EXHIBIT 99.1
MANAGEMENT RIGHTS AND STANDSTILL AGREEMENT
THIS MANAGEMENT RIGHTS AND STANDSTILL AGREEMENT (this "AGREEMENT") is
made and entered into as of August 22, 2002 by and among URS CORPORATION, a
Delaware corporation (the "COMPANY"); CARLYLE-EG&G, L.L.C., a Delaware limited
liability company ("CARLYLE-EG&G"), EG&G TECHNICAL SERVICES HOLDINGS, L.L.C., a
Delaware limited liability company (the "HOLDER REPRESENTATIVE") and TC GROUP,
L.L.C. ("CARLYLE"). Each of Carlyle-EG&G, the Holder Representative and Carlyle
shall also be referred to herein as a "CARLYLE ENTITY" and collectively, the
"CARLYLE ENTITIES".
RECITALS
WHEREAS, the Company, the Holder Representative, Carlyle-EG&G Holdings
Corp., a Delaware corporation, and Lear Siegler Services, Inc., a Delaware
corporation, entered into an Agreement and Plan of Merger, dated as of July 16,
2002, (the "MERGER AGREEMENT");
WHEREAS, in order to induce the parties to consummate the transactions
contemplated by the Merger Agreement, the parties have agreed to enter into this
Agreement; and
WHEREAS, the execution and delivery of this Agreement is a condition to
the parties obligations under to the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and of the respective
covenants and agreements contained herein, the Company and each of the Carlyle
Entities agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following respective meanings:
(a) an "AFFILIATE" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"CONTROL" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a person, whether through
the ownership of voting securities, by contract, as trustee or executor, or
otherwise;
(b) "BOARD" means the Board of Directors of the Company;
(c) "CLOSING DATE" shall mean the Closing Date as defined in
the Merger Agreement;
(d) "PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity;
(e) "REPRESENTATIVE" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and other representatives;
and
1.
(f) "VOTING SECURITIES" shall mean securities of the Company
with the power to vote with respect to the election of directors generally,
measured with respect to voting power and not with respect to numbers of shares.
2. MANAGEMENT RIGHTS.
(a) MANAGEMENT RIGHTS. From and after the Closing Date and for
so long as the Carlyle Entities and their Affiliates collectively own or control
at least 10% of the Voting Securities (assuming conversion of all outstanding
shares of Series D Senior Convertible Participating Preferred Stock and Series E
Senior Cumulative Convertible Participating Preferred Stock into the Company's
Common Stock), the Carlyle Entities, or their permitted assigns, shall have the
following contractual management rights. Such rights shall be in addition to,
and nothing in this Agreement shall be deemed to limit, any other rights that
any Carlyle Entity may hold as a stockholder of the Company or otherwise:
(i) To consult with and advise management of the
Company regarding operating and financial matters and significant business
issues, including without limitation management's proposed annual operating
plans. Upon request, management of the Company shall meet with authorized
representatives of the Carlyle Entities, or their permitted assigns, at a
mutually agreeable time and place within 45 days after the end of each fiscal
year for an annual progress consultation.
(ii) To examine the books and records of the Company,
inspect its facilities, and receive other information at reasonable times and
intervals concerning the general status of the Company's financial condition and
operations.
(b) BOARD OF DIRECTORS.
(i) At all times on and after the first business day
following the Closing Date, for so long as the Carlyle Entities and their
Affiliates collectively own or control at least 10% of the Voting Securities
(assuming conversion of all outstanding shares of Series D Senior Convertible
Participating Preferred Stock and Series E Senior Cumulative Convertible
Participating Preferred Stock into the Company's Common Stock), and until Joseph
E. Lipscomb no longer wishes to serve as a director, the Company shall take all
such actions as may be necessary or appropriate to (A) cause Joseph E. Lipscomb
to be nominated for election or re-election and elected or re-elected as a
member of the Board and to be maintained in such position at all times
(including, without limitation, nominating such person for election as a member
of the Board, causing the Board to recommend to the stockholders of the Company
that such person be elected as a member of the Board and soliciting proxies and
voting such proxies in favor of the election of such person to the Board).
(ii) In the event that a vacancy is created on the
Board at any time by the death, disability, retirement or resignation of Joseph
E. Lipscomb, the Company and the Carlyle Entities will take such actions as will
result in the election or appointment of a new director designated by the
Carlyle Entities (including, without limitation, nominating such person for
election as a member of the Board, causing the Board to recommend to the
stockholders of the Company that such person be elected as a member of the Board
and soliciting proxies and
2.
voting such proxies in favor of the election of such person to the Board);
provided that such designee is reasonably acceptable to the Company.
