) shall contain the name of the corporation and the name of the state
of incorporation. The seal may be used by impressing it or reproducing a
facsimile of it, or otherwise.
9.7 RESIGNATION. Any director, officer or agent may resign by giving
written notice to the president or the secretary. The resignation shall take
effect at the time specified therein, or immediately if no time is
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specified therein. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
9.8 AMENDMENT OF BYLAWS. These Bylaws may be altered, amended, or repealed
at any meeting of the board of directors at which a quorum is present, in
accordance with Bylaw 3.3, provided notice of the proposed alteration,
amendment, or repeal is contained in the notice of such meeting.
9.9 CONSTRUCTION. Whenever the context so requires, the masculine shall
include the feminine and neuter, and the singular shall include the plural and
conversely.
If any portion of these bylaws shall be invalid or inoperative, then, so far
as is reasonable and possible:
(a) The remainder of these Bylaws shall be considered valid and
operative.
(b) Effect shall be given to the intent manifested by the portion held
invalid or inoperative.
9.10 TABLE OF CONTENTS; HEADINGS. The table of contents and headings are
for organization, convenience and clarity. In interpreting these Bylaws, they
shall be subordinated in importance to the other written material.
9.11 CERTAIN DEFINITIONS.
CHANGE IN CONTROL TRANSACTION: any of the following:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than the
Corporation, or any of its Subsidiaries or any Investor or Excluded Group
(an "ACQUIRING PERSON") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the
combined voting power or economic interests of the then outstanding voting
securities of the corporation entitled to vote generally in the election of
directors; provided, however, that any transfer from any Investor or
Excluded Group will not result in a Change in Control if such transfer was
part of one or a series of related transactions the effect of which, absent
the transfer to such Acquiring Person by the Investor or Excluded Group,
would not have resulted in the acquisition by such Acquiring Person of 35%
or more of the combined voting power or economic interests of the then
outstanding voting securities; or
(b) the individuals who at the beginning of any 12 consecutive month
period following the Closing constituted a majority of the directors of the
corporation (the "INCUMBENT MAJORITY") cease for any reason to constitute at
least a majority of such directors; provided that (i) any individual
becoming a director whose election, or nomination for election by the
corporation's stockholders pursuant to the Stockholders Agreement, was
approved by a vote of the stockholders having the right to designate such
director pursuant to the Stockholders Agreement and (ii) any director whose
election to the Board or whose nomination for election by the stockholders
of the corporation was approved by the Incumbent Majority, shall, in each
such case, be considered as though such individual were a member of the
Incumbent Majority, but excluding, as a member of the Incumbent Majority,
any such individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of the
directors of the corporation (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) and further excluding any
person who is an affiliate or associate of an Acquiring Person having or
proposing to acquire beneficial ownership of 25% or more of the combined
voting power of the then outstanding voting securities of the corporation
entitled to vote generally in the election of directors; or
(c) the approval by the stockholders of the corporation of a
reorganization, merger or consolidation, in each case, with respect to which
all or substantially all of the individuals and entities who were the
respective beneficial owners of the voting securities of the corporation
immediately prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 51% of the combined voting power of
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the then outstanding voting securities entitled to vote generally in the
election of directors of the corporation resulting from such reorganization,
merger or consolidation; or
(d) the sale or other disposition of assets representing 50% or more of
the assets of the corporation and its subsidiaries in one transaction or
series of related transactions.
EXCLUDED GROUP: a "group" (as such term is used in Rule 13d-5 of the
Exchange Act) that includes one or more of the Investors, including, without
limitation, for the purpose of this definition only, any party to the
Stockholder' Agreement.
INVESTOR: Questor or ▇▇▇▇▇▇ or their respective Affiliates.
MARKET VALUE: shall mean, as of any date: (i) if any equity securities are
listed on a national securities exchange, the average of the closing prices as
reported for composite transactions during the 30 consecutive trading days
preceding the trading day immediately prior to such date or, if no sale occurred
on a trading day, then the mean between the closing bid and asked prices on such
exchange on such trading day; (ii) if any equity securities are traded on the
Nasdaq National Market ("NMM"), the average of the closing prices as reported on
the NMM during the 30 consecutive trading days preceding the trading day
immediately prior to such date or, if no sale occurred on a trading day, then
the mean between the highest bid and lowest asked prices as of the close of
business on such trading day, as reported on the NMM; (iii) if any equity
securities are not traded on a national securities exchange or the NMM but are
otherwise traded over-the-counter, the arithmetic average (for consecutive
trading days) of the mean between the highest bid and lowest asked prices as of
the close of business during the 30 consecutive trading days preceding the
trading day immediately prior to such date as quoted on the National Association
of Securities Dealers Automated Quotation system or an equivalent generally
accepted reporting service; or (iv) if there is no active market for any equity
securities, the market value thereof as mutually agreed by the corporation and a
majority in interest of the stockholders.
STOCKHOLDERS AGREEMENT: the Stockholders Agreement, dated as of [ ], 1999,
among the corporation, Questor Partners Fund II, L.P. ("FUND II"), Questor
Side-by-Side Partners II, L.P. (the "SIDE-BY-SIDE FUND"), Questor Side-by-Side
Partners II 3(c)(1), L.P. (the "3(c)(1) FUND" and together with Fund II and the
Side-by-Side Fund, "QUESTOR"), and ▇▇▇▇▇▇ Equity Investors III, L.P. ("▇▇▇▇▇▇
EQUITY") and TC Co-Investors, LLC ("TC CO-INVESTORS" and, together with ▇▇▇▇▇▇
Equity, "▇▇▇▇▇▇").
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LIST OF DISCLOSURE SCHEDULES
----------------------------
(Schedules omitted in accordance with Item 601 of Regulation S-K)
-----------------------------------------------------------------
4(b) Capitalization; Series F Preferred
4(d) No Conflicts
4(f) Litigation
4(i) Absence of Liabilities
4(j) Taxes
4(k) Title to Property and Assets
4(l) Employee Benefit Plans and Related Matters: ERISA
4(n) Material Contracts
4(p) Absence of Certain Changes
The Company agrees to furnish supplementally a copy of any omitted schedule
to the Commission upon request.