EXHIBIT 3
INVESTMENT AGREEMENT
dated as of
June 25, 1997
among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL PARTNERS III, L.P.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL INVESTORS, L.P.,
MSCP III 892 INVESTORS, L.P.,
and
CATALYTICA, INC.
TABLE OF CONTENTS
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Page
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ARTICLE 1
Definitions
Section 1.1. Definitions............................................ 1
ARTICLE 2
Purchase and Sale
Section 2.1. Purchase and Sale...................................... 6
Section 2.2. Closing................................................ 6
Section 2.3. Legending of Securities................................ 6
ARTICLE 3
Representations and Warranties of the Company
Section 3.1. Corporate Existence and Power.......................... 7
Section 3.2. Corporate Authorization................................ 7
Section 3.3. Governmental Authorization............................. 8
Section 3.4. Non-contravention...................................... 8
Section 3.5. Capitalization......................................... 9
Section 3.6. Subsidiaries........................................... 9
Section 3.7. SEC Filings............................................ 10
Section 3.8. Financial Statements................................... 10
Section 3.9. Absence of Certain Changes............................. 11
Section 3.10. No Undisclosed Material Liabilities.................... 12
Section 3.11. Compliance with Contracts.............................. 13
Section 3.12. Proxy Materials........................................ 13
Section 3.13. Litigation............................................. 14
Section 3.14. Compliance with Laws and Court Orders; No Defaults..... 14
Section 3.15. Insurance Coverage..................................... 14
Section 3.16. Finders' Fees.......................................... 14
Section 3.17. Employee Benefit Plans................................. 15
Section 3.18. Taxes.................................................. 17
Section 3.19. Environmental Matters.................................. 17
Section 3.20. Properties............................................. 19
Section 3.21. Receivables............................................ 19
Section 3.22. Products............................................... 19
Section 3.23. Greenville Purchase Agreement and Supply Agreement..... 20
ARTICLE 4
Representations and Warranties of the Funds
Section 4.1. Corporate Existence and Power.......................... 20
Section 4.2. Corporate Authorization................................ 20
Section 4.3. Governmental Authorization............................. 20
Section 4.4. Non-contravention...................................... 20
Section 4.5. Proxy Materials........................................ 21
Section 4.6. Finders' Fees.......................................... 21
Section 4.7. Purchase for Investment................................ 21
Section 4.8. Disclosure of Information.............................. 21
Section 4.9. Restricted Securities.................................. 21
ARTICLE 5
Covenants of the Company
Section 5.1. Conduct of Business.................................... 22
Section 5.2. Access to Information.................................. 23
Section 5.3. Notices of Certain Events.............................. 23
Section 5.4. Registration Rights.................................... 24
Section 5.5. Stockholder Meeting; Proxy Materials................... 24
Section 5.6. Access to Book and Records............................. 24
Section 5.7. Other Offers........................................... 24
ARTICLE 6
Covenants of the Funds
Section 6.1. Notices of Certain Events.............................. 25
Section 6.2. Agreement to Provide Information....................... 25
ARTICLE 7
Covenants of the Company and the Funds
Section 7.1. Filings; Consents; Reasonable Best Efforts............. 26
ARTICLE 8
Additional Covenants
Section 8.1. Board Representation; Committees....................... 26
Section 8.2. Reports................................................ 27
Section 8.3. Sale or Transfer of Restricted Securities.............. 27
Section 8.4. Right to Cause Repurchase.............................. 27
Section 8.5. Capital Expenditures................................... 28
Section 8.6. Acquisition of Greenville Facility..................... 28
Section 8.7. No Transfer or Assignment.............................. 28
ARTICLE 9
Conditions to Closing
Section 9.1. Conditions to Obligations of Each Party................ 29
Section 9.2. Conditions to Obligations of the Funds................. 29
Section 9.3. Conditions to Obligation of the Company................ 30
ARTICLE 10
Survival; Indemnification
Section 10.1. Survival.............................................. 31
Section 10.2. Indemnification by the Company........................ 31
Section 10.3. Indemnification by the Funds.......................... 32
Section 10.4. Procedures............................................ 32
ARTICLE 11
Termination
Section 11.1. Grounds for Termination............................... 32
Section 11.2. Effect of Termination................................. 33
ARTICLE 12
Miscellaneous
Section 12.1. Notices............................................... 33
Section 12.2. Amendments and Waivers................................ 34
Section 12.3. Expenses.............................................. 35
Section 12.4. Successors and Assigns................................ 35
Section 12.5. Governing Law......................................... 35
Section 12.6. Counterparts; Third Party Beneficiaries............... 35
Section 12.7. Public Announcements.................................. 35
Section 12.8. Entire Agreement; Exhibits............................ 36
Section 12.9. Headings.............................................. 36
INVESTMENT AGREEMENT
AGREEMENT dated as of June 25, 1997 among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Capital Partners III, L.P., a Delaware limited partnership ("MSCP III Fund"),
MSCP III 892 Investors L.P., a Delaware limited partnership ("892 Investors
Fund"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Investors, L.P., a Delaware limited partnership
("Employee Fund") and Catalytica, Inc., a Delaware corporation (the "Company").
The parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1. Definitions. (a) The following terms, as used
herein, have the following meanings:
"1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"Balance Sheet" means the audited consolidated balance sheet of
the Company and the Subsidiaries as of December 31, 1996.
"Balance Sheet Date" means December 31, 1996.
"beneficial ownership" and "beneficially own" shall be
determined in accordance with Rules 13d-3 and 13d-5 under the 1934 Act.
"Benefit Arrangement" means any employment, severance or similar
contract or arrangement (whether or not written) or any plan, policy, fund,
program or contract or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option, or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or
medical benefits, disability benefits, worker's compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance or
other benefits) that (i) is not an Employee Plan, (ii) is entered into,
maintained, administered or contributed to, as the case may be, by the
Company, any of its Affiliates or Subsidiaries and (iii) covers any employee or
former employee of the Company or any Subsidiary of the Company.
"Change of Control" means the occurrence of any of the
following: (A) any sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
subsidiaries taken as a whole to any "person" (as defined in Section 13(d) of
the ▇▇▇▇ ▇▇▇) or "group" (as defined in Section 13(d)(3) and 14(d)(2) of the
1934 Act); (B) the Company consolidates with, or merges with or into, another
"person" (as defined above) or "group" (as defined above) in a transaction or
series of related transactions in which the voting stock of the Company is
converted into or exchanged for cash, securities or other property, other than
any transaction where (1) the outstanding voting stock of the Company is
converted into or exchanged for voting stock of the surviving corporation and
(2) the "beneficial owners" (as defined in Rule 13d-3 under the ▇▇▇▇ ▇▇▇) of
the voting stock of the Company immediately prior to such transaction own,
directly or indirectly through one or more subsidiaries, not less than a
majority of the total voting stock of the surviving corporation immediately
after such transaction; (C) the consummation of any transaction or series of
related transactions (including, without limitation, by way of merger or
consolidation) the result of which is that any "person" (as defined above) or
"group" (as defined above) other than the Funds becomes the "beneficial owner"
(as defined above) of more than 50% of the voting power of the voting stock of
the Company or (D) the first day on which a majority of the members of the
Board of Directors of the Company are not directors who were nominated for
election or elected to the Board of Directors of the Company with the approval
of a majority of the directors who were members of the Board at the time of
such nomination or election.
"Class A Common Stock" means the Class A Common Stock of the
Company, par value $.001 per share, having the terms set forth in the
Company's Fourth Amended and Restated Certificate of Incorporation attached
hereto as Exhibit A.
"Class B Common Stock" means the Class B Common Stock of the
Company, par value $.001 per share, having the terms set forth in the
Company's Fourth Amended and Restated Certificate of Incorporation attached
hereto as Exhibit A.
"Closing Date" means the date of the Closing.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the Common Stock of the Company, par value
$.001 per share.
"Employee Plan" means any "employee benefit plan", as defined in
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by the Company, any of its
Affiliates or Subsidiaries and (iii) covers any employee or former employee of
the Company or any Subsidiary of the Company.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, and the rules and
regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other entity which,
together with such entity, would be treated as a single employer under Section
414 of the Code.
"Fund" means each or any of the MSCP III Fund, the 892 Investors
Fund and the Employee Fund.
"Greenville Purchase Agreement" means the Asset Purchase
Agreement dated of even date herewith among the Company, Catalytica
Pharmaceuticals, Inc. and GlaxoWellcome Inc. including the exhibits and
schedules thereto as the same may be amended in accordance with the terms
thereof.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or other
adverse claim of any kind in respect of such property or asset. For the
purposes of this Agreement, a Person shall be deemed to own subject to a Lien
any property or asset which it has acquired or holds subject to the interest
of a vendor or lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such property or asset.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations
of the Company and the Subsidiaries, taken as a whole.
"Mitsubishi Stock Purchase Agreement" means the Stock Purchase
Agreement dated December 10, 1992 between the Company and Mitsubishi Oil Co.,
Ltd.
"MSCP III" means the program of investment funds comprising the
MSCP III Fund, the 892 Investors Fund and the Employee Fund.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Proxy Materials" means each document filed by the Company with
the Commission in connection with the meeting of the stockholders of the
Company described in Section 5.5 including, without limitation, the proxy
statement of the Company and any amendment or supplement thereto.
"Restricted Securities" means the shares of Class A Common Stock
and Class B Common Stock to be purchased by the Funds pursuant to this
Agreement and any other securities or rights convertible into or exchangeable
or exercisable (whether immediately or otherwise) for such shares.