(c) OBSERVER RIGHTS. The Company shall, for so long as the
Carlyle Entities and their Affiliates collectively own or control at least 10%
of the Voting Securities (assuming conversion of all outstanding shares of
Series D Senior Convertible Participating Preferred Stock and Series E Senior
Cumulative Convertible Participating Preferred Stock into the Company's Common
Stock), permit an individual designated by the Carlyle Entities and acceptable
to the Company to attend and observe meetings of the Board, and such designee
shall have the right to receive all written information provided by the Company
to the Board (but only if specifically requested by such designee). Such
designee shall have no right to vote on any matter presented to the Board, but
otherwise shall have all rights of a director, including: (i) the right to
examine books and records of the Company; (ii) the right to review and
participate in all discussions of the Board including, without limitation,
capital or equity programs; (iii) the right to receive, upon request, any
information relating to the Company and its subsidiaries, and to any Affiliates
thereof; and (iv) the right to meet on a regular basis with the management
personnel of the Company and its subsidiaries, or any Affiliates thereof;
provided that any such designee shall agree to be bound by all policies relating
to confidentiality and material non-public information which are applicable to
the directors and senior executive officers of the Company.
(d) INFORMATION RIGHTS. The Company shall provide to the
Carlyle Entities, upon written request, such financial and other information
concerning the Company and its subsidiaries as may from time to time be
reasonably requested by the Carlyle Entities in order to comply with applicable
venture capital operating company regulations.
3. STANDSTILL PROVISIONS. Each Carlyle Entity agrees that, during the
term of this Agreement, without the Company's prior written consent, no Carlyle
Entity and no investment partnership in which Carlyle or one of its wholly owned
subsidiaries is a general partner will, in any manner, directly or indirectly:
(a) acquire, publicly announce an intention to acquire,
publicly offer or propose to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, beneficial ownership of any Voting
Securities, or direct or indirect rights or options to acquire (through
purchase, exchange, conversion or otherwise) any Voting Securities if as a
result of such acquisition, the Carlyle Entities and their Affiliates would
beneficially own or have the right to acquire Voting Securities representing
more than 30% of the issued and outstanding Voting Securities; provided,
however, that this Section 3(a) shall not restrict any Carlyle Entity from
acquiring the Voting Securities initially issuable to the Carlyle Entities under
the terms of the Merger Agreement or issuable pursuant to the conversion rights
under the Certificate of Designations for the Series D Senior Convertible
Participating Preferred Stock or the Certificate of Designations for the Series
E Senior Cumulative Convertible Participating Preferred Stock;
(b) seek representation on the Board of the Company (other
than pursuant to the terms of Section 2 hereof or pursuant to the Certificate of
Designations for the Series E Senior Cumulative Convertible Participating
Preferred Stock);
3.
(c) make any public announcement or proposal whatsoever with
respect to a merger or other business combination, sale or transfer of
substantially all of the assets, recapitalization, dividend, share repurchase,
liquidation or other extraordinary corporate transaction with the Company or any
other transaction which would result in a change of control of the Company
(other than the sale of securities or capital stock of the Company by the
Carlyle Entities or their Affiliates), advise, assist, solicit or encourage any
other persons to make any such statement or proposal;
(d) make, directly or indirectly, any "solicitation" of
"proxies" (as such terms are defined in Rule 14a-1 under the Securities Exchange
Act of 1934, so amended (the "1934 ACT")) to vote any Voting Securities, seek to
advise, encourage or influence any person or entity with respect to the voting
of any Voting Securities, initiate or propose any stockholder proposal or induce
or attempt to induce any other person to initiate any stockholder proposal
(other than any such action in furtherance of the election to the Board of the
person designated by the Carlyle Entities pursuant to Section 2);
(e) deposit any Voting Securities into a voting trust, unless
the trustee of such voting trust agrees to be bound by the terms of this
Agreement;
(f) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the 1934 Act) with respect to any Voting
Securities, other than a group consisting of the Carlyle Entities and their
Affiliates or pursuant to the Voting Agreement, dated as of July 16, 2002;
(g) make a public request to the Company (or its directors,
officers, stockholders, employees or agents) to take any action in respect of
the foregoing matters (other than any such action in furtherance of the election
to the Board of the person designated by the Carlyle Entities pursuant to
Section 2 hereof or pursuant to the Certificate of Designations for the Series E
Senior Cumulative Convertible Participating Preferred Stock);
(h) publicly disclose any intention, plan or arrangement
inconsistent with the foregoing; or
(i) request or propose that the Company or any Representative
of the Company amend or waive any provision set forth in this Section 3.
