UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE l3D
Under the Securities Exchange Act of 1934
CLEAN HARBORS, INC.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
184496107
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(CUSIP Number)
with a copy to:
Stephen Feinberg Robert G. Minion, Esq.
450 Park Avenue Lowenstein Sandler PC
28th Floor 65 Livingston Avenue
New York, New York 10022 Roseland, New Jersey 07068
(212) 421-2600 (973) 597-2424
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 10, 2002
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule l3G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Cusip No. 184496107
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1) Names of Reporting Persons. I.R.S. Identification Nos. of above persons
(entities only):
Stephen Feinberg
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2) Check the Appropriate Box if a Member of a Group (See Instructions):
(a) Not
(b) Applicable
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3) SEC Use Only
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4) Source of Funds (See Instructions): WC
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): Not Applicable
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6) Citizenship or Place of Organization: United States
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Number of 7) Sole Voting Power: *
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Shares Beneficially 8) Shared Voting Power: *
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Owned by
Each Reporting 9) Sole Dispositive Power: *
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Person With 10) Shared Dispositive Power: *
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11) Aggregate Amount Beneficially Owned by Each Reporting Person:
1,595,238*
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12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): Not Applicable
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13) Percent of Class Represented by Amount in Row (11): 11.6%*
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14) Type of Reporting Person (See Instructions): IA, IN
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* Cerberus CH LLC, a Delaware limited liability company ("Cerberus CH"), is the
holder of 16,750 shares of Series C Convertible Preferred Stock, par value $0.01
per share (the "Preferred Shares"), of Clean Harbors, Inc., a Massachusetts
corporation (the "Company"). Subject to certain restrictions, the Preferred
Shares are convertible at any time on or after the date of issuance of such
shares into shares of common stock, par value $0.01 per share (the "Shares"), of
the Company. The conversion price of the Preferred Shares is $10.50 per share,
subject to certain conversion price adjustments. Stephen Feinberg possesses sole
power to vote and direct the disposition of all securities held by Cerberus CH.
Thus, as of September 10, 2002, for the purposes of Reg. Section 240.13d-3,
Stephen Feinberg is deemed to beneficially own 1,595,238 Shares, or 11.6% of the
Shares deemed issued and outstanding as of that date.
Item 1. Security and Issuer.
-------------------
The class of equity securities to which this Schedule 13D relates is
the common stock, par value $0.01 per share (the "Shares"), of Clean Harbors,
Inc., a Massachusetts corporation (the "Company"). The principal executive
offices of the Company are located at 1501 Washington Street, Braintree,
Massachusetts 02184.
Item 2. Identity and Background.
-----------------------
The person filing this statement is Stephen Feinberg, whose business
address is 450 Park Avenue, 28th Floor, New York, New York 10022. Mr. Feinberg
serves as the managing member of Cerberus Associates, L.L.C., which is the
general partner of Cerberus Partners, L.P., which is the managing member of
Cerberus CH LLC, a Delaware limited liability company ("Cerberus CH"). Cerberus
CH is engaged in the investment in personal property of all kinds, including but
not limited to capital stock, depository receipts, investment companies, mutual
funds, subscriptions, warrants, bonds, notes, debentures, options and other
securities of whatever kind and nature. Mr. Feinberg also provides investment
management and other services for various other third parties.
Mr. Feinberg has never been convicted in any criminal proceeding
(excluding traffic violations or similar misdemeanors), nor has he been a party
to any civil proceeding commenced before a judicial or administrative body of
competent jurisdiction as a result of which he was or is now subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws. Mr. Feinberg is a citizen of the United
States.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Pursuant to a Securities Purchase Agreement, dated as of September 6,
2002, by and among the Company, Cerberus CH and certain other parties thereto
(the "Purchase Agreement"), on September 10, 2002, Cerberus CH purchased 16,750
shares of Series C Convertible Preferred Stock, par value $0.01 per share (the
"Preferred Shares"), of the Company, at a purchase price of $1,000 per share.
Subject to certain restrictions, the Preferred Shares are convertible at any
time on or after the date of issuance thereof into Shares. The conversion price
of the Preferred Shares is $10.50 per share, subject to certain conversion price
adjustments. All funds used to purchase or acquire the securities of the Company
by Cerberus CH came directly from the assets of Cerberus CH.
Item 4. Purpose of Transaction.
----------------------
The acquisition of the securities referred to herein is for
investment purposes. Mr. Feinberg has no present plans or intentions which
relate to or would result in any of the transactions required to be described in
Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
------------------------------------
Based upon information provided by the Company, there were 12,164,312
Shares issued and outstanding as of August 31, 2002. As of September 10, 2002,
Cerberus CH is the holder of 16,750 Preferred Shares. Subject to certain
restrictions, the Preferred Shares are convertible at any time on or after the
date of issuance of such shares into Shares. The conversion price of the
Preferred Shares is $10.50 per share, subject to certain conversion price
adjustments. Stephen Feinberg possesses sole power to vote and direct the
disposition of all securities held by Cerberus CH. Thus, as of September 10,
2002, for the purposes of Reg. Section 240.13d-3, Stephen Feinberg is deemed to
beneficially own 1,595,238 Shares, or 11.6% of the Shares deemed issued and
outstanding as of that date.
During the sixty days prior to September 10, 2002, the only
transaction in Shares, or securities convertible into, exercisable for or
exchangeable for Shares, by Mr. Feinberg or any person or entity controlled by
him or any person or entity for which he possesses voting or investment control
over the securities thereof, was the September 10, 2002 purchase of 16,750
Preferred Shares pursuant to the Purchase Agreement at a purchase price of
$1,000 per Preferred Share, as described in this Schedule 13D.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
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In connection with the purchase of the Preferred Shares, in addition
to the Purchase Agreement which is attached as Exhibit 1 hereto, Cerberus CH
entered into (i) an Investors Rights Agreement, dated September 6, 2002,
pursuant to which, among other things, the Company, Cerberus CH and certain
other parties agreed to the terms pursuant to which (a) the Company shall
register the shares of the Company issuable upon conversion of the Preferred
Shares for resale by the filing of a registration statement with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended, as
well as perform various other obligations and agreements related to such
registration and (b) Cerberus CH and certain other parties were granted co-sale
rights with respect to certain sales of Shares by one or more shareholders of
the Company, as more particularly set forth and described in the Investors
Rights Agreement attached as Exhibit 2 hereto, (ii) a Voting Agreement, dated
September 6, 2002, pursuant to which, among other things, certain shareholders
of the Company (a) agreed to vote in favor of certain matters brought to a vote
of the shareholders of the Company with respect to the transactions contemplated
by the Purchase Agreement, (b) granted a proxy to certain persons (including
persons affiliated with and/or employed by Cerberus CH or its affiliates) to
vote their Shares with respect to certain matters involving the Company and (c)
agreed to refrain from transferring their Shares unless certain conditions are
satisfied, as more particularly set forth and described in the Voting Agreement
attached as Exhibit 3 hereto and (iii) a Letter Agreement, dated September 6,
2002, pursuant to which, among other things, Cerberus Capital Management, L.P.,
on behalf of Cerberus CH, agreed with Oak Hill Advisors, Inc. that Cerberus CH
and Oak Hill Advisors, Inc. will preserve certain specified rights of the
holders of the Preferred Shares with respect to the Company, as more
particularly set forth and described in the Letter Agreement attached as Exhibit
4 hereto.
In addition, pursuant to the Purchase Agreement, the Company has
agreed, among other things, to (i) use its best efforts to solicit proxies from
the shareholders of the Company to vote in favor of the approval of the issuance
of Shares in connection with the transactions contemplated by the Purchase
Agreement greater in the aggregate than 19.99% of the number of Shares
outstanding prior to the consummation of the transactions contemplated by the
Purchase Agreement and (ii) cause the board of directors of the Company to
recommend to the stockholders that they approve such proposal.
The descriptions of the transactions and agreements set forth in this
Schedule 13D are qualified in their entirety by reference to the complete
agreements governing such matters, each of which are attached to this Schedule
13D as exhibits pursuant to Item 7 hereof.
Except as otherwise described herein, no contracts, arrangements,
understandings or similar relationships exist with respect to the securities of
the Company between Stephen Feinberg and any person or entity.
Item 7. Material to be Filed as Exhibits.
--------------------------------
1. Securities Purchase Agreement, dated as of September 6, 2002, by
and among the Company, Cerberus CH and certain other parties identified therein.
2. Investors Rights Agreement, dated as of September 6, 2002, by
and among the Company, Cerberus CH and certain other parties identified therein.
3. Voting Agreement, dated as of September 6, 2002, by and among the
Company, Cerberus CH and certain other parties identified therein.
4. Letter Agreement, dated September 6, 2002, by and between
Cerberus Capital Management, L.P., on behalf of Cerberus CH, and Oak Hill
Advisors, Inc.
Signature
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
September 12, 2002
/s/ Stephen Feinberg
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Stephen Feinberg, in his capacity
as the managing member of Cerberus
Associates, L.L.C., the general
partner of Cerberus Partners, L.P.,
the managing member of Cerberus CH LLC.
Attention: Intentional misstatements or omissions of fact constitute
Federal criminal violations (See 18 U.S.C. 1001).
Execution Copy
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SECURITIES PURCHASE AGREEMENT
among
CLEAN HARBORS, INC.
and
THE BUYERS LISTED ON SCHEDULE A HERETO
September 6, 2002
================================================================================
TABLE OF CONTENTS
Page
----
1. PURCHASE AND SALE OF PREFERRED SHARES.....................................2
2. BUYER'S REPRESENTATIONS AND WARRANTIES....................................2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................4
4. COVENANTS................................................................29
5. TRANSFER AGENT INSTRUCTIONS..............................................31
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL...........................32
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE........................33
8. INDEMNIFICATION..........................................................36
9. MISCELLANEOUS............................................................37
EXHIBITS
Exhibit A - Form of Certificate
Exhibit B - Form of Investors Rights Agreement
Exhibit C - Form of Voting Agreement
Exhibit D Irrevocable Transfer Agent Instructions
Exhibit E Sale Order
Exhibit F - Form of Company Counsel Opinion
INDEX
Page
19.99% Rule....................................................................5
1933 Act.......................................................................1
1934 Act.......................................................................8
Agreement......................................................................1
Articles of Organization.......................................................6
Bankruptcy Code...............................................................28
Business Day...................................................................2
Business Intellectual Property................................................19
Business Trade Secrets........................................................19
Buyers.........................................................................1
By-laws........................................................................6
CAA...........................................................................23
Capital Stock..................................................................6
CERCLA........................................................................23
Certificate....................................................................1
Closing........................................................................2
Closing Date...................................................................2
Code..........................................................................14
Common Stock...................................................................1
Company........................................................................1
Company Financial Statements...................................................8
Congress......................................................................34
Congress Loan Documents.......................................................34
Congress Loans................................................................34
Copyrights....................................................................19
CSD Acquisition................................................................1
CSD Acquisition Assets........................................................28
CSD Acquisition Documents.....................................................28
CSD Balance Sheets.............................................................8
CSD Business...................................................................5
CWA...........................................................................23
DTC...........................................................................31
Employee Plans................................................................14
Environmental Claims..........................................................23
Environmental Laws............................................................23
Environmental Liabilities.....................................................23
Environmental Lien............................................................23
Environmental Permits.........................................................24
EPCRA.........................................................................23
ERISA.........................................................................14
ERISA Affiliate...............................................................14
FIFRA.........................................................................23
Financing Agreement............................................................1
Foreign Pension Plan..........................................................16
FRBP..........................................................................33
GAAP...........................................................................8
Governmental Authority........................................................24
Handle........................................................................24
Hazardous Materials...........................................................24
Indebtedness..................................................................12
Indemnified Liabilities.......................................................36
Indemnitees...................................................................36
Initial Lenders................................................................1
Intellectual Property.........................................................19
Intellectual Property Contracts...............................................19
Investment Company Status.....................................................29
Investors Rights Agreement.....................................................1
Irrevocable Transfer Agent Instructions.......................................31
Legal Requirements............................................................14
Licensed Intellectual Property................................................20
Liens..........................................................................6
Material Adverse Effect........................................................4
McKim..........................................................................1
OSHA..........................................................................23
Patents.......................................................................19
PBGC..........................................................................15
Permits.......................................................................25
Policies......................................................................25
Preferred Shares...............................................................2
Preferred Stock................................................................1
Preferred Stock Certificates...................................................2
Principal Market..............................................................31
Purchase Price.................................................................2
RCRA..........................................................................23
Registered....................................................................20
Regulation D...................................................................3
Release.......................................................................24
Remedial Action...............................................................24
Required Policies.............................................................25
Resolutions...................................................................35
Rule 144.......................................................................3
Sale Order....................................................................33
SEC............................................................................3
SEC Documents..................................................................8
Securities.....................................................................5
Series B Preferred Stock.......................................................6
Shareholder's Rights Plan.....................................................27
Stockholder Approval..........................................................31
Subsidiaries...................................................................4
Suit..........................................................................17
Technology Systems............................................................20
Title IV Plan.................................................................15
TOSCA.........................................................................23
Trade Secrets.................................................................19
Trademarks....................................................................19
Transaction Documents..........................................................5
Voting Agreement...............................................................1
Voting Shareholders............................................................1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of September
6, 2002, by and among Clean Harbors, Inc., a Massachusetts corporation, with
headquarters located at 1501 Washington Street, Braintree, Massachusetts 02184
(the "Company") and the Buyers listed on the signature pages hereto (the
"Buyers").
WHEREAS, the Company proposes to purchase substantially all of the
assets of the Chemical Services Division of Safety-Kleen Corp. and its
subsidiaries, each as a debtor-in-possession (collectively, "CSD"), pursuant to
Sections 363/365 of the United States Bankruptcy Code (the "CSD Acquisition");
WHEREAS, simultaneously herewith, the Company and certain of its
Subsidiaries, as borrowers, certain of the Company's Subsidiaries, as
guarantors, the lenders from time to time parties thereto, as lenders, (the
"Initial Lenders") and Ableco Finance, LLC, as agent for the Initial Lenders,
have entered into a Financing Agreement, dated as of the date hereof (such
agreement as in effect on the date hereof, the "Financing Agreement"), pursuant
to which the Initial Lenders have agreed to make senior and senior subordinated
loans and other extensions of credit to the Company to finance the CSD
Acquisition, to refinance certain indebtedness and for other proper purposes;
WHEREAS, the Buyers, each of whom is an affiliate of one of the
Initial Lenders, desire to purchase from the Company, and the Company desires to
sell and issue to the Buyers shares of Series C Convertible Preferred Stock, par
value $0.01 per share, of the Company (the "Preferred Stock"), which are
convertible into shares (the "Conversion Shares") of the Company's Common Stock,
par value $0.01 per share (the "Common Stock"), and have the rights,
restrictions, privileges and preferences set forth in the Certificate of Vote of
Directors Establishing a Series of a Class of Stock, (the "Certificate"), which
shall contain the vote and the description of Series C Convertible Preferred
Stock in the form attached hereto as Exhibit A;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company, the Buyers and Alan S. McKim and the Trustees of the
Alan S. McKim Children's Trust, who are significant shareholders of the Company
(collectively, "McKim") are executing and delivering to each other an Investors
Rights Agreement substantially in the form attached hereto as Exhibit B (the
"Investors Rights Agreement"), pursuant to which the Company has agreed, among
other things, to provide to the Buyers certain registration rights under the
Securities Act of 1933, as amended (the "1933 Act") and the rules and
regulations promulgated thereunder and applicable state securities laws and
McKim has, among other things, agreed to grant the Buyers certain rights to
tag-along to sales of Common Stock by McKim;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company and certain shareholders of the Company (the "Voting
Shareholders") are executing and delivering to the Buyers a Voting Agreement
substantially in the form attached hereto as Exhibit C (the "Voting Agreement"),
- 1 -
pursuant to which the Voting Shareholders have agreed, among other things, to
vote in favor of any matter brought to a vote of the shareholders of the Company
regarding the transactions contemplated hereby and the other Transaction
Documents (as defined herein); and
WHEREAS, the location of defined terms in this Agreement is set forth
on the Index of Terms attached hereto.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements contained herein, the parties agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
a. Purchase of Preferred Shares. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 6 and 7 below and in
reliance on the representations, warranties, covenants and other agreements
herein, the Company shall issue and sell to each Buyer, and each Buyer severally
agrees to purchase from the Company, the respective number of shares of
Preferred Stock (the "Preferred Shares") set forth opposite such Buyer's name on
Schedule A (the "Closing") at a purchase price of $1,000 per share, or an
aggregate purchase price for all Preferred Shares of $25,000,000 the "Purchase
Price").
b. The Closing. The date and time of the Closing (the "Closing
Date") shall be 10:00 a.m., New York City time, on September 10, 2002, or if
earlier, on the first Business Day after which all conditions to closing
identified in Sections 6 and 7 hereof have been satisfied or waived by the party
entitled to grant such waiver (or such later date as is mutually agreed to by
the Company and the Buyers). The Closing shall occur on the Closing Date at the
offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022.
For all purposes of this Agreement, the term "Business Day" means any day other
than Saturday, Sunday or other day on which commercial banks in The City of New
York are authorized or required by law to remain closed.
c. Payment and Delivery. Subject to the terms and conditions of
this Agreement, on the Closing Date,
(i) each Buyer shall pay its respective share of the
Purchase Price set forth on Schedule A to the Company for the Preferred Shares
to be issued and sold to such Buyer by wire transfer of immediately available
funds in accordance with the Company's written wire instructions; and
(ii) the Company shall deliver to each Buyer stock
certificates (in the denominations as such Buyer shall request) (the "Preferred
Stock Certificates"), representing such number of the Preferred Shares which
such Buyer is then purchasing hereunder, in each case, duly executed on behalf
of the Company and registered in the name of such Buyer or its nominee(s).
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
- 2 -
a. Organization and Qualification. Such Buyer is an entity duly
authorized and validly existing under the laws of its jurisdiction of
organization and has the requisite power to carry on its business as it is now
being conducted and currently proposed to be conducted.
b. Authorization; Enforcement; Validity. This Agreement and the
Investors Rights Agreement have been duly and validly authorized, executed and
delivered on behalf of such Buyer and are legal, valid and binding obligations
of such Buyer, enforceable against such Buyer in accordance with their terms,
subject as to enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
c. Investment Purpose. Such Buyer is acquiring the Securities for
its own (or an Affiliate's) account and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time.
d. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the 1933 Act.
e. Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
f. Transfer or Resale. Such Buyer understands that except as
provided in the Investors Rights Agreement, the Securities have not been and are
not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (i) subsequently
registered thereunder, (ii) such Securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from such
registration, or (iii) such Buyer provides the Company with reasonable
assurance, upon request by the Company, that such Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule thereto) ("Rule 144").
g. Legends. Such Buyer understands that, until such time as the
sale of the Securities have been registered under the 1933 Act as contemplated
by the Investors Rights Agreement, the stock certificates representing the
Securities, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
- 3 -
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) EXCEPT PURSUANT TO (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS OR (B)
PURSUANT TO RULE 144 UNDER SAID ACT OR (C) ANY
OTHER EXEMPTION FROM REGISTRATION UNDER THE
1933 ACT RELATING TO THE DISPOSITION OF
SECURITIES.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, (i) such Securities are registered for resale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a form reasonably acceptable to the Company, to
the effect that a public sale, assignment or transfer of the Securities may be
made without registration under the 1933 Act, or (iii) such holder provides the
Company with reasonable assurances that the Securities can be sold pursuant to
Rule 144 without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers (it being
understood and agreed that, unless the context otherwise requires, such
representations and warranties are made assuming the completion of the CSD
Acquisition in accordance with the CSD Acquisition Documents and after giving
full effect thereto), that:
a. Organization and Qualification. The Company and its
"Subsidiaries" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns 50% or more of the capital stock or
other equity, economic or similar interests or owns capital stock or holds an
equity, economic or similar interest which ownership entitles the Company to
elect 50% or more of the board of directors or similar governing body of such
entity, and assuming the CSD Acquisition has been completed) are entities duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate or
other power and authorization to own their properties and to carry on their
business as now being conducted and currently proposed to be conducted. Each of
the Company and its Subsidiaries is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which its ownership
of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, "Material Adverse Effect" means any material adverse
effect on the business, properties, assets, operations, results of operations,
prospects or financial condition of the Company and its Subsidiaries, taken as a
- 4 -
whole, on the business, assets (tangible and intangible), accounts receivable,
rights, contracts, agreements, instruments, equipment, inventory, intellectual
property, claims, property (real or otherwise), licenses, Permits,
authorizations, approvals, bank accounts, lockbox arrangements, banks and
records and goodwill and liabilities of the Chemical Services Division of
Safety-Kleen Services, Inc. acquired or assumed (by agreement, operation of law
or otherwise) by the Company pursuant to the CSD Acquisition Documents (the "CSD
Business"), or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority or
ability of the Company to perform its obligations under the Transaction
Documents (as defined below) or the Certificate. A true, complete and correct
list of the Company's Subsidiaries is set forth on Schedule 3(a).
b. Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Investors Rights Agreement, the Voting
Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section 5)
and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement, including the
Financing Agreement, the Congress Loan Documents and the CSD Acquisition
Documents (the "Transaction Documents"), and to issue the Preferred Shares and
the Conversion Shares issuable upon conversion of the Preferred Shares in
accordance with the terms of the Certificate (the Preferred Shares and the
Conversion Shares collectively referred to as the "Securities") in accordance
with the terms hereof and thereof. The execution and delivery of the Transaction
Documents by the Company and the execution and filing of the Certificate by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including, without limitation, the issuance and reservation for
issuance of the Preferred Shares and the Conversion Shares issuable upon
conversion thereof have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its stockholders (except to the extent that stockholder approval
may be required pursuant to the rules of the NASD for the issuance of a number
of Conversion Shares greater in the aggregate than 19.99% of the number of
shares of Common Stock outstanding immediately prior to the Closing Date (the
"19.99% Rule")). The Transaction Documents have been duly executed and delivered
by the Company. The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies. The
Certificate will be filed on or prior to the Closing Date with the Secretary of
State of the Commonwealth of Massachusetts and will be in full force and effect
on or prior to the Closing Date, enforceable against the Company in accordance
with its terms and shall not have been amended unless in compliance with its
terms.
c. Capitalization. The authorized capital stock of the Company
consists of (i) 20,000,000 shares of Common Stock, of which as of August 31,
2002 12,164,312 shares are issued and outstanding, no shares are held in
treasury, 2,087,625 shares are reserved for issuance pursuant to the Company's
stock option and purchase plans, and no shares are issuable or reserved for
issuance pursuant to securities (other than the Preferred Shares and shares
reserved for issuance pursuant to the Company's stock option and purchase plans
and 340,480 shares of Common Stock reserved for issuance pursuant to the
- 5 -
conversion of the Series B Convertible Preferred Stock, par value $0.01 per
share, of the Company (the "Series B Preferred Stock")) and 1,237,808 shares of
Common Stock reserved for issuance pursuant to the exercise of outstanding
warrants to purchase Common Stock) exercisable or exchangeable for, or
convertible into, shares of Common Stock and (ii) 2,000,000 shares of preferred
stock, 894,585 shares of which are designated Series A Preferred Stock of the
Company, none of which are issued and outstanding and 156,416 shares of which of
which are designated as Series B Convertible Preferred Stock, 112,000 of which
are issued and outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(c), (A) no Capital Stock of the Company or any of its
Subsidiaries are subject to preemptive rights or any other similar rights
(arising under Massachusetts law, the Company's Articles of Organization
(defined below) or By-laws (defined below) or any agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound) or any pledges, claims, liens, mortgages,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens" ) granted or created by the Company; (B) there are no
outstanding debt securities issued by the Company or any of its Subsidiaries
which are convertible or exercisable into or exchangeable for Capital Stock of
the Company or any of its Subsidiaries; (C) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, any Capital Stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional Capital Stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
Capital Stock of the Company or any of its Subsidiaries; (D) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their Capital Stock under the 1933 Act
(other than the Investors Rights Agreement); (E) there is no outstanding Capital
Stock or instrument of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem any Capital Stock or any debt security of the
Company or any of its Subsidiaries (other than in the Certificate); (F) there is
no outstanding Capital Stock or instrument of the Company or any of its
Subsidiaries containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities as described in this Agreement; and
(G) the Company does not have any stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement. The Company has furnished
to each Buyer (or its representatives) true, complete and correct copies of the
Company's Articles of Organization, as amended and as in effect on the date
hereof (the "Articles of Organization"), and the Company's By-laws, as amended
and as in effect on the date hereof (the "By-laws"), and the terms of all
securities convertible into or exercisable or exchangeable for Capital Stock and
the material rights of the holders thereof in respect thereto, including,
without limitation, stock options granted under any benefit plan or stock option
plan of the Company. For purposes of this Agreement, the term "Capital Stock"
means (A) with respect to any Person that is a corporation, any and all shares,
interests, participations or other equivalents (however designated and whether
or not voting) of corporate stock, and (B) with respect to any Person that is
not a corporation, any and all partnership, membership or other equity interests
of such Person.