"Shareholder Group" means the MSCP III Fund, the 892 Investors
Fund and the Employee Fund and their respective Affiliates.
"Subsidiary" means any entity 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 Company.
"Supply Agreement" means the Supply Agreement for primary,
secondary and sterile products to be entered into as of the Closing Date
between Catalytica Pharmaceuticals, Inc. and GlaxoWellcome Inc., including the
exhibits and schedules thereto.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means (i) any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, license, withholding on amounts paid to or by any Person, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with
any interest or any penalty, addition to tax or additional amount imposed by
any governmental authority (a "Taxing authority") responsible for the
imposition of any such tax (domestic or foreign), (ii) liability of any Person
for the payment of any amounts of the type described in (i) as a result of
being a member of any affiliated, consolidated, combined or unitary group or
being a party to any agreement or arrangement whereby liability of a Person for
payments of such amounts was determined or taken into account with reference
to the liability of any other Person for any period, and (iii) liability of any
Person for the payment of any amounts of the type described in (i) as a result
of any express or implied obligation to indemnify any other Person.
"Total Voting Power" means the aggregate number of votes which
may be cast by holders of outstanding Voting Securities.
"Voting Securities" means all securities of the Company
entitled, in the ordinary course, to vote in the election of Directors of the
Company.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
---- -------
Acquisition Proposal 5.07
Bank Letter 3.10
Company Securities 3.05
Closing 2.02
Company 10-K 3.07
Company 10-Q 3.07
Damages 10.2
Fund Nominee 8.01
Greenville Facility 8.06
Proxy Materials 3.03
Purchase Price 2.01
Put Price 8.04
Stockholder Approval 3.02
Subsidiary Securities 3.06
ARTICLE 2
Purchase and Sale
Section 2.1. Purchase and Sale. Upon the terms and subject to
the conditions of this Agreement, the Company agrees to sell and the Funds
agree to purchase for cash an aggregate of 30,000,000 shares of Class A Common
Stock and Class B Common Stock for a purchase price equal to $4.00 per share
(the "Purchase Price"). The Funds shall not purchase at Closing a number of
shares of Class A Common Stock which would result in the Funds beneficially
owning 40.1% or more of the Total Voting Power. The actual number of shares
of Class A Common Stock and Class B Common Stock that each Fund will purchase
shall be determined by the Funds at Closing.
The Purchase Price shall be paid in accordance with Section
2.2.
Section 2.2. Closing. The closing (the "Closing") of the
transactions contemplated hereby shall take place at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ in Research Triangle Park at 10:00 a.m. EST on July
31, 1997 or at such other time or place as the parties may agree. At the
Closing:
(a) The Company shall deliver to each Fund one or more
certificates for the Class A Common Stock and Class B Common Stock, registered
in the name of such Fund and representing the number of shares of Class A
Common Stock and Class B Common Stock to be purchased by such Fund; and
(b) Each Fund shall deliver to the Company an amount equal to
the number of shares of Class A Common Stock and Class B Common Stock to be
purchased by such Fund at the Closing multiplied by the Purchase Price in
immediately available funds by wire transfer to an account of the Company
designated by the Company, by notice to each Fund, no later than two business
days prior to the Closing.
Section 2.3. Legending of Securities. (a) All securities to
be issued to each Fund by the Company hereunder shall bear the following
legend:
"The securities represented hereby have not been registered under
the Securities Act of 1933, as amended, or securities laws of any
state and may not be offered, sold, transferred or otherwise
disposed of unless registered with the Securities and Exchange
Commission of the United States and the securities regulatory
authorities of applicable states or unless an exemption from such
registration is available. The securities represented by this
certificate are subject to an Investment Agreement dated June 25,
1997 (a copy of which is on file with the Secretary of the
Company) which provides, among other things, for certain
restrictions on transfer thereof. The securities represented by
this certificate may not be sold or otherwise transferred except
in compliance with said Agreement."
(b) At the request of the Funds, the Company agrees to remove
the foregoing legend from securities transferred as permitted in accordance
with paragraphs (c) or (d) of Section 8.3 hereof.
ARTICLE 3
Representations and Warranties of the Company
The Company represents and warrants to each Fund as of the date
hereof and as of the Closing Date that:
Section 3.1. Corporate Existence and Power. (a) The Company
is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all corporate
powers and all governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted, except for those
licenses, authorizations, permits, consents and approvals the absence of which
would not, individually or in the aggregate, have a Material Adverse Effect.
The Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect. The Company has heretofore delivered to each Fund true and complete
copies of the amended and restated certificate of incorporation and bylaws of
the Company as currently in effect.
Section 3.2. Corporate Authorization. (a) The execution,
delivery and performance by the Company of this Agreement are within the
Company's corporate powers and, except for any required approval of the
Company's stockholders ("Stockholder Approval"), have been duly authorized by
all necessary corporate action on the part of the Company. This Agreement
constitutes a valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, except as the indemnification under
the Registration Rights Agreement may be limited by applicable law and except
as the enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and by equitable principles.
(b) The Class A Common Stock and the Class B Common Stock,
when issued and delivered to and paid for by each Fund pursuant to this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Class A Common Stock and the Class B Common Stock is not
subject to any preemptive or similar rights, other than such rights as have
been waived prior to the date hereof. The shares of Common Stock reserved for
issuance upon conversion of the Class A Common Stock and the Class B Common
Stock have been duly authorized by the Company and reserved for issuance upon
such conversion and, when issued upon such conversion in accordance with the
terms of the Class A Common Stock and the Class B Common Stock, will have been
validly issued, fully paid and non-assessable, and, except as set forth on
Schedule 3.02(b), the issuance of shares of Common Stock will not be subject
to any preemptive or similar rights. The preemptive rights under the
Mitsubishi Stock Purchase Agreement with respect to the issuance of the Class
A Common Stock and Class B Common Stock pursuant to this Agreement have been
waived.
Section 3.3. Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement require no action by
or in respect of, or filing with, any governmental body, agency, or official
other than (i) compliance with any applicable requirements of the HSR Act; (ii)
compliance with the rules and regulations of The Nasdaq Stock Market; (iii)
compliance with any applicable requirements of the 1934 Act including the
filing of the definitive Proxy Materials for the Stockholder Approval (the
"Proxy Materials"); (iv) any filings to be made in Delaware in connection with
the proposed amendment to the Company's amended and restated certificate of
incorporation; and (v) any action or filing as to which the failure to make or
obtain would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 3.4. Non-contravention. The execution, delivery and
performance by the Company of this Agreement do not and will not (i) violate
the amended and restated certificate of incorporation or bylaws of the Company
or any Subsidiary, (ii) assuming compliance with the matters referred to in
Section 3.3, violate any applicable law, rule, regulation, judgment,
injunction, order or decree, (iii) except as set forth on Schedule 3.4,
require any consent or other action by any Person under, constitute a default
under, or give rise to any right of termination, cancellation or acceleration
of any right or obligation of the Company or any Subsidiary or to a loss of any
benefit to which the Company or any Subsidiary is entitled under, any
agreement or other instrument binding upon the Company or any Subsidiary or
any license, franchise, permit or other similar authorization held by the
Company or any Subsidiary, or (iv) result in the creation or imposition of any
Lien on any asset of the Company or any Subsidiary.
Section 3.5. Capitalization. (a) The authorized capital
stock of the Company consists of (i) 40,000,000 shares of Common Stock, of
which 19,863,297 shares are issued and outstanding as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇)
5,000,000 shares of undesignated preferred stock, none of which are issued or
outstanding as of the date hereof and (iii) options outstanding to purchase
1,196,114 shares of Common Stock as of April 30, 1997. Upon consummation of
the Closing, an aggregate of 30,000,000 shares of Class A Common Stock and
Class B Common Stock will be outstanding and the number of shares of
authorized Common Stock will be 120,000,000. All outstanding shares of Common
Stock and any other class of capital stock of the Company have been duly
authorized and are validly issued, fully paid and nonassessable.
(b) Except as set forth in this Section 3.05, there are no
outstanding (i) shares of capital stock or Voting Securities of the Company,
(ii) securities of the Company convertible into or exchangeable for shares of
capital stock or Voting Securities of the Company or (iii) except as set forth
on Schedule 3.05(b), options or other rights to acquire from the Company, or
other obligations of the Company to issue, any capital stock, Voting
Securities or securities convertible into or exchangeable for capital stock or
Voting Securities of the Company (the items in clauses 3.05(b)(i),(ii) and
(iii) being referred to collectively as the "Company Securities"). There are
no outstanding obligations of the Company or any Subsidiary to repurchase,
redeem or otherwise acquire any Company Securities.
Section 3.6. Subsidiaries. (a) Each Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would
not, individually or in the aggregate, have a Material Adverse Effect, is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where the failure to be so qualified or in good standing would
not, individually or in the aggregate, have a Material Adverse Effect. All
Subsidiaries and their respective jurisdictions of incorporation are
identified on Schedule 3.6.
(b) Except as disclosed in Schedule 3.6, all of the
outstanding capital stock of, or other voting securities or ownership
interests in, each Subsidiary, is owned by the Company, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities or ownership
interests). Except as disclosed in Schedule 3.6, there are no outstanding (i)
securities of the Company or any Subsidiary convertible into or exchangeable
for shares of capital stock or other voting securities or ownership interests
in any Subsidiary or (ii) options or other rights to acquire from the Company
or any Subsidiary, or other obligation of the Company or any Subsidiary to
issue, any capital stock or other voting securities or ownership interests in,
or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Subsidiary (the items
in clauses 3.06(b)(i) and (ii) being referred to collectively as the
"Subsidiary Securities"). Except as set forth on Schedule 3.6, there are no
outstanding obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any outstanding Subsidiary Securities.