4. RESTRICTIONS ON TRANSFERS. Each Carlyle Entity agrees that it shall
not, directly or indirectly, sell or transfer beneficial ownership of any Voting
Securities (other than to the Company or any person or group approved by the
Company, which approval shall not be unreasonably withheld or delayed) if, as a
result of such sale or transfer, the transferee, together with its Affiliates,
would beneficially own 15% percent or more of the Voting Securities; provided,
however, that such sale or transfer shall not require the consent of the Company
if: (i) such transferee agrees to hold all Voting Securities subject to the
provisions of Sections 3 and 4 of this Agreement; (ii) such sale or transfer is
made pursuant to a bona fide public offering registered under the Securities Act
of 1933, as amended (the "1933 ACT"), or one or more "block trades" or brokerage
transactions pursuant to a registration statement filed pursuant to the 1933
Act; provided that, to the knowledge of the Carlyle Entities, no single
transferee will, upon
4.
completion of such block trade or brokerage transaction, beneficially own more
than 15% of the Company's Voting Securities; (iii) such sale or transfer is made
pursuant to Rule 144 under the 1933 Act; or (iv) such sale or transfer is made
in response to an offer to purchase or exchange any Voting Securities for cash
or other consideration.
5. SPECIFIC PERFORMANCE. Each of the Carlyle Entities and the Company
acknowledges that the other party would not have an adequate remedy at law for
money damages if any of the covenants or agreements of the other party in this
Agreement were not performed in accordance with its terms and therefore agrees
that the other party shall be entitled to specific enforcement of such covenants
or agreements and to injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
6. TERMINATION. This Agreement shall terminate upon the occurrence of
any of the following:
(a) the written agreement of the Company and the Carlyle
Entities to terminate this Agreement; or
(b) at such time as the Carlyle Entities and their Affiliates
collectively own less than 10% of the Voting Securities (assuming conversion of
all outstanding shares of Series D Senior Convertible Participating Preferred
Stock and Series E Senior Cumulative Convertible Participating Preferred Stock
into the Company's Common Stock).
7. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to the Company, to:
URS CORPORATION
100 California Street, Suite 500
San Francisco, CA 94111
Facsimile No. (415) 398-2621
Attention: Kent P. Ainsworth
with a copy to:
COOLEY GODWARD LLP
One Maritime Plaza
San Francisco, California 94111
Telecopy No.: (415) 951-3699
Attention: Samuel M. Livermore, Esq.
5.
(b) if to the Carlyle Entities, to:
THE CARLYLE GROUP
1001 Pennsylvania Ave., N.W., Suite 200
Washington, D.C. 20004-2505
Facsimile No. (202) 347-9250
Attention: Joseph E. Lipscomb
with a copy to:
LATHAM & WATKINS
555 Eleventh St., N.W.
Suite 1000
Washington, D.C. 20004-1304
Telecopy No.: (202) 637-2201
Attention: Daniel T. Lennon, Esq.
8. INTERPRETATION. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". 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. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. References to a person
are also to its permitted successors and assigns.
9. AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
10. EXTENSION; WAIVER. At any time the parties may (a) extend the time
for the performance of any of the obligations or other acts of the other parties
or (b) waive compliance by the other parties with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
6.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
12. ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS
THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS
THEREOF.
14. ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by either of the parties hereto without the prior
written consent of the other party; provided, that the Carlyle Entities may
assign their rights hereunder to an Affiliate to whom such entities transfer
shares of Voting Securities and, with respect to the rights provided by Sections
2(a) and 2(b), to any Affiliate as required to allow such Affiliate to comply
with applicable venture capital operating company regulations; provided, that in
each such case, the Affiliate agrees to be bound by the terms and conditions of
this Agreement. Any assignment in violation of the preceding sentence shall be
void. Subject to the preceding two sentences, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
15. CONSENT TO JURISDICTION. Each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal court located in the
State of Delaware or any Delaware state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court, and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in the State of Delaware or a Delaware state court.
16. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. 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. 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 to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
7.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
COMPANY: URS CORPORATION
By: /s/ Kent P. Ainsworth
------------------------------------
Name: Kent P. Ainsworth
Title: Executive Vice President, Chief
Financial Officer and Secretary
Signature Page - Management Rights and Standstill Agreement
CARLYLE ENTITIES CARLYLE-EG&G, L.L.C.
By: /s/ Allan M. Holt
------------------------------------
Name: Allan M. Holt
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Title: Chairman
---------------------------------
EG&G TECHNICAL SERVICES HOLDINGS, L.L.C.
By: /s/ Joseph E. Lipscomb
------------------------------------
Name: Joseph E. Lipscomb
----------------------------------
Title: Vice President
---------------------------------
TC GROUP, L.L.C.
BY: TCG HOLDINGS, L.L.C.,
ITS MANAGING MEMBER
By: /s/ Joseph E. Lipscomb
------------------------------------
Joseph E. Lipscomb, Managing Director
Signature Page - Management Rights and Standstill Agreement