- 6 -
d. Issuance of Securities. The Preferred Shares are duly
authorized and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all taxes, and
Liens with respect to the issuance thereof and (iii) entitled to the rights and
preferences set forth in the Certificate. As of the Closing Date, at least
2,380,953 shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(e) below) will have been duly
authorized and reserved for issuance of the Conversion Shares. Upon conversion
or issuance in accordance with the Certificate, as applicable, the Conversion
Shares will be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Common Stock. Based in part
on the representations made by the Buyers in Section 2 hereof, the issuance by
the Company of the Securities is exempt from registration under the 1933 Act.
e. No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the performance by the Company of its
obligations under the Certificate, the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
reservation for issuance and issuance of the Conversion Shares) and the
performance by the Company and its Subsidiaries of their respective obligations
under the CSD Acquisition Documents and the consummation by the Company and its
Subsidiaries of the transactions contemplated by the CSD Acquisition Documents
do not and will not (i) result in a violation of the Articles of Organization or
the By-laws; (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, indenture, lease or instrument, permit, concession,
franchise or license to which the Company or any of its Subsidiaries is a party;
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal Market (as defined below)) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected. Neither the Company nor
its Subsidiaries is in violation, in any material respect, of any term of its
Articles of Organization or its By-laws or their organizational charter or
by-laws or other constituent documents, respectively. Except as disclosed in
Schedule 3(e) and as specifically contemplated by this Agreement and as required
under the 1933 Act or under any applicable state securities laws, the Company is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or Governmental Authority in order for it
to execute, deliver or perform any of its obligations under or contemplated by
the Transaction Documents, to perform its obligations under the Certificate in
accordance with the terms hereof or thereof, to complete the CSD Acquisition or
to perform its obligations under any of the CSD Acquisition Documents. Except as
disclosed in Schedule 3(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company is not in violation of the
listing requirements of the Principal Market and has no actual knowledge of any
facts which would reasonably lead to delisting or suspension of the Common Stock
by the Principal Market in the foreseeable future.
- 7 -
f. SEC Documents; Financial Statements.
(i) Except as set forth on Schedule 3(f), since January 1,
2001, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). As of the date of filing of such SEC Documents, such SEC Documents,
as it may have been subsequently amended by filings made by the Company with the
SEC prior to the date hereof, complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. None of the SEC
Documents, as of the date filed and as they may have been subsequently amended
by filings made by the Company with the SEC prior to the date hereof, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). None of the Company nor any of its
Subsidiaries have any material liabilities or obligations of any nature (whether
known or unknown, and whether absolute, accrued, contingent, matured,
liquidated, unasserted or otherwise) of a kind required by generally accepted
accounting principles ("GAAP") to be set forth on a financial statement that is
not fully and adequately reflected or reserved against in the financial
statements contained in the Company's most recent Annual Report on Form 10-K and
Quarterly Report on Form 10-Q filed with the SEC, other than liabilities
expressly assumed in connection with the CSD Acquisition and liabilities and
obligations incurred since June 30, 2002 in the ordinary course of business
consistent with past practice that are not material in amount.
(ii) The Company has delivered to each Buyer (or its
representatives) true, complete and correct copies of the audited balance sheets
of the CSD Business as of the fiscal years of the CSD Business ended August 31,
1999, 2000 and 2001, together with a report thereon from Arthur Andersen LLP
(collectively, the "CSD Balance Sheets"). The Company has also delivered to each
Buyer (or its representatives) true, complete and correct copies of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
June 30, 2002 and the related consolidated statements of operations, cash flows
and stockholders' equity for the six month period then ended (the "Company
Financial Statements ". The CSD Balance Sheets and the Company Financial
Statements fairly present the consolidated financial condition of the Company
and its Subsidiaries or the CSD, as the case may be, as at the respective dates
thereof and the consolidated results of operations of the Company and its
Subsidiaries for the fiscal periods ended on such respective dates, all in
accordance with GAAP. To the best of the Company's knowledge, after due inquiry
- 8 -
of the management of the CSD responsible for the preparation of the CSD Balance
Sheets, the CSD Balance Sheets fairly present in accordance with GAAP in all
material respects each item of working capital, line item by line item as of the
dates indicated thereon.
(iii) The Company has heretofore furnished to each Buyer (A)
projected quarterly balance sheets and statements of operations and cash flows
of the Company and its Subsidiaries (after giving effect to the CSD Acquisition)
for the period from October 1, 2002 through December 31, 2004 and (B) projected
annual balance sheets and statements of operations and cash flows of the Company
and its Subsidiaries for the fiscal years ending in 2002 through 2007. Such
projections are believed by the Company to be reasonable, have been prepared on
a reasonable basis and in good faith by the Company in light of (w) the
historical financial performance of the Company, (x) to the best knowledge of
management of the Company, after reasonable inquiry, the projected financial
performance of CSD, (y) current and reasonably foreseeable business conditions
and (z) believed by the Company to be reasonable at the time made and upon the
best information then reasonably available to the Company. The Company is not
aware of any facts or information that would lead it to believe that such
projections are incorrect or misleading in any material respect.
g. Full Disclosure. No other information provided by or on
behalf of the Company to the Buyers which is not included in the SEC Documents,
including, without limitation, information referred to in Section 2(f), contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are or were made, not misleading. The Company is
not required to file and will not be required to file any agreement, note,
lease, mortgage, deed or other instrument entered into prior to the date hereof
and to which the Company or any Subsidiary is a party or by which the Company or
any Subsidiary is bound which has not been previously filed as an exhibit to its
reports filed with the SEC under the 1934 Act.
h. Absence of Certain Changes. Since June 30, 2002, neither the
Company nor any of its Subsidiaries has:
(i) suffered any Material Adverse Effect or any event,
change occurrence or development, reasonably likely to cause or have a Material
Adverse Effect;
(ii) conducted its business and operations other than in
the ordinary course of business and consistent with past practices;
(iii) except for the dividend of $1.00 per share paid in
cash on July 15, 2002, to the holders of the Company's 112,000 outstanding
shares of Series B Convertible Preferred Stock, declared, set aside or paid any
dividend on, or other distribution (whether in cash, stock or property, or any
combination thereof) in respect of, any of the Company's or any of its
Subsidiary's Capital Stock, or purchased, redeemed or otherwise acquired or
agreed to purchase, redeem or otherwise acquire, any Capital Stock of the
Company or its Subsidiaries or any options, warrants, calls or rights to acquire
any such Capital Stock, other than dividends from any wholly-owned Subsidiary of
the Corporation to the Corporation or another wholly-owned Subsidiary of the
Corporation;
- 9 -
(iv) undergone a material change in accounting method,
principles or practices, except as may be required by a concurrent change in
GAAP or disclosed in the footnotes to any of the financial statements included
in the SEC Documents;
(v) except as required by this Agreement, authorized for
issuance, sold, delivered, granted or issued any options, warrants, calls,
subscriptions or other rights for, or otherwise agreed or committed to issue,
sell, deliver or grant any shares of any class of Capital Stock of the Company
or any of its Subsidiaries or any securities convertible into or exchangeable or
exercisable for shares of any class of Capital Stock of the Company or its
Subsidiaries;
(vi) except in the ordinary course of business and
consistent with past practice and except in connection with the Financing
Agreement, the Congress Loan Documents and in connection with the CSD
Acquisition, as described in Schedule 3(h)(vi), (A) created or incurred any
indebtedness for borrowed money, (B) assumed, guaranteed, endorsed or otherwise
as an accommodation become responsible for the obligations of any other Person,
(C) made any loans or advances to any other Person, or (D) mortgaged, pledged or
subjected to any Lien, any asset having a book or market value in excess of
$100,000;
(vii) granted any increase in the base compensation of,
or made any other material change in employment terms for, any of its directors,
officers and employees, except for increases or changes based upon changed
responsibilities or duties and increases or changes made in the ordinary course
of business consistent with past practice;
(viii) adopted, modified or terminated any bonus, profit-
sharing, incentive, severance or other plan or contract for the benefit of any
of its directors, officers and employees other than changes which do not
materially increase the aggregate cost of such plan or contract;
(ix) except for the provision of services or sales in the
ordinary course of business and consistent with past practice, sold, leased,
licensed, transferred or otherwise disposed of any of its assets or property
having a book or market value in excess of $100,000;
(x) entered into any new line of business, or incurred or
committed to incur any capital expenditures, obligations or liabilities in
connection therewith in excess of $1,000,000 in the aggregate;
(xi) other than the CSD Acquisition, acquired or agreed to
acquire by merging or consolidating with, or agreed to acquire by purchasing a
substantial portion of the assets of, or in any other manner, any business of
any other Person for aggregate consideration valued at more than $500,000;
(xii) made any cancellation or waiver of (A) any right
material to the operation of the business of the Company or its Subsidiaries, or
(B) any debts or claims against any affiliate of the Company;
- 10 -
(xiii) made any disposition of, or failed to keep in effect
any material right in, to or for the use of any material Intellectual Property
of the Company or its Subsidiaries;
(xiv) suffered any damage, destruction or loss, whether or
not covered by insurance, that has had or is reasonably likely to have a
Material Adverse Effect;
(xv) entered into any agreement, arrangement or transaction
with any shareholder, employee, officer or director of the Company or any of its
Subsidiaries (other than customary agreements for services as employees,
officers and directors that have been filed as exhibits to an SEC Document) or
any Person controlling, controlled by or under common control with the Company;
(xvi) except in connection with the CSD Acquisition as
described in subsections (x) through (xii) of Section 6.01(r) of the Financing
Agreement, incurred or project to incur any closure, clean-up or remediation
costs with respect to any current or formerly owned or leased property of the
Company or any of its Subsidiaries in excess of $1,000,000 in the aggregate; or
(xvii) agreed to do any of the things described in the
preceding clauses (i) through (xvi).
The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does
the Company or any of its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings or any
actual knowledge of any fact which would reasonably lead a creditor to do so.
i. Material Contracts.
(i) Neither the Company nor any of its Subsidiaries is a
party to or bound by, and neither they nor their properties are subject to, any
contracts, agreements or arrangements required to be disclosed in a Form 10-K or
10-Q under the Exchange Act which is not filed as an exhibit to one or more of
the SEC Documents filed and publicly available.
(ii) Schedule 3(i) sets forth as of the date hereof (A)
a list of all written and oral contracts, agreements, instruments or
arrangements to which the Company or any of its Subsidiaries is a party or by
which the Company or such Subsidiary or any of their respective assets is bound
which would be required to be filed as exhibits to the Company's Annual Report
on Form 10-K for the year ending December 31, 2001 or any subsequent Exchange
Act filing by the Company, including, without limitation, all such contracts,
agreement, instrument and arrangements relating to the CSD Business that would
have been required to be filed by the Company as an exhibit to an SEC Document
had the CSD Acquisition occurred prior to the date of this Agreement; and (B)
the following written and oral arrangements (all such written or oral
agreements, arrangements or commitments as are required to be set forth on
Schedule 3(i) or filed as exhibits to any SEC Document, collectively the
"Material Contracts"):
- 11 -
(A) each partnership, joint venture or similar agreement of
the Company or any of its Subsidiaries with another Person that is material to
the operation of the business of the Company or any of its Subsidiaries or the
CSD Business;
(B) each contract or agreement under which the Company or
any of its Subsidiaries have created, incurred, assumed or guaranteed (or may
create, incur, assume or guarantee) Indebtedness of more than $100,000 in
principal amount or under which the Company or any of its Subsidiaries have
imposed (or may impose) a Lien on any of their respective assets, whether
tangible or intangible securing Indebtedness in excess of $100,000.
"Indebtedness" shall have the meaning ascribed to such term in the Certificate;
(C) each contract or agreement to which the Company or any
of its Subsidiaries is a party which involves an obligation or commitment to pay
or be paid an amount in excess of $1,000,000 per year;
(D) each contract or agreement which involves or contributes
to the Company or any of its Subsidiaries aggregate annual remuneration which
exceeds 2% of the Company's and its Subsidiaries' consolidated annual net
revenues for the twelve months ended December 31, 2000, December 31, 2001 or
December 31, 2002 (projected), in each case both before and after giving effect
to the CSD Acquisition;
(E) each contract or agreement relating to employment or
consulting which provides for annual compensation in excess of $100,000 and each
severance, termination, confidentiality, non-competition or indemnification
agreement or arrangement with any of the directors, officers, consultants or key
employees of the Company or any of its Subsidiaries;
(F) each contract or agreement to which the Company or any
of its Subsidiaries or affiliates is a party limiting, in any material respect,
the right of the Company or any of its Subsidiaries (x) to engage in, or to
compete with any Person in, any business, including each contract or agreement
containing exclusivity provisions restricting the geographical area in which, or
the method by which, any business may be conducted by the Company or any of its
Subsidiaries or affiliates or (y) to solicit any customer or client;
(G) all contracts or agreements between the Company or any
of its Subsidiaries and any shareholder, employee, officer or director of the
Company or any Subsidiary, and any Person controlling, controlled by or under
common control with the Company;
(H) each contract, agreement and franchise with any
municipality, county or city for waste collection, disposal, recycling or other
services which provides for aggregate payments in excess of $1,000,000 and is
for a term of one year or longer (whether or not subject to early termination);
(I) all other contracts or agreements which are material to
the Company and its Subsidiaries taken as a whole or the CSD Business or the
conduct of their respective businesses, other than those made in the ordinary
course of business or those which are terminable by the Company or any of its
- 12 -
Subsidiaries upon no greater than 60 days prior notice and without penalty or
other adverse consequence;
(J) all contracts or agreements pursuant to which the
Company or any of its Subsidiaries is required to make payment of any cure
amount under contract or agreement being assigned by the CSD to the Company or
any of its Subsidiaries; and
(K) all other contracts or agreements obligating the Company
or any of its Subsidiaries to indemnify or guarantee the indemnification of any
other Person.
(iii) All the Material Contracts are valid, subsisting, in
full force and effect, binding upon the Company or one of its Subsidiaries in
accordance with their terms, and to the knowledge of the Company, binding upon
the other parties thereto in accordance with their terms. The Company and its
Subsidiaries have paid in full or accrued all amounts now due from them under
the Material Contracts (including all cure amounts due under contracts or
agreements referred to in Section 3(i)(ii)(J) above) and have satisfied in full
or provided for all of their liabilities and obligations under the Material
Contracts which are presently required to be satisfied or provided for, and are
not (with or without notice or lapse of time or both) in default in any material
respect under any of the Material Contracts nor to the knowledge of the Company
is any other party to any such Material Contract (with or without notice or
lapse of time or both) in default in any material respect thereunder. No notice
of termination or cancellation or intent to terminate or cancel has been given
by the Company or any Subsidiary to any other party to any Material Contract and
none of the Company nor any Subsidiary has received notice of termination or
cancellation of a Material Contract or the intention to terminate or cancel any
Material Contract from any other party thereto, and, to the Company's knowledge,
no basis exists for any such termination or cancellation of any Material
Contract.
j. Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court or Governmental Authority,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company, the CSD
Acquisition, the CSD Business or any of the Company's Subsidiaries or any of the
Company's or the Company's Subsidiaries' officers or directors in their
capacities as such, except as expressly set forth in Schedule 3(j), which seeks
injunctive or declaratory relief against or affecting the Company, any of its
Subsidiaries or any of their respective assets or properties or, with respect to
the Company and its Subsidiaries, that if adversely determined, could have a
Material Adverse Effect. To the knowledge of the Company, none of the directors
or officers of the Company have been a party to any securities related
litigation during the past five years.
k. Acknowledgment Regarding Buyer's Purchase of Securities. The
Company acknowledges and agrees that each of the Buyers is acting solely in the
capacity of an arm's length purchaser with respect to the Transaction Documents
and the Certificate and the transactions contemplated hereby and thereby. The
Company further acknowledges that each Buyer is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
the Transaction Documents and the Certificate and the transactions contemplated
hereby and thereby and any advice given by any of the Buyers or any of their
respective representatives or agents in connection with the Transaction
Documents and the Certificate and the transactions contemplated hereby and
- 13 -
thereby is merely incidental to such Buyer's purchase of the Securities. The
Company further represents to each Buyer that the Company's decision to enter
into the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.
l. Compliance with Law. Except as set forth on Schedule 3(l),
none of the Company, any of its Subsidiaries or, to the Company's knowledge, the
CSD Business (i) has violated or conducted its business or operations in
violation of, and has not used or occupied its properties or assets in material
violation of, any statute, law, ordinance, rule, regulation, permit, order,
writ, judgment, injunction, decree or award issued, enacted or promulgated by
any Governmental Authority or any arbitrator ("Legal Requirements"), (ii) to the
Company's knowledge, has been alleged to be in material violation of any Legal
Requirement, and (iii) has received any notice of any violation or alleged
material violation of, or any citation for material non-compliance with, any
Legal Requirements.
m. No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.
n. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
issuance by the Company of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or, except as set forth on Schedule 3(n),
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of the Principal Market, nor will the Company or
any of its Subsidiaries take any action or steps that would require registration
of the issuance by the Company of any of the Securities under the 1933 Act or,
except as set forth on Schedule 3(n), cause the offering of the Securities to be
integrated with other offerings.
o. Employee Benefit Plans; Labor Matters. (i) Schedule 3(o)
lists all "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all material
bonus, stock option, stock purchase, stock appreciation right, incentive,
deferred compensation, supplemental retirement, severance and other similar
material fringe or employee benefit plans, programs, policies or arrangements,
any material employment, consulting or executive compensation agreements that
are currently maintained or have been maintained within the last six years by
the Company or any trade or business under common control with the Company (an
"ERISA Affiliate"), within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended (the "Code"), or under which the Company or any ERISA
Affiliate has, or within the last six years had, any liability or obligation to
contribute, for the benefit of or relating to any employee, former employee or
retiree of the Company or any ERISA Affiliate (collectively, for purposes of
this Section 3(o), referred to as the "Employee Plans").
- 14 -
(ii) With respect to any Employee Plan, where applicable,
(A) such Employee Plan has been maintained in accordance with ERISA, the Code,
the terms of such Employee Plan and other applicable Legal Requirements; (B) a
favorable determination letter has been obtained from the IRS, and a copy
thereof delivered to each Buyer, for any such Employee Plan that is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA and which is
intended to be qualified within the meaning of Section 401(a) of the Code, and
since such determination letter, no event has occurred that would disqualify
such Plan; (C) there has been no non-exempt "prohibited transaction" (including
without limitation as a result of any of the transactions contemplated hereby)
within the meaning of Section 4975(c) of the Code or Section 406 of ERISA
involving the assets of any Employee Plan; and (iv) neither the Company nor any
ERISA Affiliate is or was during the preceding six years obligated to contribute
to any multiemployer plan and neither the Company nor any ERISA Affiliate has
assumed any obligation of any predecessor of the Company with respect to any
multiemployer plan.
(iii) There are no pending actions which have been asserted
in writing or instituted (other than in respect of benefits due in the ordinary
course which, in the aggregate are not material) against the assets of any of
the Employee Plans or against the Company or any ERISA Affiliate or any
fiduciary of the Employee Plans with respect to the Employee Plans.
(iv) Except as required by Section 4980B of the Code, no
Employee Plan or other arrangement provides medical or death benefits with
respect to current or former employees of the Company or any ERISA Affiliate
beyond their retirement or other termination of employment. Any continuation
coverage provided under any welfare benefits plans complies with Section 4980B
of the Code and is at the expense of the participant or beneficiary.
(v) No Employee Plan has incurred an "accumulated funding
deficiency" and there has not been any unpaid required installments, within the
meaning of Section 412 of the Code, nor has there been issued a waiver or
variance of the minimum funding standards imposed by the Code with respect to
any Employee Plan that is subject to Title IV of ERISA (a "Title IV Plan"), nor
has any Lien been created under Section 302(f) of ERISA or security been
required under Section 307 of ERISA, nor are any excise taxes due or hereafter
to become due under Section 4971 or 4972 of the Code with respect to the funding
of any such plan for any plan year or other fiscal period ending on or before
the Closing Date. With respect to each Title IV Plan, there has not occurred any
reportable event within the meaning of Section 4043(b) of ERISA or the
regulations thereunder. The Pension Benefit Guaranty Corporation ("PBGC") has
not instituted or, to the knowledge of the Company or any ERISA Affiliate,
threatened a proceeding to terminate any Title IV Plan. All PBGC premiums due on
or before the Closing Date with respect to any Title IV Plan have been paid in
full, including late fees, interest and penalties, if and to the extent
applicable. True, correct and complete copies of the most recent actuarial
report which accurately reflects the funded status and contribution requirements
for each Title IV Plan have been delivered to each Buyer (or its
representatives). There has been no material adverse change in the assets,
liabilities or financial position of each Title IV Plan since the date of the
most recent actuarial report. Neither the Company nor any ERISA Affiliate has,
at any time within the five year period preceding the Closing Date, entered into
- 15 -
any transaction the principal purpose of which was to evade liability to which
the Company or such ERISA Affiliate would otherwise be subject under Title IV of
ERISA. The principal purpose of the Company in entering into the transactions
contemplated by this Agreement is not to evade liability to which the Company
would otherwise be subject under Title IV of ERISA.
(vi) No Employee Plan or agreement, program, policy or other
arrangement by its terms or in effect would or could possibly require any
payment or transfer of money, property or other consideration on account of or
in connection with the transactions contemplated by this Agreement, including
but not limited to any employee (current, former or retired) of the Company or
any ERISA Affiliate (whether or not any such payment would constitute a
"parachute payment" or "excess parachute payment" within the meaning of Section
280G of the Code).