Section 3.7. SEC Filings. (a) The Company has delivered to
each Fund (i) the annual report on Form 10-K for its fiscal year ended December
31, 1995, (ii) the annual report on Form 10-K/A for its fiscal year ended
December 31, 1996 (the "Company 10-K"), (iii) its quarterly report on Form
10-Q for its fiscal quarter ended March 31, 1997, (iv) its quarterly report on
Form 10-Q/A for its fiscal quarter ended March 31, 1997 (the "Company 10-Q"),
(v) its proxy or information statements relating to meetings of, or actions
taken without a meeting by, the stockholders of the Company since December 31,
1995 and (vi) all of its other reports, statements, schedules and registration
statements filed with the Commission since December 31, 1995 (the items in
clauses 3.07(i) through (vi) being referred to collectively as the "SEC
Reports").
(b) As of its filing date, or, if such SEC Report was amended,
on the date of filing of such amendment, each SEC Report did not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
Section 3.8. Financial Statements. The audited consolidated
balance sheets as of December 31, 1995 and 1996 and the related audited
consolidated statements of income and cash flows for each of the years ended
December 31, 1995 and 1996 included in the Company 10-K and the unaudited
interim consolidated balance sheet for the three months ended March 31, 1997
and the related unaudited interim consolidated statements of income and cash
flows for the three months ended March 31, 1997 included in the Company 10-Q,
of the Company fairly present, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of the Company as of the
dates thereof and its consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
Section 3.9. Absence of Certain Changes. Except as set forth
in the Company 10-K or the Company 10-Q or on Schedule 3.9, and as contemplated
by this Agreement, since December 31, 1996, the businesses of the Company and
its Subsidiaries have been conducted in the ordinary course consistent with
past practices and there has not been:
(i) any event, occurrence, development or state of
circumstances or facts which has had or would reasonably be expected
to have a Material Adverse Effect; provided that for purposes of this
Section 3.09(i) the continued incurrence of operating losses by the
Company at a rate per quarter not greater than $1,600,000 shall be
deemed not to constitute a Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of
the Company, or any repurchase, redemption or other acquisition by the
Company or any Subsidiary of any outstanding shares of capital stock
or other securities of, or other ownership interests in, the Company
or any Subsidiary;
(iii) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
(iv) any incurrence, assumption or guarantee by the Company
or any Subsidiary of any indebtedness for borrowed money, except in
the ordinary course of business consistent with past practices;
(v) any creation or assumption by the Company or any
Subsidiary of any Lien on any material asset other than in the
ordinary course of business consistent with past practices but not in
any event exceeding $100,000;
(vi) any making of any loan, advance or capital contributions
to or investment in any Person other than loans, advances or capital
contributions to or investments in Subsidiaries made in the ordinary
course of business consistent with past practices;
(vii) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets of the
Company or any Subsidiary which, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect;
(viii) any change in any method of accounting or application
thereof by the Company or any Subsidiary;
(ix) any (A) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director,
officer or employee of the Company or any Subsidiary (or any amendment
to any such existing agreement), (B) grant of any severance or
termination pay to any director, officer or employee of the Company or
any Subsidiary, or (C) change in compensation or other benefits
payable to any director, officer or employee of the Company or any
Subsidiary pursuant to any severance or retirement plans or policies
thereof, other than in the ordinary course of business consistent with
past practices; or
(x) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any
Subsidiary, which employees were not subject to a collective
bargaining agreement at December 31, 1996, or any lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to any
employees of the Company or any Subsidiary.
Section 3.10. No Undisclosed Material Liabilities. There are
no liabilities of the Company or any Subsidiary of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and
there is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than:
(a) liabilities disclosed or provided for in the Balance Sheet;
(b) liabilities incurred in the ordinary course of business
consistent with past practice since the December 31, 1996,
which in the aggregate are not material to the Company and the
Subsidiaries, taken as a whole;
(c) liabilities under this Agreement;
(d) obligations under the Greenville Purchase Agreement, including
the Escrow Agreement and the other agreements to be entered
into in connection therewith, and obligations for expenses
related to the transactions contemplated hereby; and
(e) the Commitment Letter and Fee Letter with The Chase Manhattan
Bank and Chase Securities Inc. (collectively, the "Bank
Letter").
Section 3.11. Compliance with Contracts. Neither the Company
nor any of its Subsidiaries is in default under, and no condition exists that
with notice or lapse of time or both would constitute a default under, (i) any
mortgage, loan agreement, indenture or evidence of indebtedness for borrowed
money to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries or any material amount of their assets
is bound, (ii) any contract or agreement filed as an exhibit to any SEC Reports
or (iii) any judgment, order or injunction of any court, arbitrator or
governmental body, agency, official or authority, which, individually or in the
aggregate, under (i), (ii) or (iii) would reasonably be expected to have a
Material Adverse Effect.
Section 3.12. Proxy Materials. (a) The Proxy Materials will,
when filed, comply as to form in all material respects with the applicable
requirements of the 1934 Act.
(b) Each time any Proxy Materials are distributed to
stockholders of the Company or any other solicitation of stockholders of the
Company is made by or on behalf of the Company or any Affiliate of the
Company, and at the time the stockholders of the Company vote on the issuance
of the Class A Common Stock and the Class B Common Stock pursuant to this
Agreement, the Proxy Materials (as supplemented and amended, if applicable)
will not include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which the statements were made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of a proxy for the same meeting or subject
matter which has become false or misleading. The representations and
warranties contained in this Section 3.12 will not apply to statements or
omissions included in the Proxy Materials based upon information furnished to
the Company in writing by any of the Funds specifically for use therein.
Section 3.13. Litigation. Except as set forth on Schedule
3.13, there is no action, suit, investigation or proceeding pending against,
or to the knowledge of the Company threatened against or affecting, the
Company or any Subsidiary or any of their respective properties before any
court or arbitrator or any governmental body, agency or official (i) which
would reasonably be expected to have a Material Adverse Effect or (ii) which
in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated by this Agreement.
Section 3.14. Compliance with Laws and Court Orders; No
Defaults. Neither the Company nor any Subsidiary is in violation of any
applicable law, rule, regulation, judgement, injunction, order or decree
except for any violation which, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
Section 3.15. Insurance Coverage. The Company has furnished to
each Fund a list of, and true and complete copies of, all insurance policies
and fidelity bonds relating to the assets, business, operations, employees,
officers or directors of the Company and the Subsidiaries. There is no claim
by the Company or any Subsidiary pending under any of such policies or bonds
as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds or in respect of which such
underwriters have reserved their rights. All premiums payable under all such
policies and bonds have been paid timely and the Company and the Subsidiaries
have otherwise complied in all material respects with the terms and conditions
of all such policies and bonds. Such policies of insurance and bonds (or
other policies and bonds providing substantially similar insurance coverage)
have been in effect since January 1, 1997 and remain in full force and effect.
The Company does not know of any threatened termination of, premium increase
with respect to, or material alteration of coverage under, any of such policies
or bonds. Such policies and bonds are of the type and in amounts customarily
carried by Persons conducting businesses similar to those of the Company or
any Subsidiary.
Section 3.16. Finders' Fees. Except as set forth on Schedule
3.16, there is no investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of the Company
who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
Section 3.17. Employee Benefit Plans. (a) Schedule 3.17
identifies each Employee Plan. The Company has furnished or made available
to each Fund copies of the Employee Plans (and, if applicable, related trust
agreements) and all amendments thereto and written interpretations thereof
together with (i) the most recent annual report prepared in connection with any
Employee Plan (Form 5500 including, if applicable, Schedule B thereto) and
(ii) the most recent actuarial valuation report prepared in connection with any
Employee Plan. Neither the Company nor any of its ERISA Affiliates
contributes to or maintains (i) a Multiemployer Plan, (ii) a Title IV Plan or
(iii) a plan maintained in connection with any trust described in 501(c)(9) of
the Code.
(b) Neither the Company nor any of its ERISA Affiliates has
incurred, or reasonably expects to incur prior to the Closing Date, any
liability under Title IV of ERISA arising in connection with the termination
of, or complete or partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA that could become a liability of any Fund or any
of its ERISA Affiliates after the Closing Date.
(c) As of December 31, 1996, except as would not have a Material
Adverse Effect, there is no aggregate unfunded liability of the Company and
any Subsidiary in respect of all Employee Plans or Benefit Arrangements
described under Sections 4(b)(5) or 401(a)(1) of ERISA, computed using
reasonable actuarial assumptions and determined as if all benefits under such
plans were vested and payable as of such date.
(d) No transaction prohibited by Section 406 of ERISA or Section
4975 of the Code, has occurred with respect to any employee benefit plan or
arrangement which is covered by Title I of ERISA which transaction has or will
cause the Company or any of its Subsidiaries to incur any liability under
ERISA, the Code or otherwise, excluding transactions effected pursuant to and
in compliance with a statutory or administrative exemption and excluding such
transaction or transactions, individually or in the aggregate that would not
have a Material Adverse Effect. Neither the Company nor any ERISA Affiliate of
the Company has engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Sections 4069 or 4212(c)
of ERISA.
(e) Each Employee Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during
the period since its adoption; each trust created under any such Plan is
exempt from tax under Section 501(a) of the Code and has been so exempt since
its creation. The Company has provided each Fund with the most recent
determination letter of the Internal Revenue Service relating to each such
Employee Plan. Each Employee Plan has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations, including but not limited
to ERISA and the Code.
(f) Schedule 3.17 identifies each Benefit Arrangement. The
Company has made available to each Fund copies or descriptions of each Benefit
Arrangement (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof. Each Benefit Arrangement has
been maintained in compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations
and has been maintained in good standing with applicable regulatory
authorities except to the extent such failure to comply would not have a
Material Adverse Effect.
(g) Neither the Company nor any Subsidiary has any current or
projected liability in respect of post-employment or post-retirement health or
medical or life insurance benefits for retired, former or current employees of
the Company or any Subsidiary, except as required to avoid excise tax under
Section 4980B of the Code. Except in the ordinary course of business, there
has been no amendment to, written interpretation of or announcement (whether
or not written) by the Company or any Subsidiary relating to, or change in
employee participation or coverage under, any Employee Plan or Benefit
Arrangement that would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the expense incurred
in respect thereof for the most recent fiscal year ended prior to the date
hereof.
(h) Except as set forth in Schedule 3.17, there is no contract,
plan or arrangement (written or otherwise) covering any employee or former
employee of the Company or any Subsidiary that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 280G of the Code.
(i) There has been no failure of a group health plan (as defined in
Section 5000(b)(1) of the Code) to meet the requirements of Code Section
4980B(f) with respect to a qualified beneficiary (as defined in Section
4980B(g)) except to the extent that the failure to meet such requirements would
not have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has contributed to a nonconforming group health plan (as defined
in Section 5000(c)) and no ERISA Affiliate of the Company or any of its
Subsidiaries has incurred a tax under Section 5000(a) which is or could become
a liability of the Company or any of its Subsidiaries.
(j) Except as set forth on Schedule 3.17, no employee or former
employee of the Company or any Subsidiary will become entitled to any bonus,
retirement, severance, job security or similar benefit or enhanced such
benefit (including acceleration of vesting or exercise of an incentive award)
as a result of the transactions contemplated hereby.
Section 3.18. Taxes. Except as disclosed in the financial
statements included in the Company 10-K (including the notes thereto) or
except in respect of Taxes, the liability for which would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect,
(i) all Tax returns, statements, reports and forms required to be filed with
any Taxing authority by or on behalf of the Company or any Subsidiary
(collectively, the "Returns"), have been or will be filed when due in
accordance with all applicable laws except where failure to so file would not
subject the Company or any Subsidiary to liabilities or penalties; (ii) as of
the time of filing, the Returns correctly reflected in all material respects
(and, as to any Returns not filed as of the date hereof, will correctly
reflect in all material respects) the facts regarding the income, business,
assets, operations, activities and status of the Company and each Subsidiary;
(iii) the Company and each Subsidiary has timely paid, withheld or made
provision for all Taxes shown as due and payable on the Returns that have been
filed; (iv) the charges, accruals and reserves for Taxes with respect to the
Company and its Subsidiaries for any Tax period (or portion thereof) ending on
or before the Closing Date (excluding any provision for deferred income taxes)
reflected on the books of the Company and its Subsidiaries are adequate to
cover such Taxes; (v) neither the Company nor any Subsidiary is delinquent in
the payment of any Tax and has not requested any extension of time within which
to file or send any Return, which Return has not since been filed or sent; (vi)
neither the Company nor any Subsidiary (or any member of any affiliated or
combined group of which the Company or any Subsidiary is or has been a member)
has been granted any extension or waiver of the limitation period applicable
to any Returns; (vii) there is no claim, audit, action, suit, proceeding or
investigation now pending or threatened against or with respect to the Company
or any Subsidiary of which the Company is aware in respect of any Tax or
assessment; and (viii) there are no liens for Taxes upon the assets of the
Company or any Subsidiary except liens for current Taxes not yet due.
Section 3.19. Environmental Matters. (a) Except as set forth
in the Company 10-K:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, no investigation, action, claim,
suit, proceeding or review is pending, or, to the knowledge of the
Company or any Subsidiary, threatened by any governmental entity or
other Person with respect to any matters relating to the Company or
any Subsidiary and relating to or arising out of any Environmental Law
which, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect;
(ii) the Company is in compliance with all Environmental Laws
and has, and is in compliance with, all Environmental Permits, except
where any noncompliance or failure to receive Environmental Permits
could not reasonably be expected to result in a Material Adverse
Effect; and
(iii) there are no liabilities of, or relating to, the Company
or any Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, arising under or
relating to any Environmental Law which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect, and there are no facts, conditions, situations or set of
circumstances which could reasonably be expected to result in or be
the basis for any such liability.
(b) The Company and Subsidiaries, to their knowledge, have made
available to the Fund's environmental consultant all (1) environmental
assessments; (2) environmental investigations; (3) environmental studies; (4)
environmental audits; (5) environmental tests; or (6) environmental reviews, in
the Company's or Subsidiaries' possession or control, relating to the current
or prior business of the Company or any Subsidiary or any property or facility
now or previously owned, leased or operated by the Company or any Subsidiary,
other than routine operation and maintenance records.
(c) Neither the Company nor any Subsidiary owns, leases or operates
or has owned, leased or operated any real property, or conducts or has
conducted any operations, in New Jersey or Connecticut.
(d) For purposes of this Section, the following terms shall have
the meanings set forth below:
(A) "Company" and "Subsidiary" shall include any
entity which is, in whole or in part, a predecessor of the
Company or any Subsidiary, but shall not include any assets
acquired pursuant to the Greenville Purchase Agreement;
(B) "Environmental Laws" means any federal, state,
local and foreign law (including, without limitation, common
law), treaty, judicial decision, regulation, rule, judgment,
order, decree, injunction, permit or governmental restriction or
any agreement or contract with any governmental authority or
other third party, whether now or hereafter in effect, relating
to human health and safety, the environment or to pollutants,
contaminants, wastes or chemicals or toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances,
wastes or materials; and
(C) "Environmental Permits" means all permits,
licenses, franchises, certificates, approvals and other similar
authorizations of governmental authorities relating to or
required by Environmental Laws and affecting, or relating in any
way to, the business of the Company or any Subsidiary as
currently conducted.
Section 3.20. Properties. (a) Except as set forth in Schedule
3.20, the Company and the Subsidiaries have good title to, or in the case of
leased property have valid leasehold interests in, all property and assets
(whether real or personal, tangible or intangible) reflected on the Balance
Sheet or acquired after December 31, 1996, except for property and assets sold
since December 31, 1996 in the ordinary course of business consistent with
past practices.
(b) The plants, buildings, structures and equipment owned or leased
by the Company and the Subsidiaries (i) have no material defects, are in good
operating condition and repair and have been reasonably maintained consistent
with standards generally followed in the industry (giving due account to the
age and length of use of same, ordinary wear and tear excepted) and (ii)
comply in all material respects with applicable zoning and other applicable
land-use regulations.
Section 3.21. Receivables. All accounts receivable of the
Company and the Subsidiaries are fully collectible in the aggregate amount
thereof, subject to normal and customary trade discounts, less any reserves
for doubtful accounts recorded on the Balance Sheet and subsequent to December
31, 1996 in the ordinary course of business consistent with past practices
except to the extent the inability of the Company to collect such accounts
receivable would not have a Material Adverse Effect.
Section 3.22. Products. Each of the products produced or sold
by the Company or any Subsidiary is, and at all times up to and including the
sale thereof has been, (i) in compliance in all material respects with all
applicable federal, state, local and foreign laws and regulations and (ii)
conforms in all material respects to any warranty (express or implied) made
with respect to such product.
Section 3.23. Greenville Purchase Agreement and Supply
Agreement. The representations and warranties of the Company or any
Subsidiary contained in the Greenville Purchase Agreement and Supply Agreement
and, to the knowledge of the Company, each other party thereto, shall be true
in all material respects on the Closing Date.
ARTICLE 4
Representations and Warranties of the Funds
Each Fund represents and warrants to the Company, severally as
to itself and not jointly, as of the date hereof and as of the Closing Date
that:
Section 4.1. Corporate Existence and Power. Such Fund is
organized under the laws of the State of Delaware.
Section 4.2. Corporate Authorization. The execution, delivery
and performance by such Fund of this Agreement are within the powers of such
Fund and have been duly authorized by all necessary action on the part of such
Fund. This Agreement constitutes a valid and binding agreement of such Fund
enforceable against such Fund in accordance with its terms, except as the
indemnification under the Registration Rights Agreement may be limited by
applicable law and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally and by equitable
principles.
Section 4.3. Governmental Authorization. The execution,
delivery and performance by such Fund of this Agreement require no action by
or in respect of, or filing with, any governmental body, agency or official
other than compliance with any applicable requirements of the HSR Act; and
(ii) any such action or filing as to which the failure to make or obtain would
not, individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations
of such Fund.
Section 4.4. Non-contravention. The execution, delivery and
performance by such Fund of this Agreement do not and will not (i) violate the
certificate of limited partnership of such Fund or (ii) assuming compliance
with the matters referred to in Section 4.3, violate (x) any applicable law,
rule or regulation, that, in the experience of such Fund, is normally
applicable to general business entities in relation to transactions of the
type contemplated by this Agreement or (y) any judgment, injunction, order or
decree binding on such Fund.
Section 4.5. Proxy Materials. The information with respect to
such Fund that has been furnished to the Company in writing specifically for
use in any Proxy Materials, each time any Proxy Materials are distributed to
stockholders of the Company or any other solicitation of stockholders of the
Company is made by or on behalf of the Company or any Affiliate of the
Company, and at the time the stockholders of the Company vote on the issuance
of the Class A Common Stock and Class B Common Stock pursuant to this
Agreement will not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which such statements were
made, not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of a proxy for the same meeting
or subject matter which has become false or misleading.
Section 4.6. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of such Fund who might be entitled to any fee or
commission from such Fund or any of its Affiliates upon consummation of the
transactions contemplated by this Agreement.
Section 4.7. Purchase for Investment. Such Fund is acquiring
its shares of the Class A Common Stock and Class B Common Stock for investment
for its own account and not with a view to, or for sale in connection with,
any distribution thereof. Such Fund is an "Accredited Investor" as such term
is defined in Regulation D under the 1933 Act.
Section 4.8. Disclosure of Information. Each Fund believes
it has received all the information it considers necessary or appropriate for
deciding whether to purchase the Restricted Securities (and the Common Stock
underlying the Restricted Securities). Each Fund further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the sale of the Restricted Securities
(and the Common Stock underlying the Restricted Securities).
Section 4.9. Restricted Securities. Each Fund understands
that the Restricted Securities (and the Common Stock underlying the Restricted
Securities) it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the 1933 Act, only in certain limited circumstances. In
this connection each Fund represents that it is familiar with Rule 144 under
the 1933 Act, as presently in effect, and understands the resale limitations
imposed thereby and by the 1933 Act.
ARTICLE 5
Covenants of the Company
The Company agrees that:
Section 5.1. Conduct of Business. (a) From the date hereof
until the Closing Date, the Company shall conduct, and shall cause each
Subsidiary to conduct, its businesses in the ordinary course consistent with
past practice and to use its reasonable best efforts to preserve intact its
business organizations and relationships with third parties and to keep
available the services of its present officers and employees. Without
limiting the generality of the foregoing, from the date hereof until the
Closing Date, except as described in the Proxy Materials or as contemplated by
the Greenville Purchase Agreement, the Supply Agreement and the Bank Letter,
the Company will not, and will not permit any Subsidiary to:
(i) adopt or propose any change in its amended and restated
certificate of incorporation or bylaws;
(ii) adopt any stockholders rights plan (or any arrangement
which is designed to disadvantage any Fund on the basis of the size of
its shareholdings);
(iii) make any material change in its capital structure or
issue any capital stock except pursuant to any outstanding securities
or options;
(iv) merge or consolidate with any other Person or acquire a
material amount of assets of any other Person;
(v) except as previously disclosed to the Funds, modify or
enter into any employee benefit arrangements or any agreements with
employees or grant any severance or termination compensation rights to
employees or grant options to any employee or consultant of the
Company or any Subsidiary;
(vi) sell, lease, license or otherwise dispose of any material
assets or property except (A) pursuant to existing contracts or
commitments and (B) in the ordinary course consistent with past
practice; or
(vii) except as aforesaid, agree or commit to do any of the
foregoing.
(b) the Company will not, and will not permit any of its
Subsidiaries to (A) 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 any time prior to, the Closing Date or (B) 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.
Section 5.2. Access to Information. From the date hereof
until the Closing Date, the Company will (i) give, and will cause each
Subsidiary to give, to each Fund, its counsel, financial advisors, auditors
and other authorized representatives reasonable access to the offices,
properties, books and records of the Company and the Subsidiaries, (ii)
furnish, and will cause each Subsidiary to furnish, to each Fund, its counsel,
financial advisors, auditors and other authorized representatives such
financial and operating data and other information relating to the Company and
the Subsidiaries as such Persons may reasonably request and (iii) instruct the
employees, counsel and financial advisors of the Company and each Subsidiary
to cooperate with each Fund in its investigation of the Company and each
Subsidiary. Notwithstanding the foregoing, the Funds' access to information
shall be subject to confidentiality obligations owed by the Company to third
parties and to requirements of law.
Section 5.3. Notices of Certain Events. The Company shall
promptly notify each Fund of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting the Company or any Subsidiary that,
if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 3.13 or that relate to the
consummation of the transactions contemplated by this Agreement.
Section 5.4. Registration Rights. At any time after July 1,
1998, each Fund shall have the registration rights set forth in Exhibit B.
Section 5.5. Stockholder Meeting; Proxy Materials. The Company
shall cause a meeting of its stockholders to be duly called and held as soon as
reasonably practicable for the purpose of approving the transactions
contemplated by this Agreement. The board of directors of the Company shall,
subject to their fiduciary duties under applicable law as advised by counsel,
recommend to the Company's stockholders approval of the transactions
contemplated by this Agreement. In connection with such meeting, the Company
(i) will promptly prepare and file with the SEC, will use its best efforts to
have cleared by the SEC and will thereafter mail to its stockholders as
promptly as practicable a proxy statement and all other Proxy Materials for
such meeting as may be required under applicable law, and (ii) will use its
reasonable best efforts to obtain the necessary approval by its stockholders
of the transactions contemplated by this Agreement.
Section 5.6. Access to Book and Records. The Company agrees
that, after Closing and for so long as the Funds in the aggregate beneficially
own directly or indirectly at least 10% of the outstanding shares of Common
Stock on a fully diluted basis, each Fund will have access on reasonable terms
to the books, records and employees of the Company and its Subsidiaries and to
the provision by the Company of all information reasonably requested by such
Fund, subject to confidentiality obligations that at the time may be owed by
the Company to third parties, to appropriate confidentiality arrangements and
requirements of law.
Section 5.7. Other Offers. From the date hereof until the
earlier of the termination hereof or the Closing Date, except pursuant to the
transactions contemplated by this Agreement, the Company and the Subsidiaries
and the officers, directors, employees or other agents of the Company and the
Subsidiaries will not, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal or (ii) subject to the fiduciary
duties of the Board of Directors under applicable law as advised by counsel,
engage in negotiations with, or disclose any nonpublic information relating to
the Company or any Subsidiary or afford access to the properties, books or
records of the Company or any Subsidiary to, any Person that may be
considering making, or has made, an Acquisition Proposal. The Company will
promptly notify each Fund after receipt of any Acquisition Proposal or any
request for nonpublic information relating to the Company or any Subsidiary or
for access to the properties, books or records of the Company or any
Subsidiary by any Person that may be considering making, or has made, an
Acquisition Proposal and will keep each Fund fully informed of the status and
details of any such Acquisition Proposal, indication or request. "Acquisition
Proposal" means any offer or proposal for, or any indication of interest in, a
merger or other business combination involving the Company or any Subsidiary
or the acquisition of any equity interest in excess of 10% of the outstanding
Common Stock in, or a substantial portion of the assets of, the Company or any
Subsidiary, other than the transactions contemplated by this Agreement and the
Greenville Purchase Agreement or described in the Proxy Materials.
ARTICLE 6
Covenants of the Funds
Each Fund agrees that:
Section 6.1. Notices of Certain Events. Such Fund shall
promptly notify the Company of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement; and
(ii) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement.
Section 6.2. Agreement to Provide Information. (a) Such Fund
agrees to provide to the Company in writing all information concerning such
Fund as may be reasonably necessary for the Company to prepare the Proxy
Material and any other current or future securities or regulatory reports or
filings of the Company.
(b) Such Fund will not (A) take or agree or commit to take any
action that would make any representation and warranty of the Fund hereunder
inaccurate in any material respect at, or as of any time prior to, the Closing
Date or (B) 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.
ARTICLE 7
Covenants of the Company and the Funds
The parties hereto agree that:
Section 7.1. Filings; Consents; Reasonable Best Efforts. (a)
Each party hereto agrees to cooperate with each other in good faith and to use
its reasonable best efforts in making all required governmental filings and
obtaining at the earliest practicable date all necessary approvals and consents
from governmental entities and third parties.
(b) Each of the parties hereto agrees to use its reasonable
best efforts to consummate the transactions contemplated hereby and to fulfill
the conditions set forth herein.
ARTICLE 8
Additional Covenants
Section 8.1. Board Representation; Committees. (a) The Company
agrees that MSCP III Fund shall have the right, so long as the Funds, in the
aggregate, shall continue to beneficially own at least 30% of the outstanding
common stock of the Company, to cause the Company to include, as nominees for
the Company's Board of Directors recommended by the Board, up to 3 Directors
(each, a "Fund Nominee"); provided that one of the Fund Nominees shall be
▇▇▇▇▇▇ ▇▇▇▇▇▇ for so long as he remains an officer of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital
Partners III, Inc.; and provided further that initially MSCP III Fund intends
to designate 2 Fund Nominees. In the event that the Funds' beneficial
ownership of outstanding common stock of the Company shall be (i) less than
30% but equal to or greater than 10%, MSCP III Fund shall have the right to
designate 2 Fund Nominees or (ii) less than 10% but equal to or greater than
6%, MSCP III Fund shall have the right to designate 1 Fund Nominee. The
Company agrees to increase the size of the Board of Directors promptly after
the Closing by 2 Directors (or 3 Directors in the event that MSCP III Fund
elects to designate an additional Fund Nominee) and shall appoint as Directors
of the Company those persons designated by MSCP III Fund. The Company further
agrees that until the termination of this Agreement the Board of Directors
shall consist of no more than 10 Directors.
(b) At the request of MSCP III Fund, the Company agrees to
place at least one of the Fund Nominees acting as a Director of the Company on
each committee of the Board of Directors of the Company.
Section 8.2. Reports. The Company agrees that the financial
statements of the Company shall be audited as of the end of each fiscal year by
the Company's independent certified public accountants. The Company's current
independent public accountants are Ernst & Young LLP. In the event that Ernst
& Young LLP ceases to be the Company's accountants, the Company agrees that
its independent public accountants thereafter shall be a nationally recognized
independent certified public accounting firm.
Section 8.3. Sale or Transfer of Restricted Securities. Each
Fund will not, and will not permit its Affiliates to, sell, pledge, encumber,
transfer or otherwise dispose of any Restricted Securities, except:
(a) to an Affiliate or partner of such Fund; provided that
such Affiliate or partner who would beneficially own Voting Securities
representing in the aggregate 5% or more of Total Voting Power agrees
in writing to be bound by the terms of this Agreement;
(b) to any Person who, after giving effect to such sale,
pledge, encumbrance or transfer, would beneficially own Voting
Securities representing in the aggregate 10% or less of Total Voting
Power (except for an institutional investor which may own up to 20% of
the Total Voting Power);
(c) pursuant to a firm commitment, underwritten distribution
to the public, registered under the 1933 Act in accordance with the
registration rights set forth in Exhibit B hereto, in which the
Shareholder Group uses its reasonable best efforts to effect as wide a
distribution of such Restricted Securities as is reasonably
practicable;
(d) pursuant to Rule 144 under the 1933 Act in compliance
with the provisions of Section 8.03(b);
(e) pursuant to a tender or exchange offer made (i) by the
Company or (ii) to the Company's stockholders and not opposed by the
Company's Board of Directors; or
(f) with the prior written consent of the Company, which
consent shall not be unreasonably withheld.
Section 8.4. Right to Cause Repurchase. (a) At any time after
July 1, 2005 and in any year thereafter upon six months prior written notice,
the Funds shall have the right to cause the Company to purchase during any
annual period commencing July 1 and ending June 30 up to one-third of the
shares of Class A Common Stock and Class B Common Stock initially acquired by
the Funds at a price per share payable in cash equal to the liquidation
preference of such share plus accrued, but unpaid, dividends thereon, if any
(the "Put Price").
(b) In addition, upon a Change of Control, the Funds shall have
the right to cause the Company to purchase all of the shares of Class A Common
Stock and Class B Common Stock initially acquired by the Funds at the Put
Price. The Company shall effect such repurchase within 180 days of receipt
of written notice to the Company from the Funds requesting repurchase
hereunder. In the event of the inability or failure of the Company to comply
with the terms of this Section 8.4 and in addition to any other remedies
available to the Funds, the Funds shall be entitled to appoint a number of
additional Directors to the Board of Directors of the Company such that the
total number of Directors appointed by MSCP III Fund would constitute a
majority of the Directors of the Company.
Section 8.5. Capital Expenditures. The Company agrees that
for so long as the Funds own in the aggregate not less than 20% of the
outstanding common stock of the Company, the Company shall not, without first
obtaining the written consent of MSCP III Fund, (a) authorize capital
expenditures in excess of the amount approved in the Company's annual
operating plan or (b) make significant decisions relating to the expansion of
the Company's products or activities beyond the scope of the business plan
prepared in connection with the acquisition of the GlaxoWellcome Inc.
pharmaceutical manufacturing facility located in Greenville, North Carolina
("Greenville Facility").
Section 8.6. Acquisition of Greenville Facility. The Company
shall not, directly or indirectly, acquire the Greenville Facility without the
Funds participating in the financing of such acquisition in accordance with
the terms of this Agreement. MSCP shall not, directly or indirectly, provide
any financing to any Person for the acquisition of the Greenville Facility
other than in accordance with the terms of this Agreement.
Section 8.7. No Transfer or Assignment. The provisions of this
Article 8 shall not be transferrable or assignable by any of the Funds to any
Person other than wholly-owned subsidiaries of such Funds.
ARTICLE 9
Conditions to Closing
Section 9.1. Conditions to Obligations of Each Party. The obligations of the
Company and the Funds to consummate the Closing are subject to the
satisfaction of the following conditions:
(i) Any applicable waiting period under the HSR Act relating
to the transactions contemplated hereby shall have expired or been
terminated.
(ii) No provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation
of the Closing.
(iii) The issuance of the Class A Common Stock and Class B
Common Stock pursuant to this Agreement and the related amendment to
the Company's amended and restated certificate of incorporation shall
have been approved by the stockholders of the Company in accordance
with the Delaware General Corporation Law and the applicable rules and
regulations of The Nasdaq Stock Market.
(iv) The Company shall have obtained all necessary debt
financing to consummate the transactions contemplated by the
Greenville Purchase Agreement.
Section 9.2. Conditions to Obligations of the Funds. The
obligation of each Fund to consummate the Closing is subject to the
satisfaction of the following further conditions:
(i) (A) The Company shall have performed in all material
respects all of its obligations hereunder required to be performed by
it on or prior to the Closing Date, (B) the representations and
warranties of the Company contained in this Agreement and in any
certificate or other writing delivered by the Company pursuant hereto
shall be true in all material respects at and as of the Closing Date,
as if made at and as of such date, and (C) each Fund shall have
received a certificate signed on the Company's behalf by an executive
officer of the Company to the foregoing effect.
(ii) Each Fund shall have received an opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, special counsel
to the Company, dated the Closing Date, in form and substance
reasonably satisfactory to each Fund. In rendering such opinion, such
counsel may rely upon certificates of public officers and, as to
matters of fact, upon certificates of officers of the Company, copies
of which certificates shall be contemporaneously delivered to each
Fund.
(iii) The Greenville Purchase Agreement shall be closed
substantially simultaneously herewith.
(iv) There shall have been no material amendment or waiver of
the Greenville Purchase Agreement and no material change to the form
of the Supply Agreement since the date hereof.
(v) Each Fund shall have received all documents it may
reasonably request relating to the existence of each of the Company
and its Subsidiaries and the Company's authority for this Agreement,
all in form and substance reasonably satisfactory to such Fund.
Section 9.3. Conditions to Obligation of the Company. The
obligation of the Company to consummate the Closing is subject to the
satisfaction of the following further conditions:
(i) (A) Each Fund shall have performed in all material
respects all of its obligations hereunder required to be performed by
it at or prior to the Closing Date, (B) the representations and
warranties of each Fund contained in this Agreement and in any
certificate or other writing delivered by each Fund pursuant hereto
shall be true in all material respects at and as of the Closing Date,
as if made at and as of such date, and (C) the Company shall have
received a certificate signed on behalf of each Fund by the General
Partner of each Fund to the foregoing effect.
(ii) The Company shall have received an opinion of ▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇, special counsel to the Funds, in form and substance
reasonably satisfactory to the Company. In rendering such opinion,
such counsel may rely upon certificates of public officers and, as to
matters of fact, upon certificates of officers of the Funds, copies of
which certificates shall be contemporaneously delivered to the
Company.
(iii) The Greenville Purchase Agreement shall be closed
simultaneously herewith.
(iv) The Company shall have received all documents it may
reasonably request relating to the existence of each Fund and the
authority of each Fund for this Agreement, all in form and substance
reasonably satisfactory to the Company.
ARTICLE 10
Survival; Indemnification
Section 10.1. Survival. The covenants, agreements,
representations and warranties of the parties hereto contained in this
Agreement or in any certificate or other writing delivered pursuant hereto or
in connection herewith shall survive the Closing until two years after the
Closing Date; provided that (i) the covenants and agreements contained in
Article 8 and Section 10.2(b) shall survive indefinitely and (ii) the
covenants, agreements, representations and warranties contained in Section
3.19 shall survive until expiration of the statute of limitations applicable
to the matters covered thereby (giving effect to any waiver, mitigation or
extension thereof), if later. Notwithstanding the preceding sentence, any
covenant, agreement, representation or warranty in respect of which indemnity
may be sought under this Agreement shall survive the time at which it would
otherwise terminate pursuant to the preceding sentence, if notice of the
inaccuracy or breach thereof giving rise to such right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to
such time.
Section 10.2. Indemnification by the Company. (a) The Company
hereby agrees to indemnify and hold harmless each Fund and its Affiliates
against and from any and all damage, loss, liability and expense (including,
without limitation, reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit or proceeding)
("Damages") incurred or suffered by such Fund or any Affiliate of such Fund
arising out of any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by the Company pursuant to this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, the
Company agrees to indemnify each Fund and each of its Affiliates from and
against all Damages (including without limitation all reasonable costs and
expenses of investigation by engineers, environmental consultants and similar
technical personnel, but not including any diminution in the value of the
Funds' investment in the Company or its Subsidiaries), whether accrued,
contingent, absolute, determined, determinable or otherwise, incurred or
suffered by each Fund or any of such Affiliates which relate to the Company
or any Subsidiary and which arise out of or relate to (i) any Environmental
Law and (ii) actions occurring or conditions existing on or prior to the
Closing Date (including without limitation matters disclosed or required to be
disclosed in the Company 10-K).
Section 10.3. Indemnification by the Funds. Each of the Funds
hereby agrees to indemnify and hold harmless the Company and its Affiliates
against and from any and all Damages incurred or suffered by the Company or
any Affiliate of the Company arising out of any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by any of the Funds
pursuant to this Agreement.
Section 10.4. Procedures. The party seeking indemnification
under Section 10.2 or 10.3, as the case may be, (the "Indemnified Party")
agrees to give prompt notice to the party against whom indemnity is sought (the
"Indemnifying Party") of the assertion of any claim, or the commencement of
any suit, action or proceeding in respect of which indemnity may be sought
under such Section. The Indemnifying Party may at the request of the
Indemnified Party participate in and control the defense of any such suit,
action or proceeding at its own expense. The Indemnifying Party shall not be
liable under Section 10.2 or 10.3, as the case may be, for any settlement
effected without its consent of any claim, litigation or proceeding in respect
of which indemnity may be sought hereunder.
ARTICLE 11
Termination
Section 11.1. Grounds for Termination. This Agreement may be
terminated at any time:
(i) by mutual written agreement of the Company and each
Fund;
(ii) prior to the Closing, by either the Company or (solely
with respect to the obligations of such Fund) any Fund upon termination of the
Greenville Purchase Agreement (but in any event not later than September 30,
1997);
(iii) by the Funds with respect to all of their respective
obligations hereunder if the Company within a reasonable time after Closing
shall fail to nominate for election or appoint to the Company's Board of
Directors the persons designated by MSCP III Fund pursuant to Section 8.01; or
(iv) prior to the Closing, by either the Company or (solely
with respect to the obligation of such Fund) any Fund if there shall be any
law or regulation that makes consummation of the transactions contemplated
hereby illegal or otherwise prohibited or if consummation of the transactions
contemplated hereby would violate any nonappealable final order, decree or
judgment of any court or governmental body having competent jurisdiction.
The party desiring to terminate this Agreement shall give
notice of such termination to each other party.
Section 11.2. Effect of Termination. If this Agreement is
terminated as permitted by Section 11.01, termination shall be without
liability of any party (or any stockholder, director, officer, employee,
agent, consultant or representative of such party) to the other parties to
this Agreement; provided that if such termination shall result from the
willful failure of any party to fulfill a condition to the performance of the
obligations of any other party or to perform a covenant of this Agreement or
from a willful breach by any party to this Agreement, such party shall be
fully liable for any and all damage, loss or expense incurred or suffered by
the other party or parties as a result of such failure or breach. The
provisions of Article 10 and Sections 8.06, 12.3 and 12.5 shall survive any
termination hereof pursuant to Section 11.1; provided that Section 8.06 shall
terminate if MSCP delivers written notice to the Company of MSCP's decision to
terminate this Agreement pursuant to Section 11.01.
ARTICLE 12
Miscellaneous
Section 12.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given,
if to the Funds, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Partners
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to:
Catalytica, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices, requests and other communications shall be deemed received
on the date of receipt by the recipient thereof if received prior to 5 p.m. in
the place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to
have been received until the next succeeding business day in the place of
receipt.
Section 12.2. Amendments and Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Closing Date if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights
or remedies provided by law.
Section 12.3. Expenses. All costs and expenses incurred by the
parties hereto in connection with the transactions contemplated by this
Agreement shall be the responsibility of such party; provided, however, that,
if the Closing occurs as contemplated hereby or the Closing does not occur
because the requisite stockholder adoption and approval shall not have been
obtained by the Company, the costs and expenses incurred by the parties hereto
in connection with the preparation of this Agreement shall be paid by the
Company. Notwithstanding anything to the contrary contained in this Section
12.03, all reasonable fees and disbursements of Ernst & Young LLP arising in
connection with the transactions contemplated by this Agreement and the
Greenville Purchase Agreement shall be paid by the Company; provided, however,
that if the Closing does not occur for any reason, the Company and the Funds
shall each pay 50% of such fees and disbursements.
Section 12.4. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that except as expressly
provided herein no party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the consent of each other
party hereto.
Section 12.5. Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of New York, without
regard to the conflicts of law rules of such state.
Section 12.6. Counterparts; Third Party Beneficiaries. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. No provision of this Agreement is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 12.7. Public Announcements. The Company and each Fund
shall agree on the form and content of any public announcements which shall
be made concerning this Agreement or the transactions contemplated hereby, and
neither the Company nor any Fund shall make any such public announcement
without the consent of the other, except with respect to any public
announcement or other public disclosure, to the extent either party
determines, in good faith and with the advice of counsel, such announcement
or disclosure is required by law or the rules or regulations of any exchange on
which such party's securities are listed or to avoid undue risk that the
transactions contemplated hereby will be enjoined or that such party, its
officers, directors or representatives will be liable for damages as a result
thereof.
Section 12.8. Entire Agreement; Exhibits. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, among the parties with respect to the
subject matter of this Agreement, except for the Confidentiality Agreement
dated September 12, 1996 between the Company and MSCP III. No representation,
inducement, promise, understanding, condition or warranty not set forth herein
has been made or relied upon by any party hereto. All exhibits hereto
constitute part of this Agreement and are expressly incorporated herein.
Section 12.9. Headings. The headings and the table of contents
appearing in this Agreement are inserted only as a matter of convenience and
for reference and in no way define, limit or describe the scope and intent of
this Agreement or any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
CATALYTICA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
___________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL PARTNERS III, L.P.
By: MSCP III, L.P.
its General Partner
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Partners III, Inc.,
its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL INVESTORS, L.P.
By: MSCP III, L.P.
its General Partner
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Partners III, Inc.,
its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
MSCP III 892 INVESTORS, L.P.
By: MSCP III, L.P.,
its General Partner
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Partners III, Inc.,
its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
Exhibit A
See Exhibit 4 to Schedule 13D
Exhibit B
REGISTRATION RIGHTS
ARTICLE 1
Definitions
Section 1.1. Definitions. Terms defined in the Investment
Agreement (the "Agreement") dated as of June 19, 1997 among Catalytica, Inc.,
a Delaware corporation (the "Company"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Partners III,
L.P., a Delaware limited partnership ("MSCP III Fund"), MSCP III 892 Investors
L.P., a Delaware limited partnership ("892 Investors Fund"), and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Capital Investors, L.P., a Delaware limited partnership ("Employee
Fund" and together with MSCP III Fund and 892 Investors Fund, the
"Shareholder") are used herein as therein defined. In addition, the following
terms, as used herein, have the following meanings:
"Demand Registration" means a Demand Registration as defined in
Section 2.01.
"Piggyback Registration" means a Piggyback Registration as
defined in Section 2.02.
"Registrable Securities" means shares of Common Stock owned
from time to time by the Shareholder and its Affiliates, and any other
securities issued by the Company in exchange for or upon conversion of any
such securities.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
ARTICLE 2
Registration Rights
Section 2.1. Demand Registration. (a) At any time after July
1, 1998 Shareholder may make up to four written requests for registration
under the 1933 Act of all or part of its Registrable Securities (a "Demand
Registration"); provided that the Company shall not be obligated to effect
(i) more than one Demand Registration in any 6-month period or (ii) a Demand
Registration for Registrable Securities having an aggregate offering price of
less than $15 million. Such request will specify the number of shares of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof. A registration will not count as a Demand
Registration until a registration statement relating to such Demand
Registration has become effective.
(b) If Shareholder so elects, the offering of such Registrable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. Shareholder shall select the book-running and other
managing Underwriters in connection with such offering and any additional
investment bankers and managers to be used in connection with the offering.
The Company shall be obligated to cause senior management of the Company to
participate in any "road-show" in connection with the offering.
Section 2.2. Piggyback Registration. If the Company proposes
to file a registration statement under the 1933 Act with respect to an
offering of Common Stock (i) for the Company's own account (other than a
registration statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the Commission)) or relating solely to securities issued pursuant
to any present or future restricted stock, stock option, stock purchase or
dividend reinvestment plan or other similar type of plan of the Company which
provides for the issuance of equity securities or options or rights to
purchase equity securities of the Company, or (ii) for the account of any of
its holders of Common Stock, then the Company shall give written notice of such
proposed filing to Shareholder as soon as practicable (but in no event less
than 15 days before the anticipated filing date), and such notice shall offer,
subject to the terms and conditions hereof, Shareholder the opportunity to
register such Registrable Securities as Shareholder may request on the same
terms and conditions as the Company's or such holders' shares (a "Piggyback
Registration").
Section 2.3. Reduction of Offering. Notwithstanding anything
contained herein, if the managing Underwriter or Underwriters of an offering
described in Section 2.01 or 2.02 shall advise the Company that (i) the size
of the offering that Shareholder, the Company and any other Persons intend to
make or (ii) the kind of securities that Shareholder, the Company and such
other Persons intend to include in such offering are such that the success of
the offering would be materially and adversely affected, then (A) if the size
of the offering is the basis of such Underwriter's advice, the amount of
Registrable Securities to be offered for the account of Shareholder shall be
reduced to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
Underwriter or Underwriters; provided that (x) in the case of a Demand
Registration, the amount of Registrable Securities to be offered for the
account of the Shareholder shall be reduced only after the amount of
securities to be offered for the account of the Company and such other Persons
has been reduced to zero, and (y) in the case of a Piggyback Registration, if
securities are being offered for the account of Persons other than the
Company, then the proportion by which the amount of such Registrable
Securities intended to be offered for the account of Shareholder is reduced
shall not exceed the proportion by which the amount of such securities
intended to be offered for the account of such other Persons is reduced; and
(B) if the combination of securities to be offered is the basis of such
Underwriter's advice, (x) the Registrable Securities to be included in such
offering shall be reduced as described in clause (A) above (subject to the
proviso in clause (A)), or (y) in the case of a Piggyback Registration, if the
actions described in sub-clause (x) of this clause (B) would, in the judgment
of the managing Underwriter, be insufficient to eliminate the adverse effect
that inclusion of the Registrable Securities requested to be included would
have on such offering, such Registrable Securities will be excluded from such
offering.
ARTICLE 3
Registration Procedures
Section 3.1. Filings; Information. Whenever Shareholder
requests a Demand Registration, the Company will use its best efforts to
effect the registration of such Registrable Securities as quickly as
practicable, and in connection with any such request:
(a) The Company will as expeditiously as possible prepare and
file with the Commission a registration statement on any form for which the
Company then qualifies and which counsel for the Company shall deem
appropriate and available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of distribution
thereof, and use reasonable best efforts to cause such filed registration
statement to become and remain effective for a period of not less than 90
days; provided that if the Company shall furnish to Shareholder a certificate
signed by its Chairman, Chief Executive Officer or Chief Financial Officer
stating that in his or her good faith judgment it would be detrimental or
otherwise disadvantageous to the Company or its shareholders for such a
registration statement to be filed, or, in the case of an effective
registration statement, for sales to be effected thereunder, the Company shall
have a period of not more than 90 days within which to file such registration
statement measured from the date of receipt of the request in accordance with
Section 2.01 or, in the case of an effective registration statement, the
Company shall be entitled to require Shareholder to refrain from selling
Registrable Securities under such registration statement for a period of up to
90 days; provided further that, in the case of a registration statement to be
filed, the Company shall be entitled to only one 90 day delay in any 360 day
period, and, in the case of an effective registration statement, the Company
shall be entitled to require Shareholder to refrain from selling Registrable
Securities under such Registration Statement for an aggregate of 90 days in
any 360 day period. If the Company furnishes a notice under this paragraph at
a time when a registration statement filed pursuant to this Agreement is
effective, the Company shall extend the period during which such registration
statement shall be maintained effective as provided in this Section 3.01(a)
hereof by the number of days during the period from and including the date of
the giving of notice under this paragraph to the date when sales under the
registration statement may recommence.
(b) The Company will, if requested, prior to filing such
registration statement or any amendment or supplement thereto, furnish to
Shareholder and each managing Underwriter, if any, copies thereof, and
thereafter furnish to Shareholder and each such Underwriter, if any, such
number of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto and documents
incorporated by reference therein) and the prospectus included in such
registration statement (including each preliminary prospectus) as Shareholder
or such Underwriter may reasonably request in order to facilitate the sale of
the Registrable Securities.
(c) After the filing of the registration statement, the Company
will promptly notify Shareholder of any stop order issued or, to the knowledge
of the Company, threatened to be issued by the Commission and take all
necessary actions required to prevent the entry of such stop order or to
remove it if entered.
(d) The Company will use its reasonable best efforts to qualify the
Registrable Securities for offer and sale under such other securities or blue
sky laws of such jurisdictions in the United States as Shareholder reasonably
(in light of Shareholder's intended plan of distribution) requests; provided
that the Company will not be required to (i) qualify generally to do business
in any jurisdiction where it would not otherwise be required to qualify but
for this paragraph (d), (ii) subject itself to taxation in any such
jurisdiction or (iii) generally consent to service of process in any such
jurisdiction.
(e) The Company shall, as promptly as practicable, notify
Shareholder, at any time when a prospectus relating to the sale of the
Registrable Securities is required by law to be delivered in connection with
sales by an Underwriter or dealer, of the occurrence of an event requiring the
preparation of a supplement or amendment to such registration statement or
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such registration statement or prospectus will not
contain 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, in the light of the circumstances under which they were made, not
misleading, and as promptly as practicable make available to Shareholder and
to the Underwriters any such supplement or amendment. Shareholder agrees that,
upon receipt of any notice from the Company of the happening of any event of
the kind described in the preceding sentence, Shareholder will forthwith
discontinue the offer and sale of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until receipt of
the copies of such supplemented or amended prospectus and, if so directed by
the Company, Shareholder will deliver to the Company all copies, other than
permanent file copies then in Shareholder's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice. In the event the Company shall give such notice, the Company shall
extend the period during which such registration statement shall be maintained
effective as provided in Section 3.01(a) hereof by the number of days during
the period from and including the date of the giving of such notice to the
date when the Company shall make available to Shareholder such supplemented or
amended prospectus.
(f) The Company will enter into customary agreements (including an
underwriting agreement in customary form and satisfactory in form and
substance to the Company in its reasonable judgment) and take such other
actions as are reasonably required in order to expedite or facilitate the sale
of such Registrable Securities.
(g) The Company will furnish to Shareholder and to each managing
Underwriter, if any, a signed counterpart, addressed to Shareholder and each
Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a
comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters delivered to such parties.
(h) The Company will make generally available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the 1933 Act.
(i) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
The Company may require Shareholder promptly to furnish in
writing to the Company such information regarding Shareholder, the plan of
distribution of the Registrable Securities and other information as the
Company may from time to time reasonably request or as may be legally required
in connection with such registration.
Section 3.2. Registration Expenses. In connection with any
Demand Registration or Piggyback Registration, the Company shall pay the
following expenses incurred in connection with such registration (the
"Registration Expenses"): (i) all filing fees with the Commission and the
National Association of Securities Dealers, (ii) fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) printing expenses, (iv) the fees and expenses
incurred in connection with the listing of the Registrable Securities, (v) fees
and expenses of counsel and independent certified public accountants for the
Company (including the expenses of any comfort letters pursuant to Section
3.01(g) hereof) and (vi) the reasonable fees and expenses of any additional
experts retained by the Company in connection with such registration. The
Shareholder shall pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities of the Shareholder. The
Company shall pay (i) internal Company expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties) and (ii) the reasonable out-of-pocket expenses of
Shareholder (excluding the fees and expenses of counsel to Shareholder).
ARTICLE 4
Indemnification and Contribution
Section 4.1. Indemnification by the Company. The Company
agrees to indemnify and hold harmless Shareholder, its officers and directors,
and each Person, if any, who controls Shareholder within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act from and against any
and all losses, claims, damages and liabilities caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus (including documents incorporated by
reference therein), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished in
writing to the Company by or on behalf of Shareholder expressly for use
therein; provided that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of Shareholder if a copy
of the then current prospectus was not provided to purchaser at or prior to
the time of such purchase and such current prospectus would have cured the
defect giving rise to such loss, claim, damage or liability or for any sales
occurring during the period in which the Company is not required to keep the
registration statement effective as provided in Section 3.01(a) or after the
Company has informed Shareholder under Section 3.01(e) and prior to the
delivery by the Company of any supplement or amendment to such prospectus. The
Company also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each person who controls such
underwriters on substantially the same basis as that of the indemnification of
Shareholder provided in this Section 4.01.
Section 4.2. Indemnification by Shareholder. Shareholder
agrees to indemnify and hold harmless the Company, its officers and directors,
and each Person, if any, who controls the Company within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as
the foregoing indemnity from the Company to Shareholder, but only with
reference to information furnished in writing by or on behalf of Shareholder
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. Shareholder also agrees to indemnify and hold harmless
Underwriters of the Registrable Securities, their officers and directors and
each person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Company provided in this Section 4.02.
Section 4.3. Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 4.01 or 4.2, such Person (the "Indemnified Party") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Party") in writing and the Indemnifying Party, upon the request of the
Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of
both parties by the same counsel would, in the opinion of counsel reasonably
acceptable to the Indemnifying Party, be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all such Indemnified Parties, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate
firm for the Indemnified Parties, such firm shall be designated in writing by
the Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
Section 4.4. Contribution. If the indemnification provided
for in this Article 4 is unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
Shareholder from the offering of the securities, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and
Shareholder in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
Shareholder shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by each of the Company and Shareholder, in each
case as set forth in the table on the cover page of the prospectus, bear to
the aggregate public offering price of the securities. The relative fault of
the Company and Shareholder 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 such party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and Shareholder agree that it would not be just and
equitable if contribution pursuant to this Section 4.04 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any
such action or claim. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
ARTICLE 5
Miscellaneous
Section 5.1. Participations in Underwritten Registrations. No
Person may participate in any underwritten registered offering contemplated
hereunder unless such Person (a) agrees to sell its securities on the basis
provided in any underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and these Registration Rights.
Section 5.2. Rule 144. The Company covenants that it will use
best efforts to file any reports required to be filed by it under the 1933 Act
and the 1934 Act and that it will take such further action as Shareholder may
reasonably request, all to the extent required from time to time to enable
Shareholder to sell Registrable Securities without registration under the 1933
Act within the limitation of the exemptions provided by Rule 144 under the
1933 Act, as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission. Upon the request of
Shareholder, the Company will deliver to Shareholder a written statement as to
whether it has complied with such requirements.
Section 5.3. Holdback Agreements. (a) Shareholder agrees not
to offer, sell, contract to sell or otherwise dispose of any Registrable
Securities, or any securities convertible into or exchangeable or exercisable
for such securities, from the date of filing of a registration statement
relating to the sale of Registrable Securities through the 90 day period
beginning on the date of the first sale of Registrable Securities pursuant to
the registration statement other than the Registrable Securities to be sold
pursuant to such registration statement.
(b) The Company agrees not to offer, sell, contract to sell or
otherwise dispose of any securities similar to the Registrable Securities to
be sold pursuant hereto, or any securities convertible into or exchangeable or
exercisable for such securities, during the 14 days prior to, and during the
90 day period beginning on, the effective date of any registration statement
registering the Registrable Securities other than any shares of Common Stock
sold upon the exercise of an option or warrant or the conversion of a security
outstanding at such date or pursuant to any Company stock option plan or
issued by the Company as consideration for an acquisition.
Section 5.4. Termination of Company Obligation. All
registration rights provided hereunder shall terminate at such time as
Shareholder holds less than 5% of the outstanding common stock and is able to
sell all of its Registrable Securities without registration under the 1933 Act
during any single three month period.
Section 5.5. No Transfer or Assignment of Registration Rights.
The registration rights set forth in this Agreement shall not be transferrable
or assignable by the Shareholder except to permitted transferees under Section
8.03(a) of the Investment Agreement.