(vii) Neither the Company nor any ERISA Affiliate has
incurred any obligations in connection with the termination of or withdrawal
from any Foreign Pension Plan (as defined below), or has any unfunded liability
with respect to benefits under any such Foreign Pension Plan. "Foreign Pension
Plan" means any plan, fund or other similar program maintained outside the
United States of America primarily for the benefit of employees residing outside
of the United States of America, or that has been maintained within the last six
years by the Company or any ERISA Affiliate or under which the Company or any
ERISA Affiliate has had any liability or obligation to contribute within the
past six years, which plan, fund or other similar program provides retirement
income for such employees, results in a deferral of income for such employees in
contemplation of retirement or provides payments to be made to such employees
upon termination of employment, and which plan is not subject to ERISA or the
Code.
(viii) Any terminated Employee Plan has been terminated in
accordance with applicable law, all benefits under any such terminated Employee
Plan have been fully paid to the participants and beneficiaries in accordance
with the terms of such Employee Plan, and neither the Company nor any ERISA
affiliate has any continuing liability or other obligation with respect to such
Employee Plan.
(ix) Neither the Company nor its ERISA Affiliates has
incurred any material liability or obligation under the Worker Adjustment and
Retraining Notification Act or similar state Legal Requirements, which remains
unpaid or unsatisfied
(x) Except as listed in Schedule 3(o), neither the Company
nor any ERISA Affiliate is a party to any employment, labor or collective
bargaining agreement. No labor organization or group of employees of the Company
or any ERISA Affiliate has made a pending demand for recognition or
certification to the Company or any ERISA Affiliate and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened to be brought or filed
with the National Labor Relations Board or any other labor relations tribunal or
authority relating to the Company or any ERISA Affiliate. Except as listed in
Schedule 3(o), there are no organizing activities involving the Company or any
ERISA affiliate pending with any labor organization or group of employees of the
Company.
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(xi) There are no unfair labor practice charges, grievances
or complaints pending or, to the knowledge of the Company or any ERISA Affiliate
threatened in writing by or on behalf of any employee or group of employees of
the Company or any ERISA Affiliate. There is no labor strike, work stoppage, or
lockout pending or affecting the Company or any ERISA Affiliate.
(xii) There are no complaints, charges, or claims against
the Company or any ERISA Affiliate pending, or to the knowledge of the Company
or any ERISA Affiliate, threatened in writing to be brought or filed, with any
authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment or any
individual by the Company. The Company and each ERISA Affiliate is in material
compliance with all Legal Requirements governing the employment of labor,
including, but not limited to, all such laws relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health, workers'
compensation and the collection and payment of withholding and/or Social
Security taxes and similar taxes.
p. Intellectual Property. Except as otherwise set forth on
Schedule 3(p):
(i) Schedule 3(p) sets forth a true, correct and complete
list and summary description of all (A) Registered or material Owned
Intellectual Property (each identified as a Patent, Trademark, Trade Secret or
Copyright, as the case may be), (B) material Technology Systems, and (C)
material Intellectual Property Contracts.
(ii) All Business Intellectual Property is valid, subsisting
and enforceable. No Owned Intellectual Property has been abandoned, canceled or
adjudicated invalid (excepting any expirations in the ordinary course), or is
subject to any outstanding order, judgment or decree restricting its use or
adversely affecting or reflecting the Company's or the Subsidiaries' rights
thereto. To the Company's knowledge, no Licensed Intellectual Property has been
abandoned, canceled or adjudicated invalid (excepting any expirations in the
ordinary course), or is subject to any outstanding order, judgment or decree
restricting its use or adversely affecting or reflecting the Company's or the
Subsidiaries' rights thereto. The Owned Intellectual Property has been used with
all patent, trademark, copyright, confidential, proprietary, and other
Intellectual Property notices and legends prescribed by law or otherwise
permitted.
(iii) No suit, action, reissue, reexamination, public
protest, interference, arbitration, mediation, opposition, cancellation or other
proceeding (collectively, "Suit") is pending concerning any claim or position
that the Company or the Subsidiaries have violated any Intellectual Property
rights. No claim has been threatened or asserted against the Company or its
Subsidiaries or any of their indemnitees for violation of any Intellectual
Property rights. The Company and the Subsidiaries are not violating and have not
violated any Intellectual Property rights.
(iv) No Suit is pending concerning any Intellectual Property
Contract, including any Suit concerning a claim or position that the Company or
the Subsidiaries or another Person has breached any Intellectual Property
Contract or that any Intellectual Property Contract is invalid or unenforceable.
- 17 -
No such claim has been threatened or asserted. The Company and the Subsidiaries
are in material compliance with, and have conducted their business so as to
comply, in all material respects, with all terms of all Intellectual Property
Contracts. There exists no event, condition or occurrence which, with the giving
of notice or lapse of time, or both, would constitute a material breach or
default by the Company or the Subsidiaries or another Person under any
Intellectual Property Contract. Each Person who is a party to any Intellectual
Property Contract had and has all rights, power and authority necessary to enter
into, be bound by and fully perform such Intellectual Property Contract. No
party to any Intellectual Property Contract has given the Company or the
Subsidiaries notice of its intention to cancel, terminate or fail to renew any
Intellectual Property Contract.
(v) No Suit is pending concerning the Owned Intellectual
Property, including any Suit concerning a claim or position that the Owned
Intellectual Property has been violated or is invalid, unenforceable,
unpatentable, unregisterable, cancelable, not owned or not owned exclusively by
the Company or the Subsidiaries. No such claim has been threatened or asserted.
To the Company's knowledge, no valid basis for any such Suits or claims exists.
(vi) To the Company's knowledge, no Suit is pending
concerning the Licensed Intellectual Property, including any Suit concerning a
claim or position that the Licensed Intellectual Property has been violated or
is invalid, unenforceable, unpatentable, unregisterable, cancelable, not owned
or not owned exclusively by the licensor of such Intellectual Property. No Suit
is pending concerning the right of the Company or the Subsidiaries to use the
Licensed Intellectual Property, including any Suit concerning a claim or
position that such right has been violated or is invalid, unenforceable, not
owned or not owned exclusively by the Company or the Subsidiaries. To the
Company's knowledge, no such claims have been threatened or asserted and no
valid basis for any such Suits or claims exists.
(vii) To the Company's knowledge, no Person is violating
any Business Intellectual Property.
(viii) The Company and the Subsidiaries own or otherwise
hold valid rights to use all Intellectual Property used or contemplated to be
used in the respective businesses of the Company and the Subsidiaries. All such
rights are free of all Liens and are fully assignable by the Company and the
Subsidiaries to any Person, without payment, consent of any Person or other
condition or restriction. The Business Intellectual Property constitutes all
Intellectual Property necessary to operate the respective businesses of the
Company and the Subsidiaries as currently conducted or contemplated.
(ix) The Company and the Subsidiaries have timely made all
filings and payments with the appropriate foreign and domestic agencies required
to maintain in subsistence all Registered Owned Intellectual Property. No due
dates for filings or payments concerning the Owned Intellectual Property
(including without limitation office action responses, affidavits of use,
affidavits of continuing use, renewals, requests for extension of time,
maintenance fees, application fees and foreign convention priority filings) fall
due within ninety (90) days of the Closing Date, whether or not such due dates
are extendable. The Company and the Subsidiaries are in compliance with all
applicable rules and regulations of such agencies with respect to Business
Intellectual Property. All documentation necessary to confirm and effect the
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Company's and the Subsidiaries' ownership of Owned Intellectual Property, if
acquired from other Persons, has been recorded in the United States Patent and
Trademark Office, the United States Copyright Office and other official offices.
(x) The Company and the Subsidiaries have taken all
reasonable measures to protect the secrecy, confidentiality and value of all
Trade Secrets used in their businesses (collectively, "Business Trade Secrets")
(including without limitation entering into appropriate confidentiality
agreements with all officers, directors, employees, and other Persons with
access to the Business Trade Secrets). To the Company's knowledge, the Business
Trade Secrets have not been disclosed to any Persons other than Company and
Subsidiaries employees or Company and Subsidiaries contractors who had a need to
know and use such Business Trade Secrets in the ordinary course of employment or
contract performance and who executed appropriate confidentiality agreements.
(xi) The Technology Systems are adequate in all material
respects for their intended use and for the operation of such businesses as are
currently operated and as are currently contemplated to be operated by the
Companies and the Subsidiaries. The Intellectual Property Contracts set forth on
Schedule 3(p) provide the Company and Subsidiaries with all necessary rights in
connection with the use of the Technology Systems.
(xii) As used in this Agreement, the following terms shall
have the following meanings:
(A) "Business Intellectual Property" shall mean the
Owned Intellectual Property and the Licensed Intellectual Property.
(B) "Intellectual Property" shall mean all foreign
and domestic (i) trademarks, service marks, brand names, certification marks,
collective marks, d/b/a's, Internet domain names, logos, symbols, trade dress,
assumed names, fictitious names, trade names, and other indicia of origin, all
applications and registrations for all of the foregoing, and all goodwill
associated therewith and symbolized thereby, including without limitation all
extensions, modifications and renewals of same (collectively, "Trademarks");
(ii) inventions, discoveries and ideas, whether patentable or not, and all
patents, registrations, and applications therefor, including without limitation
divisions, continuations, continuations-in-part and renewal applications, and
including without limitation renewals, extensions and reissues (collectively,
"Patents"); (iii) confidential and proprietary information, trade secrets and
know-how, including without limitation processes, schematics, databases,
formulae, drawings, prototypes, models, designs and customer lists
(collectively, "Trade Secrets"); (iv) published and unpublished works of
authorship, whether copyrightable or not (including without limitation computer
software), copyrights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions thereof
(collectively, "Copyrights"); and (v) all other intellectual property or
proprietary rights and claims or causes of action arising out of or related to
any infringement, misappropriation or other violation of any of the foregoing,
including without limitation rights to recover for past, present and future
violations thereof.
(C) "Intellectual Property Contracts" shall mean
all agreements concerning the Business Intellectual Property, including without
limitation agreements granting the Company and the Subsidiaries rights to use
- 19 -
the Licensed Intellectual Property, agreements granting rights to use Owned
Intellectual Property, confidentiality agreements, Trademark coexistence
agreements, Trademark consent agreements and nonassertion agreements.
(D) "Licensed Intellectual Property" shall mean
Intellectual Property that the Company and the Subsidiaries are licensed or
otherwise permitted by other Persons to use, including without limitation all
Intellectual Property related to any Technology Systems owned by third parties.
(E) "Owned Intellectual Property" shall mean
Intellectual Property owned by the Company and the Subsidiaries.
(F) "Registered" shall mean issued, registered, renewed
or the subject of a pending application.
(G) "Technology Systems" means the electronic data
processing, information, recordkeeping, communications, telecommunications and
computer systems (including all computer programs and software, databases,
firmware, hardware and related documentation) which are used by the Company
and/or the Subsidiaries in their respective businesses.
q. Properties. (i) The Company and its Subsidiaries have good
and marketable title to, valid leasehold interests in, or valid licenses to use,
all property and assets of the Company and its Subsidiaries (including the
property and assets of the CSD), free and clear of all Liens, except as
described on Schedule 3(q) or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by the Company and any of its Subsidiaries. All such properties and
assets are in good working order and condition, ordinary wear and tear excepted.
Schedule 3(q) sets forth a complete and accurate list of the location, by state
and street address, of all real property owned, licensed or leased by the
Company and its Subsidiaries and identifies the interest (fee, leasehold or
license) of the Company or Subsidiary therein. The Company or its Subsidiaries
has valid leasehold interests in the leases described on Schedule 3(q) to which
it is a party. True, complete and correct copies of each such lease have been
delivered to each of the Buyers (or its representatives). Schedule 3(q) sets
forth with respect to each such lease, the commencement date, termination date,
renewal options (if any) and annual base rents. Each such lease is valid and
enforceable in accordance with its terms in all material respects and is in full
force and effect. To the best knowledge of the Company, no other party to any
such lease is in default of its obligations thereunder, and none of the Company
or any of its Subsidiaries (or any other party to any such lease) has at any
time delivered or received any notice of default which remains uncured under any
such lease and no event has occurred which, with the giving of notice or the
passage of time or both, would constitute a default under any such lease.
(ii) All Permits material to the Company or its Subsidiaries
required to have been issued to the Company or its Subsidiaries with respect to
the real property owned, licensed or leased by the Company or any of its
Subsidiaries to enable such property to be lawfully occupied and used for all of
the purposes for which it is currently occupied and used (separate and apart
- 20 -
from any other properties), have been lawfully issued and are in full force and
effect and all such real property complies with all applicable Legal
Requirements and Policies covering such properties in all material respects.
(iii) Neither the Company nor any of its Subsidiaries have
received any notice, nor has any knowledge, of any pending, threatened or
contemplated condemnation proceeding affecting any real property owned, licensed
or leased by the Company or any Subsidiary.
(iv) No portion of any real property owned, licensed or
leased by the Company or any of its Subsidiaries has suffered any damage by fire
or other casualty loss which has not heretofore been completely repaired and
restored to its condition existing prior to such casualty. No portion of any
improvements (other than paving, parking and landscaped areas) constructed on
any of the real property owned, licensed or leased by the Company or any of its
Subsidiaries is located in a special flood hazard area as designated by any
Governmental Authority.
r. Environmental Laws. Except as set forth on Schedule 3(r),
(i) The Company's and its Subsidiaries' businesses,
Facilities (as defined in the Financing Agreement), operations, properties and
assets are in material compliance with Environmental Laws.
(ii) The Company and its Subsidiaries have obtained and are
in material compliance with all material Environmental Permits necessary to
operate, use or occupy all of the Company's and its Subsidiaries' businesses,
facilities, operations, properties and assets, except for Environmental Permits
relating to the SK Facilities (as defined in the Financing Agreement) which are
not yet effective but for which requisite applications have been filed.
(iii) Except as provided in Section 6.01(r) of the Financing
Agreement, the Company and its Subsidiaries have obtained and are in full
compliance with all financial assurance requirements under RCRA and any similar
Environmental Law, as specifically set forth but not limited to 40 C.F.R. 264
and 265, necessary to operate, use or occupy all of the Company's and its
Subsidiaries' businesses, facilities, operations, properties and assets.
(iv) The Company and its Subsidiaries are in material
compliance with all applicable writs, orders, consent decrees, judgments and
injunctions by any Governmental Authority, decrees, informational requests or
demands issued pursuant to, or arising under, any Environmental Laws.
(v) The Company's and its Subsidiaries' will not be required
to spend more than $1,000,000 in the aggregate for any Facility or $5,000,000
for all Facilities to comply with any Environmental Laws that have been
promulgated and enacted by a Governmental Authority, but will not be effective
until after the date of this Agreement or the Closing Date, except to the extent
those expenditures are already specifically included within the aggregate
amounts described in clause (x) or (xi) below or in the capital expenditures
described in Section 7.02(g) of the Financing Agreement.
- 21 -
(vi) Except for Releases for which the related Environmental
Liabilities are specifically included within the aggregate amounts described in
clauses (ix) through (xi) below, there has been no Release at any of the
facilities, assets or properties owned or operated by the Company, its
Subsidiaries or, to the knowledge of the Company and its Subsidiaries, a
predecessor in interest.
(vii) Except for Environmental Claims specifically included
within the aggregate amounts described in clauses (ix) through (xi), no
Environmental Claims have been asserted against any treatment, storage or
disposal facility that received or Handled Hazardous Materials generated by the
Company, its Subsidiaries or any predecessor in interest which could reasonably
be expected to result in any Environmental Liabilities in excess of $1,000,000
for any Facility or $5,000,000 in the aggregate for all Facilities.
(viii) Except for Environmental Claims specifically included
within the aggregate amounts described in clauses (ix) through (xi) below, no
Environmental Claims have been asserted against the Company, its Subsidiaries
or, to the knowledge of the Company and its Subsidiaries, any predecessor in
interest nor does the Company or its Subsidiaries have knowledge or notice of
any threatened or pending Environmental Claims against the Company, its
Subsidiaries or any predecessor in interest which could reasonably be expected
to result in any Environmental Liabilities in excess of $1,000,000 individually
or $5,000,000 in the aggregate.
(ix) The Company and its Subsidiaries will not assume any
Environmental Liabilities related to the acquisition of CSD that are more than
ten percent above $265,000,000, calculated in accordance with GAAP.
(x) Excluding any Environmental Liabilities related to the
CSD Acquisition assumed by the Company and its Subsidiaries, the Company's and
its Subsidiaries will not spend more than ten percent above $29,250,000 for
closure, post closure and post closure care of the CH Facilities (as defined in
the Financing Agreement), as those terms are used in RCRA and any similar
Environmental Law, as specifically set forth but not limited to 40 C.F.R. 264
and 265.
(xi) Excluding any Environmental Liabilities of CSD assumed
by the Company and its Subsidiaries, to the knowledge of the Company's and its
Subsidiaries, there are no Remedial Actions that will cost, in the aggregate,
more than $1,000,000 per calendar year for the foreseeable future.
(xii) All representations, including without limitation
applications, warranty statements and accompanying materials provided in support
of such representations, provided by the Company and its Subsidiaries to obtain
any Policies, are truthful and complete in all respects, and the Company and its
Subsidiaries have done nothing to prejudice it's rights to obtain the benefits
of it's Policies by failing to comply with any of the provisions, conditions or
requirements of its Polices.
(xiii) there are no Environmental Liens associated or, to
the best knowledge of the Company, threatened to be associated with any of the
- 22 -
CSD Acquisition Assets or the Company's or any of its Subsidiaries' businesses,
Facilities, operations, properties and assets.
(xiv) except for work, repairs, contributions and Capital
Expenditures (as defined in the Financing Agreement) specifically included in
the aggregate amounts set forth in clauses (ix) through (xi) above or Section
7.02(g) of the Financing Agreement, to the best knowledge of the Company, (A) no
work, repairs, construction or Capital Expenditures are required to be made as a
condition of continued compliance of the Facilities or the Company's or any of
its Subsidiaries' business with any Environmental Laws, or any license,
Environmental Permit or approval issued pursuant thereto or (B) no license,
Environmental Permit or approval referred to above is about to be reviewed, made
subject to limitations or conditions, revoked, withdrawn or terminated.
(xv) As used in this Agreement, the following terms shall
have the following meanings:
(A) "Environmental Claims" refers to any complaint,
summons, citation, notice, directive, order, claim, litigation, investigation,
notice of violation, judicial or administrative proceeding, judgment, letter or
other communication from any Governmental Authority, or any third party
involving violations of Environmental Laws, Handling of Hazardous Materials or
Releases of Hazardous Materials from (i) any assets, properties or businesses of
the Company or any predecessor in interest; (ii) from adjoining properties or
businesses; or (iii) from or onto any facilities which received Hazardous
Materials generated or Handled by the Company, its Subsidiaries or any
predecessor in interest.
(B) "Environmental Laws" includes the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
9601 et seq., as amended; the Resource Conservation and Recovery Act ("RCRA"),
42 U.S.C. 6901 et seq., as amended; the Clean Air Act ("CAA"), 42 U.S.C. 7401 et
seq., as amended; the Clean Water Act ("CWA"), 33 U.S.C. 1251 et seq., as
amended; the Occupational Safety and Health Act ("OSHA"), 29 U.S.C. 655 et seq.,
as amended; Toxic Substances Control Act ("TOSCA"), 15 U.S.C. 2601 et seq., as
amended; Hazardous Materials Transportation Act, 49 U.S.C. 5101 et seq., as
amended; the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7
U.S.C. 136-136y et seq., as amended; the Emergency Planning and Community
Right-to-Know Act of 1986 (Title III of SARA or "EPCRA"); 42 U.S.C. 11001, et
seq., as amended, and any other foreign, federal, state, local or municipal
laws, statutes, regulations, guidance documents, rules or ordinances imposing
liability or establishing standards of conduct for Handling of Hazardous
Materials and the protection of the health, safety and the environment.
(C) "Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities.
(D) "Environmental Liabilities" means any monetary
obligations, losses, liabilities (including strict liability), damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
all reasonable out-of-pocket fees, disbursements and expenses of counsel,
out-of-pocket expert and consulting fees and out-of-pocket costs for
environmental site assessments, remedial investigation and feasibility studies),
- 23 -
fines, penalties, sanctions and interest incurred as a result of any
Environmental Claim filed by any Governmental Authority, Person or any third
party which relate to the CSD Acquisition Assets or any violations of
Environmental Laws, Handling of Hazardous Materials, Remedial Actions, Releases
or threatened Releases of Hazardous Materials from or onto (i) any property
presently or formerly owned by the Corporation or any of its Subsidiaries or a
predecessor in interest, or (ii) any facility that received Hazardous Materials
that were generated or Handled by the Company or any of its Subsidiaries or a
predecessor in interest.
(E) "Environmental Permits" means any permits, licenses,
certificates, exemptions, authorizations, registrations or approvals required by
any Governmental Authority or under Environmental Laws.
(F) "Governmental Authority" means any nation or
government, any foreign, federal, state, city, town, municipality, county, local
or other political subdivision thereof or thereto and any department,
commission, board, bureau, instrumentality, agency, organization,
self-regulatory authority or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
(G) "Handle" means any manner of generating,
accumulating, storing, treating, disposing of, transporting, transferring,
labeling, handling, manufacturing or using, as any of such terms may further be
defined in any Environmental Law, of any Hazardous Materials.
(H) "Hazardous Materials"- shall include, without regard
to amount and/or concentration (i) any element, compound, or chemical that is
defined, listed or otherwise classified as a contaminant, pollutant, toxic
pollutant, toxic or hazardous substances, extremely hazardous substance or
chemical under Environmental Laws; (ii) any wastes regulated, defined, listed or
otherwise classified by Environmental Laws, including but not limited to
hazardous waste, agricultural wastes, biological waste, medical waste,
biohazardous or infectious waste, special waste, recyclable materials, sludge,
used oils, construction and demolition debris and solid waste; (iii) petroleum,
petroleum-based or petroleum-derived products; (iv) polychlorinated biphenyls;
(v) any substance exhibiting a hazardous waste characteristic including but not
limited to corrosivity, ignitibility, toxicity or reactivity as well as any
radioactive or explosive materials; and (vi) any raw materials, building
components, including but not limited to asbestos-containing materials and
manufactured products containing Hazardous Materials.
(I) "Release" means any spilling, leaking, pumping,
emitting, emptying, discharging, injecting, escaping, leaching, migrating,
dumping, or disposing of Hazardous Materials (including the abandonment or
discarding of barrels, containers or other closed receptacles containing
Hazardous Materials) into the environment.
(J) "Remedial Action" means all actions taken to (i)
clean up, remove, remediate, contain, treat, monitor, assess, evaluate or in any
other way address Hazardous Materials in the indoor or outdoor environment; (ii)
prevent or minimize a Release or threatened Release of Hazardous Materials so
they do not migrate or endanger or threaten to endanger public health or welfare
or the indoor or outdoor environment; (iii) perform pre-remedial studies and
- 24 -
investigations and post-remedial operation and maintenance activities; or (iv)
any other actions authorized by 42 U.S.C. 9601.
s. Insurance. Schedule 3(s) contains a list of all Policies and
sets forth, with respect to each such Policy, a description of the insured loss
coverage, the expiration date and time of coverage, the dollar limitations of
coverage, and a general description of each deductible feature. For purposes of
this Section 3(s), the term "Policies" means all insurance policies, bonds and
guarantees (including, without limitation, all performance and warranty bonds
required under outstanding contracts or purchase orders and otherwise required
pursuant to all Legal Requirements) and self insurance arrangements that cover
or purport to cover risks or losses to or associated with the business,
operations, premises, properties, assets, employees, agents and directors
(including, without limitation, those arising with respect to environmental
matters) to which the Company or any of its Subsidiaries (including the CSD
Business) is a party, a named insured or a beneficiary thereof. The Company and
its Subsidiaries maintain Policies (the "Required Policies") with financially
sound and reputable insurance companies against risks of liability, product
liability, environmental liability, casualty and fire, theft and other losses
and liabilities as required by any Legal Requirements and as are customarily
obtained to cover comparable businesses and assets in amounts, scope and
coverage which are consistent with industry practice and adequate for the
Company and its Subsidiaries (including the CSD Business). The Required Policies
are in full force and effect, and neither the Company nor any of its
Subsidiaries is in material default under any of them. Except as set forth on
Schedule 3(s), neither the Company nor any of its Subsidiaries has received any
notice of cancellation or intent to cancel or increase the premiums with respect
to any of the Policies, nor, to the Company's knowledge, is there any basis for
such action. None of the Company, any of its Subsidiaries or, to the Company's
knowledge, the CSD Business, has incurred any material loss, damage, expense or
liability covered by any Required Policy for which it has not asserted a claim
under such Required Policy. Except as set forth on Schedule 3(s), none of the
Company, any of its Subsidiaries or, to the Company's knowledge, the CSD
Business, has been refused any bonds, financial assurance or insurance with
respect to their respective assets or properties, nor has its coverage been
limited below usual and customary limits by any bonding company, financial
guarantor or insurance provider or with which it has carried insurance during
the last three years, except where such Person has been able to obtain
substitute bonds, guarantees or insurance, as applicable, providing similar
coverage at comparable costs, premiums and deductibles.
t. Regulatory Permits. Each of the Company and its Subsidiaries
has, and is in compliance with, all permits, licenses, authorizations,
approvals, entitlements and accreditations (collectively, "Permits") required
for the Company and its Subsidiaries lawfully to own, lease, manage or operate,
or to acquire, each business currently owned, leased, managed or operated, or to
be acquired, by such Person, except for certain Environmental Permits relating
to the SK Facilities (as defined in the Financing Agreement) for which
applications have been filed on or prior the Effective Date but which are not
yet effective as described in Section 6.01(r) of the Financing Agreement. Except
as set forth in Section 6.01(r) of the Financing Agreement, no condition exists
or event has occurred which, in itself or with the giving of notice or lapse of
time or both, would result in the suspension, revocation, impairment, forfeiture
or non-renewal of any such permit, license, authorization, approval, entitlement
or accreditation, and there is no claim that any thereof is not in full force
and effect. Schedule 3(t) contains a true, complete and correct list of all
- 25 -
material Permits of the Company and its Subsidiaries indicating thereon the
expiration date of each such Permit. To the Company's knowledge, each material
Permit of the Company and its Subsidiaries that is scheduled to expire within 24
months of the Closing Date will be renewable by the Company or the applicable
Subsidiary without undue cost or expense to the Company or the applicable
Subsidiary.
u. Internal Accounting Controls. Except as set forth on Schedule
3(u), the Company and each of its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
v. Unconditional Obligation. The Company understands and
acknowledges that the number of Conversion Shares issuable upon conversion of
the Preferred Shares will increase in certain circumstances. The Company further
acknowledges that its obligation to issue shares upon conversion of the
Preferred Shares in accordance with this Agreement and Certificate is, in each
case, absolute and unconditional (except to the extent set forth in Section 11
of the Certificate) regardless of the dilutive effect that such issuance may
have on the ownership interests of other stockholders of the Company.
w. No Materially Adverse Contracts, Etc. Neither the Company nor
any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
x. Customers and Suppliers. There exists no actual or threatened
termination, cancellation or limitation of, or modification to or change in, the
business relationship between (i) any of the Company or any of its Subsidiaries,
on the one hand, and any customer or any group thereof, on the other hand, whose
agreements with any of the Company or any of its Subsidiaries are individually
or in the aggregate material to the business or operations of the Company and/or
any of its Subsidiaries, or (ii) any of the Company or any of its Subsidiaries,
on the one hand, and any material supplier thereof, on the other hand; and there
exists no present state of facts or circumstances that could give rise to or
result in any such termination, cancellation, limitation, modification or change
(including without limitation, the transactions contemplated hereby, pursuant to
the Financing Agreement, the Congress Loan or the CSD Acquisition). Schedule
3(x) lists the top fifty customers that are common to the Company and its
Subsidiaries (before giving effect to the CSD Acquisition) showing the total
revenues received during the most recently completed fiscal year by the Company
and its Subsidiaries (before giving effect to the CSD Acquisition), on the one
hand, and CSD, on the other hand. The Company is not aware of any facts or
circumstances that might give rise to a material reduction or loss of business
- 26 -
for the Company and its Subsidiaries (after giving effect to the CSD
Acquisition) from any customers listed on Schedule 3(x) as a result of the CSD
Acquisition or otherwise.
y. Tax Status. The Company and each of its Subsidiaries (i) has
made or filed all federal, foreign, state, local and municipal income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes), (ii) has paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and for which the Company has made appropriate
reserves for on its books, and (iii) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations (referred to in clause
(i) above) apply. There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the Company knows of no
basis for any such claim.
z. Transactions With Affiliates. Except as set forth on Schedule
3(z), and other than the grant of stock options described on Schedule 3(c), none
of the officers, directors, stockholders or employees of the Company or any
Subsidiary, any Person controlling, controlled by or under common control with
the Company, is presently a party to any transaction with the Company or any of
its Subsidiaries, including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
aa. Application of Takeover Protections. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement), including, without
limitation, pursuant to any shareholder rights plan or similar agreement or
instrument or other similar anti-takeover provision under the Articles of
Organization or the laws of the state of its incorporation which is or could
become applicable to the Buyers as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyers' ownership of the Securities.
bb. Shareholder's Rights Plan. The Company has not adopted a
shareholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of Common Stock or a change in control of the Company.
cc. CSD Acquisition Documents. (i) (A) The Company and each
Subsidiary (before giving effect to the CSD Acquisition), and to the Company's
knowledge, each other party to the Acquisition Agreement governing the CSD
Acquisition, each bill of sale, each assignment agreement, each assumption
agreement and all other agreements, instruments and documents entered into or
delivered in connection with the CSD Acquisition (including, without limitation
the final executed versions of each agreement attached as an exhibit to the CSD
acquisition agreement, each as amended, modified and supplement to date
- 27 -
(collectively, the "CSD Acquisition Documents"), is not in default on any of its
obligations under such CSD Acquisition Document, (B) all representations and
warranties made by the Company in the CSD Acquisition Documents and in the
certificates delivered in connection therewith are true and correct in all
material respects as of the date hereof and, to the best knowledge of the
Company, all material representations and warranties made in the Acquisition
Documents by or on behalf of the sellers thereunder, or any other party thereto
other than the Company, are true and correct in all material respects as of the
date hereof, (C) all written information with respect to the Company and the CSD
Acquisition, and, to the best knowledge of the Company, the business and all of
the property and assets (tangible and intangible) sold, assigned or otherwise
transferred to, or assumed or otherwise acquired by, the Company and certain of
its Subsidiaries pursuant to the Acquisition Documents (the "CSD Acquisition
Assets"), furnished to the Buyers by the Company or on behalf of the Company,
were, at the time the same were so furnished, complete and correct in all
material respects, or have been subsequently supplemented by other written
information, to the extent necessary to give each Buyer a true and accurate
knowledge of the subject matter of each of them in relation to the Company, its
Subsidiaries, the CSD Acquisition, the CSD Business and the CSD Acquisition
Assets acquired in connection with the CSD Acquisition, in all material
respects, (D) no representation, warranty or statement made by the Company or,
to its best knowledge, the sellers or any other party thereto other than the
Company, at the time they were made in any CSD Acquisition Document, or any
agreement, certificate, statement or document required to be delivered pursuant
to any CSD Acquisition Document contains any untrue statement of material fact
or omits to state a material fact necessary in order to make the statements
contained in such CSD Acquisition Documents not misleading in light of the
circumstances in which they were made, and (E) in connection with the CSD
Acquisition, the Company and certain of its Subsidiaries are acquiring the CSD
Acquisition Assets and, on the date hereof, after giving effect to the
transactions contemplated by this Agreement and the Financing Agreement, by the
CSD Acquisition Documents, and the Sale Order (as defined herein), will have
good title to such CSD Acquisition Assets free and clear of all Liens other than
the Liens created by the Financing Agreement and the agreements and instruments
entered into in connection therewith and other than Liens permitted by such
documents.
(ii) The Company (or its representatives) has delivered to
each Buyer a complete and correct copy of the CSD Acquisition Documents,
including all schedules and exhibits thereto and the Sale Order as currently in
effect, (B) each CSD Acquisition Document sets forth the entire agreement and
understanding of the parties thereto relating to the subject matter thereof, and
there are no other agreements, arrangements or understandings, written or oral,
relating to the matters covered thereby, (C) none of the CSD Acquisition
Documents nor the Sale Order has been amended or otherwise modified without the
prior written consent of the Buyers, (D) the execution, delivery and performance
of the CSD Acquisition Documents have been duly authorized by all necessary
action on the part of each such person or entity, (E) the CSD Acquisition has
been effected in accordance with the terms of the Sale Order, the Acquisition
Documents and all applicable law (including, without limitation, the United
States Bankruptcy Code (11 U.S.C. ss. 101, et seq.) (the "Bankruptcy Code"), as
amended, and any successor statute), (F) at the time of consummation of the CSD
Acquisition, there does not exist any judgment, order or injunction prohibiting
or imposing any material adverse condition upon the consummation of the CSD
Acquisition, (G) at the time of consummation thereof, all consents and approvals
of, and filings and registrations with, and all other actions in respect of, all
- 28 -
Legal Requirements required in order to consummate the CSD Acquisition shall
have been obtained, given, filed or taken and shall be in full force and effect,
(viii) all actions taken by the Company and its Subsidiaries pursuant to or in
furtherance of the CSD Acquisition have been taken in compliance in all material
respects with respective Acquisition Documents, the Bankruptcy Code and the Sale
Order, (ix) the Company and its Subsidiaries did not incur or assume any
liabilities or obligations pursuant to or in connection with the CSD Acquisition
other than those liabilities and obligations set forth on Schedule 3(cc)(ii),
and (x) each Acquisition Document is the legal, valid and binding obligation of
the parties thereto, enforceable against such parties in accordance with its
terms.
dd. Investment Company Status. The Company is not, and upon
consummation of the sale of the Securities and after giving effect to the CSD
Acquisition, will not be, an "investment company," a company controlled by an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
ee. Foreign Corrupt Practices. Neither the Company nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company or any Subsidiary used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
ff. Solvency. The Company individually and together with its
Subsidiaries on a consolidated basis (both before and after giving effect to the
CSD Acquisition, the transactions contemplated by this Agreement, the Financing
Agreement and the Congress Loan Documents) is solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not have, nor does it intend to take any action
that would impair, its ability to pay its debts from time to time incurred in
connection therewith as such debts mature.
gg. Broker's or Finder's Commissions. Except as set forth on
Schedule 3(gg), no broker's or finder's fee or commission will be payable by or
on behalf of the Company or any of its Subsidiaries with respect to the issuance
and sale of the Securities.
4. COVENANTS.
a. Reasonable Best Efforts. Each party shall use its reasonable
best efforts to timely satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
b. Use of Proceeds. The Company will use the proceeds from the
sale of the Preferred Shares as described with particularity on Schedule 4(b).
- 29 -
c. Financial Information.
(i) So long as any of the Securities remain outstanding, the
Company will provide the following information to each Buyer:
(A) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly period) in
each fiscal year, consolidated statements of operations, stockholders' equity
and cash flows of the Company and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such quarterly period, and a
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such quarterly period, setting forth in each case in comparative form figures
for the corresponding period in the preceding fiscal year, and certified by the
Chief Financial Officer of the Company, subject to changes resulting from
year-end adjustments;
(B) as soon as practicable and in any event within 90 days
after the end of each fiscal year, consolidated statements of operations,
stockholders' equity and cash flows of the Company and its Subsidiaries for such
year, and the consolidated balance sheet of the Company and its Subsidiaries as
at the end of such year, setting forth in each case in comparative form
corresponding consolidated figures from the preceding annual audit and certified
to the Company by independent public accountants of recognized national standing
selected by the Company;
(C) promptly after their becoming available, copies of all
registration statements and reports which the Company or any of its Subsidiaries
shall have filed with the SEC or any national securities exchange or quotation
system;
(D) promptly after the mailing thereof to the holders of
Common Stock of the Company, copies of all financial statements, reports and
proxy statements so mailed;
(E) promptly after their becoming available, copies of all
reports and compliance certificates filed in connection with the Financing
Agreements and the Congress Facility; and
(F) true, complete and correct copies of all documents,
reports, financial data and other information that each Buyer may reasonably
request.
(ii) The Company shall permit the authorized representatives
designated by each Buyer to visit and inspect any of the properties of the
Company or any of its Subsidiaries, including their books of account, and to
discuss their affairs, finances and accounts with their officers, all at such
times as each Buyer may reasonably request.
(iii) Each Buyer shall have the right to consult with and
advise the management of the Company and its subsidiaries, upon reasonable
notice at reasonable times from time to time, on all matters relating to the
operation of the Company and its Subsidiaries.
d. Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
- 30 -
issuance of shares of Common Stock needed to provide for the issuance of the
Conversion Shares issuable upon conversion of all outstanding Preferred Shares
(without regard to any limitations on conversions) in accordance with the terms
of the Certificate.
e. Listing. The Company shall promptly secure the listing of
all of the Registrable Securities (as defined in the Investors Rights Agreement)
upon each national securities exchange and automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents and the Certificate. So
long as any Securities are outstanding, the Company shall maintain the Common
Stock's authorization for quotation on the Nasdaq National Market or for listing
on the New York Stock Exchange (as applicable, the "Principal Market"). So long
as any Preferred Shares are outstanding and other than in connection with
Organic Changes (as defined in the Certificate) that have been properly
authorized by the holders of Preferred Shares in accordance with the
Certificate, neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Common Stock from the Principal Market. The Company shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 4(f).
f. Proxy Statement. The Company shall provide each stockholder
entitled to vote at the next meeting of stockholders of the Company, which
meeting shall occur on or before April 30, 2003 and the record date for such
meeting shall be established by the Company's Board of Directors on or before
March 15, 2003; a proxy statement, together with a form of proxies, which have
been previously approved by the Buyers and a counsel of their choice, soliciting
each such stockholder's affirmative vote at such stockholder meeting for
approval for the issuance of a number of Conversion Shares greater in the
aggregate than 19.99% of the number of shares of Common Stock outstanding
immediately prior to the Closing Date pursuant to applicable law, the rules of
the NASD and any other rules and regulations of the Principal Market (such
affirmative approval being referred to herein as the "Stockholder Approval"),
and the Company shall use its best efforts to solicit proxies to vote in favor
of such issuance and to cause the Board of Directors of the Company to recommend
to the stockholders that they approve such proposal.
g. Compliance with Law. The Company shall, and shall cause its
Subsidiaries, to comply in all material respects with all applicable Legal
Requirements (including, without limitation, all Environmental Laws).
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its transfer
agent, and any subsequent transfer agent, to issue certificates or credit shares
to the applicable balance accounts at the Depository Trust Company ("DTC"),
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares in such amounts as specified from time to time by each Buyer
to the Company upon conversion of the Preferred Shares (the "Irrevocable
Transfer Agent Instructions"), a form of which is attached as Exhibit D hereto.
- 31 -
Prior to registration of the Conversion Shares under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement. The Company warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 5 and stop transfer
instructions to give effect to Section 2(f) hereof (in the case of the
Conversion Shares, prior to registration of the Conversion Shares under the 1933
Act) will be given by the Company to its transfer agent and that the Securities
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement, the Certificate and the
Investors Rights Agreement. If a Buyer provides the Company with an opinion of
counsel, in a form reasonably acceptable to the Company, to the effect that a
public sale, assignment or transfer of Securities may be made without
registration under the 1933 Act or the Buyer provides the Company with
reasonable assurances that the Securities can be sold pursuant to Rule 144
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Company shall permit the
transfer, and, in the case of the Conversion Shares, promptly instruct its
transfer agent to issue one or more certificates, or credit shares to one or
more balance accounts at DTC, in such name and in such denominations as
specified by such Buyer and without any restrictive legend. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyers by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyers shall be entitled,
in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company to issue and sell the Preferred Shares
to each Buyer at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:
a. Such Buyer shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Company.
b. Such Buyer shall have delivered to the Company the Purchase
Price for the Preferred Shares being purchased by such Buyer at the Closing by
wire transfer of immediately available funds pursuant to the wire instructions
provided by the Company at least two (2) Business Days prior to the Closing.
c. The representations and warranties of such Buyer shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by such Buyer at or prior to the Closing Date.
- 32 -
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Preferred
Shares from the Company at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for each Buyer's sole benefit and may be waived by such
Buyer at any time in its sole discretion by providing the Company with prior
written notice thereof:
a. (i) The Company shall have executed each of the Transaction
Documents and copies of the agreements and documents evidencing or otherwise
relating to the Financing Agreement (all certified as true, complete and correct
by the Chief Executive Officer or Chief Financial Officer of the Company) and
delivered the same to such Buyer, (ii) McKim shall have executed and delivered
to the Buyers the Investors Rights Agreement and (iii) each party to the Voting
Agreement shall have executed and delivered to the Buyers the Voting Agreement.
b. The Certificate shall have been filed with and made effective
by the Secretary of State of the Commonwealth of Massachusetts, and a copy
thereof stamped as filed by the Secretary of State of the Commonwealth of
Massachusetts shall have been delivered to such Buyer.
c. The order of the United States Bankruptcy Court approving the
CSD Acquisition (the "Sale Order") shall be in the form attached hereto as
Exhibit E and (i) shall continue to be in full force and effect without
modification, amendment or supplement, (ii) no appeal shall have been filed
within the time period specified by Rule 8002(a) of the Federal Rules of
Bankruptcy Procedure ("FRBP"), (iii) in the event a timely appeal has been
filed, the effectiveness of the Sale Order shall not have been stayed in
accordance with Rule 8005 of the FRBP and (iv) in the event such order was
stayed pending appeal, such stay shall have been terminated by a subsequent
court order.
d. The Company shall have consummated the CSD Acquisition
pursuant to the Acquisition Documents (without any further amendment or
modification thereto that has not been approved in writing by the Buyers). All
conditions precedent to the obligations of all parties to the Acquisition
Documents to the consummation of the CSD Acquisition shall have been satisfied
(or, with the prior written consent of the Buyers, waived) in the reasonable
judgment of such Buyer.
e. The Company and its Subsidiaries shall have obtained all
required licenses, waivers, consents and approvals, governmental and otherwise
in connection with the transactions contemplated by the Financing Agreement,
this Agreement and the operation of the Company's business (including the CSD
Acquisition), and such licenses, waivers and consents and approvals shall be in
full force and effect.
f. Such Buyer shall have determined, in its sole discretion, that
no event or development shall have occurred since June 30, 2002 which could have
a Material Adverse Effect and that no material disruption or adverse
developments in the financial markets generally or affecting the securities of
- 33 -
companies in the Company's industry which makes it inadvisable for such Buyer to
proceed with the purchase of the Preferred Shares has occurred.
g. There shall exist no claim, action, suit, investigation,
litigation or proceeding, pending or threatened in any court or before any
arbitrator or Governmental Authority which relates to the CSD Acquisition, the
Sale Order, the Acquisition Documents, this Agreement or the Financing Agreement
or which, in the opinion of such Buyer, has any reasonable likelihood of having
a Material Adverse Effect.
h. The Company and its Subsidiaries shall have received the
proceeds of the advance under the $100,000,000 revolving credit facility ( the
"Congress Loans") to be provided by Congress Financial Corporation ("Congress")
and there shall be not less than $25 million in excess borrowings available
under the Congress Loan Documents as of the Closing Date, after giving effect to
the CSD Acquisition, the transactions contemplated hereby, under the Financing
Agreement and the Congress Loan Documents, and such Buyer shall have received
copies of the loan agreement, promissory note and other agreements, instrument,
certificates and documents securing, evidencing or otherwise relating to the
Congress Loans (the "Congress Loan Documents"), which shall be in form and
substance satisfactory to such Buyer and which shall be true, correct and
complete, as certified by the Chief Executive Officer or the Chief Financial
Officer of the Company.
i. The Common Stock (x) shall be designated for quotation or
listed on the Principal Market and (y) shall not have been suspended by the SEC
or the Principal Market from trading on the Principal Market nor shall
suspension by the SEC or the Principal Market have been threatened either (A) in
writing by the SEC or the Principal Market or (B) by falling below the minimum
listing maintenance requirements of the Principal Market.
j. The representations and warranties of the Company (both before
and after giving effect to the CSD Acquisition) shall be true, complete and
correct in all material respects (except for representations and warranties
qualified by materiality or Material Adverse Effect or such similar
qualification, which shall not be further qualified) as of the date when made
and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and the Company
shall have performed, satisfied and complied with the covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. Such Buyer shall
have received a certificate, executed by the Chief Executive Officer or the
Chief Financial Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
such Buyer, including, without limitation, an update as of the Closing Date
regarding the representation contained in Section 3(c) above.
k. Such Buyer shall have received the opinion of Davis, Malm &
D'Agostine, P.C., dated as of the Closing Date, in form, scope and substance
satisfactory to such Buyer and in substantially the form attached hereto as
Exhibit F.
- 34 -
l. The Company shall have executed and delivered to such Buyer
the Preferred Stock Certificates (in such denominations as such Buyer shall
request) for the Preferred Shares being purchased by such Buyer at the Closing.
m. The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b) above and in a form reasonably
acceptable to such Buyer (the "Resolutions").
n. As of the Closing Date, the Company shall have reserved out
of its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Preferred Shares, at least 2,380,953 shares of Common
Stock.
o. The Irrevocable Transfer Agent Instructions, in the form of
Exhibit D attached hereto, shall have been delivered to such Buyer, duly
executed by the Company and acknowledged in writing by the Company's transfer
agent.
p. The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company and each
Subsidiary in such entity's state of incorporation or organization issued by the
Secretary of State of such state of incorporation or organization as of a date
within five days of the Closing Date.
q. The Company shall have delivered to such Buyer a certified
copy of the Articles of Organization as certified (or, in the case of the
Certificate, stamped as filed) by the Secretary of State of the Commonwealth of
Massachusetts as of a date within five (5) days of the Closing Date.
r. The Company shall have delivered to such Buyer a secretary's
certificate, dated as of the Closing Date, certifying as to (A) the Resolutions,
(B) the Articles of Organization and (C) the By-laws, each as in effect at the
Closing.
s. The Company shall have made all filings under all applicable
federal and state securities laws necessary to consummate the issuance of the
Securities pursuant to this Agreement in compliance with such laws.
t. The Company shall have delivered to such Buyer a letter from
the Company's transfer agent certifying the number of shares of Common Stock
outstanding as of a date within five days of the Closing Date.
u. Such Buyer shall be satisfied, in its sole discretion, with
the terms, amount and scope of all Policies in effect with respect to the
Company and its Subsidiaries (both before and after giving effect to the CSD
Acquisition).
v. Such Buyer shall be satisfied, in its sole discretion, with
all ERISA, environmental, tax and labor matters relating to the Company and its
Subsidiaries (both before and after giving effect to the CSD Acquisition).
- 35 -
w. Such Buyer shall be satisfied, in its sole discretion, with
the terms, conditions and indemnities of each contract, agreement or instrument
being assumed or guaranteed by the Company in connection with the CSD
Acquisition.
x. After giving effect to the payment of the purchase price for
the CSD Acquisition and all expenses of the Company and its Subsidiaries in
connection therewith, the Financing Agreement and the Congress Loans, there
shall be not less than $25,000,000 of unrestricted borrowing availability under
the Congress Loan Documents, as certified to such Buyer in writing by the Chief
Executive Officer or Chief Financial Officer of the Company.
y. Such Buyer shall have received such other agreements,
instruments, certificates and other documents as it may determine are customary
for the transactions contemplated by the Transaction Documents, in each case in
form and substance satisfactory to such Buyer.
8. INDEMNIFICATION.
In consideration of each Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company's other obligations under the Transaction Documents and the
Certificate, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of Preferred Shares and all of their stockholders,
officers, directors, managers, members, employees and direct or indirect
investors and any of the foregoing persons' agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents, the Certificate or any other certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents, the Certificate or any other certificate, instrument or document
contemplated hereby or thereby, (c) any cause of action, suit or claim brought
or made against such Indemnitee (other than a cause of action, suit or claim
which is (x) brought or made by the Company and (y) is not a shareholder
derivative suit) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents, the
Certificate or any other certificate, instrument or document contemplated hereby
or thereby, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities or
(iii) the status of such Buyer or holder of Securities as an investor in the
Company. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Except as otherwise set forth herein, the
mechanics and procedures with respect to the rights and obligations under this
Section 8 shall be the same as those set forth in Section 5 of the Investors
Rights Agreement, including, without limitation, those procedures with respect
- 36 -
to the settlement of claims and the Company's rights to assume the defense of
claims.
9. MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between each Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
- 37 -
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended or waived other than by an instrument in writing signed
by the Company and the holders of at least a majority of the Preferred Shares
then outstanding. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Preferred Shares then
outstanding. No consideration shall be offered or paid to any person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents or the Certificate unless the same consideration also is offered to
all of the parties to the Transaction Documents or holders of Preferred Shares,
as the case may be.
f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one (1) Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
Clean Harbors, Inc.
1501 Washington Street
Braintree, MA 02185
Attention: Chief Financial Officer
Telephone: 781-849-1800, Ext. 4450
Facsimile: 781-848-1632
With a copy to:
Davis, Malm & D'Agostine, P.C.
One Boston Place
Boston, Massachusetts 02108
Attention: C. Michael Malm, Esq.
Telephone: 617-365-2500
Facsimile: 617-525-6215
If to the Transfer Agent:
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
Attention: Fran Noftel or Donna Ansbro
Telephone: 718-921-8200
Facsimile: 718-921-8337
- 38 -
If to a Buyer, to it at the address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or at such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
g. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least a majority of the Preferred Shares
then outstanding, including by merger or consolidation. A Buyer may assign some
or all of its rights hereunder without the consent of the Company; provided,
however, that the transferee has agreed in writing to be bound by the applicable
provisions of this Agreement.
h. No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. The representations and warranties of the Company
and the Buyers contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4, 5 and 9, and the indemnification provisions set forth in
Section 8, shall survive the Closing. Each Buyer shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.
j. Publicity. The Company and each Buyer shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy thereof
and in no event may the Company disclose publicly the identity of any Buyer or
their nominees or affiliates without the prior consent of such Buyer).
k. Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
- 39 -
l. Placement Agent. Except as disclosed in writing to the Buyers,
the Company acknowledges that it has not engaged any Person as placement agent
or broker in connection with the sale of the Preferred Shares. The Company shall
be responsible for the payment of any placement agent's fees, financial advisory
fees, or brokers' commissions (other than for persons engaged by or on behalf of
any Buyer) relating to or arising out of the transactions contemplated hereby.
The Company shall pay, and hold each Buyer harmless against, any liability, loss
or expense (including, without limitation, attorney's fees and out-of-pocket
expenses) arising in connection with any such claim.
m. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
n. Remedies. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and the
Certificate and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
o. Payment Set Aside. To the extent that the Company makes a
payment or payments to any Buyer hereunder or pursuant to the Investors Rights
Agreement, the Certificate or the Buyers enforce or exercise their rights
hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
[signature page follows]
- 40 -
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
CLEAN HARBORS, INC.
By: ______________________________
Name:
Title:
BUYERS:
CERBERUS CH LLC
By: Cerberus Partners, L.P.
its Managing Member
By: Cerberus Associates, L.L.C.
its General Partner
By:_______________________________
Name:
Title:
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.
its General Partner
By:______________________________
Name:
Title:
OAK HILL SECURITIES FUND II, L.P.
By: Oak Hill Securities GenPar II, L.P.
its General Partner
By: Oak Hill Securities MGP II, Inc.
its General Partner
By:______________________________
Name:
Title:
LERNER ENTERPRISES, L.P.
By: Oak Hill Asset Management, Inc.
As advisor and attorney-in-fact to
Lerner Enterprises
By:______________________________
Name:
Title:
P&PK FAMILY LTD. PARTNERSHIP
By: Oak Hill Asset Management, Inc.
As advisor and attorney-in-fact to
P&PK Family Ltd. Partnership
By:_______________________________
Name:
Title:
CARDINAL INVESTMENT PARTNERS I, L.P.
By: Oak Hill Advisors, L.P.
As advisor and attorney-in-fact to
Cardinal Investment Partners I, L.P.
By: Oak Hill Advisors MGP, Inc.
its General Partner
By:_______________________________
Name:
Title:
SCHEDULE A
Number of Amount of
Investor Address Preferred Commitment of Investor's Representatives' Address
and Facsimile Number Shares Preferred Shares and Facsimile Number
----------------------------- ------------- ---------------- ------------------------------------
Cerberus CH LLC 16,750 $16,750,000 Schulte Roth & Zabel LLP
450 Park Avenue, 28th Floor 919 Third Avenue
New York, NY 10022 New York, NY 10022
Telephone: (212) 891-2100 Attn: Stuart Freedman, Esq.
Facsimile: (212) 891-1540 Telephone: (212) 756-2000
Attention: Kevin Genda and Daniel Wolf Facsimile: (212) 593-5955
Oak Hill Securities Fund, L.P. Paul, Weiss, Rifkind, Wharton &
65 East 55th Street Garrison
New York, New York 10022 3,465 $3,465,000 1285 Avenue of the Americas
Telephone: (212) 326-1552 New York, NY 10019
Facsimile: (212) 838-8411 Telephone: (212) 373-3000
Attention: William H. Bohnsack, Jr. Facsimile: (212) 757-3990
Attention: Eric Goodison
Oak Hill Securities Fund II, L.P. Paul, Weiss, Rifkind, Wharton &
65 East 55th Street Garrison
New York, New York 10022 3,465 $3,465,000 1285 Avenue of the Americas
Telephone: (212) 326-1552 New York, NY 10019
Facsimile: (212) 838-8411 Telephone: (212) 373-3000
Attention: William H. Bohnsack, Jr. Facsimile: (212) 757-3990
Attention: Eric Goodison
Lerner Enterprises, L.P. Paul, Weiss, Rifkind, Wharton &
65 East 65th Street Garrison
New York, New York 10022 730 $730,000 1285 Avenue of the Americas
Telephone: (212) 326-1552 New York, NY 10019
Facsimile: (212) 838-8411 Telephone: (212) 373-3000
Attention: William H. Bohnsack, Jr. Facsimile: (212) 757-3990
Attention: Eric Goodison
P&PK Family Ltd. Partnership Paul, Weiss, Rifkind, Wharton &
65 East 55th Street Garrison
New York, New York 10021 165 $165,000 1285 Avenue of the Americas
Telephone: (212) 326-1552 New York, NY 10019
Facsimile: (212) 838-8411 Telephone: (212) 373-3000
Attention: William H. Bohnsack, Jr. Facsimile: (212) 757-3990
Attention: Eric Goodison
Cardinal Investment Partners I, L.P. Paul, Weiss, Rifkind, Wharton & Garrison
65 East 55th Street 425 $425,000 1285 Avenue of the Americas
New York, New York 10021 New York, NY 10019
Telephone: (212) 326-1552 Telephone: (212) 373-3000
Facsimile: (212) 838-8411 Facsimile: (212) 757-3990
Attention: William H. Bohnsack, Jr. Attention: Eric Goodison
Execution Copy
================================================================================
CLEAN HARBORS, INC.
INVESTORS RIGHTS AGREEMENT
Dated as of September 6, 2002
================================================================================
TABLE OF CONTENTS Page
----------------- ----
1. Definitions................................................................1
2. REGISTRATION UNDER THE SECURITIES ACT......................................6
2.1. Demand Registration...............................................6
2.2. Incidental Registration...........................................9
2.3. S-3 Registration; Shelf Registration.............................11
2.4. Underwritten Offerings...........................................12
2.5. Expenses.........................................................12
2.6. Conversions; Exercises...........................................12
2.7. Registration Eligibility.........................................13
3. HOLDBACK ARRANGEMENTS.....................................................13
3.1. Restrictions on Sale by Holders of Registrable Securities........13
3.2. Restrictions on Sale by the Company and Others...................14
4. REGISTRATION PROCEDURES...................................................14
4.1. Obligations of the Company.......................................14
4.2. Seller Information...............................................18
4.3. Notice to Discontinue............................................19
5. INDEMNIFICATION; CONTRIBUTION.............................................19
5.1. Indemnification by the Company...................................19
5.2. Indemnification by Holders.......................................20
5.3. Conduct of Indemnification Proceedings...........................20
5.4. Contribution.....................................................21
5.5. Indemnification Payments.........................................21
5.6. Other Indemnification............................................21
6. General Provisions Regarding Registrations................................22
6.1. Adjustments Affecting Registrable Securities.....................22
6.2. Registration Rights to Others....................................22
6.3. Availability of Information; Rule 144; Rule 144A;
Other Exemptions..............................................22
7. PROVISIONS APPLICABLE TO SECURITYHOLDERS..................................22
7.1. General Restriction..............................................22
7.2. Right of Co-Sale.................................................22
7.3. Permitted Transfers..............................................23
8. General.................................................................. 24
8.1. Amendments and Waivers...........................................24
8.2. Notices..........................................................24
8.3. Successors and Assigns...........................................25
8.4. Counterparts.....................................................26
8.5. Descriptive Headings, Etc........................................26
8.6. Severability.....................................................26
8.7. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.......................26
8.8. Remedies; Specific Performance...................................27
8.9. Entire Agreement.................................................27
8.10. Further Assurances...............................................27
8.11. Construction.....................................................27
8.12. No Inconsistent Agreement........................................27
8.13. Costs and Attorneys' Fees........................................27
-ii-
INVESTORS RIGHTS AGREEMENT
This INVESTORS RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of September 6, 2002, by and among Clean Harbors, Inc., a Massachusetts
corporation (the "Company") the investors identified as Initial Holders on the
signature pages hereto (the "Initial Holders"), Alan S. McKim and the Trustees
of Alan S. McKim's Children's Trust (the "Trust," and together with Alan S.
McKim, "McKim").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, simultaneously herewith, the Company and certain of its
subsidiaries, as borrowers, certain of the Company's subsidiaries, as
guarantors, the financial institutions from time to time parties thereto, as
lenders, (the "Initial Lenders") and Ableco Finance, LLC, as agent for the
Initial Lenders, have entered into a Financing Agreement, dated as of the date
hereof (the "Financing Agreement"), pursuant to which the Initial Lenders have
agreed to make senior and senior subordinated loans and other extensions of
credit to the Company.
WHEREAS, simultaneously herewith, the Company and the Initial Holders,
each of whom is an Affiliate of one of the Initial Lenders, have entered into a
Preferred Stock Purchase Agreement (the "Purchase Agreement"), pursuant to which
the Company has issued and sold to the Initial Holders and the Initial Holders
have purchased, 25,000 shares of Series C Convertible Redeemable Preferred
Stock, par value $0.01 per share, of the Company (the "Series C Preferred
Stock").
WHEREAS, in order to induce the Initial Lenders to enter into the
Financing Agreement and the Initial Holders to enter into the Securities
Purchase Agreement, (i) the Company is granting the Initial Holders registration
rights and certain other rights and (ii) McKim, who will benefit as a
significant shareholder of the Company by the Initial Lenders making loans to
the Company under the Financing Agreement and the Company's issuance and sale of
the Series C Preferred Stock to the Initial Holders under the Purchase
Agreement, is granting the Initial Holders the right to tag-along to certain
sales of Company securities by McKim, all subject to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate" shall mean (i) with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person, and (ii) with respect to any
individual, shall also mean the spouse, sibling, child, step-child, grandchild,
niece, nephew or parent of such Person, or the spouse thereof.
"Agents" shall have the meaning set forth in Section 5.1.
"Agreement" shall have the meaning set forth in the preamble.
"Common Stock" shall mean shares of common stock, par value $.01 per
share, of the Company.
"Company" shall have the meaning set forth in the preamble.
"Conversion Shares" shall mean the shares of Common Stock or other
securities issued or issuable upon conversion of the Series C Preferred Stock.
"Convey" has the meaning set forth in Section 7.1.
"Demand Registration" shall mean a registration required to be
effected by the Company pursuant to Section 2.1.
"Demand Registration Statement" shall mean a registration statement of
the Company which covers the Registrable Securities requested to be included
therein pursuant to the provisions of Section 2.1 and all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference (or deemed to be incorporated by
reference) therein.
"Encumbrance" shall mean any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restriction of any kind.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Financing Agreement" shall have the meaning set forth in the first
recital.
"Governmental Entity" shall mean any domestic (federal and state),
foreign or supranational court, commission, governmental body, regulatory
agency, authority or tribunal.
"Holders" shall mean the Initial Holders for so long as they are the
registered owner of any Registrable Securities and such of their heirs,
successors and permitted assigns (including any permitted transferees of
Registrable Securities) who acquire or are otherwise the transferee of
Registrable Securities, directly or indirectly, from any Initial Holder (or any
subsequent Holder), for so long as such heirs, successors and permitted assigns
are the registered owner of any Registrable Securities. For purposes of this
Agreement, a Person will be deemed to be a Holder whenever such Person holds an
option to purchase, or a security convertible into or exercisable or
exchangeable for, Registrable Securities, whether or not such purchase,
conversion, exercise or exchange has actually been effected and disregarding any
legal restrictions upon the exercise of such rights. Registrable Securities
issuable upon exercise of an option or upon conversion, exchange or exercise of
another security shall be deemed outstanding for the purposes of this Agreement.
2
"Holder's Counsel" shall mean one firm of counsel (per registration)
to the Holders of Registrable Securities participating in such registration,
which counsel shall be selected (i) in the case of a Demand Registration, by the
Initiating Holders holding a majority of the Registrable Securities for which
registration was requested in the Request, and (ii) in all other cases, by the
Majority Holders of the Registration.
"Incidental Registration" shall mean a registration required to be
effected by the Company pursuant to Section 2.2.
"Incidental Registration Statement" shall mean a registration
statement of the Company, which covers the Registrable Securities requested to
be included therein pursuant to the provisions of Section 2.2 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Initial Holders" shall have the meaning set forth in the preamble.
"Initial Lenders" shall have the meaning set forth in the first
recital.
"Initiating Holders" shall mean, with respect to a particular
registration, the Holders who initiated the Request for such registration.
"Inspector" or "Inspectors" has the meaning set forth in Section
4.1(g).
"Majority Holders" shall mean one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities then
outstanding.
"Majority Holders of the Registration" shall mean, with respect to a
particular registration, one or more Holders of Registrable Securities who would
hold a majority of the Registrable Securities to be included in such
registration.
"McKim" has the meaning set forth in the preamble.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq National Market" shall have the meaning set forth in Section
4.1(k).
"No-Action Letter" shall have the meaning set forth in Section 2.7
"Permitted Family Transferee" has the meaning set forth in Section
7.3.
"Person" shall mean any individual, firm, partnership, corporation,
trust, joint venture, association, joint stock company, limited liability
company, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof, and shall
include any successor (by merger or otherwise) of such entity.
"Pro Rata Share" has the meaning set forth in Section 7.2(a).
3
"Prospectus" shall mean the prospectus included in a Registration
Statement (including, without limitation, any preliminary prospectus and any
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act) and any such Prospectus as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to such Prospectus, including post-effective amendments, and in each
case including all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Purchase Agreement" has the meaning set forth in the second recital.
"Purchaser" has the meaning set forth in Section 7.2(a).
"Purchase Offer" has the meaning set forth in Section 7.2(a).
"Records" shall have the meaning set forth in Section 4.1(g).
"Registrable Securities" shall mean (i) any Conversion Shares, and
(ii) any other securities of the Company (or any successor or assign of the
Company, whether by merger, consolidation, sale of assets or otherwise) which
may be issued with respect to, in exchange for, or in substitution of,
Conversion Shares by reason of any dividend or stock split, combination of
shares, merger, consolidation, recapitalization, reclassification,
reorganization, sale of assets or similar transaction. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when (A) a registration statement with respect to the sale of such securities
shall have been declared effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement, (B)
such securities are sold pursuant to Rule 144 (or any similar provisions then in
force) under the Securities Act, (C) such securities have been otherwise
transferred and a new certificate or other evidence of ownership for them not
bearing the legend restricting further transfer shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration under the Securities Act, or (D) such securities shall have ceased
to be outstanding.
"Registration Expenses" shall mean any and all reasonable out of
pocket expenses incident to performance of or compliance with this Agreement by
the Company and its subsidiaries, including, without limitation (i) all SEC,
stock exchange, NASD and other registration, listing and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws and compliance with the rules of any stock exchange (including
fees and disbursements of counsel in connection with such compliance and the
preparation of a blue sky memorandum and legal investment survey), (iii) all
printers' fees and costs incurred in printing, distributing, mailing and
delivering any Registration Statement, any Prospectus and any other document
relating to the performance of or compliance with this Agreement, (iv) the fees
and disbursements of counsel for the Company, (v) the fees and disbursements of
Holders' Counsel, (vi) the fees and disbursements of all independent public
accountants (including the expenses of any audit and/or "cold comfort" letters)
and the fees and expenses of other Persons, including experts, retained by the
Company, (vii) the expenses incurred in connection with making road show
presentations and holding meetings with potential investors to facilitate the
distribution and sale of Registrable Securities, (viii) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
4
securities, (ix) premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable Securities
being registered, and (x) all internal expenses of the Company (including all
salaries and expenses of officers and employees performing legal or accounting
duties); provided, however, Registration Expenses shall not include discounts
and commissions payable to underwriters, selling brokers, dealer managers or
other similar Persons engaged in the distribution of any of the Registrable
Securities; provided, further, that in any case where Registration Expenses are
not to be borne by the Company, such expenses shall not include salaries of
Company personnel or general overhead expenses of the Company, auditing fees,
premiums or other expenses relating to liability insurance required by
underwriters of the Company or other expenses for the preparation of financial
statements or other data normally prepared by the Company in the ordinary course
of its business or which the Company would have incurred in any event; and
provided, further, that in the event the Company shall not register any
securities with respect to which it had given written notice of its intention to
register to Holders, notwithstanding anything to the contrary in the foregoing,
all of the costs incurred by the Holders in connection with such registration
shall be deemed to be Registration Expenses.
"Registration Statement" shall mean any registration statement of the
Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Request" shall have the meaning set forth in Section 2.1(a).
"SEC" shall mean the Securities and Exchange Commission, or any
successor agency having jurisdiction to enforce the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, and the rules and regulations thereunder, or any successor
statute.
"Series C Preferred Stock" shall have the meaning set forth in the
second recital.
"Shelf Registration" shall have the meaning set forth in Section
2.1(a).
"Stockholders" shall mean, collectively, the holders of Common Stock.
"Subordinated Note Holders" shall have the meaning set forth in
Section 2.1(b).
"Subordinated Note Holder Registration Rights Agreement" shall have
the meaning set forth in Section 2.1(b).
"Subordinated Note Holder Warrant Shares" shall have the meaning set
forth in Section 2.1(b).
"Underwriters" shall mean the underwriters, if any, of the offering
being registered under the Securities Act.
5
"Underwritten Offering" shall mean a sale of securities of the Company
to an Underwriter or Underwriters for reoffering to the public.
"Withdrawn Demand Registration" shall have the meaning set forth in
Section 2.1(a).
"Withdrawn Request" shall have the meaning set forth in Section
2.1(a).
2. REGISTRATION UNDER THE SECURITIES ACT.
2.1. Demand Registration.
(a) Right to Demand Registration. Subject to Section
2.1(c) and Section 2.7 hereof, at any time or from time to time, any Initial
Holder (or an assignee to whom such Initial Holder has expressly delegated or
assigned all or any portion of its rights under this sentence) shall have the
right to request in writing that the Company register all or part of such
Holders' Registrable Securities (a "Request") (which Request shall specify the
amount of Registrable Securities intended to be disposed of by such Holders and
the intended method of disposition thereof) by filing with the SEC a Demand
Registration Statement. As promptly as practicable, but no later than 15 days
after receipt of a Request, the Company shall give written notice of such
requested registration to all other Holders of Registrable Securities. Subject
to Section 2.1(b), the Company shall include in a Demand Registration (A) the
Registrable Securities intended to be disposed of by the Initiating Holders and
(B) the Registrable Securities intended to be disposed of by any other Holder
which shall have made a written request (which request shall specify the amount
of Registrable Securities to be registered and the intended method of
disposition thereof) to the Company for inclusion thereof in such registration
within 20 days after the receipt of such written notice from the Company. The
Company shall, as expeditiously as reasonably practicable following a Request,
use its best efforts to cause to be filed with the SEC a Demand Registration
Statement providing for the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
all such Holders, to the extent necessary to permit the disposition of such
Registrable Securities to be registered in accordance with the intended methods
of disposition thereof specified in such Request or further requests (including,
without limitation, by means of a shelf registration pursuant to Rule 415 under
the Securities Act (a "Shelf Registration") if so requested and if the Company
is then eligible to use such a registration). The Company shall use its best
efforts to have such Demand Registration Statement declared effective by the SEC
as soon as practicable thereafter and to keep such Demand Registration Statement
continuously effective for the period specified in Section 4.1(b).
(i) A Request may be withdrawn prior to the filing of
the Demand Registration Statement by the Majority Holders of the
Registration (a "Withdrawn Request") and a Demand Registration
Statement may be withdrawn prior to the effectiveness thereof by the
Majority Holders of the Registration (a "Withdrawn Demand
Registration"), and such withdrawals shall be treated as a Demand
Registration which shall have been effected pursuant to this Section
2.1, unless the Holders of Registrable Securities to be included in
such Registration Statement reimburse the Company for its reasonable
out-of-pocket Registration Expenses relating to the preparation and
filing of such Demand Registration Statement (to the extent actually
6
incurred), in which case such withdrawal shall not be treated as a
Demand Registration effected pursuant to this Section 2.1 (and shall
not be counted toward the number of Demand Registrations); provided,
however, that if a Withdrawn Request or Withdrawn Registration
Statement is made (A) because of a material adverse change in the
business, financial condition or prospects of the Company, or (B)
because the sole or lead managing Underwriter advises that the amount
of Registrable Securities to be sold in such offering be reduced
pursuant to Section 2.1(b) by more than 15% of the Registrable
Securities to be included in such Registration Statement, then such
withdrawal shall not be treated as a Demand Registration effected
pursuant to this Section 2.1 (and shall not be counted toward the
number of Demand Registrations) and the Company shall pay all
Registration Expenses in connection therewith. Any Holder requesting
inclusion in a Demand Registration may, at any time prior to the
effective date of the Demand Registration Statement (and for any
reason) revoke such request by delivering written notice to the
Company revoking such requested inclusion.
(ii) The registration rights granted pursuant to the
provisions of this Section 2.1 shall be in addition to the
registration rights granted pursuant to the other provisions of
Section 2 hereof.
(b) Priority in Demand Registrations. If a Demand
Registration involves an Underwritten Offering, and the sole or lead managing
Underwriter, as the case may be, of such Underwritten Offering shall advise the
Company in writing (with a copy to each Holder requesting registration) on or
before the date five days prior to the date then scheduled for such offering
that, in its opinion, the amount of Registrable Securities requested to be
included in such Demand Registration exceeds the number which can be sold in
such offering within a price range acceptable to the Majority Holders of the
Registration (such writing to state the basis of such opinion and the
approximate number of Registrable Securities which may be included in such
offering), and the Request is not thereafter withdrawn, the Company shall
include in such Demand Registration, to the extent of the number which the
Company is so advised may be included in such offering, (i) the Registrable
Securities requested to be included in the Demand Registration by the Holders
and (ii) the Common Stock issuable upon exercise of warrants (the "Subordinated
Note Holder Warrant Shares") issued to the holders of the Company's Senior
Subordinated Notes due 2008 (the "Subordinated Note Holders") to the extent
requested to be registered by the Subordinated Note Holders exercising
"piggyback" registration rights pursuant to the terms of that certain
Registration Rights Agreement, dated as of April 30, 2001, among the
Subordinated Note Holders and the Company as in effect on the date hereof (the
"Subordinated Note Holder Registration Rights Agreement"), in each case
allocated pro rata in proportion to the number of Registrable Securities and
Subordinated Note Holder Warrant Shares to be registered by the Subordinated
Note Holders requested to be included in such Demand Registration by each of
them. In the event the Company shall not, by virtue of this Section 2.1(b),
include in any Demand Registration all of the Registrable Securities of any
Holder requested to be included in such Demand Registration, such Holder may,
upon written notice to the Company given within five days of the date such
Holder first is notified of such matter, further reduce the amount of
Registrable Securities it desires to have included in such Demand Registration,
whereupon only the Registrable Securities, if any, that it desires to have
7
included will be so included and the Holders not so reducing shall be entitled
to a corresponding pro rata increase in the amount of Registrable Securities to
be included in such Demand Registration.
(c) Limitations on Registrations. The rights of Holders of
Registrable Securities to request Demand Registrations pursuant to Section
2.1(a) are subject to the following limitations: in no event shall the Company
be required to effect a Demand Registration unless the aggregate offering price,
net of underwriting discounts and commissions, is at least $5,000,000; provided,
however, that the Company shall be required to effect a Demand Registration
regardless of the aggregate offering price in the event that the Majority
Holders are disposing of all of the Registrable Securities held by them; and
(iii) in no event shall the Company be required to effect more than (A) two
Demand Registrations for the benefit of Cerberus CH LLC, an Initial Holder, and
its successors and assigns and (B) one Demand Registration for the benefit of
all of the Initial Holders that are Affiliates of Oak Hill Advisors, Inc. ("Oak
Hill") or accounts or funds that Oak Hill or its Affiliates control or advise,
and their successor and assigns; provided, however, that such number shall be
increased to the extent the Company (x) does not include in what would otherwise
be the final registration for which the Company is required to pay Registration
Expenses the number of Registrable Securities requested to be registered by the
Holders by reason of Section 2.1(b) or (y) terminates a Shelf Registration
pursuant to Section 2.3 prior to the time that all Registrable Securities
covered by such Shelf Registration have been sold; and provided, further, that
the Registration Expenses in connection with each additional Demand Registration
shall be allocated pro rata among all Persons on whose behalf securities of the
Company are included in such registration, on the basis of the respective
amounts of the securities then being registered on their behalf.
(d) Underwriting; Selection of Underwriters. Notwithstanding
anything to the contrary contained in Section 2.1(a), if the Initiating Holders
holding a majority of the Registrable Securities for which registration was
requested in the Request so elect, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of a firm commitment
Underwritten Offering and such Initiating Holders may require that all Persons
(including other Holders) participating in such registration sell their
Registrable Securities to the Underwriters at the same price and on the same
terms of underwriting applicable to the Initiating Holders. If any Demand
Registration involves an Underwritten Offering, the sole or managing
Underwriters and any additional investment bankers and managers to be used in
connection with such registration shall be selected by the Company subject to
the approval of the Majority Holders of the Registration.
(e) Effective Registration Statement; Suspension. A Demand
Registration Statement shall not be deemed to have become effective (and the
related registration will not be deemed to have been effected) (i) unless it has
been declared effective by the SEC and remains effective in compliance with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Demand Registration Statement for the
time period specified in Section 4.1(b), (ii) if the offering of any Registrable
Securities pursuant to such Demand Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, or (iii) if, in the case of an Underwritten
Offering, the conditions to closing specified in an underwriting agreement to
which the Company is a party are not satisfied (other than by the sole reason of
any breach or failure by the Holders of Registrable Securities) and are not
otherwise waived.
8
(f) Registration Statement Form. Registrations under this
Section 2.1 shall be on Form S-3 (or a successor form thereto adopted by the
SEC) or, if such Form is not then available, on such other appropriate
registration form of the SEC as shall be selected by the Initiating Holders
holding a majority of the Registrable Securities for which the registration was
requested in the Request and which shall be available for the sale of
Registrable Securities in accordance with the intended method or methods of
disposition specified in the requests for registration. The Company agrees to
include in any such Registration Statement all information which any selling
Holder, upon advice of counsel, shall reasonably request.
(g) Other Registrations. During the period (i) beginning on
the date of a Request and (ii) ending on the date that is 90 days after the date
that a Demand Registration Statement filed pursuant to such Request has been
declared effective by the SEC or, if the Holders shall withdraw such Request or
such Demand Registration Statement, on the date of such Withdrawn Request or
such Withdrawn Registration Statement, the Company shall not, without the
consent of the Majority Holders of the Registration, file a registration
statement pertaining to any other securities of the Company except to the extent
(if any) that such filing may then be required and not subject to deferral under
the Subordinated Note Holder Registration Rights Agreement.
2.2. Incidental Registration.
(a) Right to Include Registrable Securities. (i) If the
Company at any time or from time to time proposes to register any of its
securities under the Securities Act (other than in a registration on Form S-4 or
S-8 or any successor form to such forms and other than pursuant to Section 2.1
or 2.3) whether or not pursuant to registration rights granted to other holders
of its securities and whether or not for sale for its own account, the Company
shall deliver prompt written notice (which notice shall be given at least 45
days prior to such proposed registration) to all Holders of Registrable
Securities of its intention to undertake such registration, describing in
reasonable detail the proposed registration and distribution (including the
anticipated range of the proposed offering price, the class and number of
securities proposed to be registered and the distribution arrangements) and of
such Holders' right to participate in such registration under this Section 2.2
as hereinafter provided. Subject to the other provisions of this Section 2.2(a)
and Section 2.2(b), upon the written request of any Holder made within 30 days
after the receipt of such written notice (which request shall specify the amount
of Registrable Securities to be registered and the intended method of
disposition thereof), the Company shall effect the registration under the
Securities Act of all Registrable Securities requested by Holders to be so
registered (an "Incidental Registration"), to the extent required to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered, by inclusion of such Registrable
Securities in the Registration Statement which covers the securities which the
Company proposes to register and shall cause such Registration Statement to
become and remain effective with respect to such Registrable Securities in
accordance with the registration procedures set forth in Section 4. If an
Incidental Registration involves an Underwritten Offering, immediately upon
notification to the Company from the Underwriter of the price at which such
securities are to be sold, the Company shall so advise each participating
Holder. The Holders requesting inclusion in an Incidental Registration may, at
9
any time prior to the effective date of the Incidental Registration Statement
(and for any reason), revoke such request by delivering written notice to the
Company revoking such requested inclusion.
(ii) If at any time after giving written notice of its
intention to register any securities and prior to the effective date
of the Incidental Registration Statement filed in connection with such
registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may,
at its election, give written notice of such determination to each
Holder of Registrable Securities and, thereupon, (A) in the case of a
determination not to register, the Company shall be relieved of its
obligation to register any Registrable Securities in connection with
such registration (but not from its obligation to pay the Registration
Expenses incurred in connection therewith), without prejudice,
however, to the rights of Holders to cause such registration to be
effected as a registration under Section 2.1 and (B) in the case of a
determination to delay such registration, the Company shall be
permitted to delay the registration of such Registrable Securities for
the same period as the delay in registering such other securities;
provided, however, that if such delay shall extend beyond 120 days
from the date the Company received a request to include Registrable
Securities in such Incidental Registration, then the Company shall
again give all Holders the opportunity to participate therein and
shall follow the notification procedures set forth in the preceding
paragraph. There is no limitation on the number of such Incidental
Registrations pursuant to this Section 2.2 which the Company is
obligated to effect.
(iii) The registration rights granted pursuant to the
provisions of this Section 2.2 shall be in addition to the
registration rights granted pursuant to the other provisions of
Section 2 hereof.
(b) Priority in Incidental Registration. If an Incidental
Registration involves an Underwritten Offering (on a firm commitment basis), and
the sole or the lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date five days prior to the
date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable Securities) requested to be included in such
registration exceeds the amount which can be sold in such offering without
materially interfering with the successful marketing of the securities being
offered (such writing to state the basis of such opinion and the approximate
number of such securities which may be included in such offering without such
effect), the Company shall include in such registration, to the extent of the
number which the Company is so advised may be included in such offering without
such effect, (i) in the case of a registration initiated by the Company, (A)
first, the securities that the Company proposes to register for its own account
(but solely to the extent that the proceeds thereof shall not be used to
purchase shares of common stock of the Company or other securities of the
Company), (B) second, the Registrable Securities requested to be included in
such registration by the Holders and the Subordinated Note Holder Warrant Shares
requested to be registered in such registration by the Subordinated Note Holders
pursuant to the Subordinated Note Holder Registration Rights Agreement,
allocated pro rata in proportion to the number of Registrable Securities and
Subordinated Note Holder Warrant Shares requested to be included in such
registration by each of them, and (C) third, other securities of the Company to
be registered on behalf of any other Person, (ii) in the case of a registration
initiated by a Person other than the Company or the Subordinated Note Holders,
(A) first, the Registrable Securities requested to be included in such
registration by the Holders, the Subordinated Note Holder Warrant Shares
requested to be included in such registration by the Subordinated Note Holders
pursuant to the Subordinated Note Holder Registration Rights Agreement and any
Persons initiating such registration, allocated pro rata in proportion to the
number of securities requested to be included in such registration by each of
them, (B) second, the securities that the Company proposes to register for its
own account, and (C) third, the securities of the Company to be registered on
10
behalf of any other Person and (iii) in the case of a registration initiated by
the Subordinated Note Holders pursuant to the Subordinated Note Holders
Registration Rights Agreement, (A) first, the Subordinated Note Holder Warrant
Shares requested to be included in such registration by the Subordinated Note
Holders pursuant to the Subordinated Note Holder Registration Rights Agreement,
(B) second, the Registrable Securities requested to be included in such
registration by the Holders, allocated pro rata in proportion to the number of
securities requested to be included in such registration by each of them, (C)
third, the securities that the Company proposes to register for its own account,
and (D) fourth, the securities of the Company to be registered on behalf of any
other Person; provided, however, that in the event the Company will not, by
virtue of this Section 2.2(b), include in any such registration all of the
Registrable Securities of any Holder requested to be included in such
registration, such Holder may, upon written notice to the Company given within
three days of the time such Holder first is notified of such matter, reduce the
amount of Registrable Securities it desires to have included in such
registration, whereupon only the Registrable Securities, if any, it desires to
have included will be so included and the Holders not so reducing shall be
entitled to a corresponding pro rata increase in the amount of Registrable
Securities to be included in such registration.
(c) Selection of Underwriters. If any Incidental Registration
involves an Underwritten Offering, the sole or managing Underwriter(s) and any
additional investment bankers and managers to be used in connection with such
registration shall be subject to the approval of the Majority Holders of the
Registration (such approval not to be unreasonably withheld).
2.3. S-3 Registration; Shelf Registration.
(a) Shelf Registration. If a request made pursuant to
Section 2.1 is for a Shelf Registration, subject to Section 2.7, the Company
shall use its best efforts to keep the Shelf Registration continuously effective
through the date on which all of the Registrable Securities covered by such
Shelf Registration may be sold pursuant to Rule 144(k) under the Securities Act
(or any successor provision having similar effect); provided, however, that
prior to the termination of such Shelf Registration, the Company shall first
furnish to each Holder of Registrable Securities participating in such Shelf
Registration (i) an opinion, in form and substance satisfactory to the Majority
Holders of the Registration, of counsel for the Company satisfactory to the
Majority Holders of the Registration stating that such Registrable Securities
are freely saleable pursuant to Rule 144(k) under the Securities Act (or any
successor provision having similar effect) or (ii) a "No-Action Letter" from the
staff of the SEC stating that the SEC would not recommend enforcement action if
the Registrable Securities included in such Shelf Registration were sold in a
public sale other than pursuant to an effective registration statement.
11
2.4. Underwritten Offerings.
(a) Demand Underwritten Offerings. If requested by the sole
or lead managing Underwriter for any Underwritten Offering effected pursuant to
a Demand Registration, the Company shall enter into a customary underwriting
agreement with the Underwriters for such offering, such agreement to be
reasonably satisfactory in substance and form to the Company and each Holder of
Registrable Securities participating in such offering and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including, without limitation,
indemnification and contribution to the effect and to the extent provided in
Section 5.
(b) Holders of Registrable Securities to be Parties to
Underwriting Agreement. The Holders of Registrable Securities to be distributed
by Underwriters in an Underwritten Offering contemplated by Section 2 shall be
parties to the underwriting agreement between the Company and such Underwriters
and may, at such Holders' option, require that any or all of the representations
and warranties by, and the other agreements on the part of, the Company to and
for the benefit of such Underwriters shall also be made to and for the benefit
of such Holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such Underwriters under such underwriting
agreement be conditions precedent to the obligations of such Holders of
Registrable Securities; provided, however, that the Company shall not be
required to make any representations or warranties with respect to written
information specifically provided by a selling Holder for inclusion in the
Registration Statement. No Holder shall be required to make any representations
or warranties to, or agreements with, the Company or (in the case of an
Incidental Registration) the Underwriters other than representations, warranties
or agreements regarding such Holder, such Holder's Registrable Securities and
such Holder's intended method of disposition.
(c) Participation in Underwritten Registration.
Notwithstanding anything herein to the contrary, no Person may participate in
any underwritten registration hereunder unless such Person (i) agrees to sell
its securities on the same terms and conditions provided in any underwritten
arrangements approved by the Persons entitled hereunder to approve such
arrangement and (ii) accurately completes and executes in a timely manner all
questionnaires, powers of attorney, indemnities, custody agreements,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
2.5. Expenses. The Company shall pay all Registration Expenses
in connection with any Demand Registration, Incidental Registration or Shelf
Registration whether or not such registration shall become effective and whether
or not all Registrable Securities originally requested to be included in such
registration are withdrawn or otherwise ultimately not included in such
registration, except as otherwise provided with respect to a Withdrawn Request
and a Withdrawn Demand Registration in Section 2.1(a).
2.6. Conversions; Exercises. Notwithstanding anything to the
contrary herein, in order for any Registrable Securities that are issuable upon
the exercise of conversion rights, options or warrants to be included in any
registration pursuant to Section 2 hereof, the exercise of such conversion
rights, options or warrants must be effected no later than immediately prior to
12
the closing of any sales under the Registration Statement pursuant to which such
Registrable Securities are to be sold.
2.7. Registration Eligibility. The Company and each Initial
Holder acknowledge that the Company is operating on the date hereof pursuant a
No-Action Letter from the SEC in the form attached hereto as Exhibit A (the
"No-Action Letter"), which may limit the Company's ability to have Registration
Statements covering Registrable Securities declared effective by the SEC. In
light of the foregoing, the Company and the Initial Holders agree that if the
Company, solely by virtue of the limitations expressly set forth in the
No-Action Letter, is unable to have any Registration Statement covering
Registrable Securities declared effective by the SEC, the Company shall not be
in breach of its obligation to register Registrable Securities pursuant to this
Agreement if, and only, if during the effectiveness of this Agreement (whether
or not a Request is pending) the Company is using its best efforts to remedy the
condition giving rise to such limitations expressed in the No-Action Letter,
which "best efforts" shall include, but not be limited to, (a) as described in
the Company's request for the No-Action Letter, procuring and filing with the
SEC as part of a report on Form 8-K filed by the Company (with amendments
thereto) not later than 45 days after the date of this Agreement the audited
balance sheets of the Chemical Services Division of Safety-Kleen Corp. (the
"CSD") as of the completion of the CSD's fiscal years ended August 31, 2001,
2000, and 1999, (b) seeking further effective waivers or no-action relief (to
the extent, if any, then required) from the SEC no later than the earlier of (i)
the date thirty (30) days after a Request is made to register Registrable
Securities and (ii) 90 days after the date of the next fiscal year end of the
Company (and, to the extent such relief is not granted, seeking such waivers or
no-action relief on a no less frequent basis than annually following each prior
request until such relief is granted), to the effect that the Company may
register the Registrable Securities with the SEC without compliance by the
Company with the requirement to file historical audited financial statements for
the CSD, (c) taking such other actions as are reasonably requested by the
Holders or that would otherwise reasonably be expected to allow the Company to
register Registrable Securities without complying with SEC rules and regulations
concerning the filing of historical audited financial statements for the CSD.
3. HOLDBACK ARRANGEMENTS.
3.1. Restrictions on Sale by Holders of Registrable Securities.
Each Holder of Registrable Securities agrees, by acquisition of such Registrable
Securities, if timely requested in writing by the sole or lead managing
Underwriter, not to make any short sale of, loan, grant any option for the
purchase of or effect any public sale or distribution, of any of the Company's
equity securities (or any security convertible into or exchangeable or
exercisable for any of the Company's equity securities) during the time period
reasonably requested by the sole or lead managing Underwriter not to exceed 90
days, beginning on the effective date of the applicable registration statement
(except as part of such underwritten registration or pursuant to registrations
on Forms S-4 or S-8 or any successor form to such forms), unless the sole or
lead Managing Underwriter in such Underwritten Offering otherwise agrees;
provided, however, that to the extent the Company or the sole lead Managing
Underwriter releases any Person from the foregoing restrictions in whole or in
part it shall, on the same day, notify the Initial Holder of such release and
such parties shall automatically be released to the same extent.
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3.2. Restrictions on Sale by the Company and Others. The
Company and McKim agree that if timely requested in writing by the sole or lead
managing Underwriter in an Underwritten Offering of any Registrable Securities,
not to make any short sale of, loan, grant any option for the purchase of or
effect any public sale or distribution of any of the Company's equity securities
(or any security convertible into or exchangeable or exercisable for any of the
Company's equity securities) during the nine business days (as such term is used
in Rule 10b-6 under the Exchange Act) prior to, and during the time period
reasonably requested by the sole or lead managing Underwriter not to exceed 90
days, beginning on the effective date of the applicable registration statement
(except as part of such underwritten registration or pursuant to registrations
on Forms S-4 or S-8 or any successor form to such forms), unless the sole or
lead Managing Underwriter in such Underwritten Offering otherwise agrees. The
Company will use its reasonable best efforts to cause each director or officer
of the Company and each holder of 5% or more of the equity securities (or any
security convertible into or exchangeable or exercisable for any of its equity
securities) of the Company purchased from the Company at any time after the date
of this Agreement (other than in a registered public offering or in a public
sale) to so agree.
4. REGISTRATION PROCEDURES.
4.1. Obligations of the Company. Whenever the Company is required
to effect the registration of Registrable Securities under the Securities Act
pursuant to Section 2 of this Agreement, the Company shall, as expeditiously as
possible:
(a) prepare and file with the SEC (promptly, and in any
event within 60 days after receipt of a request to register Registrable
Securities) the requisite Registration Statement to effect such registration,
which Registration Statement shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith, and the Company shall use
its best efforts, consistent with its obligations under Section 2.7 hereof and
applicable law, to cause such Registration Statement to become effective within
120 days after receipt of a request to register Registrable Securities;
provided, that the Company may discontinue any registration of its securities
that are not Registrable Securities, and, under the circumstances specified in
Section 2.2, its securities that are Registrable Securities. Before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
or comparable statements under securities or blue sky laws of any jurisdiction,
the Company shall (i) provide Holders' Counsel and any other Inspector (as
defined below) with an adequate and appropriate opportunity to participate in
the preparation of such Registration Statement and each Prospectus included
therein (and each amendment or supplement thereto or comparable statement) to be
filed with the SEC, which documents shall be subject to the review and comment
of Holders' Counsel, and (ii) not file any such Registration Statement or
Prospectus (or amendment or supplement thereto or comparable statement) with the
SEC to which Holder's Counsel, any selling Holder or any other Inspector shall
have reasonably objected on the grounds that such filing does not comply in all
material respects with the requirements of the Securities Act or of the rules or
regulations thereunder;
(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
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therewith as may be necessary (i) to keep such Registration Statement effective,
and (ii) to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such Registration
Statement, in each case until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller(s) thereof set forth in such Registration Statement;
(c) furnish, without charge, to each selling Holder of such
Registrable Securities and each Underwriter, if any, of the securities covered
by such Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits), and the Prospectus included in such Registration Statement (including
each preliminary Prospectus) in conformity with the requirements of the
Securities Act, and other documents, as such selling Holder and Underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such selling Holder (the Company hereby
consenting to the use in accordance with applicable law of each such
Registration Statement (or amendment or post-effective amendment thereto) and
each such Prospectus (or preliminary prospectus or supplement thereto) by each
such selling Holder of Registrable Securities and the Underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Registration Statement or Prospectus);
(d) prior to any public offering of Registrable Securities,
use its best efforts to register or qualify all Registrable Securities and other
securities covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions as any selling Holder of Registrable
Securities covered by such Registration Statement or the sole or lead managing
Underwriter, if any, may reasonably request to enable such selling Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such selling Holder and to continue such registration or qualification
in effect in each such jurisdiction for as long as such Registration Statement
remains in effect (including through new filings or amendments or renewals), and
do any and all other acts and things which may be necessary or advisable to
enable any such selling Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such selling Holder;
(e) use its best efforts to obtain all other approvals,
consents, exemptions or authorizations from such governmental agencies or
authorities as may be necessary to enable the selling Holders of such
Registrable Securities to consummate the disposition of such Registrable
Securities;
(f) notify Holders' Counsel, each Holder of Registrable
Securities covered by such Registration Statement and the sole or lead managing
Underwriter, if any: (i) when the Registration Statement, any pre-effective
amendment, the Prospectus or any prospectus supplement related thereto or
post-effective amendment to the Registration Statement has been filed and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any state
securities or blue sky authority for amendments or supplements to the
Registration Statement or the Prospectus related thereto or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation or threat of any
proceedings for that purpose, (iv) of the receipt by the Company of any
15
notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
existence of any fact of which the Company becomes aware or the happening of any
event which results in (A) the Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to be
stated therein or necessary to make any statements therein not misleading or (B)
the Prospectus included in such Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to be
stated therein or necessary to make any statements therein, in the light of the
circumstances under which they were made, not misleading, (vi) if at any time
the representations and warranties contained in any underwriting agreement in
respect of such offering cease to be true and correct in all material respects,
and (vii) of the Company's reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate or that there exists
circumstances not yet disclosed to the public which make further sales under
such Registration Statement inadvisable pending such disclosure and
post-effective amendment; and, if the notification relates to an event described
in any of the clauses (ii) through (vii) of this Section 4.1(f), the Company
shall promptly prepare a supplement or post-effective amendment to such
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that (1) such
Registration Statement shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (2) as thereafter delivered to
the purchasers of the Registrable Securities being sold thereunder, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading (and shall furnish to each such Holder and each Underwriter, if
any, a reasonable number of copies of such Prospectus so supplemented or
amended); and if the notification relates to an event described in clause (iii)
of this Section 4.1(f), the Company shall take all reasonable action required to
prevent the entry of such stop order or to remove it if entered;
(g) make available for inspection by any selling Holder of
Registrable Securities, any sole or lead managing Underwriter participating in
any disposition pursuant to such Registration Statement, Holders' Counsel and
any attorney, accountant or other agent retained by any such seller or any
Underwriter (each, an "Inspector" and, collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company and any subsidiaries thereof as may be in existence at such time
(collectively, the "Records") as shall be necessary, in the opinion of such
Holders' and such Underwriters' respective counsel, to enable them to exercise
their due diligence responsibility and to conduct a reasonable investigation
within the meaning of the Securities Act, and cause the Company's and any
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspectors in connection with such Registration Statement;
(h) obtain an opinion from the Company's counsel and a "cold
comfort" letter from the Company's independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such Registration Statement, in each case dated the effective date
of such Registration Statement (and if such registration involves an
Underwritten Offering, dated the date of the closing under the underwriting
16
agreement), in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to underwriters in
underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the sole or lead managing Underwriter, if any, and to the
Majority Holders of the Registration, and furnish to each Holder participating
in the offering and to each Underwriter, if any, a copy of such opinion and
letter addressed to such Holder (in the case of the opinion) and Underwriter (in
the case of the opinion and the "cold comfort" letter);
(i) provide a CUSIP number for all Registrable Securities
and provide and cause to be maintained a transfer agent and registrar for all
such Registrable Securities covered by such Registration Statement not later
than the effectiveness of such Registration Statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and any other governmental agency or
authority having jurisdiction over the offering, and make available to its
security holders, as soon as reasonably practicable but no later than 90 days
after the end of any 12-month period, an earnings statement (i) commencing at
the end of any month in which Registrable Securities are sold to Underwriters in
an Underwritten Offering and (ii) commencing with the first day of the Company's
calendar month next succeeding each sale of Registrable Securities after the
effective date of a Registration Statement, which statement shall cover such
12-month periods, in a manner which satisfies the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder;
(k) if so requested by the Majority Holders of the
Registration, use its best efforts to cause all such Registrable Securities to
be (i) duly included for quotation on the Nasdaq Stock Market's National Market
(the "Nasdaq National Market") or listed on the principal national securities
exchange on which the Company's similar securities are then listed, if
applicable, or (ii) if securities of the Company are not at the time included on
the Nasdaq National Market or listed on any national securities exchange (or if
the listing of Registrable Securities is not permitted under the rules of each
national securities exchange on which the Company's securities are then listed),
on the National Nasdaq Market or a national securities exchange designated by
the Majority Holders of the Registration;
(l) enter into and perform customary agreements (including,
if applicable, an underwriting agreement in customary form) and provide
officers' certificates and other customary closing documents;
(m) cooperate with each selling Holder of Registrable
Securities and each Underwriter participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD and make reasonably available its
employees and personnel and otherwise provide reasonable assistance to the
Underwriters (taking into account the needs of the Company's businesses and the
requirements of the marketing process) in the marketing of Registrable
Securities in any Underwritten Offering;
(n) cooperate with the selling Holders of Registrable
Securities and the sole or lead managing Underwriter, if any, to facilitate the
17
timely preparation and delivery of certificates not bearing any restrictive
legends representing the Registrable Securities to be sold, and cause such
Registrable Securities to be issued in such denominations and registered in such
names in accordance with the underwriting agreement prior to any sale of
Registrable Securities to the Underwriters or, if not an Underwritten Offering,
in accordance with the instructions of the selling Holders of Registrable
Securities at least three business days prior to any sale of Registrable
Securities;
(o) keep each selling Holder of Registrable Securities
advised in writing as to the initiation and progress of any registration under
Section 2 hereunder;
(p) furnish to each Holder participating in the offering
and the sole or lead managing Underwriter, if any, without charge, at least one
manually-signed copy of the Registration Statement and any post-effective
amendments thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those deemed to be
incorporated by reference);
(q) if requested by the sole or lead managing Underwriter,
if any, or any selling Holder of Registrable Securities, promptly incorporate in
a prospectus supplement or post-effective amendment such information concerning
such Holder of Registrable Securities, the Underwriters or the intended method
of distribution as the sole or lead managing Underwriter or the selling Holder
of Registrable Securities reasonably requests to be included therein and as is
appropriate in the reasonable judgment of the Company, including, without
limitation, information with respect to the number of shares of the Registrable
Securities being sold to the Underwriters, the purchase price being paid
therefor by such Underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold in such offering;
make all required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; and supplement or make
amendments to any Registration Statement if requested by the sole or lead
managing Underwriter of such Registrable Securities; and
(r) use its best efforts to take all other steps necessary
to expedite or facilitate the registration and disposition of the Registrable
Securities contemplated hereby.
4.2. Seller Information. The Company may require each selling
Holder of Registrable Securities as to which any registration is being effected
to furnish to the Company such information regarding such seller and the
disposition of such securities as the Company may from time to time reasonably
request in writing; provided, however, that such information shall be used only
in connection with such Registration. If any Registration Statement or
comparable statement under "blue sky" laws refers to any Holder by name or
otherwise as the Holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance satisfactory to such Holder and the Company, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such Holder
will assist in meeting any future financial requirements of the Company and (ii)
18
in the event that such reference to such Holder by name or otherwise is not in
the judgment of the Company, as advised by counsel, required by the Securities
Act or any similar federal statute or any state "blue sky" or securities law
then in force, the deletion of the reference to such Holder.
4.3. Notice to Discontinue. Each Holder of Registrable
Securities agrees by acquisition of such Registrable Securities that, (a) upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 4.1(f)(ii) through 4.1(f)(vii), such Holder shall forthwith
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
4.1(f) and, (b) if so directed by the Company, such Holder shall deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in such Holder's possession, of the Prospectus covering such Registrable
Securities which is current at the time of receipt of such notice. If the
Company shall give any such notice, the Company shall extend the period during
which such Registration Statement shall be maintained effective pursuant to this
Agreement (including, without limitation, the period referred to in Section
4.1(b)) by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 4.1(f) to and including the date
when the Holder shall have received the copies of the supplemented or amended
prospectus contemplated by and meeting the requirements of Section 4.1(f).
5. INDEMNIFICATION; CONTRIBUTION.
5.1. Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each Holder
of Registrable Securities, its officers, directors, partners, members,
shareholders, employees, Affiliates, advisers, attorneys and agents
(collectively, "Agents") and each Person who controls such Holder (within the
meaning of the Securities Act) and its Agents with respect to each registration
which has been effected pursuant to this Agreement, against any and all losses,
claims, damages or liabilities, joint or several, actions or proceedings
(whether commenced or threatened) in respect thereof, and expenses (as incurred
or suffered and including, but not limited to, any and all expenses incurred in
investigating, preparing or defending any litigation or proceeding, whether
commenced or threatened, and the reasonable fees, disbursements and other
charges of legal counsel) in respect thereof (collectively, "Claims"), insofar
as such Claims arise out of or are based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (including any preliminary, final or summary prospectus and any
amendment or supplement thereto) related to any such registration or any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, or any qualification or
compliance incident thereto; provided, however, that the Company will not be
liable in any such case to the extent that any such Claims arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission of a material fact so made in reliance upon and
in conformity with written information furnished to the Company by a Holder
expressly for use therein. The Company shall also indemnify any Underwriters of
the Registrable Securities, their Agents and each Person who controls any such
19
Underwriter (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of any Person who may be entitled to
indemnification pursuant to this Section 5 and shall survive the transfer of
securities by such Holder or Underwriter.
5.2. Indemnification by Holders. Each Holder, if Registrable
Securities held by it are included in the securities as to which a registration
is being effected, agrees to, severally and not jointly, indemnify and hold
harmless, to the fullest extent permitted by law, the Company, its directors and
officers, each other Person who participates as an Underwriter in the offering
or sale of such securities and its Agents and each Person who controls the
Company (within the meaning of either Section 15 of the Securities Act of
Section 20 of the Exchange Act) against any and all Claims, insofar as such
Claims arise out of or are based upon any untrue or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus (including
any preliminary, final or summary prospectus and any amendment or supplement
thereto) related to such registration, or 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, to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by a Holder expressly for use therein; provided,
however, that the aggregate amount which any such Holder shall be required to
pay pursuant to this Section 5.2 shall in no event be greater than the amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such Claims
less all amounts previously paid by such Holder with respect to any such Claims.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Person who may be entitled to
indemnification pursuant to this Section 5 and shall survive the transfer of
securities by such Holder or Underwriter.
5.3. Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party of notice of any Claim or the commencement of
any action or proceeding involving a Claim under this Section 5, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 5, (a) notify the indemnifying party in
writing of the Claim or the commencement of such action or proceeding; provided,
that the failure of any indemnified party to provide such notice shall not
relieve the indemnifying party of its obligations under this Section 5, except
to the extent the indemnifying party is materially and actually prejudiced
thereby and shall not relieve the indemnifying party from any liability which it
may have to any indemnified party otherwise than under this Section 5, and (b)
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
indemnified party shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party has agreed in writing to pay such fees and expenses, (ii) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such indemnified party within 20 days
after receiving notice from such indemnified party that the indemnified party
believes it has failed to do so, or (C) in the reasonable judgment of any such
indemnified party, based upon advice of counsel, a conflict of interest shall
exist between such indemnified party and the indemnifying party with respect to
20
such claims; it being understood, however, that the indemnifying party shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to no more
than one firm of local counsel) at any time for all such indemnified parties. No
indemnifying party shall be liable for any settlement of any such claim or
action effected without its written consent, which consent shall not be
unreasonably withheld. No indemnifying party shall, without the consent of the
indemnified party, which consent shall not be unreasonable withheld, consent to
entry of any judgment or enter into any settlement of any claim or action in
respect of which indemnification or contribution may be sought hereunder, unless
such settlement, (x) includes an unconditional release of the indemnified party
from all liability arising out of such action or claim, (y) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party, and (z) does not provide for any action on
the part of any party other than the payment of money damages which is to be
paid in full by the indemnifying party.
5.4. Contribution. If the indemnification provided for in Section
5.1 or 5.2 from the indemnifying party for any reason is unavailable to (other
than by reason of exceptions provided therein), or is insufficient to hold
harmless an indemnified party hereunder in respect of any Claim, then the
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 Claim in such proportion as is appropriate to reflect the relative fault
of the indemnifying party, on the one hand, and the indemnified party, on the
other hand, in connection with the actions which resulted in such Claim, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. If, however, the foregoing allocation is not permitted by applicable
law, then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party in such proportion as is appropriate to reflect not
only such relative faults but also the relative benefits of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations.
5.5. Indemnification Payments. The indemnification and
contribution required by this Section 5 shall be made by periodic payments of
the amount thereof during the course of any investigation or defense, as and
when bills are received or any expense, loss, damage or liability is incurred.
5.6. Other Indemnification. Indemnification similar to that
specified in the preceding Sections 5.1 and 5.2 (with appropriate modifications)
shall be given by the Company and each selling Holder of Registrable Securities
with respect to any required registration or other qualification of securities
under any Federal or state law or regulation of any governmental authority,
other than the Securities Act. The indemnity agreements contained herein shall
be in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract.
21
6. General Provisions Regarding Registrations.
6.1. Adjustments Affecting Registrable Securities. The Company
agrees that it shall not effect or permit to occur any combination or
subdivision of shares which would adversely affect the ability of the Holder of
any Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration.
6.2. Registration Rights to Others. The Company represents and
warrants that, except as set forth in the Subordinated Note Holder Registration
Rights Agreement, as in effect as of the date hereof, a true, complete and
correct copy of which has been delivered to each of the Initial Holders, it is
not currently a party to any agreement with respect to its securities granting
registration rights to Persons. If the Company shall at any time hereafter
provide to any holder of any securities of the Company rights with respect to
the registration of such securities under the Securities Act, (i) such rights
shall not be in conflict with or adversely affect any of the rights provided in
this Agreement to the Holders and (ii) if such rights are provided on terms or
conditions more favorable to such holder than the terms and conditions provided
in this Agreement, the Company shall provide (by way of amendment to this
Agreement or otherwise) such more favorable terms or conditions to the Holders.
6.3. Availability of Information; Rule 144; Rule 144A; Other
Exemptions. The Company covenants that it shall timely file any reports required
to be filed by it under the Securities Act or the Exchange Act (including, but
not limited to, the reports under Sections 13 and 15(d) of the Exchange Act
referred to in subparagraph (c) of Rule 144 under the Securities Act), and that
it shall take such further action as any Holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 and Rule
144A under the Securities Act, as such rules may be amended from time to time,
or (ii) any other rule or regulation now existing or hereafter adopted by the
SEC. Upon the request of any Holder of Registrable Securities, the Company shall
deliver to such Holder a written statement as to whether it has complied with
such requirements.
7. PROVISIONS APPLICABLE TO SECURITYHOLDERS.
7.1. General Restriction. McKim may not, directly or indirectly,
sell, assign, transfer, pledge, bequeath, hypothecate, mortgage, grant any proxy
with respect to, or in any other way encumber or otherwise dispose of
("Convey"), any shares of Common Stock except pursuant to the provisions of this
Article 7.
7.2. Right of Co-Sale. (a) If McKim desires to Convey shares of
Common Stock to any Person (the "Purchaser"), each Holder shall have the right
to require, as a condition to such Conveyance, that the Purchaser purchase from
such Holder at the same price and on the same terms and conditions as involved
in such sale or disposition by McKim (the "Purchase Offer") the number of shares
of Common Stock owned by such Holder equal to the aggregate number of shares of
22
Common Stock proposed to be purchased by the Purchaser from McKim multiplied by
a fraction, the numerator of which is the number of shares of Common Stock held
of record by such Holder and the denominator of which is the aggregate number of
shares of Common Stock held of record by McKim and the Holders. The amount of
shares of Common Stock that each Holder is entitled to sell under this Section
7.2 shall be referred to as its "Pro Rata Share". McKim shall deliver to each
Holder not more than 60 days and not less than 30 days prior to the proposed
Conveyance to the Purchaser a copy of the Purchase Offer, if in writing, and a
description of all other material terms and conditions of the Purchase Offer.
Within 25 days after receipt of the Purchase Offer, a Holder shall give notice
to McKim of its intent to sell all or a portion of its Pro Rata Share. In the
event that a Holder shall elect to participate in any such sale or disposition,
such Holder shall communicate in writing such election to participate to McKim,
which communication shall be delivered to McKim pursuant to Section 8.2 hereof,
and the number of shares of Common Stock to be Conveyed by McKim to the
Purchaser shall be reduced accordingly.
(b) McKim and each participating Holder may, up to and
including 90 days after but not until at least 60 days after McKim's delivery of
the notice of the Purchase Offer to the Holders, Convey any or all of their
shares of Common Stock to the Purchaser, in quantities and on terms and
conditions no more favorable in any material respect to those specified in the
Purchase Offer or otherwise disclosed to the Holders, and the Holders shall not
have the right to require that the Purchaser purchase any of their shares of
Common Stock as to which they did not exercise their co-sale rights hereunder.
If such sale is not consummated by the expiration of such 90 day period, the
restrictions provided for herein shall again become effective, and no Conveyance
of such shares of Common Stock may be made thereafter by McKim without again
complying with the requirements of this Section 7.2.
(c) The closing of any sale of the shares of Common Stock
by the Holders and/or McKim pursuant to this Section 7.2 shall be held at the
Company's principal office at 10:00 a.m., local time, no later than 30 days
after the dates of expiration of the right to sell referred to in Sections
7.2(a) and 7.2(b) hereof, or at such other time and place as the parties to the
transaction may agree. At such closing, each Holder (if it has elected to
participate in accordance with this Section 7.2) and/or McKim shall Convey all
the shares of Common Stock purchased by the Purchaser pursuant to this Section
7.2 free and clear of any Encumbrances (other than restrictions imposed by the
organizational documents of the Company, including without limitation, this
Agreement, and pursuant to applicable federal and state securities laws), and
each such Holder and/or McKim shall so represent and warrant, and further
represent and warrant that it is the record and beneficial owner of such shares
of Common Stock. The Purchaser shall deliver at such closing, in cash by wire
transfer of immediately available funds, payment in full to the each of the
Holders and/or McKim for its respective portion of such shares of Common Stock
sold.
(d) The election by a Holder not to exercise its rights
under this Section 7.2 in any one instance shall not affect the rights of that
Holder as to any subsequent proposed Conveyance by McKim. Any Conveyance by
McKim of any of its shares of Common Stock without first giving the Holders the
rights described in this Section 7.2 shall be void and of no force or effect.
7.3. Permitted Transfers. Subject to the final proviso of this
paragraph, the provisions of Section 7.1 or 7.2 shall not apply to the
23
Conveyance of Common Stock by McKim (a) in a public offering registered under
the Securities Act; provided; that the Holders shall have had the opportunity to
participate in such offering, without limitation on the number of Registrable
Securities covered thereby, in accordance with Section 2 hereof, (b) in a sale
pursuant to Rule 144 of the Securities Act, (c) pursuant to a bona fide pledge
of the Common Stock to a nationally recognized financial institution as security
for a bona fide financing arrangement by McKim and (d) to any one or more
persons or entities each of which is a "Permitted Holder" as such term is
defined in the Certificate of Designation in respect of the Series C Preferred
Stock (collectively "Permitted Family Transferees"); provided, however, that
such Permitted Family Transferee(s) shall take such shares of Common Stock
subject to and be fully bound by this Agreement with the same effect as if it
were a party hereto and shall execute and deliver to the Company and each Holder
an instrument of accession and such additional documentation as the Company's
Board of Directors and the Holders may reasonably require to bind such Permitted
Family Transferee in the same manner that McKim is bound under this Agreement,
and references herein to McKim shall be deemed to include any such Permitted
Family Transferee(s).
8. General.
8.1. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified,
supplemented or terminated, and waivers or consents to departures from the
provisions hereof may not be given, without the written consent of the Company
and the Majority Holders and if adverse to McKim, McKim; provided, however, that
no such amendment, modification, supplement, waiver or consent to departure
shall reduce the aforesaid percentage of Registrable Securities without the
written consent of all of the Holders of Registrable Securities; and provided
further, that nothing herein shall prohibit any amendment, modification,
supplement, termination, waiver or consent to departure the effect of which is
limited only to those Holders who have agreed to such amendment, modification,
supplement, termination, waiver or consent to departure.
8.2. Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, telecopier,
any courier guaranteeing overnight delivery or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to the
applicable party at the address set forth below or such other address as may
hereafter be designated in writing by such party to the other parties in
accordance with the provisions of this Section:
If to the Company: Clean Harbors, Inc.
1501 Washington Street
Braintree, MA 02185
Attn: Chief Financial Officer
Fax No. (781) 848-1632
with copies to: Davis, Malm & D'Agostine, P.C.
One Boston Place
Boston, MA 02108
Attn: C. Michael Malm
Fax No. (617) 523-6215
24
If to McKim: Alan S. McKim
c/o Clean Harbors, Inc.
1501 Washington Street
Braintree, MA 02185
Fax No. (781) 848-1632
with copies to: Davis, Malm & D'Agostine, P.C.
One Boston Place
Boston, MA 02108
Attn: C. Michael Malm
Fax No. (617) 523-6215
If to a Holder, to its address and facsimile set forth on the Schedule
of Holders attached hereto, with copies to such Holder's representatives as set
forth on the Schedule of Holders, or to such other address and/or facsimile
number and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. All such notices and communications (and
deliveries) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; when receipt is acknowledged, if telecopied; on
the next business day, if timely delivered to a courier guaranteeing overnight
delivery; and five days after being deposited in the mail, if sent first class
or certified mail, return receipt requested, postage prepaid.
8.3. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
successors and permitted assigns (including any permitted transferee of Series C
Preferred Stock Registrable Securities). Any Holder may assign to any transferee
of its Series C Preferred Stock or Registrable Securities (other than a
transferee that acquires such Registrable Securities in a registered public
offering or pursuant to a sale under Rule 144 of the Securities Act (or any
successor rule)), its rights and obligations under this Agreement; provided,
however, if any transferee shall take and hold Series C Preferred Stock or
Registrable Securities, such transferee shall promptly notify the Company and by
taking and holding such Registrable Securities such transferee shall
automatically be entitled to receive the benefits of and be conclusively deemed
to have agreed to be bound by and to perform all of the terms and provisions of
this Agreement as if it were a party hereto (and shall, for all purposes, be
deemed a Holder under this Agreement). If the Company shall so request any heir,
successor or permitted assign (including any permitted transferee) wishing to
avail itself of the benefits of this Agreement shall agree in writing to acquire
and hold the Registrable Securities subject to all of the terms hereof. For
purposes of this Agreement, "successor" for any entity other than a natural
person shall mean a successor to such entity as a result of such entity's
merger, consolidation, sale of substantially all of its assets, or similar
transaction. Except as provided above or otherwise permitted by this Agreement,
neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by any Holder, McKim or by the
Company without the consent of the other parties hereto.
25
8.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all of which counterparts, taken together, shall constitute
one and the same instrument.
8.5. Descriptive Headings, Etc. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (a) words of any gender shall be deemed to include each
other gender; (b) words using the singular or plural number shall also include
the plural or singular number, respectively; (c) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and paragraph references are to the Sections and
paragraphs of this Agreement unless otherwise specified; (d) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified; (e) "or" is not
exclusive; and (f) provisions apply to successive events and transactions.
8.6. Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
8.7. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY OF
THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND
THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. THE
COMPANY, MCKIM AND THE INITIAL HOLDERS WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 8.7.
THE COMPANY, MCKIM AND THE INITIAL HOLDERS HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH OF THE COMPANY, MCKIM AND THE INITIAL
26
HOLDERS REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
8.8. Remedies; Specific Performance. The parties hereto
acknowledge that money damages would not be an adequate remedy at law if any
party fails to perform in any material respect any of its obligations hereunder,
and accordingly agree that each party, in addition to any other remedy to which
it may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this Agreement,
without the posting of any bond, in accordance with the terms and conditions of
this Agreement in any court specified in Section 8.7 hereof, and if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law. Except as otherwise provided by law, a delay or omission by a
party hereto in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or acquiescence
in any such breach. No remedy shall be exclusive of any other remedy. All
available remedies shall be cumulative.
8.9. Entire Agreement. This Agreement and the Financing Agreement
and the Purchase Agreement (collectively, the "Other Agreements") are intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertakings
relating to such subject matter, other than those set forth or referred to
herein or in the Other Agreements. This Agreement and the Other Agreements
supersede all prior agreements and understandings between the Company and the
other parties to this Agreement with respect to such subject matter.
8.10. Further Assurances. Each party hereto shall do and perform
or cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
8.11. Construction. Each of the Company, McKim and the Initial
Holders acknowledge that it has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement with its
legal counsel and that this Agreement shall be construed as if jointly drafted
by the Company, McKim and the Initial Holders.
8.12. No Inconsistent Agreement. Neither the Company nor McKim
will hereafter enter into any agreement which is inconsistent with
the rights granted to the Holders in this Agreement.
8.13. Costs and Attorneys' Fees. In the event that any action,
suit or other proceeding is instituted concerning or arising out of this
27
Agreement, the Company, McKim and the Initial Holders agree that the prevailing
party shall recover from the non-prevailing party all of such prevailing party's
costs and reasonable attorneys' fees incurred in each and every such action,
suit or other proceeding, including any and all appeals or petitions therefrom.
[Remainder of this page intentionally left blank. Signature page follows.]
28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
THE COMPANY
CLEAN HARBORS, INC.
By:_____________________________
Name:
Title
INITIAL HOLDERS
CERBERUS CH LLC
By: Cerberus Partners, L.P.
its Managing Member
By: Cerberus Associates, L.L.C.
its General Partner
By:_____________________________
Name:
Title:
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.
its General Partner
By:_____________________________________
Name:
Title:
OAK HILL SECURITIES FUND II, L.P.
By: Oak Hill Securities GenPar II, L.P.
its General Partner
By: Oak Hill Securities MGP II, Inc.
its General Partner
By:_____________________________________
Name:
Title:
LERNER ENTERPRISES, L.P.
By: Oak Hill Asset Management, Inc.
As advisor and attorney-in-fact to
Lerner Enterprises
By:_____________________________________
Name:
Title:
P&PK FAMILY LTD. PARTNERSHIP
By: Oak Hill Asset Management, Inc.
As advisor and attorney-in-fact to
P&PK Family Ltd. Partnership
By:____________________________________
Name:
Title:
CARDINAL INVESTMENT PARTNERS I, L.P.
By: As advisor and attorney-in-fact to
Cardinal Investment Partners I, L.P.
By: Oak Hill Advisors MGP, Inc.
its General Partner
By:____________________________________
Name:
Title:
MCKIM
By:_____________________________
Name: Alan S. McKim
Alan S. McKim's Children's Trust
By:_____________________________
C. Michael Malm, Trustee
By:_____________________________
Carol R. Cohen, Trustee
SCHEDULE OF HOLDERS
Holder Address Investor's Representatives' Address
and Facsimile Number and Facsimile Number
----------------------------------------- ----------------------------------
Cerberus CH LLC Schulte Roth & Zabel LLP
450 Park Avenue, 28th Floor 919 Third Avenue
New York, NY 10022 New York, NY 10022
Telephone: (212) 891-2100 Attn: Stuart Freedman, Esq.
Facsimile: (212) 891-1540 Telephone: (212) 756-2000
Attention: Daniel Wolf and Kevin Genda Facsimile: (212) 593-5955
Oak Hill Securities Fund, L.P. Paul, Weiss, Rifkind, Wharton
65 East 55th Street & Garrison
New York, New York 10022 1285 Avenue of the Americas
Telephone: (212) 326-1552 New York, NY 10019
Facsimile: (212) 838-8411 Telephone: (212) 373-3000
Attention: William H. Bohnsack, Jr. Facsimile: (212) 757-3990
Attention: Eric Goodison
Oak Hill Securities Fund II, L.P. Paul, Weiss, Rifkind, Wharton
65 East 55th Street & Garrison
New York, New York 10022 1285 Avenue of the Americas
Telephone: (212) 326-1552 New York, NY 10019
Facsimile: (212) 838-8411 Telephone: (212) 373-3000
Attention: William H. Bohnsack, Jr. Facsimile: (212) 757-3990
Attention: Eric Goodison
Lerner Enterprises, L.P. Paul, Weiss, Rifkind, Wharton
65 East 65th Street & Garrison
New York, New York 10022 1285 Avenue of the Americas
Telephone: (212) 326-1552 New York, NY 10019
Facsimile: (212) 838-8411 Telephone: (212) 373-3000
Attention: William H. Bohnsack, Jr. Facsimile: (212) 757-3990
Attention: Eric Goodison
P&PK Family Ltd. Partnership Paul, Weiss, Rifkind, Wharton
65 East 55th Street & Garrison
New York, New York 10021 1285 Avenue of the Americas
Telephone: (212) 326-1552 New York, NY 10019
Facsimile: (212) 838-8411 Telephone: (212) 373-3000
Attention: William H. Bohnsack, Jr. Facsimile: (212) 757-3990
Cardinal Investment Partners I, L.P. Paul, Weiss, Rifkind, Wharton
65 East 55th Street & Garrison
New York, New York 10021 1285 Avenue of the Americas
Telephone: (212) 326-1552 New York, NY 10019
Facsimile: (212) 838-8411 Telephone: (212) 373-3000
Attention: William H. Bohnsack, Jr. Facsimile: (212) 757-3990
Attention: Eric Goodison
EXHIBIT A
[SEC NO-ACTION LETTER]
Execution Copy
VOTING AGREEMENT
VOTING AGREEMENT, dated as of September 6, 2002 (this "Agreement"), by
the stockholders of Clean Harbors, Inc., a Massachusetts corporation (the
"Company") listed on the signature pages hereto under the heading "Stockholders"
(each, a "Stockholder" and collectively, the "Stockholders"), the Company and
the investors listed on the signature pages hereto under the heading
"Investors") (each, an "Investor" and collectively, the "Investors").
WHEREAS, the Investors and the Company have entered into a (i)
Securities Purchase Agreement, dated as of the date hereof (the "Securities
Purchase Agreement"), pursuant to which, among other things, the Company has
agreed to issue and sell to the Investors and the Investors have agreed to
purchase, 25,000 shares of Series C Convertible Preferred Stock, par value $0.01
per share, of the Company (collectively, the "Preferred Shares") and (ii) an
Investors Rights Agreement, dated as of the date hereof (the "Investors Rights
Agreement"), pursuant to which the Company has agreed, among other things, to
provide to the Investors certain registration rights under the Securities Act of
1933, as amended (the "1933 Act") and the rules and regulations promulgated
thereunder and applicable state securities laws and one of the Stockholders has,
among other things, agreed to grant the Investors certain rights to tag-along to
sales of Company Common Stock (as defined below) by such Stockholder (the
transactions contemplated by the Securities Purchase Agreement and the Investors
Rights Agreement collectively referred to herein as the "Transaction");
WHEREAS, as of the date hereof, the Stockholders own collectively
4,391,762 shares of common stock, par value $0.01 per share, of the Company
("Company Common Stock"), which represent in the aggregate approximately 36% of
the total issued and outstanding Common Stock on a primary basis and
approximately 32% of the total issued and outstanding Common Stock on a
fully-diluted basis; and
WHEREAS, as a condition to the willingness of the Investors to enter
into the Transaction, the Investors have required that the Stockholders agree,
and in order to induce the Investors to enter into the Securities Purchase
Agreement, the Stockholders have agreed, to enter into this Agreement with
respect to all the shares of Company Common Stock now owned and which may
hereafter be acquired by the Stockholders (the "Shares") and any other
securities, if any, which the Stockholders are entitled to vote at any meeting
of stockholders of the Company (the "Other Securities").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
PROXY OF THE STOCKHOLDERS
SECTION 1.01. Voting Agreement. Each Stockholder hereby agrees that at
any meeting of the stockholders of the Company, however called, and in any
action by consent of the Company, each of the Stockholders shall vote the Shares
and the Other Securities: (a) in favor of any matters relating to the
Transaction, the Securities Purchase Agreement (as amended from time to time)
and the Investors Rights Agreement (as amended from time to time) or any of the
transactions contemplated by such agreements and the Certificate of Vote of
Directors Establishing a Series of a Class of Stock in respect of the Preferred
Shares (the "Certificate"), including, without limitation the issuance to the
Investors of a number of shares of Company Common Stock issuable upon conversion
of the Preferred Shares greater in the aggregate than 19.99% of the number of
shares of Company Common Stock outstanding immediately prior to the Closing Date
(as defined in the Securities Purchase Agreement) pursuant to applicable law,
the rules of the NASD and any other rules and regulations of the Principal
Market (as defined in the Securities Purchase Agreement); and (b) against any
proposal or any other corporate action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Securities Purchase Agreement, the Investors
Rights Agreement, the Certificate or which could result in any of the conditions
to the Company's obligations under the Securities Purchase Agreement, the
Investors Rights Agreement or the Certificate not being fulfilled. Each
Stockholder acknowledges receipt and review of a copy of the Securities Purchase
Agreement, the Investors Rights Agreement and the Certificate.
SECTION 1.02. Irrevocable Proxy. Each Stockholder hereby irrevocably
appoints each of Kevin Genda, Daniel Wolf and William Bohnsack, until the
termination of this Agreement, as his or its attorney and proxy pursuant to
Massachusetts law and all applicable provisions of the General Corporation Law
of the State of Massachusetts, with full power of substitution, to vote and
otherwise act (by written consent or otherwise) with respect to the Shares and
the Other Securities, which such Stockholder is entitled to vote at any meeting
of stockholders of the Company (whether annual or special and whether or not an
adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise, on the matters and in the manner specified in Section 1.01 hereof.
THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
The Stockholders hereby revoke all other proxies and powers of attorney with
respect to the Shares and the Other Securities which they may have heretofore
appointed or granted, and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by the Stockholders with respect to the matters specified in Section
1.01 hereof. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of any Stockholder and any obligation of any
Stockholder under this Agreement shall be binding upon the heirs, personal
representatives and successors or assigns of such Stockholder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants, severally but not
jointly, to the Investors as follows:
SECTION 2.01. Authority Relative to This Agreement. Each Stockholder
has all necessary power and authority to execute and deliver this Agreement, to
perform his or its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by such
Stockholder and constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
2
SECTION 2.02. No Conflict. (a) The execution and delivery of this
Agreement by such Stockholder do not, and the performance of this Agreement by
such Stockholder shall not, (i) conflict with or violate any federal, state or
local law, statute, ordinance, rule, regulation, order, judgment or decree
applicable to such Stockholder or by which the Shares or the Other Securities
owned by such Stockholder are bound or affected or (ii) result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the Shares or the Other Securities owned by such
Stockholder pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which such Stockholder is a party or by which such Stockholder or the Shares
or Other Securities owned by such Stockholder are bound or affected.
(b) The execution and delivery of this Agreement by such Stockholder
do not, and the performance of this Agreement by such Stockholder shall not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental entity.
SECTION 2.03. Title to the Shares. As of the date hereof, each
Stockholder is the beneficial owner of the number of shares of Company Common
Stock set forth opposite such Stockholder's name on Appendix A hereto entitled
to vote, without restriction, on all matters brought before holders of Company
Common Stock, which Shares represent on the date hereof the percentage of the
outstanding Company Common Stock set forth on such Appendix. Such Shares are all
the securities of the Company owned, either of record or beneficially, by such
Stockholder. Such Shares are owned free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on such Stockholder's voting rights, charges and other encumbrances
of any nature whatsoever. Except as provided in this Agreement, no Stockholder
has appointed or granted any proxy, which appointment or grant is still
effective, with respect to the Shares or Other Securities owned by such
Stockholder.
ARTICLE III
COVENANTS
SECTION 3.01. No Disposition or Encumbrance of Shares. Each
Stockholder hereby covenants and agrees that, except as contemplated by this
Agreement, such Stockholder shall not offer or agree to sell, transfer, tender,
assign, hypothecate or otherwise dispose of, grant a proxy or power of attorney
with respect to, or create or permit to exist any security interest, lien,
claim, pledge, option, right of first refusal, agreement, limitation on any
Stockholder's voting rights, charge or other encumbrance of any nature
whatsoever with respect to the Shares or Other Securities, directly or
indirectly, initiate, solicit or encourage any person to take actions which
could reasonably be expected to lead to the occurrence of any of the foregoing;
provided, that such Stockholder may assign, sell or transfer any Shares or Other
Securities provided that any such recipient of such Shares or Other Securities
has delivered to the Company and each Investor a written agreement in a form
reasonably satisfactory to the Investors that such recipient shall be bound by
and the Shares and/or Other Securities so transferred, assigned or sold shall
remain subject to this Agreement.
SECTION 3.02. Company Cooperation. The Company hereby covenants and
agrees that it will not recognize any sale, transfer, tender, assignment,
3
hypothecation or other disposal of, grant of proxy or power of attorney with
respect to, or the creation or permission to exist of any security interest,
lien, claim, pledge, option, right of first refusal, agreement on any of the
Shares or Other Securities subject to this Agreement unless the provisions of
Section 3.01 have been complied with. The Company agrees to use its best efforts
to ensure that at any time in which Stockholder Approval is required pursuant to
Section 4(f) of the Securities Purchase Agreement, it will cause holders of
Company Common Stock or Other Securities representing the percentage of
outstanding Company Common Stock required to vote in favor of the Transaction in
order for the Company to comply with its obligations under Section 4(f) of the
Securities Purchase Agreement to become party to and bound by the terms and
conditions of this Agreement and the shares of Company Common Stock and Other
Securites held by such holders to be subject to the terms and conditions of this
Agreement.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Further Assurances. Each Stockholder will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
SECTION 4.02. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that any Investor (without
being joined by any other Investor) shall be entitled to specific performance of
the terms hereof, in addition to any other remedy at law or in equity. Any
Investor shall be entitled to its reasonable attorneys' fees in any action
brought to enforce this Agreement in which it is the prevailing party.
SECTION 4.03. Entire Agreement. This Agreement constitutes the entire
agreement between the Investors, the Stockholders and the Company (other than
the Securities Purchase Agreement and the Investors Rights Agreement) with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, among the Investors, the Stockholders and
the Company with respect to the subject matter hereof.
SECTION 4.04. Amendment. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
SECTION 4.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
SECTION 4.06. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts
applicable to contracts executed in and to be performed in that Commonwealth.
All actions and proceedings arising out of or relating to this Agreement shall
4
be heard and determined in any New York state or federal court situated in the
City of New York, Borough of Manhattan.
5
IN WITNESS WHEREOF, each Stockholder and the Company has duly executed
this Agreement.
THE COMPANY:
CLEAN HARBORS, INC.
By:______________________________
Name:
Title:
Dated: September 6, 2002
STOCKHOLDERS:
Dated: September 6, 2002 __________________________________
Name: Alan S. McKim
Alan S. McKim Children's Trust
Dated: September 6, 2002 By:_______________________________
C. Michael Malm, Trustee
Dated: September 6, 2002 By:_______________________________
Carol R. Cohen, Trustee
Dated: September 6, 2002 __________________________________
Name: Stephen H. Moynihan
Agreed and Accepted
as of: September __, 2002:
INVESTORS:
CERBERUS CH LLC
By: Cerberus Partners, L.P.
its Managing Member
By: Cerberus Associates, L.L.C.
its General Partner
By:_____________________________
Name:
Title:
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.
its General Partner
By:_________________________________
Name:
Title:
OAK HILL SECURITIES FUND II, L.P.
By: Oak Hill Securities GenPar II, L.P.
its General Partner
By: Oak Hill Securities MGP II, Inc.
its General Partner
By:___________________________________
Name:
Title:
LERNER ENTERPRISES, L.P.
By: Oak Hill Asset Management, Inc.
As advisor and attorney-in-fact to
Lerner Enterprises
By:____________________________________
Name:
Title:
P&PK FAMILY LTD. PARTNERSHIP
By: Oak Hill Asset Management, Inc.
As advisor and attorney-in-fact to
P&PK Family Ltd. Partnership
By:___________________________________
Name:
Title:
CARDINAL INVESTMENT PARTNERS I, L.P.
By: As advisor and attorney-in-fact to
Cardinal Investment Partners I, L.P.
By: Oak Hill Advisors MGP, Inc.
its General Partner
By:___________________________________
Name:
Title:
APPENDIX A
Percentage of Common
Stockholder Shares Stock Deemed Outstanding
----------- ------ ------------------------
Alan S. McKim 4,231,762 31.6%
C. Michael Malm and Carol R. 60,000 0.4%
Cohen, Trustees of the Alan S.
McKim Children's Trust
Stephen H. Moynihan 100,000 0.8%
SRZ DRAFT 9/6/02
CERBERUS CAPITAL MANAGEMENT, L.P.
450 Park Avenue, 28th Floor
New York, NY 10022
September 6, 2002
Oak Hill Advisors, Inc.
65 East 55th Street
New York, New York 10022
Attention: William Bohnsack
Re: Clean Harbors, Inc.
Gentlemen:
We refer to (i) the Securities Purchase Agreement dated as of
September 6, 2002 (as amended, supplemented or otherwise modified from time to
time, the "Securities Purchase Agreement"), among Clean Harbors, Inc., a
Massachusetts corporation ("Clean Harbors"), Cerberus CH LLC, a Delaware limited
liability company ("Cerberus CH") and certain of your affiliates, funds and
accounts over which you have control (collectively, the "Oak Hill Purchasers"),
pursuant to which Cerberus CH and the Oak Hill Purchasers are purchasing in the
aggregate 25,000 shares of Series C Convertible Preferred Stock, par value,
$0.01 per share, of Clean Harbors (the "Preferred Stock"), (ii) the Investors
Rights Agreement dated as of September 6, 2002 (as amended, supplemented or
otherwise modified from time to time, the "Investors Rights Agreement"), among
Clean Harbors, Cerberus CH, the Oak Hill Purchasers, Alan S. McKim ("McKim") and
the Alan S. McKim Children's Trust (the "Trust"), (iii) the Voting Agreement
dated as of September 6, 2002 (as amended, supplemented or otherwise modified
from time to time, the "Voting Agreement"), among Clean Harbors, Cerberus CH,
the Oak Hill Purchasers, Stephen Moynihan, McKim and the Trust and (iv) the
Clean Harbors Certificate of Vote of Directors Establishing a Series of a Class
of Stock dated as of September 6, 2002 (as amended, supplemented or otherwise
modified from time to time, the "Certificate," and together with the Securities
Purchase Agreement, the Investors Rights Agreement and the Voting Agreement,
collectively the "Transaction Documents"). This letter sets forth our
understanding with respect to certain matters concerning ownership of the
Preferred Shares.
We agree, on behalf of Cerberus CH and any of our affiliates, and any
funds and accounts controlled or advised by us or our affiliates that in the
future own shares of Preferred Stock (collectively, "Cerberus"), that for so
long as the Oak Hill Purchasers, together with any of your affiliates and funds
and accounts which you or your affiliates control or advise that in the future
own shares of Preferred Stock (collectively "Oak Hill") own in the aggregate not
less than 25% of all outstanding shares of Preferred Stock, that we will not,
and will not permit any Cerberus entity to, consent to any action relating to
the amendment of provisions or the waiver of rights of the holders of Preferred
Stock or the obligations of Clean Harbors under (i) Section 10(b), (e), (i),
(k), (l), (m), (n) and (o) (to the extent (o) relates to the aforementioned
subsections (b), (e), (i), (k), (l), (m) and (n)) and Section 9(b) (so long as,
in the case of Section 9(b), Oak Hill owns the percentage of the outstanding
shares of Preferred Stock specified in such section) of the Certificate and (ii)
Section 7 of the Investors' Rights Agreement, without the prior written consent
of Oak Hill, which consent shall not be unreasonably withheld.
You agree on behalf of Oak Hill that for so long as Cerberus CH,
together with any of our affiliates, funds and accounts that we control that in
the future own Preferred Stock (collectively "Cerberus") own in the aggregate
not less than 25% of the outstanding shares of Preferred Stock, that Oak Hill
will not, and will not permit any Oak Hill entity to, consent to any action
relating to the amendment of provisions or the waiver of rights of the holders
of Preferred Stock or the obligations of Clean Harbors under (i) Section 10(b),
(e), (i), (k), (l), (m), (n) and (o) (to the extent (o) relates to the
aforementioned subsections (b), (e), (i), (k), (l), (m) and (n)) of the
Certificate and (ii) Section 7 of the Investors' Rights Agreement, without the
prior written consent of Cerberus, which consent shall not be unreasonably
withheld.
Nothing herein shall or shall be deemed to constitute an agreement
between, or impose any obligation on, Cerberus and Oak Hill with respect to our
respective rights to vote on any matter subject to a vote of all holders of
securities of Clean Harbors as contemplated by Section 9(a) of the Certificate
or otherwise.
The parties hereto agree that irreparable damage would occur in the
event any provision of this letter was not performed in accordance with the
terms hereof and that each party shall be entitled to specific performance of
the terms hereof, in addition to any other remedy at law or in equity. Each
party shall also be entitled to its reasonable attorneys' fees in any action
brought to enforce this letter in which it is the prevailing party.
This letter constitutes the entire agreement between the parties
hereto (other than the Transaction Documents) with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
This letter may not be amended except by an instrument in writing
signed by the parties hereto.
If any term or other provision of this letter is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this letter shall nevertheless remain in full force
and effect so long as the economic or legal substance of this letter is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this letter
so as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the terms of this letter remain as
originally contemplated to the fullest extent possible.
This letter shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to contracts executed in and to be
performed in that State. All actions and proceedings arising out of or relating
to this letter shall be heard and determined in any New York state or federal
court situated in the City of New York, Borough of Manhattan.
This letter shall not confer any rights or remedies upon any person
other than the parties hereto and their respective successors and assigns who
shall be bound by the terms and conditions of this letter.
Assuming that this letter accurately reflects your understanding
regarding the matters discussed herein, we would appreciate it if you would
evidence this by signing a copy of this letter in the space below and by
returning a copy of it to me.
Sincerely yours,
CERBERUS CAPITAL MANAGEMENT, L.P.
By:________________________________
Name:
Title:
CONSENTED AND AGREED TO
this 6th day of September, 2002
OAK HILL ADVISORS, INC.
By:___________________________
Name:
Title: