Exhibit 10.4
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NOTE AND EQUITY PURCHASE AGREEMENT
BY AND AMONG
CORRPRO COMPANIES, INC.,
CCFC, INC.,
OCEAN CITY RESEARCH CORP.,
CORRPRO INTERNATIONAL, INC.,
COMMONWEALTH XXXXXX HOLDINGS LTD.,
CORRPRO CANADA, INC., AND
XXXXX INSPECTIONS LTD.
AS THE LOAN PARTIES
AND
AMERICAN CAPITAL FINANCIAL SERVICES, INC.,
AS AGENT
AND
THE PURCHASERS IDENTIFIED ON
ANNEX A HERETO
MARCH 30, 2004
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TABLE OF CONTENTS
PAGE
TABLE OF CONTENTS....................................................................... i
RECITALS....................................................................... 1
ARTICLE 1 DEFINITIONS................................................................... 1
1.1. Certain Definitions................................................... 1
1.2. Accounting Principles................................................. 19
1.3. Other Definitional Provisions; Construction........................... 19
ARTICLE 2 ISSUE AND SALE OF SECURITIES.................................................. 19
2.1. Authorization and Issuance of the Notes............................... 19
2.2. Authorization and Issuance of the Warrants............................ 20
2.3. Sale and Purchase..................................................... 20
2.4. The Closing........................................................... 20
ARTICLE 3 REPAYMENT OF THE NOTES........................................................ 20
3.1. Interest Rates and Interest Payments.................................. 20
3.2. Repayment of the Notes................................................ 21
3.3. Optional Prepayment of Notes.......................................... 21
3.4. Notice of Optional Prepayment......................................... 21
3.5. Mandatory Prepayment.................................................. 22
3.6. Home Office Payment................................................... 22
3.7. Taxes................................................................. 22
3.8. Maximum Lawful Rate................................................... 23
3.9. Capital Adequacy...................................................... 23
3.10. Certain Waivers....................................................... 24
3.11. Administration Fee.................................................... 24
3.12. Several Obligations................................................... 24
3.13. Loan Party Representation; Reliance................................... 25
ARTICLE 4 CONDITIONS.................................................................... 25
4.1. Conditions to Purchase of Securities.................................. 25
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES............................ 30
5.1. Representations and Warranties of Loan Parties........................ 30
5.2. Absolute Reliance on the Representations and Warranties............... 38
ARTICLE 6 TRANSFER OF NOTES............................................................. 38
6.1. Restricted Securities................................................. 39
6.2. Legends; Purchaser's Representations.................................. 39
6.3. Transfer of Notes..................................................... 39
6.4. Replacement of Lost Securities........................................ 39
6.5. No Other Representations Affected..................................... 39
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ARTICLE 7 COVENANTS..................................................................... 40
7.1. Affirmative Covenants................................................. 40
7.2. Negative Covenants.................................................... 52
7.3. Financial Covenants................................................... 60
ARTICLE 8 EVENTS OF DEFAULT............................................................. 62
8.1. Events of Default..................................................... 62
8.2. Consequences of Event of Default...................................... 64
8.3. Security.............................................................. 65
ARTICLE 9 THE AGENT..................................................................... 65
9.1. Authorization and Action.............................................. 65
9.2. Delegation of Duties.................................................. 65
9.3. Exculpatory Provisions................................................ 65
9.4. Reliance.............................................................. 66
9.5. Non-Reliance on Agent and Other Purchasers............................ 66
9.6. Agent in its Individual Capacity...................................... 66
9.7. Successor Agent....................................................... 66
9.8. Collections and Disbursements......................................... 67
9.9. Reporting............................................................. 67
9.10. Consent of Purchasers................................................. 68
9.11. This Article Not Applicable to Loan Parties........................... 68
ARTICLE 10 PUT OPTION................................................................... 69
10.1. Grant of Option....................................................... 69
10.2. Put Price............................................................. 69
10.3. Exercise of Put Option................................................ 69
10.4. Certain Remedies...................................................... 69
10.5. Put Option Closing.................................................... 70
10.6. Transfer.............................................................. 70
10.7. Subordination......................................................... 70
ARTICLE 11 PREEMPTIVE RIGHTS............................................................ 70
11.1. Limited Preemptive Rights............................................. 70
11.2. Transfer.............................................................. 71
ARTICLE 12 REGISTRATION RIGHTS.......................................................... 71
12.1. Piggyback Registrations............................................... 71
12.2. Demand Registration Rights............................................ 72
12.3. [Intentionally Omitted.].............................................. 73
12.4. Holdback Agreements................................................... 73
12.5. Registration Procedures............................................... 73
12.6. Registration Expenses................................................. 75
12.7. Indemnification....................................................... 76
12.8. Participation in Underwritten Registrations........................... 77
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ARTICLE 13 MISCELLANEOUS................................................................ 77
13.1. Successors and Assigns................................................ 77
13.2. Modifications and Amendments.......................................... 77
13.3. No Implied Waivers; Cumulative Remedies; Writing Required............. 77
13.4. Reimbursement of Expenses............................................. 77
13.5. Holidays.............................................................. 78
13.6. Notices............................................................... 78
13.7. Survival.............................................................. 79
13.8. Governing Law......................................................... 80
13.9. Jurisdiction, Consent to Service of Process........................... 80
13.10. Jury Trial Waiver..................................................... 81
13.11. Severability.......................................................... 81
13.12. Headings.............................................................. 81
13.13. Indemnity............................................................. 81
13.14. Environmental Indemnity............................................... 81
13.15. Counterparts.......................................................... 82
13.16. Integration........................................................... 82
13.17. Subordination......................................................... 82
13.18. Judgment Currency..................................................... 83
13.19. Confidentiality and Publicity......................................... 83
13.20. Compliance with Canadian Law.......................................... 85
ARTICLE 14 GUARANTY..................................................................... 85
14.1. Guaranty.............................................................. 85
14.2. Guaranty Absolute..................................................... 85
14.3. Waiver................................................................ 86
14.4. Continuing Guaranty; Assignments...................................... 86
14.5. Subrogation........................................................... 87
14.6. Canadian Guarantors................................................... 87
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NOTE AND EQUITY PURCHASE AGREEMENT
$14,000,000 AGGREGATE PRINCIPAL AMOUNT OF
NOTES OF THE LOAN PARTIES
DUE MARCH 29, 2011
WARRANTS TO PURCHASE 3,936,967 SHARES
OF COMMON STOCK OF PARENT
THIS NOTE AND EQUITY PURCHASE AGREEMENT (this "Agreement"), dated as of March
30, 2004, is by and among CORRPRO COMPANIES, INC., an Ohio corporation
("Parent") and CCFC, INC., a Nevada corporation, ("CCFC"), OCEAN CITY RESEARCH
CORP., a New Jersey corporation, ("OCRC"), and CORRPRO INTERNATIONAL, INC.
(f/k/a Corrpro Companies Latin America, Inc., a Delaware corporation
("Intermediate Holdings", and together with Parent, CCFC, OCRC, the "US Loan
Parties"), COMMONWEALTH XXXXXX HOLDINGS LTD., a corporation amalgamated under
the laws of the Province of Alberta, Canada and a Foreign Wholly-Owned
Subsidiary of Intermediate Holdings, CORRPRO CANADA, INC., a corporation
amalgamated under the laws of the Province of Alberta, Canada and XXXXX
INSPECTIONS LTD., a corporation amalgamated under the laws of the Province of
Alberta, Canada (collectively, the "Canadian Loan Parties" and together with the
US Loan Parties, the "Loan Parties"), the securities purchasers that are now and
hereafter at any time parties hereto and are listed in Annex A (or any amendment
or supplement thereto) attached hereto (each a "Purchaser" and collectively,
"Purchasers"), and AMERICAN CAPITAL FINANCIAL SERVICES, INC., a Delaware
corporation ("ACFS"), as administrative agent for Purchasers (in such capacity
"Agent"). Capitalized terms used and not defined elsewhere in this Agreement are
defined in Article 1 hereof.
RECITALS
A. The US Loan Parties have proposed selling Notes to Purchaser
in the amount of $10,000,000 and the Canadian Loan Parties have proposed selling
Notes to Purchaser in the amount of $4,000,000 for the purpose of refinancing
certain existing indebtedness of the Loan Parties and to pay for certain
transaction expenses related thereto.
B. In order to induce Purchasers to purchase the Notes to be
issued pursuant to this Agreement, Parent has agreed to issue and sell to
Purchasers, in connection with the purchase of such Notes, warrants exercisable
for an aggregate of 3,936,967 shares of Common Stock of Parent, subject to the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the premises
and their mutual covenants and agreements herein set forth and intending to be
legally bound hereby, covenant and agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Certain Definitions. In addition to other words and terms
defined elsewhere in
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this Agreement, the following words and terms have the meanings set forth below
(and such meanings are equally applicable to both the singular and plural form
of the terms defined, as the context may require):
"ACAS" means American Capital Strategies, Ltd., a Delaware corporation.
"ACFS" means American Capital Financial Services, Inc., a Delaware
corporation.
"Administration Fee" means a fee in an amount equal to $7,500 per annum
payable by the Loan Parties to ACFS in advance commencing on the Closing Date.
"Affiliate" means with respect to any Person, any other Person that is
directly or indirectly controlling, controlled by or under common control with
such Person or entity or any of its Subsidiaries, and the term "control"
(including the terms "controlled by" and "under common control with") means
having, directly or indirectly, the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities or by contract or otherwise. Without limiting the foregoing, the
ownership of ten percent (10%) or more of the voting securities of a Person
shall be deemed to constitute control and notwithstanding anything to the
contrary herein, neither Purchasers nor any of their respective Affiliates shall
be deemed to be Affiliates of the Loan Parties by virtue of the transactions
contemplated in this Agreement.
"Agent" has the meaning assigned to such term in the preamble hereto
and any successor agent provided for hereunder.
"Agreement" means this Note and Equity Purchase Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
"Annual Corporate Charge" means any annual corporate charge that Xxxxxx
Xxxxxx Group Ltd. pays to Parent consistent with past practices.
"Appraised Value" means the fair market value of a security on a
control premium basis without discount for limitations on voting rights,
minority interests, illiquidity or restrictions on transfer, as determined by an
appraisal performed at the expense of Parent by any of (x) Houlihan, Lokey,
Xxxxxx & Zukin, (y) Duff & Xxxxxx or (z) Willamette Management Associates, or
any successor to such firms, as Parent shall elect; provided that such appraiser
shall be directed to determine the value of such securities as soon as
practicable, but in no event later than thirty (30) days from the date of its
selection and for such purposes all rights, options and warrants to subscribe
for or purchase, and other securities convertible into or exchangeable for
Common Stock of Parent shall be deemed to be exercised, exchanged or converted,
and the underlying shares of Common Stock of Parent shall be deemed outstanding.
"Business" means the principal business of the Loan Parties as set
forth in Section 5.1(b) herein and as such shall continue to be conducted
following the purchase and sale of the Securities.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banking institutions in New York are authorized or required by law to
close, and in reference to
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any Canadian Note or related obligation, any day other than a Saturday, Sunday
or other day on which commercial banks in Xxxxxxx Xxxxxxx, Xxxxxx are authorized
or required by law to be closed.
"By-laws" means the by-laws, partnership agreement, operating agreement
or analogous instrument governing the operations of each of the Loan Parties, as
applicable, including all amendments and supplements thereto.
"Canadian Benefit Plans" means any plan, fund, program, or policy,
whether oral or written, formal or informal, funded or unfunded, insured or
uninsured, providing material employee benefits, including medical, hospital
care, dental, sickness, accident, disability, life insurance, pension,
retirement or savings benefits, under which the Loan Parties have any liability
with respect to any employee or former employee, but excluding any Canadian
Pension Plans.
"Canadian Guaranty" means a Guaranty, in form and substance
satisfactory to Agent, executed and delivered, on a joint and several basis, by
each US Loan Party and any other Domestic Subsidiary of a Loan Party in favor of
Agent, for the benefit of itself and the Purchasers.
"Canadian Loan Parties" means, collectively, the parties set forth in
the preamble to this Agreement and all other Canadian Subsidiaries of the Loan
Parties that become a party to the Purchase Documents pursuant to a joinder
agreement.
"Canadian Notes" has the meaning assigned to such term in Section
2.1(b) hereof.
"Canadian Pension Plans" means each pension plan required to be
registered under Canadian federal or provincial law that is maintained or
contributed to by a Loan Party for its employees or former employees, but does
not include the Canada Pension Plan or the Quebec Pension Plan as maintained by
the Government of Canada or the Province of Quebec, respectively.
"Canadian Security Agreement" has the meaning assigned to such term in
Section 4.1(c) hereof.
"Capital Expenditures" means, for any period, the sum (without
duplication) of all expenditures (whether paid in cash or accrued as
liabilities, but excluding any reasonable expenses incurred to comply with the
Process Covenants) made by the Loan Parties on a Consolidated basis during such
period that are or are required to be treated as capital expenditures under
GAAP. For purposes of computing Capital Expenditures as of any measurement date
on or prior to March 31, 2005, Capital Expenditures for any period set forth on
Annex B included within the applicable 12 month measurement period shall be
deemed to be equal to the applicable amount set forth on Annex B.
"Capital Lease" means as to any Person, a lease of any interest in any
kind of property or asset by that Person as lessee that is properly recorded as
a "capital lease" in accordance with GAAP.
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"Capitalized Lease Obligations" means all obligations of any Person
under Capital Leases, in each case, taken at the amount thereof accounted for as
a liability in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9604, et seq.), as amended, and rules,
regulations, standards guidelines and publications issued thereunder.
"Change of Control" means the occurrence of any of the following:
(a) a merger, amalgamation, consolidation, reorganization,
recapitalization or share or interest exchange, sale or transfer or any other
transaction or series of transactions in which the stockholders, managers,
partners, owners or interest holders of Xxxxxxx immediately prior to such
transaction or series of transactions receive, in exchange for the stock or
interests owned by them, cash, property or securities of the resulting or
surviving entity or any Affiliate thereof, and, as a result thereof, Persons
who, individually or in the aggregate, were holders of fifty percent (50%) or
more of the voting stock or other voting ownership interests of Xxxxxxx,
calculated on a fully diluted basis, immediately prior to such transaction or
series of transactions hold less than fifty percent (50%) of the voting stock or
other voting ownership interests of the resulting or surviving entity or such
Affiliate thereof, calculated on a fully diluted basis; or;
(b) any "change in/of control" or similar event as defined in (a)
any certificate or incorporation, certificate of limited partnership or
certificate of formation or statement of designations or operating agreement or
partnership agreement of any Loan Party or (b) any document governing
indebtedness of such Loan Party in excess of $100,000, individually or $250,000
in the aggregate, which gives the holder of such indebtedness the right to
accelerate or otherwise require payment of such indebtedness prior to the
maturity date thereof; or;
(c) a direct or indirect sale, transfer or other conveyance or
disposition, in any single transaction or a series of transactions, of 40% or
more of the assets of the Loan Parties, on a Consolidated basis; or;
(d) Xxxxxxx ceases, indirectly or directly, to have the right to
appoint or elect a majority of the Board of Directors of Parent; or;
(e) Xxxxxxx at any time ceases to own at least seventy-five
percent (75%) of the issued and outstanding Preferred Stock owned by it on the
Closing Date (as the same may be adjusted for any combination, recapitalization
or reclassification into a greater or smaller number of shares), free and clear
of all Liens; or;
(g) except as otherwise expressly permitted under the terms and
conditions of the Agreement, US Loan Parties for any reason at any time cease to
own, directly, 100% of the outstanding equity interests and securities of their
Consolidated Subsidiaries, free and clear of all Liens other than Permitted
Liens; or;
(h) the consummation of a Public Offering, other than an offering
of securities for an employee benefit plan on SEC Form S-8 or a successor form,
that realizes at least $14,000,000 in net proceeds to the Parent; or
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(i) except as otherwise expressly permitted under the terms and
conditions of the Agreement, the Canadian Loan Parties for any reason at any
time ceases to own, directly, 100% of the outstanding equity interests and
securities of their Consolidated Subsidiaries, free and clear of all Liens other
than Permitted Liens.
"Charter Documents" means the certificate of incorporation,
partnership, organization, formation, amalgamation or continuance, or analogous
organic instrument filed with the appropriate Governmental Authorities of each
of the Loan Parties, as applicable, including all amendments and supplements
thereto.
"Closing" means the closing of the purchase and sale of the Securities
pursuant to this Agreement.
"Closing Date" means the date and time for delivery and payment of the
Notes as finally determined pursuant to Section 2.4 hereof.
"Closing Processing Fee" means a fee in an amount equal to $175,000
payable by the Loan Parties to ACFS in consideration of the structuring of the
financing contemplated hereby.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, collectively and each individually, all collateral
and/or security granted and/or securities pledged to Agent, for the benefit of
itself and the Purchasers, by the Loan Parties and any other Person pursuant to
the Purchase Documents.
"Collateral Assignment" has the meaning assigned to such term in
Section 4.1(c) hereof.
"Common Stock" means the common stock, no par value, of the Parent.
"Condition" means any condition that results in or otherwise relates to
any Environmental Liabilities.
"Consolidated or consolidated" means the consolidation in accordance
with GAAP of the accounts or other items as to which such term applies; provided
that for purposes of Section 7.3 and 7.2(e) hereof, notwithstanding any
provision to the contrary, Subsidiaries of the Parent who are Foreign
Subsidiaries but not Canadian Loan Parties shall not be consolidated with the
Loan Parties.
"Consolidated Subsidiary" means a Subsidiary of a Loan Party which is
consolidated for purposes of the financial covenants set forth in Section 7.3.
"Contingent Obligations" means, as to any Person, any obligation of
such Person guaranteeing or intending to guaranty any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary
5
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, (d) otherwise to
assure or to hold harmless the owner of such primary obligation against loss in
respect thereof, and shall include, without limitation, Interest Rate
Agreements, or (e) with respect to any letter of credit issued for the account
of that Person or as to which that Person is otherwise liable for reimbursement
of drawings; provided, however, that the term "Contingent Obligation" shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Controlled Group" means the "controlled group of corporations" as that
term is defined in Section 1563 of the Internal Revenue Code of 1986, as
amended, of which the Loan Parties are a part from time to time.
"Default" means any event or condition that, but for the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Domestic Subsidiary" of a Person means a Subsidiary of that Person
that is incorporated or otherwise organized under the laws of a State of the
United States of America.
"Domestic Wholly-Owned Subsidiary" of a Person means a Wholly-Owned
Subsidiary of that Person that is a Domestic Subsidiary of that Person.
"EBITDA" means, with respect to the Loan Parties on a Consolidated
basis and for any period, the sum, without duplication, of the following for
such period: Net Income determined in accordance with GAAP, plus to the extent
deducted in calculating Net Income (a) Interest Expense, (b) taxes on income (c)
depreciation expense, (d) amortization expense (e) all other non-cash and/or
non-recurring charges and expenses approved by Agent in its Permitted
Discretion, including non-cash charges related to marking outstanding warrants
to market, non-cash charges related to accounting for stock options and non-cash
charges related to contractual obligations with respect the Parent's chief
executive officer positions, but excluding accruals for cash expenses made in
the ordinary course of business, (f) all costs related to the transactions
contemplated hereby, by the Investments Documents, including transaction bonuses
not to exceed $375,000 in the aggregate, (g) loss from any sale of assets, other
than sales in the ordinary course of business as permitted hereunder, (h)
management fees paid in cash to Xxxxxxx pursuant to the Management Services
Agreement as permitted hereunder, (i) all reasonable expenses incurred to comply
with the Process Covenants not to exceed $750,000 in the aggregate and (j) the
Annual Corporate Charge paid in cash in an amount not to exceed $600,000 in any
fiscal year, less to the extent added in calculating Net Income (x) gain from
any sale of assets, other than sales in the ordinary course of business and (y)
all non-cash and/or non-recurring income and less cash payments made on account
of any non-cash charges added to Net Income under clause (e) above, all of the
foregoing determined on a Consolidated basis and in accordance with GAAP. For
purposes of computing EBITDA as of any measurement date on or
6
prior to Xxxxx 00, 0000, XXXXXX for any period set forth on Annex B included
within the applicable 12 month measurement period shall be deemed to be equal
the applicable amount set forth on Annex B.
"Employment Agreements" means, collectively, the employment agreements
of the following Persons, in form and substance satisfactory to Agent: Xxx Xxx,
Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxx Xxxxx, Xxxxx Xxxxxxxx and Xxxx
Xxxxx.
"Environmental Laws" means any Laws which address, are related to or
are otherwise concerned with environmental, health or safety issues, including
any Laws relating to any emissions, releases or discharges of Pollutants into
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, handling, clean-up or control of Pollutants or any exposure or impact
on worker health and safety.
"Environmental Liabilities" means any obligations or liabilities
(including any claims, suits or other assertions of obligations or liabilities)
that are:
(a) related to environmental, health or safety issues
(including on-site or off-site contamination by Pollutants of surface
or subsurface soil or water, and occupational safety and health); and
(b) based upon or related to (i) any provision of past,
present or future United States or foreign Environmental Law (including
CERCLA and RCRA) or common law, or (ii) any judgment, order, writ,
decree, permit or injunction imposed by any court, administrative
agency, tribunal or otherwise.
The term "Environmental Liabilities" includes: (i) fines, penalties,
judgments, awards, settlements, losses, damages (including foreseeable and
unforeseeable consequential damages), costs, fees (including attorneys' and
consultants' fees), expenses and disbursements; (ii) defense and other responses
to any administrative or judicial action (including claims, notice letters,
complaints, and other assertions of liability); and (iii) financial
responsibility for (1) cleanup costs and injunctive relief, including any
Removal, Remedial or other Response actions, and natural resource damages, and
(2) any other compliance or remedial measures.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may from time to time be amended, and the rules and regulations of any
governmental agency or authority, as from time to time in effect, promulgated
thereunder.
"Event of Default" means any of the events of default described in
Section 8.1 hereof.
"Existing Warrants" means (i) that certain Common Stock Purchase
Warrant, dated as of September 23, 2002, issued to Bank One, N.A. by Parent and
(ii) that certain Common Stock Purchase Warrant, dated as of September 23, 2002,
issued to The Prudential Insurance Company of America by Parent.
"Fair Market Value" of a security means (i) if determined in connection
with a sale of substantially all of the assets of or securities issued by Parent
to an unrelated third party, the
7
value to be realized by the holder of the security as a result thereof, (ii)
otherwise, if available, the Market Price thereof, and (iii) otherwise, if
Market Price is not available, the Appraised Value.
"Financing Statements" has the meaning assigned to such term in Section
4.1(c) hereof.
"Fiscal Year" or "fiscal year" means each twelve month period ending on
March 31st of each year.
"Fixed Charges" means, for the applicable period and without
duplication, the sum of the following for the Loan Parties, on a Consolidated
basis: (a) Total Debt Service, plus (b) dividends, repurchases or redemptions of
equity and/or distributions paid in cash.
"Fixed Charge Coverage Ratio" means, for the Loan Parties on a
Consolidated basis, at any date of determination, the ratio of (a) EBITDA, minus
non-financed Capital Expenditures and Capital Expenditures financed under a
revolving line of credit or similar facility, minus income taxes paid in cash,
to (b) Fixed Charges, in each case for the twelve (12) months then ending taken
as one accounting period. For purposes of computing income taxes paid in cash
under clause (a) above as of any measurement date on or prior to December 31,
2004, the amount of such income taxes paid in cash for the applicable 12 month
measurement period shall be deemed to be a pro forma amount of $1,756,000.
"Foreign Subsidiary" means any Subsidiary incorporated or formed in any
jurisdiction other than any State of the United States of America.
"GAAP" has the meaning assigned to such term in Section 1.2 hereof.
"Government" means the United States government or any agency or
Governmental Authority thereof.
"Governmental Authorities" means any federal, state, municipal,
national, local, provincial or other governmental court, department, ministry,
council, commission, board, bureau, agency or instrumentality, governmental or
quasi-governmental, domestic or foreign.
"Government Contract" or "Government Contracts" means each and all (i)
written contracts between the Loan Parties and the Government and (ii) written
subcontracts between (a) the Loan Parties and a prime contractor (a "Prime
Contractor") who is providing goods or services to the Government pursuant to a
written contract with the Government (the "Prime Contract") or (b) the Loan
Parties and a subcontractor who is providing goods or services to a Prime
Contractor pursuant to a Prime Contract; provided that in both circumstances the
subcontracts relate only to goods or services being provided to Government
pursuant to the Prime Contract. Notwithstanding the foregoing, it is understood
and agreed that for the purposes of Sections 5.1(w), 5.1(x) and 8.1 of this
Agreement, the terms "Government Contract" or "Government Contracts" shall also
include any subcontract referenced in (a) or (b) above, whether or not approved
by Agent.
"Guaranteed Obligations" has the meaning assigned to such term in
Section 14.1.
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"Guaranty" means any guaranty, including, without limitation, Article
14 of this Agreement, of the payment or performance of any Indebtedness or other
obligation and any other arrangement whereby credit is extended to one obligor
on the basis of any promise of another Person, whether that promise is expressed
in terms of an obligation to pay the Indebtedness of such obligor, or to
purchase an obligation owed by such obligor, or to purchase goods and services
from such obligor pursuant to a take-or-pay contract, or to maintain the
capital, working capital, solvency or general financial condition of such
obligor, whether or not any such arrangement is reflected on the balance sheet
of such other Person, firm or corporation, or referred to in a footnote thereto,
but shall not include endorsements of items for collection in the ordinary
course of business. For the purpose of all computations made under this
Agreement, the amount of a Guaranty in respect of any obligation shall be deemed
to be equal to the maximum aggregate amount of such obligation or, if the
Guaranty is limited to less than the full amount of such obligation, the maximum
aggregate potential liability under the terms of the Guaranty.
"Hazardous Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Holder" has the meaning assigned to such term in Section 9.1 hereof.
"Indebtedness" of any Person means, without duplication: (a) all
Indebtedness for Borrowed Money; (b) the principal balance outstanding under any
synthetic lease, off-balance sheet loan or similar off balance sheet financing
product; (c) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (b) above,
and (d) all other items not specifically excluded above which, in accordance
with GAAP, would be included in determining total liabilities as shown on the
balance sheet of such Person.
"Indebtedness for Borrowed Money" of any Person means, without
duplication, (a) all indebtedness of such Person for borrowed money, whether or
not evidenced by bonds, debentures, notes or similar instruments, (b) all
Capitalized Lease Obligations of such Person, (c) all Indebtedness of such
Person secured by any mortgage, pledge, security, Lien or conditional sale or
other title retention agreement to which any property or asset owned or held by
such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed, (d) all obligations issued, undertaken or assumed as the
deferred purchase price of Property or services (excluding trade accounts
payable and accrued obligations (other than for borrowed money) which are not
aged more than one hundred twenty (120) calendar days from the billing date or
thirty (30) days from the due date, in each case incurred in the ordinary course
of business and paid within such time period, unless the same are being
contested in good faith and by appropriate and lawful proceedings and such
reserves, if any, with respect thereto as are required by GAAP and deemed
adequate by such Loan Party's independent accountants shall have been reserved
to the satisfaction of Agent in its Permitted Discretion); (e) the face amount
of all letters of credit issued for the account of such Person and without
duplication, all drafts drawn thereunder and all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments issued by such Person; (f) all indebtedness created or
9
arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to Property acquired by the
Person (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such
Property), (g) all indebtedness for the deferred purchase price of property due
more than six months from the incurrence of such indebtedness and (h) all direct
or indirect guaranties of any or all of the foregoing.
"Intercompany Balance" means, in the aggregate, any amounts due from
any Foreign Subsidiaries that are not Canadian Loan Parties to a Loan Party
(including the amount of any Annual Corporate Charge), net of any amounts due
from a Loan Party to any Foreign Subsidiaries that are not Canadian Loan
Parties.
"Interest Expense" means total interest expense generated during the
period in question (including attributable to conditional sales contracts,
Capital Leases and other title retention agreements in accordance with GAAP and
all unused line and commitment fees and administrative and similar fees) of the
Loan Parties on a Consolidated basis with respect to all outstanding
Indebtedness including accrued interest and interest paid in kind and
capitalized interest, but excluding commissions, discounts and other fees owed
with respect to letters of credit and bankers' acceptance financing, and net
costs under Interest Rate Agreements.
"Interest Rate Agreement" means any interest rate swap, interest rate
cap, interest rate collar or other interest rate hedging agreement or
arrangement.
"Investment" as applied to any Person means the amount paid or agreed
to be paid or loaned, advanced or contributed to other Persons, and in any event
shall include (i) any direct or indirect purchase or other acquisition of any
notes, obligations, instruments, stock, securities or ownership interest
(including partnership interests and joint venture interests) and (ii) any
capital contribution to any other Person.
"Investment Documents" means (a) that certain Securities Purchase
Agreement dated December 15, 2003, between CorrPro Investments, LLC and Parent;
and (b) that certain Investor and Registration Rights Agreement dated March 30,
2004, between CorrPro Investments, LLC and Parent.
"Landlord Waiver and Consent" means a waiver/consent in form and
substance satisfactory to Agent in its Permitted Discretion from the
owner/lessor of any premises not owned by a Loan Party at which any of the
Collateral is now or hereafter located for the purpose of providing Agent access
to such Collateral, in each case as such may be modified, amended or
supplemented from time to time.
"Laws" means all U.S. and foreign federal, state, provincial or local
statutes, laws, rules, regulations, ordinances, codes, policies, rules of common
law, and the like, now or hereafter in effect, including any judicial or
administrative interpretations thereof, and any judicial or administrative
orders, consents, decrees or judgments.
"Leverage Ratio" means, for the Loan Parties on a Consolidated basis,
at any date of determination, the ratio of (i) Total Debt outstanding on such
date, to (ii) EBITDA for the twelve (12) months then ending taken as one
accounting period.
10
"Lien" means any security interest, pledge, bailment, mortgage,
hypothecation, deed of trust, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance or other
similar arrangement or interest in real or personal property, now owned or
hereafter acquired, whether such interest is based on common law, statute or
contract.
"LLC Agreement" means that certain Limited Liability Company Agreement
of CorrPro Investments, LLC entered into among Xxxxxxx, Purchaser and Senior
Lender.
"Loan Parties" means, collectively, the US Loan Parties and the
Canadian Loan Parties.
"Manage" and "Management" means generation, production, handling,
distribution, processing, use, storage, treatment, operation, transportation,
recycling, reuse and/or disposal, as those terms are defined in CERCLA, RCRA and
other Environmental Laws (including as those terms are further defined,
construed, or otherwise used in rules, regulations, standards, guidelines and
publications issued pursuant to, or otherwise in implementation of, such
Environmental Laws).
"Management Fee Subordination Agreement" means, that certain
subordination letter dated as of the Closing Date among Xxxxxxx, Purchasers and
Agent, as such may be modified, amended or supplemented from time to time, in
form and substance satisfactory to Agent.
"Management Services Agreement" means that certain Services Agreement
dated March 30, 2004 between Parent and Xxxxxxx.
"Market Price" of any security means the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of each day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of thirty (30) days consisting of the
day as of which "Market Price" is being determined and the twenty-nine (29)
consecutive Business Days prior to such day. If at any time such security is not
listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the "Market Price" shall be the fair value thereof
determined jointly by Parent and the Holders of Warrants representing a majority
of the shares of Common Stock of Parent obtainable upon exercise of the
Warrants. If such parties are unable to reach agreement within ten (10) days,
then the Market Price shall be deemed not to be available and the "Market Price"
shall be the Appraised Value.
"Material Adverse Effect" means a material adverse effect on the
business, properties, assets, liabilities or condition (financial or otherwise)
of the Loan Parties, taken as a whole.
"Material Contracts" means any and all (i) contracts between any Loan
Party and the Government; and/or (ii) contracts or agreements to which any Loan
Party is a party and pursuant to which such Loan Party is or may be (a) entitled
to receive payments, in the aggregate, in excess of Five Hundred Thousand and
No/100 Dollars ($500,000.00), or (b) obligated to make
11
payments or have any other obligation or liability thereunder (direct or
contingent), in the aggregate, in excess of Five Hundred Thousand and No/100
Dollars ($500,000.00).
"Measurement Date" has the meaning assigned to such term in Section 7.3
hereof.
"Measurement Period" means the twelve month period ending on a
Measurement Date.
"Mortgage" has the meaning assigned to such term in Section 4.1(e)
hereof.
"Multiemployer Plan" means a multiemployer plan (within the meaning of
Section 3(37) of ERISA) that is maintained for the benefit of the employees of
the Loan Parties or any member of the Controlled Group.
"Negative Pledge Agreements" means each of the Negative Pledge
Agreements dated as of the Closing Date from the Subsidiaries of the Loan
Parties listed on Schedule 7.1(v), as such may be modified, amended, restated or
supplemented from time to time.
"Net Income" means, for any Person, the net income (or loss) of such
Person on a Consolidated basis for such period taken as a single accounting
period determined in conformity with GAAP; provided, that there shall be
excluded (i) the income (or loss) of any Person in which any other Person (other
than such Person) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to such Person by such Person
during such period, (ii) the income (or loss) of any Person accrued prior to the
date it becomes a Loan Party or is merged or amalgamated into or consolidated
with a Loan Party or that Person's assets are acquired by a Loan Party, (iii)
the income of any Subsidiary of a Loan Party to the extent that the declaration
or payment of dividends or similar distributions of that income by that
Subsidiary is not at the time permitted by operation of the terms of the charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, and (iv) the income (or
loss) associated with any Interest Rate Agreement.
"Newly Issued Securities" means any shares of capital stock of Parent
or any securities containing options or rights to acquire any shares of capital
stock of Parent; provided, however, that the term "Newly Issued Securities"
shall not include (i) up to an aggregate of 4,542,654 shares of Common Stock
issued or issuable after the date of this Agreement upon exercise of options or
rights granted to directors, officers or employees of Parent pursuant to the
Option Plans, (ii) Common Stock issuable upon exercise of the Existing Warrants
and the Xxxxxxx Warrants, (iii) Common Stock issuable upon conversion of
securities convertible into or exchangeable for Common Stock outstanding as of
the date of this Agreement and (iv) shares of Preferred Stock.
"OFAC" shall mean the Office of Foreign Assets Control of the United
States of America Department of Treasury.
"Option Plans" means (i) the 1997 Long-Term Incentive Plan of Parent,
(ii) the 1997 Non-Employee Directors' Stock Option Plan of Parent and (iii) any
other stock option plan for the directors, officers and/or employees of Parent
adopted by the Board of Directors of Parent and, to the extent required by
applicable law, approved by the shareholders of Parent.
12
"Notes" collectively, means the Canadian Notes and the US Notes.
"Parent" has the meaning assigned to such term in the preamble hereto.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any other Governmental Authority
succeeding to the functions thereof.
"Permitted Discretion" means a determination or judgment made in good
faith in the exercise of reasonable (from the perspective of a secured lender)
credit or business judgment.
"Permitted Dispositions" means:
(i) the sale by any Loan Party of obsolete, worn out or
replaced equipment or excess equipment no longer needed in the ordinary
course of business and having a net book value not exceeding $200,000
in the aggregate in any fiscal year;
(ii) the sale by any Loan Party of inventory in the
ordinary course of business for fair market value and on an arm's
length basis;
(iii) the transfer by any US Loan Party or a Wholly-Owned
Subsidiary of US Loan Party of assets to a US Loan Party or any
Domestic Wholly-Owned Subsidiary of a US Loan Party;
(iv) the transfer by any Canadian Loan Party or a
Wholly-Owned Subsidiary of Canadian Loan Party of assets to any Loan
Party or any Wholly-Owned Subsidiary of any Loan Party;
(v) the transfer by any Loan Party of other assets or
properties not specifically permitted otherwise in clauses (i) through
(iv) above (other than equity interests in Subsidiaries) only so long
as (a) such Loan Party complies with the mandatory prepayment
provisions of Section 2.11 of the Senior Credit Agreement in connection
therewith (to the extent the proceeds thereof are not reinvested in
accordance with the terms of such Section 2.11 and Section 3.5 hereof),
(b) the net book value of assets so sold does not exceed $100,000 in
the aggregate in any fiscal year, (c) no Default or Event of Default
exists or otherwise would result therefrom and (d) the sole
consideration thereof, which shall be at least equal to fair market
value, is cash; and
(vi) the dispositions set forth on the Permitted
Disposition Schedule attached hereto as Schedule 1.1(a).
"Permitted Distributions" means:
(i) the declaration and payment of dividends or other
distributions by any Loan Party or a Wholly-Owned Subsidiary of any
Loan Party to a US Loan Party or any Domestic Wholly-Owned Subsidiary
of a US Loan Party;
13
(ii) the declaration and payment of dividends or other
distributions by any Canadian Loan Party or a Wholly-Owned Subsidiary
of Canadian Loan Party to any Loan Party or any Wholly-Owned Subsidiary
of any Loan Party;
(iii) the declaration and payment of dividends or other
distributions by any Loan Party payable solely in its equity securities
(to the extent constituting Permitted Securities and the same (other
than equity securities of Parent) are subject to a first priority Lien
(subject only to a prior Lien in favor of Senior Lender) in favor of
Agent, for the benefit of the Purchasers, as security for the
obligations hereunder and under the other Purchase Documents;
(iv) the issuance by Parent of shares or options to
purchase shares of capital stock under the Warrant, Existing Warrants,
the Xxxxxxx Warrant and the Option Plans; and
(v) so long as no Default or Event of Default has
occurred and is continuing or would result therefrom, the distribution
by any Loan Party, upon termination of an employee or in accordance
with any repurchase provisions set forth in the Option Plan or in
accordance with any existing option grants, to such employee to redeem
for cash equity securities or warrants or options to acquire any equity
securities of such Loan Party owned by such employee not to exceed
$100,000 annually and $250,000 in the aggregate; provided that after
giving effect to such distribution, the Loan Parties are in compliance
on a pro forma basis with the financial covenants set forth in Section
7.3 (recalculated for the most recent period for which financial
statements have been delivered).
"Permitted Liens" has the meaning assigned to such term Section 7.2(b)
hereof.
"Permitted Securities" means any shares, units or interests of equity
securities or ownership interests of Parent that by their terms (or by the terms
of any security into which it is convertible or for which it is exchangeable) or
upon the happening of any event or otherwise (A) are not convertible or
exchangeable for Indebtedness or any securities that are not Permitted
Securities, (B) (i) do not mature and (ii) are not putable or redeemable at the
option of the holder thereof, in each case under clause (i) or (ii) in whole or
in part on or prior to the date six (6) months after the earlier of the
indefeasible payment in full in cash of the obligations hereunder, (C) do not
have payments of dividends on or prior to the date six (6) months after the
indefeasible payment in full of the obligations hereunder, (D) are unsecured and
by operation of law or by legally binding agreement are subordinated in right of
repayment, liens, security and remedies to all of the obligations hereunder and
to all of Agent's and Purchasers' rights, Liens and remedies, (E) do not have
any veto or supermajority voting rights or approval rights with respect to any
issues other than to protect their own rights and preferences, and /or (F) are
not sold, issued or otherwise transferred in connection with or as a part of a
Public Offering.
"Person" means any individual, partnership, limited partnership,
corporation, limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.
14
"Plan" means any employee benefit plan (within the meaning of Section
3(3) of ERISA), other than a Multiemployer Plan, established or maintained by
any of the Loan Parties or any member of the Controlled Group.
"Pledge Agreements" has the meaning assigned to such term in Section
4.1(c) hereof.
"Pollutant" shall include any "hazardous substance" and any "pollutant
or contaminant" as those terms are defined in CERCLA; any "hazardous waste" as
that term is defined in RCRA; and any "hazardous material" as that term is
defined in the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), as amended (including as those terms are further defined, construed, or
otherwise used in rules, regulations, standards, guidelines and publications
issued pursuant to, or otherwise in implementation of, said Environmental Laws);
and including without limitation any petroleum product or byproduct, solvent,
flammable or explosive material, radioactive material, asbestos, polychlorinated
biphenyls (PCBs), dioxins, dibenzofurans, heavy metals, and radon gas; and
including any other substance or material that is reasonably determined to
present a threat, hazard or risk to human health or the environment.
"PPSA" means the Personal Property Security Act (Alberta), as in effect
from time to time.
"Preferred Stock" means that certain Series B Cumulative Redeemable
Voting Preferred Stock of Parent, no par value per share issued and outstanding
as of the Closing Date pursuant to the Preferred Stock Purchase Agreement.
"Prior Holders" means (i) the holders of "Registrable Securities," as
that term is defined in the Existing Warrants and (ii) the holders of
"Registrable Securities," as that terms is defined in the Xxxxxxx Warrants.
"Process Covenants" has the meaning assigned to such term in Section
7.1(u).
"Properties and Facilities" has the meaning assigned to such term in
Section 5.1(q).
"Proprietary Rights" means all patents, trademarks, trade names,
service marks, copyrights, inventions, production methods, licenses (other than
any "shrink wrap" licenses), formulas, know-how and trade secrets, regardless of
whether such are registered with any Governmental Authorities, including
applications therefor.
"Public Offering" means any offer or sale of securities pursuant to any
registration statement filed and effective with the SEC or any other
Governmental Authority after the Closing Date.
"Purchase Documents" means this Agreement, the Notes, the Warrants and
the Security Documents and all other agreements, instruments and documents
delivered in connection therewith as any or all of the foregoing may be
supplemented or amended from time to time.
"Purchaser" has the meaning assigned to such term in the preamble
hereto and in Section 6.2 hereof.
15
"Put Option" has the meaning assigned to such term in Section 10.1
hereof.
"Put Option Closing" has the meaning assigned to such term in Section
10.5 hereof.
"Put Price" has the meaning assigned to such term in Section 10.2
hereof.
"Put Shares" has the meaning assigned to such term in Section 10.2
hereof.
"RCRA" means the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), as amended, and all rules, regulations, standards,
guidelines, and publications issued thereunder.
"Registrable Securities" means any shares of Common Stock of Parent
purchased upon the exercise of any Warrant and any shares of Common Stock of
Parent purchased pursuant to Article 11 hereof.
"Removal," "Remedial" and "Response" actions shall include the types of
activities covered by CERCLA, RCRA, and other comparable Environmental Laws, and
whether the activities are those which might be taken by a government entity or
those which a government entity or any other person might seek to require of
waste generators, handlers, distributors, processors, users, storers, treaters,
owners, operators, transporters, recyclers, reusers, disposers, or other persons
under "removal," "remedial," or other "response" actions.
"Reportable Event" means any of the events which are reportable under
Section 4043 of ERISA and the regulations promulgated thereunder, other than an
occurrence for which the thirty (30) day notice contained in 29 C.F.R. Section
2615.3(a) is waived.
"Required Purchasers" means, at any time, Purchasers holding a pro rata
percentage of the outstanding principal amount of the Notes aggregating at least
66-2/3% at such time. Anything to the contrary contained in this definition
notwithstanding, to the extent the fact that each Purchaser is considered in
determining Required Purchasers for any purpose relating to any Canadian Note
would result in material and adverse tax consequences to any US Loan Party under
Section 956 of the Code, as determined by Agent and the Required Purchasers in
their Permitted Discretion, then Required Purchasers, for such purpose, shall be
determined in accordance with the terms of this definition but solely by
reference to and among the Purchasers of the Canadian Notes.
"Revolving Financing" means one or more secured revolving lines of
credit of the Loan Parties in an initial aggregate amount not to exceed
$19,500,000, subject to adjustment as provided in the Senior Subordination
Agreement.
"SEC" means the Securities and Exchange Commission and any governmental
body or agency succeeding to the functions thereof.
"Securities" has the meaning assigned to such term in Section 2.3
hereof.
"Securities Act" means the Securities Act of 1933, as amended.
16
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Agreement" has the meaning assigned to such term in Section
4.1(c) hereof.
"Security Documents" means the Security Agreement, the Canadian
Security Agreement, the Mortgages, the IP Acknowledgements, the Pledge
Agreements, the Negative Pledge Agreements, the Financing Statements, equivalent
statements, notifications or instruments under the PPSA, and all other
documents, instruments and other materials necessary to create or perfect the
security interests created pursuant to the Security Agreement.
"Senior Credit Agreement" means that certain Revolving Credit, Term
Loan and Security Agreement by and among the Loan Parties, CapitalSource
Finance, LLC, as agent, and Senior Lender dated March 30, 2004, as such may be
amended, modified, renewed, extended or restated and any substitutions,
replacements or refinancings thereof from time to time as permitted hereunder.
"Senior Financing" means, collectively, the Revolving Financing and the
Term Financing.
"Senior Lender" shall collectively mean the banks party to the Senior
Credit Agreement.
"Senior Subordination Agreement" means that certain Subordination
Agreement among Agent, Purchasers, Senior Lender and Parent dated as of the
Closing Date as the same may be modified, amended, restated, substituted,
replaced and/or supplemented from time to time.
"Subject Securities" means the Warrants and the Warrant Shares.
"Subordinated Debt" means any Indebtedness, contingent equity, earnout
or other obligations that is unsecured and subordinated by written contract in
right of repayment, liens, security and remedies to all of the obligations
hereunder and to all of Agent's and Purchasers' rights, Liens and remedies and
in form and substance satisfactory to Agent in its Permitted Discretion.
"Subordination Agreement" means, individually and collectively, (i) the
Management Fee Subordination Agreement; and (ii) any other agreements between
Agent and holders of Subordinated Debt relating to Subordinated Debt, in each
case as the same may be modified, amended, restated and/or supplemented from
time to time, in each case in form and substance satisfactory to Agent.
"Subsidiary" of any corporation means any other corporation or limited
liability company of which the outstanding capital stock possessing a majority
of voting power in the election of directors (otherwise than as the result of a
default) is owned or controlled by such corporation directly or indirectly
through Subsidiaries.
"Term Financing" means one or more secured term credit facilities with
an aggregate principal amount not to exceed $20,500,000, subject to adjustment
as provided in the Senior Subordination Agreement.
17
"Total Debt" shall mean, at any date of determination, the sum of (i)
the total outstanding principal balance of all Indebtedness for Borrowed Money
of Loan Parties on a Consolidated basis, including, without limitation, all
Indebtedness under the Purchase Documents, the Senior Financing, all undrawn
amounts under standby letters of credit pursuant to the Senior Credit Agreement,
and all Capital Leases Obligations and (ii) all accrued interest on the
foregoing including, without limitations, all interest paid in kind. For all
purposes of this Agreement, the term "Total Debt" shall be calculated to include
(i.e., not net of) discounts, deductions or allocations relating or applicable
to or arising from any equity or equity participation or fees, whether under
GAAP or otherwise, but shall not include any Preferred Stock regardless of its
accounting treatment pursuant to GAAP or payments of principal paid by the Loan
Parties on Indebtedness satisfied with the proceeds of this Agreement.
"Total Debt Service" means, for any period, the sum of (i) scheduled or
other required payments of principal on any and all Total Debt, (ii) any other
cash amounts due or payable with respect to, in connection with or on Total
Debt, and (iii) cash Interest Expense. For purposes of computing Total Debt
Service as of any measurement date on or prior to March 31, 2005, Total Debt
Service for any period set forth on Annex B included within the applicable 12
month measurement period shall be deemed to be equal the applicable amount set
forth on Annex B.
"Transaction Documents" has the meaning assigned to such term in
Section 5.1(f) hereof.
"Transactions" means the incurrence of debt and the issuance of
securities in connection therewith, as contemplated by this Agreement, the
Notes, the Transaction Documents and all other agreements contemplated hereby
and thereby.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York from time to time; provided, that to the extent the UCC is used to
define any term herein or in any other Purchase Document and such term is
defined differently in different Articles or Divisions o the UCC the definition
of such term contained in Article or Division 9 shall govern.
"Underlying Common Stock" means (i) the Warrant Shares and (ii) any
equity securities issued or issuable with respect to the securities referred to
in clause (i) above by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization.
"US Loan Parties" means, collectively, the parties set forth in the
preamble to this Agreement and all other Domestic Subsidiaries of the Loan
Parties that become a party to the Purchase Documents pursuant to a joinder
agreement.
"US Notes" has the meaning set forth in Section 2.1(a) hereof.
"UST" means an underground storage tank, including as that term is
defined, construed and otherwise used in RCRA and in rules, regulations,
standards, guidelines and publications issued pursuant to RCRA and comparable
state and local laws.
"Warrants" has the meaning assigned to such term in Section 2.2 hereof.
18
"Warrant Shares" means the shares of Common Stock issued or issuable
upon exercise of the Warrants.
"Wholly-Owned Subsidiary" of a Person means any Subsidiary of that
Person in which (other than directors' qualifying shares required by law) 100%
of the equity, at the time as of which any determination is being made, is
owned, beneficially and of record, by that Person, or by one or more of the
other Wholly-Owned Subsidiaries of that Person, or both.
"Xxxxxxx" means Xxxxxxx Partners III, L.P., a Delaware limited
partnership, and its Affiliates, successors and assigns.
"Xxxxxxx Warrants" means the detachable warrants to be issued and sold
by Parent pursuant to the terms of the Investment Documents, including any
warrants issued upon any transfer, division or combination, or in substitution,
thereof.
1.2. Accounting Principles. The character or amount of any asset,
liability, capital account or reserve and of any item of income or expense to be
determined, and any consolidation or other accounting computation to be made,
and the construction of any definition containing a financial term, pursuant to
this Agreement shall be determined or made in accordance with generally accepted
accounting principles in the United States of America consistently applied
("GAAP") as in effect from time to time; provided that, if any change in GAAP
results in a change in the calculation of the financial covenants or
interpretation of the related provisions of this Agreement or any other Purchase
Document, then the Loan Parties and Agent agree to amend such provisions of this
Agreement so as to equitably reflect such changes in GAAP with the desired
result that the criteria for evaluating the Loan Parties' financial condition
shall be the same after such change in GAAP as if such change had not been made.
1.3. Other Definitional Provisions; Construction. Whenever the
context so requires, neuter gender includes the masculine and feminine, the
singular number includes the plural and vice versa. 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 in any particular provision of this
agreement, and references to section, article, annex, schedule, exhibit and like
references are references to this Agreement unless otherwise specified. A
Default or Event of Default shall "continue" or be "continuing" until such
Default or Event of Default has been cured or waived by Agent and Purchasers.
References in this Agreement to any Persons shall include such Persons'
successors and permitted assigns. Other terms contained in this Agreement (which
are not otherwise specifically defined herein) shall have meanings provided in
Article 9 of the UCC on the date hereof to the extent the same are used or
defined therein.
ARTICLE 2
ISSUE AND SALE OF SECURITIES
2.1. Authorization and Issuance of the Notes. (a) The US Loan
Parties have duly authorized the issuance and sale to Purchasers of $10,000,000
in aggregate principal amount of the US Loan Parties' Senior Secured
Subordinated Notes Due March 29, 2011 to be substantially in the form of the
Note attached hereto as Exhibit A-1 (including any Notes issued in substitution
therefor pursuant to Sections 6.3 and 6.4 hereof and any Notes issued in
exchange for Put Shares
19
pursuant to Section 10.4 or Section 10.5, the "US Notes").
(b) The Canadian Loan Parties have duly authorized the
issuance and sale to Purchasers of $4,000,000 in aggregate principal
amount of the Canadian Loan Parties' Senior Secured Subordinated Notes
Due March 29, 2011 to be substantially in the form of the Note attached
hereto as Exhibit A-2 (including any Notes issued in substitution
therefor pursuant to Sections 6.3 and 6.4 hereof and any Notes issued
in exchange for Put Shares pursuant to Section 10.4 or Section 10.5,
the "Canadian Notes").
2.2. Authorization and Issuance of the Warrants. Parent has duly
authorized the issuance and sale to Purchasers of stock purchase warrants
substantially in the form of the warrant attached hereto as Exhibit B
(collectively, the "Warrants") evidencing Purchasers' right to acquire an
aggregate 3,936,967 shares of Common Stock of Parent.
2.3. Sale and Purchase. Subject to the terms and conditions and in
reliance upon the representations, warranties and agreements set forth herein,
(a) the US Loan Parties shall sell to Purchasers, and Purchasers shall purchase
from the US Loan Parties, in an amount equal to the pro rata portion of the US
Notes as set forth on Annex A, the US Notes in the aggregate principal amount
set forth in Section 2.1(a) hereof for $10,000,000 in the aggregate, (b) the
Canadian Loan Parties shall sell to Purchasers, and Purchasers shall purchase
from the Canadian Loan Parties, in an amount equal to the pro rata portion of
the Canadian Notes as set forth on Annex A, the Canadian Notes in the aggregate
principal amount set forth in Section 2.1(b) hereof for $4,000,000 in the
aggregate and (c) Parent shall sell to Purchasers, and Purchasers shall purchase
from Parent, in an amount equal to the pro rata portion of the Warrants as set
forth on Annex A, the Warrants for an exercise price of $.001 per share not to
exceed $100 in the aggregate. (The Warrants and the Notes are sometimes referred
to herein collectively as the "Securities.")
2.4. The Closing. Delivery of and payment for the Securities (the
"Closing") shall be made at such place and on such other date as may be mutually
agreeable to the Loan Parties and Purchasers. The date and time of the Closing
as finally determined pursuant to this Section 2.4 are referred to herein as the
"Closing Date." Delivery of the Securities shall be made to Purchasers against
payment of the purchase price therefor, less the Closing Processing Fee and any
other amounts payable pursuant to Section 4.1(k) hereof, by wire transfer of
immediately available funds in the manner agreed to by the Loan Parties and
Purchasers. The Notes shall be issued in such name or names and in such
permitted denomination or denominations as set forth in Annex A or as Purchasers
may request in writing not less than two (2) Business Days before the Closing
Date.
ARTICLE 3
REPAYMENT OF THE NOTES
3.1. Interest Rates and Interest Payments. On the first Business
Day of each month commencing on May 1, 2004, (a) the US Loan Parties, jointly
and severally, covenant and agree to make payments in arrears to Agent for the
ratable benefit of Purchasers of accrued interest on the US Notes and (b) the
Canadian Loan Parties, jointly and severally, covenant and agree to make
payments in arrears to Agent for the ratable benefit of the Purchasers of
accrued interest on the Canadian Notes. The Notes will bear interest on the
outstanding principal amount thereof at
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a rate equal to twelve and one-half percent (12.5%). Interest on the Notes will
be computed on the basis of a year of 360 days, composed of twelve 30-day
months, and the actual number of days elapsed.
3.2. Repayment of the Notes. (a) The US Loan Parties, jointly and
severally, covenant and agree to repay to Agent, for the ratable benefit of
Purchasers, the unpaid principal balance of the US Notes in full, together with
all accrued and unpaid interest, fees and other amounts due hereunder in one (1)
payment of $10,000,000 or such other principal amount as is then outstanding,
together with all accrued and unpaid interest, fees and other amounts due
hereunder on March 29, 2011, and (b) the Canadian Loan Parties, jointly and
severally, covenant and agree to repay to Agent, for the ratable benefit of
Purchasers, the unpaid principal balance of the Canadian Notes in full, together
with all accrued and unpaid interest, fees and other amounts due hereunder in
one (1) payment of $4,000,000 or such other principal amount as is then
outstanding, together with all accrued and unpaid interest, fees and other
amounts due hereunder on March 29, 2011.
3.3. Optional Prepayment of Notes. Subject to the terms of this
Section 3.3, the Loan Parties may prepay to Agent, for the ratable benefit of
Purchasers, the outstanding principal amount of the Notes in whole or in part in
multiples of $500,000, or such lesser amount as is then outstanding, at any time
at a price equal to (a) the accrued interest, if any, to the date set for
prepayment, plus (b) a prepayment fee representing the amortization of certain
of Purchasers' costs incurred in connection with the purchase of the Notes equal
to the principal amount prepaid multiplied by the following percentage:
If Prepaid During the 12-Month Period
Ending on March 30th of
the Following Years: Percentage
------------------------------------- ----------
2005 5%
2006 4%
2007 3%
2008 2%
2009 and thereafter 0%
All such prepayments shall be applied by Agent to the outstanding
principal of the Notes after application of such prepayment to any accrued
interest and prepayment premium payable in connection therewith. Anything herein
contained to the contrary notwithstanding, the Agent, in its sole and absolute
discretion, may require all or any portion of voluntary prepayments made by the
Loan Parties to be applied to the principal balance of US Note and any related
obligations prior to the application thereof to the Canadian Note and related
Canadian obligations.
3.4. Notice of Optional Prepayment. If the Loan Parties shall elect
to prepay any Notes pursuant to Section 3.3 hereof, the Loan Parties shall give
notice of such prepayment to Agent and each holder of the Notes to be prepaid
not less than twenty (20) days or more than ninety (90) days prior to the date
fixed for prepayment, specifying (a) the date on which such prepayment is to be
made, (b) the principal amount of such Notes to be prepaid on such date, and
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(c) the premium, if any, and accrued interest applicable to the prepayment. Such
notice shall be accompanied by a certificate of the chairman of the Board of
Directors, the president, the vice president, and/or the treasurer of Parent
that such prepayment is being made in compliance with Section 3.3.
3.5. Mandatory Prepayment. The Notes shall be prepaid in full,
together with all interest, fees and expenses plus a prepayment premium computed
in accordance with Section 3.3, as if such prepayment were a voluntary
prepayment, in the event of a Change of Control or the consummation of a Public
Offering, other than an offering of securities for an employee benefit plan on
SEC Form S-8 or a successor form, that realizes at least $14,000,000 in net
proceeds to the Parent.
3.6. Home Office Payment. The Loan Parties will pay all sums
becoming due on such Notes for principal, premium, if any, and interest to Agent
by the method and at the address specified for such purpose in Annex A, or by
such other method or at such other address as Purchasers shall have from time to
time specified to the Loan Parties in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Loan Parties made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, each holder
of a Note shall surrender such Note for cancellation, promptly after such
request, to the Loan Parties at their principal executive office.
3.7. Taxes. Any and all payments by the Loan Parties hereunder or
under the Notes or other Purchase Documents that are made to or for the benefit
of Purchasers shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings and penalties, interests and all other liabilities with respect
thereto (collectively, "Taxes"), excluding taxes imposed on Agent's or
Purchasers' net income or capital and franchise taxes imposed on any of them by
the jurisdiction under the laws of which any of them is organized or any
political subdivision thereof (all such nonexcluded Taxes being hereinafter
referred to as "Covered Taxes"). If any of the Loan Parties shall be required by
law to deduct any Covered Taxes from or in respect of any sum payable hereunder
or under any Notes or other Purchase Documents to Agent for the benefit of
Purchasers, or to Purchasers, the sum payable shall be increased as may be
necessary so that after making all required deductions of Covered Taxes
(including deductions of Covered Taxes applicable to additional sums payable
under this paragraph), each Purchaser receives an amount equal to the sum it
would have received had no such deductions been made. The Loan Parties shall
make such deductions and the Loan Parties shall pay the full amount so deducted
to the relevant taxation authority or other authority in accordance with
applicable law. In addition, the Loan Parties agree to pay any present or future
stamp, documentary, excise, privilege, intangible or similar levies that arise
at any time or from time to time from any payment made under any and all
Purchase Documents or from the execution or delivery by the Loan Parties or from
the filing or recording or maintenance of, or otherwise with respect to the
exercise by Agent or Purchasers of their respective rights under any and all
Purchase Documents (collectively, "Other Taxes"). The Loan Parties will
indemnify Agent and Purchasers for the full amount of Covered Taxes imposed on
or with respect to amounts payable hereunder and Other Taxes, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. Payment of this indemnification shall be made within thirty (30) days
from the date Agent or Purchasers provide the Loan Parties
22
with a certificate certifying and setting forth in reasonable detail the
calculation thereof as to the amount and type of such Taxes. Any such
certificates submitted by Agent or Purchasers in good faith to the Loan Parties
shall, absent manifest error, be final, conclusive and binding on all parties.
The obligation of the Loan Parties under this Section 3.7 shall survive the
payment of the Notes and the termination of this Agreement. Within thirty (30)
days after the Loan Parties having received a receipt for payment of Covered
Taxes and/or Other Taxes, the Loan Parties shall furnish to Agent, the original
or certified copy of a receipt evidencing payment thereof.
3.8. Maximum Lawful Rate
(a) This Agreement, the Notes and the other Purchase
Documents are hereby limited by this Section 3.8. In no event, whether
by reason of acceleration of the maturity of the amounts due hereunder
or otherwise, shall interest and fees contracted for, charged,
received, paid or agreed to be paid to Purchasers exceed the maximum
amount permissible under such applicable law. If, from any circumstance
whatsoever, interest and fees would otherwise be payable to Agent or
Purchasers in excess of the maximum amount permissible under such
applicable law, the interest and fees shall be reduced to the maximum
amount permitted under applicable law. If from any circumstance, Agent
or Purchasers shall have received anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal
to any excess of interest shall be applied to the reduction of the
principal amount of the Notes, in such manner as may be determined by
Purchasers, and not to the payment of fees or interest, or if such
excessive interest exceeds the unpaid balance of the principal amount
of the Notes, such excess shall be refunded to the Loan Parties.
(b) For the purposes of disclosure under the Interest Act
(Canada), whenever any interest or any fee to be paid by a Loan Party
hereunder or in connection herewith is to be calculated on the basis of
any period of time ("First Period") that is less than a calendar year
(the "First Rate"), it is hereby agreed that the yearly rate of
interest to which the rate used in such calculation is equivalent is
the rate so used multiplied by the actual number of days in the year
divided by such period in which the same is to be ascertained and
divided by the number of days in the First Period. The rates of
interest to be paid under this Agreement are nominal rates, and not
effective rates or yields. The principle of deemed reinvestment of
interest does not apply to any calculation of interest under this
Agreement.
(c) Without limiting the generality of Section 3.8(a)
above, with respect to the Canadian Notes and related obligations, in
no event shall the aggregate "interest" (as that term is defined in
Section 347 of the Criminal Code (Canada)) exceed the effective annual
rate of interest on the "credit advanced" (as defined therein) lawfully
permitted under Section 347 of the Criminal Code (Canada). The
effective annual rate of interest shall be determined in accordance
with generally accepted actuarial practices and principles over the
term of the applicable Loan, and in the event of a dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries
appointed by Agent will be conclusive for the purposes of such
determination.
3.9. Capital Adequacy. If, after the date hereof, either the
introduction of or any
23
change of the interpretation of any law or the compliance by Purchasers with any
guideline or request from any governmental authority (whether or not having the
force of law) has or would have the effect of reducing the rate of return on the
capital or assets of Purchasers as a consequence of, as determined by Agent or
Purchasers in their sole discretion, the existence of any Purchaser's
obligations under this Agreement or any other Purchase Documents, then, upon
demand by Purchasers, the Loan Parties immediately shall pay to Purchasers, from
the time as specified by Purchasers, additional amounts sufficient to compensate
Purchaser in light of such circumstances. The obligations of the Loan Parties
under this Section 3.9 shall survive the payments of the Notes and the
termination of this Agreement.
3.10. Certain Waivers. The Loan Parties unconditionally waive (a)
any rights to presentment, demand, protest or (except as expressly required
hereby) notice of any kind, and (b) any rights of rescission, setoff,
counterclaim or defense to payment under the Notes or otherwise that the Loan
Parties may have or claim against any Purchaser, the Agent or any prior
Purchaser or Agent.
3.11. Administration Fee. The Loan Parties shall pay the annual
Administration Fee on the Closing Date and each anniversary thereafter until the
Notes are indefeasibly paid in full.
3.12. Several Obligations.
(a) Each US Loan Party acknowledges that it is jointly
and severally liable for all of the US Obligations under the Purchase
Documents. Each US Loan Party expressly understands, agrees and
acknowledges that (i) US Loan Parties are all Affiliates, (ii) each US
Loan Party desires to have the availability of one common credit
facility instead of separate credit facilities, (iii) each US Loan
Party has requested that the Agent and the Purchasers extend such a
common credit facility on the terms herein provided, (iv) the
Purchasers will be lending against, and relying on a Lien upon, all of
US Loan Parties' assets even though the proceeds of any particular loan
made hereunder may not be advanced directly to a particular US Loan
Party, (v) each US Loan Party will nonetheless benefit by the issuance
of the US Notes in a size greater than each could independently
warrant, (vi) all of the representations, warranties, covenants,
obligations, conditions, agreements and other terms contained in the
Purchase Documents to which any US Loan Party is a party shall be
applicable to and shall be binding upon each US Loan Party, and (vii)
the US Loan Parties have each executed the Notes as co-makers of the
Notes and that it would not be able to obtain the credit provided by
the Purchasers hereunder without the financial support provided by the
other US Loan Parties.
(b) Each Canadian Loan Party acknowledges that it is
jointly and severally liable for all of the obligations related to the
Canadian Notes under the Purchase Documents. Each Canadian Loan Party
expressly understands, agrees and acknowledges that (i) Canadian Loan
Parties are all Affiliates, (ii) each Canadian Loan Party desires to
have the availability of one common credit facility instead of separate
credit facilities, (iii) each Canadian Loan Party has requested that
the Agent and the Purchasers extend such a common credit facility on
the terms herein provided, (iv) the Purchasers will be lending against,
and relying on a Lien upon, all of Canadian Loan Parties' assets even
though the proceeds of any particular loan made hereunder may not be
advanced directly
24
to a particular Canadian Loan Party, (v) each Canadian Loan Party will
nonetheless benefit by the issuance of Canadian Notes in a size greater
than each could independently warrant, (vi) all of the representations,
warranties, covenants, obligations, conditions, agreements and other
terms contained in the Purchase Documents to which any Canadian Loan
Party is a party shall be applicable to and shall be binding upon each
Canadian Loan Party, and (vii) the Canadian Loan Parties have each
executed the Notes as co-makers of the Notes and that it would not be
able to obtain the credit provided by the Purchasers hereunder without
the financial support provided by the other Canadian Loan Parties.
(c) Anything to the contrary contained in this Agreement
or any other Purchase Document notwithstanding, to the extent any
representation, warranty, covenant or other provision contained herein
or in such Purchase Document that, by its terms, is made by Loan
Parties on a joint and several basis would result in material and
adverse tax consequences to any US Loan Party under Section 956 of the
Code due to such joint and several nature, as determined by Agent and
the Required Purchasers in their Permitted Discretion, such
representation, warranty, covenant or other provision shall be deemed
to be made, without further action or notice by or on behalf of Agent,
any Purchaser or any other Person, by each Loan Party on a several, and
not a joint basis or a joint and several basis, to and for the benefit
of Agent and each Purchaser.
3.13. Loan Party Representation; Reliance. Each Loan Party
irrevocably appoints Parent as its agent for all purposes relevant to this
Agreement and all other Purchase Documents, including the giving and receipt of
notices and execution and delivery of all documents, instruments, and
certificates contemplated herein and therein and all modifications hereto and
thereto. Any acknowledgment, consent, direction, certification, or other action
which might otherwise be valid or effective only if given or taken by all or any
Loan Party acting singly, shall be valid and effective if given or taken only by
Parent, whether or not any of the other Loan Parties joins therein, and the
Agent and the Purchasers shall have no duty or obligation to make further
inquiry with respect to the authority of Parent under this Section 3.13,
provided that nothing in this Section 3.13 shall limit the effectiveness of, or
the right of the Agent and the Purchasers to require and rely upon, any notice,
document, instrument, certificate, acknowledgment, consent, direction,
certification, or other action to be delivered by each Loan Party pursuant to
this Agreement or the other Purchase Documents. With respect to any action
hereunder, Agent and Purchasers may conclusively rely upon, and shall incur no
liability to any Loan Party in acting upon, any request or other communication
that Agent or any Purchaser reasonably believes to have been given or made by a
Person authorized on such or any Loan Party's behalf, whether or not such Person
is listed on the incumbency certificate delivered pursuant to this Agreement. In
each such case, each Loan Party hereby waives the right to dispute Agent's and
Purchasers' actions based upon such request or other communication absent
manifest error.
ARTICLE 4
CONDITIONS
4.1. Conditions to Purchase of Securities. The obligation of
Purchasers to purchase and pay for the Securities is subject to the
satisfaction, prior to or at the Closing, of the following
25
conditions:
(a) Representations and Warranties True. The
representations and warranties contained in Article 5 hereof shall be
true and correct in all material respects at and as of the Closing Date
as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein.
(b) Material Adverse Change. There will have been no
material adverse change in the business or financial condition of the
Loan Parties or the capital markets since September 30, 2003.
(c) Security Agreement; Collateral Assignment. The Loan
Parties and Agent, for the benefit of the Purchasers, shall have
entered into (i) a security agreement or security agreements, granting
to Agent a security interest in the assets of the US Loan Parties
subordinated in lien priority only to the Liens in favor of the Senior
Lender and subject to no other Liens other than Permitted Liens, in
form and substance as set forth in Exhibit C attached hereto (as the
same may be amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Security Agreement"), (ii) a
security agreement or security agreements, granting to Agent a security
interest in the assets of the Canadian Loan Parties subordinated in
lien priority only to the Liens in favor of the Senior Lender as
contemplated therein and subject to no other Liens other than any other
Permitted Liens, in form and substance acceptable to Agent attached
hereto (as the same may be amended, modified or supplemented from time
to time in accordance with the terms thereof, the "Canadian Security
Agreement"), (iii) pledge agreements granting to Agent for the benefit
of Purchasers a pledge of the equity securities held by (A) the US Loan
Parties and (B) the Canadian Loan Parties with respect to the Canadian
Notes and related obligations, in form and substance acceptable to
Agent as the same may be amended, modified or supplemented from time to
time in accordance with the terms hereof (the "Pledge Agreements") and
(iv) a collateral patent, trademark, copyright and license
acknowledgement in form and substance as set forth in Exhibit D
attached hereto (as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof, the "IP
Acknowledgement"). The Loan Parties shall have executed and delivered
to Agent, for the benefit of the Purchasers, such financing statements
and other instruments (collectively, "Financing Statements") as Agent
shall require in order to perfect and maintain the continued perfection
of the security interest created by the Security Agreement. Agent shall
have received reports of filings with appropriate government agencies
showing that there are no Liens on the Collateral other than Permitted
Liens.
(d) Mortgage and Title Insurance. Agent shall have
received (i) an ALTA mortgagee's policy of title insurance (ALTA
Revised 1987 Form or such other form acceptable to Agent) in favor of
Agent with respect to each parcel of owned real estate located in the
United States, issued by a title company and in an amount satisfactory
to Agent in its Permitted Discretion, showing that the applicable Loan
Party is the owner of such parcel and has good and marketable title
thereto and insuring that the mortgage (in form and substance as set
forth in Exhibit E attached hereto) covering such parcel constitutes a
valid Lien on such parcel, subject only to Permitted Liens and other
matters
26
approved by Agent in its Permitted Discretion, each such policy to be
in such form and containing such endorsements as may be required by
Agent in its Permitted Discretion, (ii) evidence that all premiums with
respect to such title insurance policies shall have been paid in full
by the Loan Parties, and (iii) a survey of each parcel of Real Estate
and the real estate subject to any leasehold estate identified on
Schedule 4.1(d) in sufficient detail to permit the elimination of any
survey exceptions to the title policy insuring the Lien of such
Mortgage and otherwise satisfactory to Agent in its Permitted
Discretion;
(e) Environmental Reports. Agent shall have received
reports covering the Loan Parties' properties in form and substance
satisfactory to Agent regarding the Loan Parties' compliance with
Environmental Laws.
(f) Landlord Waivers and Consents. The Loan Parties shall
have delivered to Agent a Landlord Waiver and Consent for each property
leased for the properties located in Conyers, Georgia, Xxxxx Xxxxx,
Louisiana, Houston, Texas, Sand Springs, Oklahoma and San Leandro,
California and for each other property lease, if any, for which the
consent of the landlord is needed in connection with any change of
control of the tenant, each in form and substance satisfactory to
Purchaser.
(g) LLC Agreement. CorrPro Investments, LLC and each of
its members shall have entered into the LLC Agreement.
(h) Management Fee Subordination Agreement. Agent,
Purchasers and Xxxxxxx shall have executed the Management Fee
Subordination Agreement.
(i) Investment Documents. Parent and CorrPro Investments
LLC shall have executed the Investment Documents on terms reasonably
satisfactory to Agent and Purchasers.
(j) Closing Documents. The Loan Parties will have
delivered or caused to be delivered to Agent all of the following
documents in form and substance satisfactory to Agent:
(i) the US Notes (as designated by Agent and
Purchasers pursuant to Section 2.1(a) and Annex A hereof) in
aggregate original principal amounts as set forth herein, duly
completed and executed by the US Loan Parties;
(ii) the Canadian Notes (as designated by Agent
and Purchasers pursuant to Section 2.1(b) and Annex A hereof)
in aggregate original principal amounts as set forth herein,
duly completed and executed by the Canadian Loan Parties;
(iii) the Warrants (as designated by Agent and
Purchasers pursuant to Section 2.2 and Annex A hereof)
evidencing the right to acquire the number of shares of Common
Stock of Parent set forth in Section 2.2 and Annex B hereof,
subject to adjustment from time to time in accordance with the
terms thereof;
(iv) certificates of good standing dated not more
than 10 Business Days
27
prior to the Closing Date for each of the Loan Parties issued
by their respective jurisdictions of organization and each
jurisdiction where they are qualified to operate as a foreign
corporation, or its equivalent except for such jurisdiction
where the failure to so qualify would not reasonably be likely
to have or result in a Material Adverse Effect;
(v) a copy of the Charter Documents of each of
the Loan Parties, certified by the appropriate governmental
official of the jurisdiction of its organization as of a date
not more than 10 Business Days prior to the Closing Date;
(vi) a copy of the By-laws of each of the Loan
Parties, certified as of the Closing Date by the secretary,
assistant secretary, manager or general partner, as
applicable, of each respective Loan Party;
(vii) a certificate of the secretary, assistant
secretary, managing director, manager or general partner of
each of the Loan Parties, certifying as to the names and true
signatures of the officers or other authorized person of the
respective Loan Party authorized to sign this Agreement and
the other documents to be delivered by the respective Loan
Party hereunder;
(viii) copies of the resolutions duly adopted by
the each of the Loan Party's board of directors, general
partners, board of managers or other governing body,
authorizing the execution, delivery and performance by the
respective Loan Party of this Agreement and each of the other
agreements, instruments and documents contemplated hereby to
which the respective Loan Party is a party, and the
consummation of all of the other Transactions, certified as of
the Closing Date by the secretary, assistant secretary,
manager or general partner of the respective Loan Party;
(ix) a certificate dated as of the Closing Date
from an officer, general partner or manager of each of the
Loan Parties stating that the conditions specified in this
Section 4.1 have been fully satisfied or waived by Agent;
(x) certificates of insurance evidencing the
existence of all insurance required to be maintained by the
Loan Parties pursuant to Section 7.1(c), and Agent shall be
satisfied with the type and extent of such coverage;
(xi) opinions of Xxxx Xxxxxx & Parks LLP, counsel
to the Loan Parties, and special counsel for the Loan Parties,
including, without limitation, appropriate Canadian counsel
licensed in such provinces of Canada as requested by Agent, in
each case in form and substance satisfactory to Agent;
(xii) copies of all material leases to which any
of the Loan Parties is a party; and
(xiii) such other documents relating to the
Transactions contemplated by this Agreement as Agent or its
special counsel may reasonably request.
28
(k) Purchaser's Fees and Expenses.
(i) Closing Processing Fee: On the Closing Date,
the Loan Parties shall pay the Closing Processing Fee to ACFS
(and the Loan Parties hereby authorize Agent to deduct the
Closing Processing Fee from the aggregate proceeds from the
sales of the Securities by the Loan Parties);
(ii) Initial Administrative Fee. On the Closing
Date, the Loan Parties shall have paid the initial yearly
Administrative Fee to ACFS (and the Loan Parties hereby
authorize Agent to deduct the initial Administrative Fee from
the aggregate proceeds of the sale of the Securities by the
Loan Parties); and
(iii) Other Fees and Expenses. On the Closing
Date, the Loan Parties shall have paid the fees and expenses
of Agent and Purchasers, payable by the Loan Parties pursuant
to Section 14.4 hereof (and the Loan Parties hereby authorize
Agent to deduct from the aggregate proceeds of the sale of the
Securities by the Loan Parties, all such amounts).
(l) Legal Investment. On the Closing Date, Purchasers'
purchases of the Securities shall not be prohibited by any applicable
law, rule or regulation of any Governmental Authority (including,
without limitation, Regulations T, U or X of the Board of Governors of
the Federal Reserve System) as a result of the promulgation or
enactment thereof or any changes therein, or change in the
interpretation thereof by any Governmental Authority, subsequent to the
date of this Agreement.
(m) Proceedings. All proceedings taken or required to be
taken in connection with the transactions contemplated hereby to be
consummated at or prior to the Closing and all documents incident
thereto will be satisfactory in form and substance to Agent and its
special counsel and to Purchaser and its special counsel.
(n) Employment Agreements and Key Employees. The Loan
Parties shall have entered into the Employment Agreements to which they
are a party. No key executive employee and no group of employees or
independent contractors of the Loan Parties has given notice that they
intend to terminate his, her or their employment or relationship with
the Loan Parties.
(o) Financial Condition. Parent shall have, on a
Consolidated basis, as of the Closing Date, after giving effect to the
payment of (i) prior Indebtedness, (ii) all fees payable to Purchasers
under the terms of this Agreement, and (iii) all costs and expenses
arising as a result of the Transactions contemplated by this Agreement,
the Senior Credit Agreement and any other Transaction Document to which
the Loan Parties are party: (x) adjusted EBITDA (as set forth on Annex
C attached hereto) for the twelve month period ending on February 28,
2004 of at least $12,250,000, (y) Debt to EBITDA Ratio of not more than
3.30 to 1.00, and (z) available cash and immediately accessible
availability in an amount greater than $5,000,000 on the Closing Date.
(p) Equity. Parent shall have received no less than
$13,000,000 consideration for Preferred Stock in form and substance
acceptable to Purchasers in their sole
29
discretion.
(q) Senior Credit Agreement. The Loan Parties shall have
entered into the Senior Credit Agreement in form and substance
acceptable to Purchasers in their sole discretion.
(r) Senior Subordination Agreement. Agent, Purchasers and
the Senior Lender shall have executed the Senior Subordination
Agreement.
(s) Existing Indebtedness. All in form and substance
satisfactory to Agent in its Permitted Discretion, Agent shall have
received evidence (i) of repayment in full and termination of all
liabilities and obligations of the Loan Parties to Bank One, N.A., the
Royal Bank of Canada, and The Prudential Insurance Company of America
and all related documents, agreements and instruments and of all Liens
and UCC or PPSA financing statements and similar statements relating
thereto, including, without limitation, any Liens and/or UCC or PPSA
financing statements covering or relating to any assets or properties
of any equity holders of any Loan Party, (ii) of release and
termination of, or Agent's authority to release and terminate, any and
all Liens and/or UCC or PPSA financing statements and similar
statements in, on, against or with respect to any assets or property of
the Loan Parties (other than Permitted Liens), and (iii) that any and
all existing lockbox arrangements are terminated.
(t) Middle East Operations. Agent shall have received
evidence satisfactory to Agent that Parent has received proceeds in
connection with the pending divestiture of Parent's Middle East
operations such that the Net Proceeds are at least $2,500,000.
(u) Waiver. Any condition specified in this Section 4.1
may be waived by Agent; provided that no such waiver will be effective
against Agent unless it is set forth in a writing executed by Agent.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
5.1. Representations and Warranties of Loan Parties. As a material
inducement to Agent and Purchasers to enter into this Agreement and purchase the
Notes and the Warrants, the Loan Parties, jointly and severally, hereby
represent and warrant to Agent and Purchasers as follows:
(a) Organization and Power. Each of the Loan Parties is
duly organized, validly existing and in good standing under the laws of
its state of organization. Each of the Loan Parties has all requisite
corporate or other organizational power and authority and all material
licenses, permits, approvals and authorizations necessary to own and
operate its properties, to carry on its businesses as now conducted and
presently proposed to be conducted and to carry out the Transactions,
and is qualified to do business in the jurisdictions listed on the
"Organizational Schedule" attached hereto as Schedule 5.1(a), which
includes every jurisdiction where the failure to so qualify might
reasonably be expected to have a Material Adverse Effect. Each of the
Loan Parties has its principal place of business as set forth on the
"Organizational Schedule." The copies of the
30
Charter Documents and By-Laws of the Loan Parties that have been
furnished to Agent reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete.
(b) Principal Business. The Loan Parties are primarily
engaged in the business of providing corrosion control related
services, systems, equipment and materials to the infrastructure,
environmental and energy markets, including (i) corrosion control
engineering services, systems and equipment, (ii) coating services and
(iii) pipeline integrity and risk assessment services (the "Business").
(c) Financial Statements and Financial Projections.
(i) Financial Statements. The Loan Parties have
delivered to Agent copies of their audited consolidated
year-end financial statements for and as of the end of the
three fiscal years ended March 31, 2003 and unaudited interim
statements for the fiscal quarters ended June 30, 2003,
September 30, 2003 and December 31, 2003 (the "Financial
Statements"). The Financial Statements were compiled from the
books and records maintained by the Loan Parties' management,
are correct and complete and fairly represent the consolidated
financial condition of the Loan Parties as of their dates and
the results of operations for the fiscal periods then ended
and have been prepared in accordance with GAAP except as set
forth on the "Financial Statements Exception Schedule"
attached hereto as Schedule 5.1(c).
(ii) Financial Projections. The Loan Parties have
delivered to Agent financial projections of the Loan Parties
for the period April 1, 2003 through March 31, 2008 derived
from various assumptions of the Loan Parties' management (the
"Financial Projections"). The Financial Projections represent
a reasonable estimate of possible results in light of the
history of the Business and the Loan Parties, present and
foreseeable conditions and the intentions of the Loan Parties'
management. The Financial Projections accurately reflect the
liabilities of the Loan Parties upon consummation of the
transactions contemplated hereby as of the Closing Date.
(iii) Accuracy of Financial Statements. The Loan
Parties do not have any liabilities, contingent or otherwise,
or forward or long-term commitments that are not disclosed in
the Financial Statements or in the notes thereto, except as
set forth on Schedule 5.1(c) and except as disclosed therein
there are no unrealized or anticipated losses from any
commitments of the Loan Parties which may reasonably be
expected to be or result in a Material Adverse Effect.
(d) Capitalization and Related Matters. As of the Closing
Date and immediately thereafter, the authorized capital stock of Parent
and the shares of stock that are issued , outstanding and reserved for
issuance upon exercise of the Warrants are as set forth on the
Organizational Schedule. As of the Closing Date, except as set forth on
the Organizational Schedule, the authorized capital stock of each of
the other Loan Parties and the number and ownership of all outstanding
capital stock of each of the other Loan
31
Parties is as set forth on the Organizational Schedule. As of the
Closing Date, none of the Loan Parties will have outstanding any
capital stock or securities convertible or exchangeable for any shares
of its capital stock except as set forth on the Organizational Schedule
and none will have outstanding any rights or options to subscribe for
or to purchase its capital stock or any stock or securities convertible
into or exchangeable for its capital stock except as set forth on the
Organizational Schedule. As of the Closing Date, none of the Loan
Parties will be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital
stock, except as set forth herein, in the Charter Documents and as set
forth on the Organizational Schedule, respectively, as in effect on the
date hereof. As of the Closing, all of the outstanding shares of each
Loan Party's capital stock will be validly issued, fully paid and
nonassessable. There are no statutory or, except as set forth on the
Organizational Schedule, contractual stockholders' preemptive rights
with respect to the issuance of the Warrants hereunder. Assuming the
truthfulness of the representations made by Purchaser herein, none of
the Loan Parties has violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any
of its capital stock, and the offer, sale and issuance of the
Securities hereunder do not require registration under the Securities
Act or any applicable state securities laws. To the best knowledge of
Parent, there are no agreements among Parent's stockholders with
respect to the voting or transfer of Parent's capital stock other than
as contemplated in the Purchase Documents and the Investment Documents.
(e) Subsidiaries. The Loan Parties do not own, or hold
any rights to acquire, any shares of stock or any other security or
interest in any other Person, and the Loan Parties have no
Subsidiaries, except in each case as set forth on the Organizational
Schedule.
(f) Authorization; No Breach. The execution, delivery and
performance of this Agreement, the other Purchase Documents, the Senior
Credit Agreement, the Investment Documents and all other agreements
contemplated hereby and thereby to which each of the Loan Parties is a
party (collectively, the "Transaction Documents"), and the consummation
of the Transactions have been duly authorized by each of the Loan
Parties. The execution and delivery by each of the Loan Parties of the
Purchase Documents do not and will not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) except as created pursuant to the Security
Documents, result in the creation of any Lien upon any of the Loan
Parties' capital stock or assets pursuant to, (iv) give any third party
the right to accelerate any obligation under, (v) result in a violation
of, or (vi) require any authorization, consent, approval, exemption or
other action by or notice to any Governmental Authority pursuant to,
the Charter Documents of any of the Loan Parties, or any law, statute,
rule or regulation to which any of the Loan Parties is subject, or any
agreement, instrument, order, judgment or decree to which any of the
Loan Parties is a party or to which they or their assets are subject.
(g) Governmental Approvals. Except as specifically
provided by the Purchase Documents, no registration with or consent or
approval of, or other action by, any Governmental Authority is or will
be required in connection with the consummation of
32
the Transactions by the Loan Parties.
(h) Enforceability. This Agreement constitutes, and each
of the other Purchase Documents when duly executed and delivered by
each of the Loan Parties who are parties thereto will constitute,
legal, valid and binding obligations of each of the Loan Parties
enforceable in accordance with their respective terms subject to the
effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of
equity which may limit the availability of equitable remedies (whether
in a proceeding at law or in equity).
(i) No Material Adverse Change. Since September 30, 2003,
there has been no event or occurrence that is likely to have a Material
Adverse Effect.
(j) Litigation. Except as described in the "Litigation
Schedule" attached hereto as Schedule 5.1(j) there is no action, suit,
proceeding or investigation pending or, to its knowledge, threatened
against any Loan Party that (a) questions or could reasonably be
expected to prevent or affect the validity of any of the Purchases or
the right of such Loan Party to enter into any Purchase or to
consummate the transactions contemplated thereby or (b) could
reasonably be expected to be, have or result in, either individually or
in the aggregate, any Material Adverse Change or Material Adverse
Effect. No Loan Party is aware that there is any basis for the
foregoing. No Loan Party is a party or subject to any order, writ,
injunction, judgment or decree of any Governmental Authority. As of the
Closing Date, there is no action, suit, proceeding or investigation
initiated by any Loan Party currently pending. Except as disclosed in
the financial statements most recently delivered to Agent hereunder, no
Loan Party has any existing accrued and/or unpaid Indebtedness to any
Governmental Authority or any other governmental payor.
(k) Compliance with Laws. Each Loan Party (a) except as
set forth on the Compliance Schedule attached hereto as Schedule
5.1(k), is in compliance with all laws, statutes, rules, regulations,
ordinances and tariffs of any Governmental Authority applicable to such
Loan Party, the Business and/or such Loan Party's assets or operations,
including, without limitation, ERISA and any laws or regulations
pertaining to the Business, and (b) is not in violation of any order of
any Governmental Authority or other board or tribunal, except, in the
case of both (a) and (b), where noncompliance or violation could not
reasonably be expected to be, have or result in a Material Adverse
Effect. To the Loan Parties' knowledge, there is no event, fact,
condition or circumstance which, with notice or passage of time, or
both, would constitute or result in any noncompliance with, or any
violation of, any of the foregoing, in each case except where
noncompliance or violation could not reasonably be expected to be, have
or result in a Material Adverse Effect. No Loan Party has received any
notice that any Loan Party is not in material compliance in any respect
with any of the requirements of any of the foregoing. No Loan Party has
(i) engaged in any Prohibited Transactions as defined in Section 406 of
ERISA and Section 4975 of the Code, (ii) failed to meet any applicable
minimum funding requirements under Section 302 of ERISA in respect of
its plans and no funding requirements have been postponed or delayed,
(iii) knowledge of any event or occurrence which would cause the
Pension Benefit Guaranty Corporation to institute
33
proceedings under Title IV of ERISA to terminate any of the employee
benefit plans, (iv) any fiduciary responsibility under ERISA for
investments with respect to any plan existing for the benefit of
Persons other than its employees or former employees, or (v) withdrawn,
completely or partially, from any multi-employer pension plans so as to
incur liability under the MultiEmployer Pension Plan Amendments of
1980. With respect to each Loan Party, there exists no event described
in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) day notice period
contained in 12 C.F.R. Section 2615.3 has not been waived. With respect
to each scheme or arrangement mandated by a government other than the
United States providing for post-employment benefits (each, a "Foreign
Government Scheme or Arrangement") and with respect to each employee
benefit plan maintained or contributed to by any Loan Party that is not
subject to United States law providing for post-employment benefits
(each, a "Foreign Plan"): (i) all employer and employee contributions
required by law or by the terms of any Foreign Government Scheme or
Arrangement or any Foreign Plan have been made, or, if applicable,
accrued, in accordance with normal accounting practices; (ii) the
liability of each Loan Party with respect to a Foreign Plan is
reflected in accordance with normal accounting practices on the
financial statements of such Loan Party, as the case may be; (iii) each
Foreign Plan is funded in accordance with applicable law; and (iv) each
Foreign Plan required to be registered has been registered and has been
maintained in good standing with applicable regulatory authorities.
Each Loan Party has maintained in all material respects all records
required to be maintained by any applicable Governmental Authority. No
Loan Party has engaged, or does engage, directly or indirectly, in any
business other than the Business.
(l) Environmental Protection. Except as specified in
"Environmental Schedule" attached hereto as Schedule 5.1(l), each Loan
Party is in compliance in all material respects with all applicable
Environmental Laws. Except as set forth on Schedule 5.1(l), no Loan
Party has been notified of any action, suit, proceeding or
investigation (a) relating in any way to compliance by or liability of
such Loan Party under any Environmental Laws, (b) which otherwise deals
with any Hazardous Substance or any Environmental Law, or (c) which
seeks to suspend, revoke or terminate any license, permit or approval
necessary for the generation, handling, storage, treatment or disposal
of any Hazardous Substance.
(m) Legal Investments; Use of Proceeds. The Loan Parties
will use the proceeds from the sale of the Notes to refinance certain
existing indebtedness and pay certain transaction expenses related
thereto. The Loan Parties are not engaged in the business of extending
credit for the purpose of purchasing or carrying any "margin stock" or
"margin security" (within the meaning of Regulations T, U or X issued
by the Board of Governors of the Federal Reserve System), and no
proceeds of the sale of the Notes will be used to purchase or carry any
margin stock or margin security or to extend credit to others for the
purpose of purchasing or carrying any margin stock or margin security.
(n) Taxes. Each of the Loan Parties has filed or caused
to be filed all federal, state and local tax returns that are required
to be filed by it, and has paid or caused to be paid all taxes shown to
be due and payable on such returns or on any assessments received by
it, including payroll taxes, except only for taxes that such Loan Party
is
34
currently contesting in good faith and for which adequate reserves have
been established.
(o) Intentionally Omitted.
(p) Investment Company Act; Public Utility Holding
Company Act. None of the Loan Parties is (a) an "investment company" or
"controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended, or (b) a "holding company"
or a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(q) Properties; Security Interests. Except as set forth
on the "Properties Schedule" attached hereto as Schedule 5.1 (q), each
Loan Party is the sole owner and has good, valid and marketable title
to, or a valid leasehold interest in, license of, or right to use, all
of its properties and assets, whether personal or real, free and clear
of all Liens other than Permitted Liens. Schedule 5.4 lists as of the
Closing Date (i) the locations of the chief executive office of each
Loan Party and all other locations of Collateral and all books and
records in connection therewith or in any way relating thereto or
evidencing the Collateral, (ii) identifies the common address and use
of each such location, (iii) indicates whether such location is owned
or leased by such Loan Party or whether such Loan Party is entitled to
occupy or use such location by virtue of a license or easement, (iv) if
such location is leased, describes the parties to and date of such
lease and the name and current address of the landlord under the lease,
(v) if such location is owned, sets forth a complete and accurate legal
description for such location and (vi) if such Loan Party occupies or
uses such location by virtue of a license or easement agreement,
describes such license or easement agreement with reasonable
specificity. Each Loan Party enjoys peaceful and undisturbed possession
under all such leases as of the Closing Date and such leases are valid
and subsisting and are in full force and effect. As of the Closing Date
all tangible personal property and tangible assets of each Loan Party
are in good repair, working order and condition (normal wear and tear
excepted) and are suitable and adequate for the uses for which they are
being used or are intended. The Security Agreement creates and grants
to Agent a valid and perfected first priority security interest in all
the collateral thereunder, subject only to Liens granted to the Senior
Lenders and Permitted Liens.
(r) Intellectual Property; Licenses. Except as set forth
on the "Intellectual Property Schedule" attached hereto as Schedule
5.1(r) as of the Closing Date or as thereafter otherwise disclosed in
writing to Agent from time to time, no Loan Party owns, licenses or
utilizes any registered patents, patent applications, registered
trademarks, trademark applications, registered service marks, service
xxxx applications, registered copyrights or copyright applications, or
any material trade names, software or licenses. Each Loan Party owns
directly, or is entitled to use by license or otherwise, all
Intellectual Property of any Person used in, necessary for or material
to the conduct of such Loan Party's businesses. All such items listed
on the Intellectual Property Schedule as of the Closing Date are and,
at all times after the Closing Date (except to the extent no longer
deemed necessary for or material to the conduct of the businesses of
the Loan
35
Parties in the good faith business judgment of the Loan Parties) will
be: (a) subsisting and have not been adjudged invalid or unenforceable,
in whole or part, (b) valid and enforceable, and (c) in full force and
effect and not in known conflict with the rights of any Person. Each
Loan Party has made all filings and recordations necessary in the
exercise of reasonable and prudent business judgment to protect its
interest in the material components of the Intellectual Property of
such Loan Party in the United States Patent and Trademark Office, the
United States Copyright Office or the Canadian Patent Office, Canadian
Trademark Office or Canadian Copyright Office, as applicable, and in
corresponding offices throughout the world, as appropriate in the
exercise of reasonable and prudent business judgment by the Loan
Parties based on the Loan Parties' operations. Each Loan Party has
performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every
item of the Intellectual Property of such Loan Party in full force and
effect throughout the world, as applicable, except such items of
Intellectual Property as are no longer deemed necessary for or material
to the conduct of the businesses of the Loan Parties in the reasonable
business judgment of the Loan Parties. No litigation is pending or, to
the knowledge of each Loan Party, threatened which contains allegations
respecting the validity, enforceability, infringement or ownership of
any of the Intellectual Property of such Loan Party. No Loan Party is
in breach of or default under the provisions of any of the foregoing,
nor is there any event, fact, condition or circumstance which, with
notice or passage of time or both, would constitute or result in a
conflict, breach, default or event of default under, any of the
foregoing which would reasonably be expected to be, have or result in a
Material Adverse Effect.
(s) Solvency. After giving effect to the Transactions,
(i) the fair value of the assets of the Loan Parties, at a fair
valuation, will exceed their debts and liabilities, subordinated,
contingent or otherwise, (ii) the present fair saleable value of the
property of the Loan Parties will be greater than the amount that will
be required to pay the probable liability of their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured, (iii) the Loan Parties
will be able to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute
and matured, and (iv) the Loan Parties will not have unreasonably small
capital with which to conduct the business in which they are engaged as
such business is now conducted and is proposed to be conducted
following the Closing Date.
(t) Complete Disclosure. No Purchase Document nor any
other written agreement, document, certificate, or statement furnished
to Agent or any Purchaser by or on behalf of any Loan Party or Xxxxxxx
in connection with the transactions contemplated by or pursuant to the
Purchase Documents, nor any representation or warranty made by any Loan
Party or Xxxxxxx in any Purchase Document, contains any untrue
statement of material fact or omits to state any fact necessary to make
the factual statements therein taken as a whole not materially
misleading in light of the circumstances under which it was furnished.
There is no fact known to any Loan Party or, to the best knowledge of
the Loan Parties, Xxxxxxx which has not been disclosed to Agent in
writing which could reasonably be expected to be, have or result in a
Material Adverse Effect.
36
(u) Side Agreements. Neither the Loan Parties nor any
Affiliate of the Loan Parties nor any director, officer or employee of
the Loan Parties or any of their Affiliates, respectively, has entered
into, as of the date hereof, any side agreement, either oral or
written, with any individual or business, pursuant to which the
director, officer, employee, Loan Parties or Affiliate agreed to do
anything beyond the requirements of the formal, written contracts
executed by the Loan Parties and disclosed to Purchasers and Agent
herein.
(v) Broker's or Finder's Commissions. No broker's or
finder's or placement fee or commission will be payable to any broker
or agent engaged by the Loan Parties or any of its officers, directors
or agents with respect to the issue of the Notes, the Warrants or the
transactions contemplated by this Agreement, including without
limitation the Transactions, except for fees payable (i) pursuant to
the terms of the Investment Documents not to exceed $500,000; (ii) to
Xxxxxxx and its Affiliates not to exceed $400,000 per annum pursuant to
the terms of the Management Fee Subordination Agreement; (iii) by
Parent to Xxxxx Xxxxxxx Xxxx & Co. not to exceed $1,470,000; and (iv)
to Purchasers and Agent. The Loan Parties agree to indemnify Agent and
Purchasers and hold them harmless from against any claim, demand or
liability for broker's or finder's or placement fees or similar
commissions, whether or not payable by the Loan Parties, alleged to
have been incurred in connection with such transactions, other than any
broker's or finder's fees payable to Persons engaged by Agent or
Purchasers without the knowledge of the Loan Parties.
(w) Government Contracts. All Government Contracts which
constitute Material Contracts and have a remaining term of twelve (12)
months or longer are listed on Schedule 5.1(w). No notice of
suspension, disbarment, cure notice, show cause notice or notice of
termination for default has been received by any Loan Party (or to the
best of such Loan Party's knowledge issued) in connection with any
Government Contract listed on Schedule 5.1(w), and such Loan Party is
not a party to any pending, or to such Loan Party's knowledge
threatened, suspension, debarment or termination for default issued by
any Governmental Authority or other adverse government action or
proceeding in connection with any Government Contract listed on
Schedule 5.1(w).
(x) Assignment of Government Contracts. No existing
Government Contracts of any Loan Party (and no present or future
interest of such Loan Party, in whole or in part, in, to or under any
such Government Contract) is currently assigned, pledged, hypothecated
or otherwise transferred by the Loan Parties to any person or entity
(other than the Senior Lenders).
(y) Material Contracts. No default (after any applicable
grace or cure period has expired or been cancelled) shall exist
pursuant to any obligations of any Loan Party, if any, under any
Material Contract, which default, if not remedied would have a Material
Adverse Effect.
(z) OFAC. No Loan Party (i) is a person whose property or
interest in property is blocked or subject to blocking pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions With
37
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed.
Reg. 49079 (2001)), (ii) engages in any dealings or transactions
prohibited by Section 2 of such executive order, or is otherwise
associated with any such person in any manner violative of Section 2,
or (iii) is a person on the list of Specially Designated Nationals and
Blocked Persons or subject to the limitations or prohibitions under any
other U.S. Department of Treasury's Office of Foreign Assets Control
regulation or executive order.
(aa) Patriot Act. Each Loan Party is in compliance, in all
material respects, with the Patriot Act. No part of the proceeds of the
Loans will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a
political party, candidate for political office, or anyone else acting
in an official capacity, in order to obtain, retain or direct business
or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.
(bb) Canadian Pension Plan and Benefits Plans. As of the
Closing Date, the "Canadian Pension Plans Schedule" attached hereto as
Schedule 5.1(bb) lists all Canadian Benefit Plans and Canadian Pension
Plans currently maintained or contributed to by each Loan Party. The
Canadian Pension Plans are duly registered under the Income Tax Act and
all other applicable laws which require registration. Each Loan Party
has complied with and performed all of its obligations in all material
respects under and in respect of the Canadian Pension Plans and
Canadian Benefit Plans under the terms thereof, any funding agreements
and all applicable laws (including any fiduciary, funding, investment
and administration obligations). All employer and employee payments,
contributions or premiums to be remitted, paid to or in respect of each
Canadian Pension Plan or Canadian Benefit Plan have been paid in a
timely fashion in accordance with the terms thereof, any funding
agreement and all applicable laws. There have been no improper
withdrawals or applications of the assets of the Canadian Pension Plans
or the Canadian Benefit Plans. Except as set forth on Schedule 5.1(bb),
there are no outstanding disputes concerning the assets of the Canadian
Pension Plans or the Canadian Benefit Plans. Except as set forth on
Schedule 5.1(bb), each of the Canadian Pension Plans is fully funded on
a solvency basis (using actuarial methods and assumptions which are
consistent with the valuations last filed with the applicable
Governmental Authorities and which are consistent with generally
accepted actuarial principles).
5.2. Absolute Reliance on the Representations and Warranties. Each
Loan Party agrees that the representations and warranties contained herein and
in the other Purchase Documents are made with the knowledge and intention that
Agent and Purchaser are relying and will rely thereon. All representations and
warranties contained in this Agreement and any financial statements,
instruments, certificates, schedules or other documents delivered in connection
herewith, shall survive the execution and delivery of this Agreement, regardless
of any investigation made by Agent or Purchasers or on Agent's or Purchasers'
behalf.
ARTICLE 6
TRANSFER OF NOTES
38
6.1. Restricted Securities. Purchasers acknowledge that the
Securities have not been registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, and that the Loan Parties are not
required to register the Notes or the Warrants, as the case may be.
6.2. Legends; Purchaser's Representations. Each of the Purchasers
hereby represents and warrants to the Loan Parties that it is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act and is
acquiring the Securities for investment for its own account, with no present
intention of dividing its participation with others (except for a potential
transfer or transfers of the Securities to an Affiliate or Affiliates of
Purchasers) or reselling or otherwise distributing the same in violation of the
Securities Act or any applicable state securities laws. The Loan Parties may
place an appropriate legend on the Securities owned by Purchasers concerning the
restrictions set forth in this Article 6. Upon the assignment or transfer by
Purchasers or any of its successors or assignees of all or any part of the
Securities, the term "Purchaser" as used herein shall thereafter mean, to the
extent thereof, the then holder or holders of such Securities, or portion
thereof.
6.3. Transfer of Notes. Subject to Section 6.2 hereof, a holder of
a Note may transfer such Note to a new holder, or may exchange such Note for
Notes of different denominations (but in no event of denominations of less than
$100,000 in original principal amount), by surrendering such Note to the Loan
Parties duly endorsed for transfer or accompanied by a duly executed instrument
of transfer naming the new holder (or the current holder if submitted for
exchange only), together with written instructions for the issuance of one or
more new Notes specifying the respective principal amounts of each new Note and
the name of each new holder and each address therefor. The Loan Parties shall
simultaneously deliver to such holder or its designee such new Notes, shall xxxx
the surrendered Notes as canceled and shall provide notice of such transfer to
Agent. In lieu of the foregoing procedures, a holder may assign a Note (in whole
but not in part) to a new holder by sending written notice to the Loan Parties
and Agent of such assignment specifying the new holder's name and address; in
such case, the Loan Parties shall promptly acknowledge such assignment in
writing to both the old and new holder. The Loan Parties shall not be required
to recognize any subsequent holder of a Note unless and until the Loan Parties
have received reasonable assurance that all applicable transfer taxes have been
paid.
6.4. Replacement of Lost Securities. Upon receipt of evidence
reasonably satisfactory to the Loan Parties of the mutilation, destruction, loss
or theft of any Securities and the ownership thereof, the Loan Parties shall,
upon the written request of the holder of such Securities, execute and deliver
in replacement thereof new Securities in the same form, in the same original
principal amount and dated the same date as the Securities so mutilated,
destroyed, lost or stolen; and such Securities so mutilated, destroyed, lost or
stolen shall then be deemed no longer outstanding hereunder. If the Securities
being replaced have been mutilated, they shall be surrendered to the Loan
Parties; and if such replaced Securities have been destroyed, lost or stolen,
such holder shall furnish the Loan Parties with an indemnity in writing to save
it harmless in respect of such replaced Security.
6.5. No Other Representations Affected. Nothing contained in this
Article 6 shall limit the full force or effect of any representation, agreement
or warranty made herein or in
39
connection herewith to Purchaser.
ARTICLE 7
COVENANTS
7.1. Affirmative Covenants. The Loan Parties, jointly and
severally, covenant that, so long as all or any of the principal amount of the
Notes or any interest thereon shall remain outstanding, and, thereafter, with
respect to clauses (a), (b), (c), (d), (e)(i), (e)(ii), and (o) so long as ACAS
owns at least 50% of the Warrants or Underlying Common Stock held at Closing,
the Loan Parties shall and shall cause each of its Subsidiaries to:
(a) Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its
legal existence.
(b) Businesses and Properties; Compliance with Laws. At
all times (i) do or cause to be done all things necessary to preserve,
renew, extend and keep in full force and effect the rights, licenses,
registrations, permits, certifications, approvals, consents,
franchises, patents, copyrights, trademarks and trade names, and any
other authorizations which may be material to the conduct of their
businesses; (ii) comply in all material respects with all laws and
regulations applicable to the operation of such business, including but
not limited to, all Environmental Laws, whether now in effect or
hereafter enacted and with all other applicable laws and regulations,
except where the failure could not reasonably be expected to be, have
or result in a Material Adverse Effect; (iii) maintain, preserve and
protect all property material to the conduct of such business, and (iv)
except for obsolete or worn out equipment, keep their property in good
repair, working order and condition and from time to time make, or
cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted
at all times.
(c) Insurance. Maintain insurance required by the
Purchase Documents, including but not limited to: (i) coverage on their
insurable properties (including all inventory, equipment and real
property) against the perils of fire, theft and burglary; (ii) public
liability; (iii) workers' compensation; (iv) business interruption; (v)
product liability; and (vi) such other risks as are customary with
companies similarly situated and in the same or similar business as
that of the Loan Parties under policies issued by financially sound and
reputable insurers in such amounts as are customary with companies
similarly situated and in the same or similar business. Each of the
Loan Parties shall pay all insurance premiums payable by it and shall
deliver the policy or policies of such insurance (or certificates of
insurance with copies of such policies) to Agent. All insurance
policies of the Loan Parties shall contain endorsements, in form and
substance reasonably satisfactory to Agent, providing that the
insurance shall not be cancelable except upon thirty (30) days' prior
written notice to Agent. Agent, on behalf of Purchasers, shall be shown
as a loss payee and/or an additional named insured party, as
applicable, under all such insurance policies, subject to the terms of
the Senior Subordination Agreement.
40
(d) Obligations and Taxes. Except where the failure to
comply, pay, file or perform would not reasonably be expected to be,
have or result in a Material Adverse Effect, pay and discharge promptly
when due all taxes, assessments and governmental charges or levies
imposed upon them or upon their income or profits or in respect of
their properties before the same shall become delinquent or in default,
as well as all lawful claims for labor, materials and supplies or
otherwise, which, if unpaid, might give rise to Liens or charges upon
such properties or any part thereof; provided, however, that the Loan
Parties shall not be required to pay and discharge or to cause to be
paid and discharged any such tax, assessment, charge, levy or claim so
long as the validity or amount thereof shall be contested in good faith
by appropriate proceedings and the Loan Parties shall have set aside on
their books adequate reserves with respect thereto.
(e) Financial Statements; Reports. Furnish to Agent:
(i) Annual Statements. Within ninety (90) days
after the end of each fiscal year of the Parent and its
Consolidated Subsidiaries, audited annual consolidated
financial statements and unaudited annual consolidating
financial statements of Parent and its Consolidated
Subsidiaries, including the notes thereto, consisting of
consolidated and consolidating balance sheets at the end of
such completed fiscal year and the related consolidated and
consolidating statements of income, retained earnings, cash
flows and owners' equity for such completed fiscal year, which
financial statements shall be prepared and certified without
qualification by KPMG, LLP or any other independent certified
public accounting firm satisfactory to Agent in its Permitted
Discretion and accompanied by related management letters, if
available.
(ii) Quarterly Statements. Within forty-five (45)
calendar days after the end of each fiscal quarter of the
Parent and its Consolidated Subsidiaries (other than the last
fiscal quarter of each fiscal year), unaudited consolidated
and consolidating financial statements of Loan Parties and
their Consolidated Subsidiaries consisting of a balance sheet
and statements of income, retained earnings and cash flows and
owners' equity as of the end of the immediately preceding
fiscal quarter.
(iii) Monthly Statements. Within thirty (30)
calendar days after the end of each calendar month, unaudited
financial statements (including a balance sheet and cash flow
and income statements) showing the financial condition and
results of operations of the Parent and its Consolidated
Subsidiaries as of the end of each such month and for the then
elapsed portion of the current fiscal year, together with
comparisons to the corresponding periods in the preceding year
and the budget for such periods, accompanied by a certificate
of an officer that such financial statements have been
prepared in accordance with GAAP, consistently applied, and
setting forth in comparative form the respective financial
statements for the corresponding date and period in the
previous fiscal year.
(iv) Format; Management Report; Certificate of
Compliance: Each balance sheet, operations statement and cash
flow statement furnished to Agent or
41
Purchasers pursuant to subsections (i) and (ii) of this 7.1(e)
will be furnished by an electronic means in Excel spreadsheet
format containing such line items and other formatting
requirements as may be reasonably specified by Agent. Each
financial statement furnished to Agent pursuant to subsections
(i) and (ii) of this Section 7.1(e) shall be accompanied by
(A) a written narrative report by the management of the Loan
Parties explaining material developments and trends in the
Business and such financial statements and (B) a written
certificate signed by the Loan Parties' chief financial
officer to the effect that no Default or Event of Default has
occurred during the period covered by such statements or, if
any such Default or Event of Default has occurred during such
period, setting forth a description of such Default or Event
of Default and specifying the action, if any, taken by the
Loan Parties to remedy the same, and a compliance certificate
in the form of Exhibit F showing the Loan Parties' compliance
with the covenants set forth in Section 7.3.
(v) Accountant Reports. Promptly upon the
receipt thereof, copies of all reports, if any, submitted to
the Loan Parties by independent certified public accountants
in connection with each annual, interim or special audit or
review of the financial statements of the Loan Parties made by
such accountants, including but not limited to, any comment
letter submitted by such accountants to management in
connection with any annual review.
(vi) Projections. On or prior to the Closing Date
and for each fiscal year of the Loan Parties thereafter not
less than thirty (30) calendar days prior to the commencement
of such fiscal year, consolidated and consolidating month by
month projected operating budgets, projections, profit and
loss statements, income statements, balance sheets and cash
flow reports of and for the Loan Parties for such upcoming
fiscal year (including an income statement for and a balance
sheet as at the end of each month), and annual projections for
the period commencing each such fiscal year of the Loan
Parties through the sooner of five (5) years from such date
and March 31, 2011, in each case prepared in accordance with
GAAP consistently applied with prior periods (subject to lack
of footnotes and year-end adjustments); and within ten (10)
days after any material update or amendment of any such plan
or forecast, a copy of such update or amendment, including a
description of and reasons for such update or amendment. Each
such projection, update or amendment shall be accompanied by a
written certificate signed by the Loan Parties' chief
financial officer to the effect that it has been prepared on
the basis of the Loan Parties' historical financial statements
and records, together with the assumptions set forth in such
projection and that it reflects expectations, after reasonable
analysis, of the Loan Parties' management as to the matters
set forth therein.
(vii) Borrowing Base Certificate. Upon delivery to
the Senior Lenders, a copy of each Monthly Borrowing Base
Certificate as defined in, and as required by Section 6.1(a),
of the Senior Credit Agreement.
(viii) Additional Information. Promptly, from time
to time, such other
42
information regarding the compliance by the Loan Parties with
the terms of this Agreement and the other Purchase Documents
or the affairs, operations or condition (financial or
otherwise) of the Loan Parties as Agent or Required Purchasers
may reasonably request and that is capable of being obtained,
produced or generated by the Loan Parties or of which the Loan
Parties have knowledge, including, without limitation, all
10-Ks, 10-Qs and other reports and filings made by any Loan
Party to the SEC.
(f) Notices. Promptly, and in any event upon the earlier
to occur of (x) (5) Business Days after any Loan Party or any
authorized officer of any Loan Party obtains knowledge thereof, and (y)
ten (10) Business Days after the occurrence, notify Agent in writing of
(i) any pending or threatened litigation, suit, investigation,
arbitration, dispute resolution proceeding or administrative or
regulatory proceeding brought or initiated by or against any Loan Party
or otherwise affecting or involving or relating to any Loan Party or
any Loan Party's property or assets to the extent (A) the amount in
controversy exceeds $250,000 individually or $500,000 in the aggregate
for all such events, or (B) to the extent any of the foregoing seeks
injunctive relief against a Loan Party which could reasonably be
expected to be, have or result in a Material Adverse Effect, (ii) any
Default or Event of Default, which notice shall specify the nature and
status thereof, the period of existence thereof and what action is
proposed to be taken with respect thereto, (iii) any other development,
event, fact, circumstance or condition that could reasonably be
expected to be, have or result in a Material Adverse Effect, in each
case describing the nature and status thereof and the action proposed
to be taken with respect thereto, (iv) any matter(s) in the amount of
$250,000, individually or $500,000 in the aggregate, in existence at
any one time adversely affecting the value, enforceability or
collectability of any of the Collateral, (v) any notice given or
received by any Loan Party to or from any other lenders of Indebtedness
of any such Loan Party in the amount of not less than $250,000
individually or $500,000 in the aggregate, and shall furnish to Agent a
copy of such notice, (vi) receipt of any notice or request from any
Governmental Authority regarding any liability or claim of liability in
the amount equal to or exceeding $250,000 individually or $500,000 in
the aggregate, (vii) receipt of any notice by any Loan Party regarding
termination of any lease of real property (other than by expiration of
the term) or any senior executive, (viii) if any Account or other
Collateral becomes evidenced or secured by an Instrument or Chattel
Paper, (ix) the filing, recording or assessment of any federal, state,
local or foreign tax liens securing an amount of not less than $250,000
individually or $500,000 in the aggregate against the Collateral or any
Loan Party, (x) any action taken or threatened to be taken by any
Governmental Authority (or any notice of any of the foregoing) with
respect to any Loan Party which could reasonably be expected to be,
have or result in a Material Adverse Effect or with respect to any
Collateral, (xi) any change in the corporate or legal name or the
organization identification number of any Loan Party, (xii) the loss,
termination or expiration of any contract to which any Loan Party is a
party or by which its properties or assets are subject or bound, which
could reasonably be expected to be, have or result in a Material
Adverse Effect, (xiii) any event or occurrence affecting any Foreign
Government Scheme or Arrangement or Foreign Plan, (xiv) as soon as
possible, and in any event within thirty (30) days after the Loan
Parties know or have reason to know thereof, notice of (A) the
establishment by the Loan Parties of any Plan, (B) the commencement by
the Loan
43
Parties of contributions to a Multiemployer Plan, (C) any failure by
the Loan Parties or any of their ERISA Affiliates to make contributions
required by Section 302 of ERISA (whether or not such requirement is
waived pursuant to Section 303 of ERISA), or (D) the occurrence of any
Reportable Event with respect to any Plan or Multiemployer Plan for
which the reporting requirement is not waived, together with a
statement of an officer setting forth details as to such Reportable
Event and the action which the Loan Parties propose to take with
respect thereto, together with a copy of the notice of such Reportable
Event given to the PBGC if any such notice was provided by the Loan
Parties, and (ii) promptly after receipt thereof, a copy of any notice
the Loan Parties may receive from the PBGC relating to the intention of
the PBGC to terminate any Plan or Multiemployer Plan, or to appoint a
trustee to administer any Plan or Multiemployer Plan, and/or (xv)
promptly after receipt thereof, a copy of any notice of withdrawal
liability from any Multiemployer Plan.
(g) Consents. Obtain and deliver to Agent from time to
time all required consents, approvals and agreements from such third
parties as Agent shall determine are necessary or desirable in its
Permitted Discretion and that are satisfactory to Agent in its
Permitted Discretion with respect to (i) the Purchase Documents and the
transactions contemplated thereby, (ii) claims against any Loan Party
or the Collateral, and/or (iii) any agreements, consents, documents or
instruments to which any Loan Party is a party or by which any
properties or assets of any Loan Party or any of the Collateral is or
are bound or subject, including, without limitation, Landlord Waivers
and Consents with respect to leases.
(h) Shareholder/Partner Reports and Government Filings.
Furnish to Agent, concurrently with the sending or filing thereof, a
copy of any proxy statements, financial statements or reports which
Parent has made available to its shareholders in their capacity as
shareholders and a copy of any regular material, periodic and special
reports or registration statements which any Loan Party files with the
Securities and Exchange Commission, any stock exchange or any
Governmental Authority.
(i) Intellectual Property. Furnish to Agent within thirty
(30) calendar days after June 30 and December 31 of each year, a report
specifying any material Intellectual Property interests acquired by,
obtained by, or licensed to any Loan Party during the six (6)-month
period then ended, and shall deliver to Agent, within ten (10) Business
Days, documentation to perfect Agent's, for its benefit and the benefit
of the Purchasers, Lien in such Intellectual Property, in each case in
form and substance acceptable to Agent in its Permitted Discretion.
(j) Payroll Taxes. Without limiting or being limited by
any other provision of any Purchase Document, retain and use a
third-party acceptable to Agent in its Permitted Discretion to process,
manage and pay the payroll taxes of the Loan Parties and shall cause to
be delivered to Agent within fifteen (15) calendar days after the end
of each calendar month, a report of such payroll taxes of the Loan
Parties for the immediately preceding calendar month and evidence of
payment thereof. Agent acknowledges and agrees that ADP Payroll
Services, Inc., the current provider of such services to the Loan
Parties, is acceptable as of the date hereof.
44
(k) Intentionally Omitted.
(l) Board Meetings. Provide Agent with written notice of
each regular meeting of Parent's Board of Directors at least thirty
(30) days in advance of such meeting and prior written notice of each
special meeting of Parent's Board of Directors at least seven (7) days
in advance of such meeting, but in any case such notice shall be
delivered no later than the date on which the members of the Board of
Directors are notified of such meeting. In addition, Parent will send
Agent copies of all reports and materials provided to members of the
Board of Directors at meetings or otherwise.
(m) ERISA. Comply in all material respects with the
applicable provisions of ERISA and the provisions of the Code relating
thereto and furnish to Agent and if so requested by them in writing,
Purchasers (i) as soon as possible, and in any event within thirty (30)
days after the Loan Parties know or have reason to know thereof, notice
of (A) the establishment by the Loan Parties of any Plan, (B) the
commencement by the Loan Parties of contributions to a Multiemployer
Plan, (C) any failure by the Loan Parties or any of their ERISA
Affiliates to make contributions required by Section 302 of ERISA
(whether or not such requirement is waived pursuant to Section 303 of
ERISA), or (D) the occurrence of any Reportable Event with respect to
any Plan or Multiemployer Plan for which the reporting requirement is
not waived, together with a statement of an officer setting forth
details as to such Reportable Event and the action which the Loan
Parties propose to take with respect thereto, together with a copy of
the notice of such Reportable Event given to the PBGC if any such
notice was provided by the Loan Parties, and (ii) promptly after
receipt thereof, a copy of any notice the Loan Parties may receive from
the PBGC relating to the intention of the PBGC to terminate any Plan or
Multiemployer Plan, or to appoint a trustee to administer any Plan or
Multiemployer Plan, and (iii) promptly after receipt thereof, a copy of
any notice of withdrawal liability from any Multiemployer Plan.
(n) Maintaining Records; Access to Premises and
Inspections. Maintain financial records in accordance with generally
accepted practices and, upon reasonable notice, at all reasonable times
(and at any time after the occurrence and during the continuation of a
Default or Event of Default), permit any authorized representative
designated by Agent to visit and inspect the properties and financial
records of the Loan Parties and to make extracts from such financial
records, and permit any authorized representative designated by Agent
or any Purchasers to discuss the affairs, finances and conditions of
the Loan Parties with the Loan Parties' chief financial officer and
such other officers as the Loan Parties shall deem appropriate, and the
Loan Parties' independent public accountants. The Loan Parties will
pay, on demand, all out-of-pocket expenses and other reasonable costs
and expenses incurred by or on behalf of Agent, including, without
limitation, reasonable fees, costs, client charges and expenses of
counsel for Agent, accounting due diligence periodic field audits,
physical counts, valuations, investigations, searches and filings,
monitoring of assets, appraisals of the Collateral, title searches and
reviewing environmental assessments, miscellaneous disbursements,
examination, travel, lodging and meals, arising from or related to
these inspections. Such inspections shall not take place more than
three times per calendar year unless an Event of Default exists and is
continuing.
45
(o) Board of Directors.
(i) The Parent's Board of Directors shall meet
at least once per calendar quarter. If ACAS has a member of
the Board of Directors of Parent, such ACAS director shall
receive the same compensation as any director designated by
Xxxxxxx that is an employee of Xxxxxxx and, in any case, shall
receive reimbursement for reasonable out-of-pocket expenses
from the Parent incurred in connection with attendance at
Board of Directors, committee and stockholder meetings
(ii) In the event ACAS does not have at least one
member of the Board of Directors of Parent, Agent may
designate one observer, without voting rights, who will be
entitled to attend all meetings of the Parent's Board of
Directors (including committees) and stockholders. Any
observer designated by Agent shall be entitled to notice of
all meetings of the Parent's Board of Directors (including
committee meetings) and to information provided to Directors.
Such observer shall receive the same compensation as any
director designated by Xxxxxxx that is an employee of Xxxxxxx
and, in any case, shall receive reimbursement for reasonable
out-of-pocket expenses from the Parent incurred in connection
with attendance at Board of Directors, committee and
stockholder meetings.
(iii) The Board of Directors shall maintain an
audit committee, which shall be comprised of directors who are
not otherwise employed by the Loan Parties.
(p) Subsidiaries. Own, directly or indirectly, no less
than 100% of the issued and outstanding equity of each Consolidated
Subsidiary.
(q) Collateral Documents. Subject to the terms of the
Senior Subordination Agreement,
(i) On demand by Agent in its Permitted
Discretion, each Loan Party shall make available to Agent
copies of any and all documents, instruments, materials and
other items that relate to, secure, evidence, give rise to or
generate or otherwise involve Collateral, including, without
limitation, Accounts and Inventory of such Loan Party. Each
Loan Party shall (i) execute, obtain, deliver, file, register
and/or record any and all financing statements, continuation
statements, similar statements and instruments, stock powers,
instruments and other documents, or cause the execution,
filing, registration, recording or delivery of any and all of
the foregoing, including, without limitation, deposit account
agreements, that are necessary or required under law or
otherwise or reasonably requested by Agent to be executed,
filed, registered, obtained, delivered or recorded to create,
maintain, perfect, preserve, validate or otherwise protect the
pledge of the Collateral to Agent and Agent's, for its benefit
and the benefit of the Purchasers, perfected first priority
(other than (x) a prior Lien granted to Senior Lender and (y)
with respect to property or assets covered by Permitted Liens)
46
Lien on the Collateral (and each Loan Party irrevocably grants
Agent the right, at Agent's option, to file any or all of the
foregoing), (ii) maintain, or cause to be maintained, at all
times, the pledge of the Collateral to Agent and Agent's, for
its benefit and the benefit of the Purchasers, first priority
(other than (x) a prior Lien granted to Senior Lender and (y)
with respect to property or assets covered by Permitted Liens)
and perfected Lien on the Collateral, and (iii) defend the
Collateral and Agent's, for its benefit and the benefit of the
Purchasers, first priority (other than (x) a prior Lien
granted to Senior Lender and (y) with respect to property or
assets covered by Permitted Liens) and perfected Lien thereon
against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to Agent,
and pay all costs and expenses (including, without limitation,
in-house documentation and diligence fees and legal expenses
and reasonable attorneys' fees and expenses) in connection
with such defense, which shall be added to the Obligations.
(ii) If, after the date hereof, any Loan Party
shall (A) obtain any registered Trademark, Patent or
Copyright, or apply for any such registration in the United
States Patent and Trademark Office, the United States
Copyright Office or in the Canadian Intellectual Property
Office, as applicable, or in any similar office or agency in
the United States, any State thereof, any political
subdivision thereof or in any other country, including,
without limitation, Canada, or any province or other political
subdivision thereof, or (B) becomes the owner of any
Trademark, Patent or Copyright registrations or applications
for Trademark, Patent or Copyright registration used in the
United States or any State thereof, political subdivision
thereof or in any other country, including, without
limitation, Canada, the provisions of Section 7.1(q)(ii)
hereof shall automatically apply thereto. Upon the request of
Agent, the Loan Parties shall promptly execute and deliver to
Agent any and all assignments, agreements, instruments,
documents and such other papers as may be requested by Agent
in its Permitted Discretion to evidence the security interest
in and conditional assignment of such Trademark, Patent or
Copyright, as the case may be, in favor of Agent (for the
benefit of itself and the Purchasers). The Loan Parties shall:
(1) prosecute diligently any Trademark, Patent or Copyright
application at any time pending; (2) make application for
registration or issuance of all new Trademarks, Patents and
Copyrights as reasonably deemed appropriate by such Loan
Party; (3) preserve and maintain all rights in the
Intellectual Property (except such items of Intellectual
Property as are no longer deemed necessary for or material to
the conduct of the businesses of the Loan Parties in the
reasonable business judgment of the Loan Parties); and (4) use
their best efforts to obtain any consents, waivers or
agreements necessary to enable Agent to exercise its remedies
with respect to such Intellectual Property. The Loan Parties
shall not abandon any right to file a material Trademark,
Patent or Copyright application nor shall the Loan Parties
abandon any material pending Trademark, Patent or Copyright
application, or material Trademark, Patent or Copyright
without the prior written consent of Agent.
(iii) Upon Agent's request, the Loan Parties shall
(A) make available to
47
Agent the original certificates of title for the Loan Parties'
owned motor vehicles for which a certificate of title has been
issued and (B) promptly execute such forms as required by
Agent to register Agent's (for the benefit of itself and the
Purchasers) liens on such certificates of title.
(iv) Without limiting the generality of the
foregoing and except as otherwise approved in writing by
Agent, but subject to Section 7.1(q)(v), (A) each Loan Party
shall cause its Subsidiaries (other than Foreign Subsidiaries
which are not Canadian Loan Parties) to guaranty the
obligations of Loan Parties and to cause each such Subsidiary
to grant to Agent, for the benefit of itself and Purchasers, a
security interest in all of such Subsidiary's Property to
secure such guaranty, (B) Parent shall pledge the equity
interests in US Loan Party to Agent, for the benefit of itself
and Purchasers, to secure the obligations hereunder and under
the other Purchase Documents, (C) Parent shall pledge, or
cause to be pledged, the equity interests in Canadian Loan
Party to Agent, for the benefit of itself and Purchasers, to
secure the obligations pursuant and related to the Canadian
Notes, and (D) each Loan Party shall pledge the stock and
other equity interest and securities of each of its
Consolidated Subsidiaries (other than Foreign Subsidiaries
which are not Canadian Loan Parties) to Agent, for the benefit
of itself and Purchasers, to secure the obligations hereunder
and under the other Purchase Documents. In furtherance
thereof, each such Subsidiary of a Loan Party shall become a
party to such of the Purchase Documents, including this
Agreement, as Agent shall determine.
(v) Notwithstanding anything to the contrary
contained in this Section 7.1(q), no Foreign Subsidiary of US
Loan Party constituting a "controlled foreign corporation," as
defined in Section 957 of the Code, shall be required to
deliver any guaranty of the obligations pursuant and related
to the US Notes or grant a security interest in any of its
Property to secure any such guaranty, and neither US Loan
Party nor any of its Subsidiaries shall be required to pledge
voting equity securities constituting more than sixty-five
percent (65%) (or other applicable greater percentage) of the
total combined voting power of all classes of voting equity
securities of any such Foreign Subsidiary of US Loan Party as
security for the obligations under, and related to, the US
Notes, to the extent, in any such case, such guaranty or
granting, or a pledge of additional equity securities, would
result in material and adverse tax consequences to US Loan
Party under Section 956 of the Code as determined by Agent and
the Required Purchasers in their Permitted Discretion.
(r) Taxes and Other Charges.
(i) All payments and reimbursements to Agent,
for its own account and/or for the benefit of Purchasers, or
any Purchaser made under any Purchase Document shall be free
and clear of and without deduction for all taxes, levies,
imposts, deductions, assessments, charges or withholdings, and
all liabilities with respect thereto of any nature whatsoever,
excluding (A) taxes to the extent imposed on a Purchaser's net
income, (B) any withholding taxes imposed on
48
amounts payable to a Purchaser at the time such Purchaser
becomes a party to this Agreement, except to the extent such
Purchaser's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from Loan Parties
with respect to such Non-Excluded Taxes pursuant to this
Section 7.1(r), and (C) any withholding taxes imposed on
amounts payable by the Canadian Loan Parties to Purchasers
(provided, that, this clause (C) shall not exclude any amounts
that may be payable by Loan Parties to Purchasers from time to
time due to the operation of paragraph (ii) below). If any
Loan Party shall be required by law to deduct any such
non-excluded taxes, levies, imposts, deductions, assessments,
charges or withholdings and all other liabilities with respect
thereto (collectively, "Non-Excluded Taxes") from or in
respect of any sum payable under any Purchase Document to
Agent, for its own account and/or for the benefit of
Purchaser, or any Purchaser, then the sum payable to Agent,
for its own account and/or for the benefit of Purchaser, or
such Purchaser shall be increased as may be necessary so that,
after making all such required deductions, Agent and each
Purchaser receives an amount equal to the sum it would have
received had no such deductions been made.
(ii) Notwithstanding any other provision of any
Purchase Document, if at any time after the Closing (x) any
change in any existing law, regulation, treaty (including,
without limitation, the Convention between Canada and the
United States of America with respect to Taxes on Income and
on Capital or directive or in the interpretation or
application thereof, (y) any new law, regulation, treaty or
directive enacted or any interpretation or application
thereof, or (z) compliance by Agent or any Purchaser with any
request or directive (whether or not having the force of law)
from any Governmental Authority: (A) subjects Agent or such
Purchaser to any tax, levy, impost, deduction, assessment,
charge or withholding of any kind whatsoever with respect to
any Purchase Document, or changes the basis of taxation of
payments to Agent, for its own account and/or for the benefit
of Purchaser, of any amount payable thereunder (except for net
income taxes imposed generally by federal, state or local
taxing authorities with respect to interest or commitment fees
or other fees payable hereunder or changes in the rate of tax
on the overall net income of Agent and/or each Purchaser), or
(B) imposes on Agent or Purchaser any other condition or
increased cost in connection with the transactions
contemplated thereby or participations therein; and the result
of any of the foregoing is to increase the cost to Agent or
Purchaser of making or continuing or maintaining any Loan
hereunder or to reduce any amount receivable hereunder, then,
in any such case, the Loan Parties shall promptly pay to
Agent, for its own account and/or for the benefit of
Purchaser, any additional amounts necessary to compensate
Agent and each Purchaser, on an after-tax basis, for such
additional cost or reduced amount as determined by Agent
and/or such Purchaser. If Agent or any Purchaser becomes
entitled to claim any additional amounts pursuant to this
Section 7.1(r) it shall reasonably promptly after obtaining
knowledge thereof notify Loan Parties of the event by reason
of which Agent or such Purchaser has become so entitled, and
each such notice of additional amounts payable pursuant to
this Section 7.1(r) submitted by Agent or such Purchaser to
the Loan Parties shall, absent manifest error, be final,
conclusive and
49
binding for all purposes.
(s) Future Leases; Future Real Estate.
(i) Concurrently with the execution or
assumption by any Loan Party, as lessee, of any material lease
pertaining to real property, such Loan Party shall deliver to
Agent (A) an executed copy thereof, (B) at the option of
Agent, either a leasehold mortgage upon or a collateral
assignment of such lease in favor of Agent, in either case in
form and substance reasonably acceptable to Agent, (C) a
Landlord Waiver and Consent from the landlord under such
lease, (D) at the option of Agent, a lender's policy of title
insurance, in such form and amount and containing such
endorsements as shall be reasonably satisfactory to Agent,
insuring the Lien of such leasehold mortgage or collateral
assignment of lease, together with a survey of such real
property, which survey shall be of a recent enough date and in
sufficient detail so as to permit the title company issuing
such policy to eliminate any survey exceptions to such policy
and (E) such other documents and assurances with respect to
such real property as Agent may require in its Permitted
Discretion.
(ii) The applicable Loan Party shall deliver to
Agent concurrently with the (A) execution by any Loan Party of
any contract relating to the purchase by such Loan Party of
real property, an executed copy of such contract and (B)
closing of the purchase of such real property, (1) a mortgage
or deed of trust (subject only to a prior Lien granted to
Senior Lender) in favor of Agent on such real property, in
form and substance reasonably acceptable to Agent, (2) a
lender's policy of title insurance, in such form and amount
and containing such endorsements as shall be satisfactory to
Agent in its Permitted Discretion, (3) a survey of such real
property, which survey shall be of a recent enough date and in
sufficient detail so as to permit the title company issuing
such policy to eliminate any survey exceptions to such policy
and (4) such other documents and assurances with respect to
such real property as Agent may require in its Permitted
Discretion.
(t) Canadian Pension Plans and Benefit Plans.
(i) For each existing, or hereafter adopted,
Canadian Pension Plan and Canadian Benefit Plan, each Loan
Party shall in a timely fashion comply with and perform in all
material respects all of its obligations under and in respect
of such Canadian Pension Plan or Canadian Benefit Plan,
including under any funding agreements and all applicable laws
(including any fiduciary, funding, investment and
administration obligations)
(ii) All employer or employee payments,
contributions or premiums required to be remitted, paid to or
in respect of each Canadian Pension Plan or Canadian Benefit
Plan shall be paid or remitted by each Loan Party in a timely
fashion in accordance with the terms thereof, any funding
agreements and all applicable laws.
50
(iii) The Loan Parties shall deliver to Agent (1)
if requested by Agent, copies of each annual and other return,
report or valuation with respect to each Canadian Pension Plan
as filed with any applicable Governmental Authority; (2)
promptly after receipt thereof, a copy of any direction,
order, notice, ruling or opinion that any Loan Party may
receive from any applicable Governmental Authority with
respect to any Canadian Pension Plan; and (3) notification
within 30 days of any increases having a cost to one or more
of the Loan Parties in excess of $100,000 per annum in the
aggregate, in the benefits of any existing Canadian Pension
Plan or Canadian Benefit Plan, or the establishment of any new
Canadian Pension Plan or Canadian Benefit Plan, or the
commencement of contributions to any such plan to which any
Loan Party was not previously contributing.
(u) Process Operations.
(i) Within three months following the Closing
Date, Loan Parties will revise the process for accounts
receivable invoice credits and rebills so that the rebilled
invoices age based on the original invoice date.
(ii) Within six months following the Closing
Date, Loan Parties and Xxxxxxx will engage Impact Innovations
Group or similar third party firm to review the Loan Parties'
management information systems, including financial reporting
systems.
(iii) Within six months following the Closing
Date, the Loan Parties and Xxxxxxx will revise the Loan
Parties' financial reporting systems in the US and Canada so
that such systems shall utilize a consistent general ledger
chart of accounts.
(iv) Within 12 months following the Closing Date,
the third party hired to evaluate the Loan Parties' management
information systems will present its findings and
recommendations in a written report that will be shared with
the Loan Parties' Agent, Purchasers and Senior Lender.
(v) Within 18 months following the Closing Date,
Loan Parties and Xxxxxxx will revise the Loan Parties'
financial reporting systems in the United States and Canada to
provide for consistent percentage of completion methodology
(clauses (i) through (v) of this Section 7.1(u) shall be
referred to as the "Process Covenants").
(v) Dissolution of Subsidiaries.
(i) With respect to the Subsidiaries of the Loan
Parties set forth on the "Subsidiary Dissolution Schedule"
attached hereto as Schedule 7.1(v), not later than April 30,
2004, the Loan Parties shall have filed such documents to
commence the dissolution and winding up of such companies. In
addition, the Loan Parties will pursue such dissolution and
winding up on a timely basis and will provide Agent with
updates on the status thereof upon request.
51
(ii) Not later than June 30, 2004, the Loan
Parties shall have closed on the divestiture of the Middle
East operations with a minimum of $2,500,000 in Net Proceeds.
(w) Landlord Waivers and Consents. Furnish to Agent
within five (5) calendar days after the end of each calendar month,
commencing for the month ended May 31, 2004, a report specifying the
aggregate fair market value of the Collateral located at all leased
locations for which a Landlord Waiver and Consent has not been
obtained, in form and substance acceptable to Agent in its Permitted
Discretion.
(x) Premium Financing. Not later than September 30, 2004,
the Loan Parties shall have provided that all Permitted Indebtedness
incurred in connection with the financing of insurance premiums
complies with the provisions of Section 7.2(a)(xv) of this Agreement.
(y) Good Standing. Not later than April 30, 2004, the
Loan Parties shall have provided to Agent original certified articles
of incorporation and/or certificates of status or good standing (or its
foreign jurisdiction equivalent) issued by the applicable Governmental
Authority for (i) the Parent in Alaska, Georgia, Illinois, New
Hampshire and Virginia, (ii) Xxxxx Inspections Ltd. in Alberta, Canada,
(iii) Commonwealth Xxxxxx Holdings Ltd. in Alberta, and (iv) Corrpro
Canada, Inc. in Alberta, Manatoba, New Brunswick, Newfoundland, Ontario
and Saskatchewan, Canada.
(z) Third Party Consents. Not later than April 30, 2004,
the Loan Parties shall have provided to Agent written change of control
consents for the 000 X Xxxxxx, X.X., Xxxxxxxxxx D.C. and 000 Xxxxxxxxxx
Xxxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx locations in form and substance
satisfactory to Agent in its Permitted Discretion.
7.2. Negative Covenants. The Loan Parties, jointly and severally,
covenant that, so long as all or any part of the principal amount of the Notes
or any interest thereon shall remain outstanding:
(a) Indebtedness. None of the Loan Parties shall create,
incur, assume guarantee or be or remain liable for, contingently or
otherwise, or suffer to exist any Indebtedness, except:
(i) Indebtedness under this Agreement;
(ii) Indebtedness of the Loan Parties under the
Senior Financing as renewed or modified as permitted by and,
to which payment under the Notes is subordinated under, the
terms of the Senior Subordination Agreement;
(iii) Indebtedness of the Loan Parties incurred in
the ordinary course of business with respect to customer
deposits, trade payables and other unsecured current
liabilities not the result of borrowing and not evidenced by
any note or other evidence of indebtedness;
(iv) any Indebtedness of the Loan Parties set
forth on Schedule 7.2(a)
52
and replacements thereof; provided, that, the principal
amount, interest rate or fees thereon are not increased and
the maturity and weighted average life thereof are not
shortened;
(v) Indebtedness of the Loan Parties not to
exceed $250,000 in the aggregate at any time outstanding
consisting of Capitalized Lease Obligations;
(vi) Indebtedness of the Loan Parties incurred
after the Closing Date pursuant to purchase money Liens
permitted by Section 7.2(b); provided, that the aggregate
amount thereof outstanding at any time shall not exceed
$250,000;
(vii) other Subordinated Debt to the extent
permitted by Section 7.3 of this Agreement or as otherwise
consented to in writing by the Purchasers;
(viii) Intercompany Indebtedness arising from loans
made by a US Loan Party or any of its Domestic Wholly-Owned
Subsidiaries to another US Loan Party or any Domestic
Wholly-Owned Subsidiaries of a US Loan Party; provided that
the obligations of each obligor shall be evidenced by notes,
the sole originally executed counterparts of which shall be
pledged to Agent, for the benefit of Purchasers, as security
for the obligations hereunder and have such other terms as the
Agent may require and any such notes shall be secured by a
first priority (subject only to Liens in favor of Senior
Lenders) Lien in all Property of the relevant Loan Party or
Subsidiary, as the case may be, on terms and conditions
satisfactory to Agent, and such Lien shall have been assigned
to Agent, for the benefit of Purchasers, in form and substance
satisfactory to Agent, and Agent shall have received such
agreements, documents, instruments and opinions requested by
Agent in its Permitted Discretion in respect thereof;
(ix) Indebtedness arising from loans made by a
Canadian Loan Party or any of its Wholly-Owned Subsidiaries to
any other Loan Party; provided that the obligations of each
obligor shall be evidenced by notes, the sole originally
executed counterparts of which shall be pledged to Agent, for
the benefit of Agent and Purchasers, as security for the
obligations hereunder and have such other terms as the Agent
may require and any such notes shall be secured by a first
priority (subject only to Liens in favor of Senior Lenders)
Lien in all Property of the relevant Loan Party or Subsidiary,
as the case may be, on terms and conditions satisfactory to
Agent, and such Lien shall have been assigned to Agent, for
the benefit of Purchasers, in form and substance satisfactory
to Agent, and Agent shall have received such agreements,
documents, instruments and opinions requested by Agent in its
Permitted Discretion in respect thereof;
(x) Contingent Obligations permitted under
Section 7.2(c);
(xi) Indebtedness for the deferred purchase price
of property due less than six months from the incurrence of
such indebtedness.
(xii) trade accounts payable and accrued
obligations (other than for borrowed money) which are not aged
more than one hundred twenty (120)
53
calendar days from the billing date or thirty (30) days from
the due date, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are
being contested in good faith and by appropriate and lawful
proceedings and such reserves, if any, with respect thereto as
are required by GAAP and deemed adequate by such Loan Party's
independent accountants shall have been reserved to the
satisfaction of Agent in its Permitted Discretion;
(xiii) Indebtedness in respect of taxes,
assessments, governmental charges or levies, claims of customs
authorities and claims for labor, worker's compensation,
materials and supplies to the extent that payment therefor
shall not at the time be required to be made in accordance
with the provisions of Section 7.2(b);
(xiv) Indebtedness in respect of judgments or
awards under circumstances not giving rise to a Default or
Event of Default;
(xv) Indebtedness incurred in connection with the
financing of insurance premiums in the ordinary course of
business; provided that the agreement evidencing such
Indebtedness (a "Premium Financing Agreement") must be in form
and substance satisfactory to Agent in its Permitted
Discretion and must provide that (A) the lender providing such
financing (the "Premium Lender") shall give 30 days written
notice to Agent prior to effecting any cancellation of the
financed policies (which notice must specify the nature of the
default and actions necessary to cure), (B) Agent and
Purchasers shall have the right, but not the obligation, to
cure such default and the Premium Lender shall accept such
payments to cure such default, (C) the Premium Lender shall
notify Agent prior to any assignment of the Premium Financing
Agreement and any such assignee must agree to the provisions
required hereby and (D) Agent and Purchasers are deemed to be
third party beneficiaries under the Premium Financing
Agreement;
(xvi) other Indebtedness not to exceed $500,000 in
the aggregate at any time outstanding.
(b) Negative Pledge; Liens. The Loan Parties shall not
create, incur, assume or suffer to exist any Lien of any kind on any of
their properties or assets of any kind, except the following
(collectively, "Permitted Liens"):
(i) Liens created in connection with the
Purchase Documents or otherwise arising in favor of Agent, for
the benefit of the Purchasers;
(ii) Liens created in connection with the Senior
Financing, which Liens Purchaser has subordinated to on terms
of the Senior Subordination Agreement;
(iii) Liens imposed by law for taxes, assessments
or charges of any Governmental Authority for claims not yet
due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate
54
reserves or other appropriate provisions are being maintained
by such Person in accordance with GAAP to the satisfaction of
Agent in its Permitted Discretion;
(iv) (i) statutory Liens of landlords, and of
carriers, warehousemen, mechanics and/or materialmen, and (ii)
other Liens imposed by law or that arise by operation of law
in the ordinary course of business from the date of creation
thereof, in each case of the foregoing clauses (i) and (ii)
only for amounts not yet due or which are being contested in
good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are
being maintained by such Person in accordance with GAAP to the
satisfaction of Agent in its Permitted Discretion;
(v) Liens incurred or deposits made in the
ordinary course of business (including, without limitation,
surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders,
bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar
obligations which are not delinquent for more than 90 days or
which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained by such
Person to the satisfaction of Agent in its Permitted
Discretion;
(vi) purchase money Liens securing Indebtedness
permitted under Section 7.2(a)(v) and Liens arising under
Capital Leases permitted under Section 7.2(a)(vi), in each
case to the extent such Liens attach only to the subject
Property;
(vii) any attachment or judgment Lien not
otherwise constituting an Event of Default;
(viii) easements, rights of way, restrictions,
zoning ordinances, reservations, covenants and other similar
charges, title exceptions or encumbrances relating to real
property of the Loan Parties that do not interfere in any
material respect with the ordinary conduct of the Business of
the Loan Parties or result in material diminution in value of
the Collateral; and
(ix) Liens listed on the Permitted Encumbrances
Schedule attached hereto as Schedule 7.2(b).
(c) Contingent Liabilities. The Loan Parties shall not
become liable for any Guaranties, except (a) those resulting from
endorsement of negotiable instruments for collection in the ordinary
course of business; (b) those arising under indemnity agreements to
title insurers to cause such title insurers to issue to Agent mortgagee
title insurance policies; (c) those arising with respect to customary
indemnification obligations incurred in connection with asset sales;
(d) those incurred in the ordinary course of business and consistent
with past practices with respect to surety and appeal bonds,
performance and return-of-money bonds and other similar obligations;
(e) guarantees of
55
performance by a Consolidated Subsidiary incurred in the ordinary
course of business and consistent with past practices; (f) those
incurred with respect to Indebtedness permitted by Section 7.2(a)
provided that any such Contingent Obligation is subordinated to the
obligations hereunder to the same extent as the Indebtedness to which
it relates is subordinated to the obligations hereunder and (g) those
arising under indemnification obligations under sale agreements in
effect as of the date hereof and set forth on Schedule 7.2(c). No Loan
Party shall assume or become subject to any risks or liabilities other
than those relating to its respective Business.
(d) Leases. At no point shall the sum of the aggregate
amount of annualized payments on operating leases during any Fiscal
Year exceed $6,000,000.
(e) Capital Expenditures. The Loan Parties shall not make
or commit to make any payments in any Fiscal Year on account of the
purchase or lease of any assets that if purchased would constitute
fixed assets or that if leased would constitute a Capitalized Lease
Obligation, that in the aggregate would cost more than $1,375,000
during the Fiscal Year ended March 31, 2004, $1,650,000 during the
Fiscal Year ended March 31, 2005, $1,925,000 during the Fiscal Year
ended March 31, 2006, and $2,200,000 during the Fiscal Year ended March
31, 2007 and thereafter.
(f) Mergers, etc. The Loan Parties shall not merge into
or consolidate or combine with any other Person, or purchase, lease or
otherwise acquire (in one transaction or a series of related
transactions) all or any part of the property or assets of any Person
other than purchases or other acquisitions of inventory, materials,
leases, property and equipment in the ordinary course of business;
except that (i) any US Loan Party or any of its Domestic Wholly-Owned
Subsidiaries may merge or amalgamate with, purchase, own, hold, invest
in or otherwise acquire any obligations or stock or securities of, or
any other interest in, or all or substantially all of the assets of,
any other US Loan Party or any Domestic Wholly-Owned Subsidiaries of a
US Loan Party and (ii) any Canadian Loan Party or any of its
Wholly-Owned Subsidiaries may merge or amalgamate with, purchase, own,
hold, invest in or otherwise acquire any obligations or stock or
securities of, or any other interest in, or all or substantially all of
the assets of, any other Canadian Loan Party or any of its Canadian
Subsidiaries. Except as expressly permitted by the Security Documents
and except with respect to Permitted Dispositions, the Loan Parties
shall not sell, transfer or otherwise dispose of any of its assets,
including the Collateral under the respective Security Documents.
(g) Affiliate Transactions. The Loan Parties shall not
make any loan or advance to any director, officer or employee of the
Loan Parties or any Affiliate, or enter into or be a party to any
transaction or arrangement with any Affiliate of the Loan Parties,
including, without limitation, the purchase from, sale to or exchange
of property with, any merger or consolidation with or into, or the
rendering of any service by or for, any Affiliate, except (i) pursuant
to the reasonable requirements of the Loan Parties' business and upon
fair and reasonable terms no less favorable to the Loan Parties than
would be obtained in a comparable arm's-length transaction with a
Person other than an Affiliate, (ii) the payment of a one-time closing
fee pursuant to the terms of the Investment Documents in an amount not
to exceed $500,000, (iii) a management or similar fee to
56
Xxxxxxx in an amount not to exceed $400,000 per annum and subject to
the terms of the Management Fee Subordination Agreement; provided,
that, no such payment of management or other similar fees shall be made
if a Default or Event of Default has occurred and is continuing or
would result from such payment after giving effect thereto and provided
further that the Loan Parties may pay previously accrued and unpaid
management or similar fees to Xxxxxxx, and (iv) the Annual Corporate
Charge.
(h) Dividends and Stock Purchases. The Loan Parties shall
not directly or indirectly: declare or pay any dividends or make any
distribution of any kind on their outstanding capital stock or any
other payment of any kind to any of their stockholders or its
Affiliates (including any redemption, purchase or acquisition of,
whether in cash or in property, securities or a combination thereof,
any partnership interests or capital accounts or warrants, options or
any of their other securities), or set aside any sum for any such
purpose other than for such dividends, distributions or payments paid
solely to other Loan Parties; provided, however, that this Section
7.2(h) shall not apply to Permitted Distributions, stock purchases
pursuant to Article 10 hereof or management fees and other payments
permitted under Section 7.2(g) above.
(i) Advances, Investments and Loans. The Loan Parties
shall not purchase, or hold beneficially any stock, other securities or
evidences of Indebtedness of, or make or permit to exist any loan,
Guaranty or advance to, or make any investment or acquire any interest
whatsoever in, any other Person (including, but not limited to, the
formation or acquisition of any Subsidiaries), except:
(i) securities issued or directly and fully
guaranteed or insured by the United States of America or any
agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition;
(ii) United States dollar-denominated time
deposits, certificates of deposit and bankers acceptances of
any bank or any bank whose short-term debt rating from
Standard & Poor's Ratings Group, a division of The XxXxxx-Xxxx
Companies, Inc. ("S&P"), is at least A-2 or the equivalent or
from Xxxxx'x Investors Service, Inc. ("Xxxxx'x") is at least
P-2 or the equivalent with maturities of not more than six
months from the date of acquisition;
(iii) commercial paper with a rating of at least
A-2 or the equivalent by S&P or at least P-2 or the equivalent
by Moody's maturing within six months after the date of
acquisition;
(iv) marketable direct obligations issued by any
state of the United States of America or any political
subdivision of any such state or any public instrumentality
thereof maturing within six months from the date of
acquisition thereof and, at the time of acquisition, having
one of the two highest ratings obtainable from either S&P or
Moody's;
(v) Investments in money market funds
substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (iv)
57
above;
(vi) deposit accounts maintained in accordance
with any loan agreement evidencing the Senior Financing;
(vii) Investments (including debt obligations)
received in connection with the bankruptcy or reorganization
of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(viii) receivables owing to the Loan Parties
created or acquired in the ordinary course of business and
payable on customary trade terms of the Loan Parties;
(ix) deposits made in the ordinary course of
business consistent with past practices to secure the
performance of leases or in connection with bidding on
government contracts;
(x) loans to employees for the purpose of
purchasing equity in Parent not to exceed $100,000 in the
aggregate at any time outstanding and advances for business
travel and similar temporary advances made in the ordinary
course of business to officers, directors and employees, not
to exceed $250,000 in the aggregate at any time outstanding;
(xi) the endorsement of negotiable instruments
for deposit or collection or similar transactions in the
ordinary course of business; and
(xii) securities issued by other Loan Parties.
(j) Use of Proceeds. The Loan Parties shall not use any
proceeds from the sale of the Notes hereunder, directly or indirectly,
for the purposes of purchasing or carrying any "margin securities"
within the meaning of Regulations T, U or X promulgated by the Board of
Governors of the Federal Reserve Board or for the purpose of arranging
for the extension of credit secured, directly or indirectly, in whole
or in part by collateral that includes any "margin securities."
(k) Stock Issuances. Except as permitted hereunder,
pursuant to the Option Plans, or upon the exercise of the Warrant, the
Existing Warrants and the Xxxxxxx Warrant, the Loan Parties shall not
issue any capital stock or other equity interests or any options or
warrants to purchase, or securities convertible into capital or equity
interests or establish any stock appreciation rights or similar
programs based on the value of the Loan Parties' equity interests.
(l) Amendment of Charter Documents. The Loan Parties
shall not amend, terminate, modify or waive or agree to the amendment,
modification or waiver of any material term or provision of their
respective Charter Documents, or Bylaws.
(m) Subsidiaries. None of the Loan Parties shall
establish or acquire any
58
Subsidiary.
(n) Business. None of the Loan Parties shall engage,
directly or indirectly, in any business other than the Business.
(o) Fiscal Year; Accounting. None of the Loan Parties
shall change its Fiscal Year from ending on March 31st or method of
accounting (other than immaterial changes in methods), except as
required by GAAP.
(p) Establishment of New or Changed Business Locations.
None of the Loan Parties shall relocate its principal executive offices
or other facilities or establish new business locations or store any
Collateral at a location not identified to Agent on or before the date
hereof, without providing not less than thirty (30) days advance
written notice to Agent.
(q) Changed or Additional Business Names. None of the
Loan Parties shall change its corporate name or establish new or
additional trade names without providing not less than thirty (30) days
advance written notice to Agent.
(r) Remuneration. The Loan Parties will not permit the
aggregate amount of salary and other direct and indirect remuneration
(including, but not limited to, employee benefits and professional,
consulting and management fees and expenses and bonuses) paid or
accrued by any of the Loan Parties during any fiscal year to or for the
benefit of (a) Xxxxxxx or any successor of any of the foregoing persons
or any member of any such person's immediate family directly or
indirectly in amounts not to exceed amounts permitted under Section
7.2(g)(iii) (except that no such direct or indirect remuneration shall
be made at any time during the existence of any Event of Default) or
(b) any other officer, director or member of management of any of the
Loan Parties to exceed amounts which are reasonable and customary for
employees or directors with similar responsibility and experience of
other comparable companies in the same industry as the Loan Parties.
(s) Patriot Act. None of Xxxxxxx, any Loan Party or any
Subsidiary of any Loan Party (i) is currently or will become a Person
whose property or interests in property are blocked or subject to
blocking pursuant to Section 1 of Executive Order 13224 of September
23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg.
49079(2001)), (ii) will engage in any dealings or transactions
prohibited by Section 2 of such executive order, or be otherwise
associated with any such person in any manner violative of Section 2,
or (iii) will otherwise become a Person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other OFAC regulation or executive order
(t) Applications under CCAA. None of the Loan Parties
shall file any plan of arrangement under the Companies' Creditors
Arrangements Act (Canada) ("CCAA Plan") that provides for, or would
permit directly or indirectly, the Agent or any Purchaser to be
classified with any other creditor of any Loan Party for the purposes
of
59
such CCAA Plan or otherwise.
(u) Transfer of Assets.
(i) No Loan Party shall (A) transfer any
material portion of the Collateral, whether in one transaction
or a series of transactions, to any leased location for which
a Landlord Waiver and Consent has not been obtained or (B) at
any time after May 31, 2004, maintain any books or records of
any Loan Party at any leased location for which a Landlord
Waiver and Consent has not been obtained or maintain any
Collateral (except for movement of equipment, inventory and
related assets for performance of services in the ordinary
course of business) in excess of $100,000 in the aggregate at
all leased locations for which a Landlord Waiver and Consent
has not been obtained.
(ii) Except for movement of equipment, inventory
and related assets for performance of services in the ordinary
course of business, no Loan Party shall (A) with respect to
Collateral owned by any US Loan Party move Collateral outside
the United States, and (ii) with respect to Collateral owned
by any Canadian Loan Party, move Collateral outside the United
States or Canada. In addition, except for movement of
equipment, inventory and related assets for performance of
services in the ordinary course of business, the Loan Parties
shall not transfer any Collateral with fair market value of
more than $100,000, individually or in the aggregate, whether
in one transaction or a series of transactions, to any
location for which a Landlord Waiver and Consent has not been
obtained, without the prior written consent of Agent.
7.3. Financial Covenants. The Loan Parties, jointly and severally,
covenant that, so long as all or any part of the principal amount of the Notes
or any interest thereon shall remain outstanding, they shall maintain, on a
Consolidated basis at the end of each calendar quarter (each such date being a
"Measurement Date") beginning March 31, 2004:
(a) Leverage Ratio
As measured on each of the following test dates, the Leverage Ratio
shall not exceed the respective maximum ratio set forth in the table below:
MEASUREMENT DATE: MAXIMUM LEVERAGE RATIO:
----------------- -----------------------
March 31, 2004, June 30, 2004 and September 30, 2004 5.500 to 1.0
December 31, 2004 5.225 to 1.0
March 31, 2005, June 30, 2005, September 30, 2005 and December 31, 2005 4.675 to 1.0
March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006 4.400 to 1.0
March 31, 2007, June 30, 2007, September 30, 2007 and December 31, 2007 3.850 to 1.0
March 31, 2008, June 30, 2008, September 30, 2008 and December 31, 2008 3.300 to 1.0
60
March 31, 2009 and the end of each fiscal quarter thereafter 2.750 to 1.0
(b) Minimum EBITDA
As measured on each of the following test dates for the twelve
(12)-month period then ending taken as one accounting period, EBITDA for Loan
Parties shall not be less than the respective minimum amount set forth in the
table below:
MEASUREMENT DATE: MINIMUM EBITDA LEVEL:
----------------- ---------------------
March 31, 2004, June 30, 2004, September 30, 2004,
December 31, 2004 and March 31, 2005 $ 8,100,000
June 30, 2005, September 30, 2005 and December 31, 2005 $ 9,000,000
March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006 $ 9,225,000
March 31, 2007, June 30, 2007, September 30, 2008 and December 31, 2007 $ 9,450,000
March 31, 2008, June 30, 2008, September 30, 2008 and December 31, 2008 $ 9,900,000
March 31, 2009 and the end of each fiscal quarter thereafter $ 10,800,000
(c) Fixed Charge Coverage Ratio
As measured on the last day of each fiscal quarter, the Fixed Charge
Coverage Ratio shall not be less than 1.0 to 1.0.
Notwithstanding the foregoing, to the extent that the Loan Parties would
otherwise violate any of the financial covenants set forth in this Section or in
the Senior Credit Agreement, the Loan Parties may use the proceeds of Permitted
Securities or Subordinated Debt permitted under Section 7.2 to prepay the Term
Financing to avoid such a violation, in which case the proceeds received by the
Loan Parties from such Permitted Securities or Subordinated Debt may be added to
Net Income in the calculation of EBITDA for the applicable month to the extent
necessary to avoid such violation and shall continue to apply with respect to
such month for so long as such month is included in the applicable test period
provided the following conditions precedent have been satisfied as determined by
Agent in the Agent's Permitted Discretion: (i) upon issuance of such Permitted
Securities or Subordinated Debt, the Loan Parties notify Agent in writing that
the proceeds of such Permitted Securities or Subordinated Debt constitute
amounts to be applied under and in accordance with Section 7.3; (ii) such
Permitted Securities or Subordinated Debt shall be made or incurred, as
applicable, at any time during the applicable test period or thereafter but no
later than ten (10) Business Days from the earlier to occur of (x) the date that
the Loan Parties delivered to Agent a compliance certificate required pursuant
to Section 7.1(c) or (y) the date that such compliance certificates are required
to be delivered under Section 7.1(c);
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(iii) the proceeds of such Permitted Securities or Subordinated Debt are applied
upon receipt to prepay the Term Financing and shall be due and payable within
five (5) Business Days of the date it is determined that such proceeds are in
excess of the deficiency; (iv) the amount of the proceeds of such Permitted
Securities and Subordinated Debt does not exceed $1,000,000 in any fiscal year
or $3,000,000 in the aggregate, (v) Parent has not exercised its rights under
this Section 7.3 to cure a breach of any covenant in this Section due to a
shortfall in EBITDA with respect to any such covenant for the immediately
preceding fiscal quarter; (vi) no other Event of Default has occurred and is
continuing; and (vii) the utilization by Loan Parties of such Permitted
Securities or Subordinated Debt for purposes of avoiding a violation of any of
the financial covenants may not be used if Agent determines, in its Permitted
Discretion, that the breach being cured by such Permitted Securities or
Subordinated Debt has not resulted in a Material Adverse Change.
ARTICLE 8
EVENTS OF DEFAULT
8.1. Events of Default. An Event of Default means the occurrence of
one or more of the following described events:
(a) any Loan Party shall default in the payment of (i)
interest on the Notes within three (3) Business Days after its due date
or (ii) principal of the Notes when due, whether at maturity, upon
notice of prepayment, upon any scheduled payment date or by
acceleration or otherwise;
(b) any Loan Party shall default under any agreement
under which any Indebtedness (other than Indebtedness under the Senior
Financing) in an aggregate principal amount of $200,000 or more is
created in a manner entitling the holder of such Indebtedness to
accelerate the maturity of such Indebtedness.
(c) any representation or warranty herein made by any
Loan Party, or any certificate or financial statement furnished
pursuant to the provisions hereof, shall prove to have been false or
misleading in any material respect as of the time made or furnished or
deemed made or furnished; provided that no default shall be deemed to
occur under Section 5.1(l) solely as a result of any environmental
report, financial statement or similar document, certificate or
statement prepared by a third party and furnished to Agent or any
Purchaser on behalf of any Loan Party to the extent that such Loan
Party has and promptly exercises any rights to obtain adequate redress
from such third party for any damages resulting therefrom to the
satisfaction of Agent in its Permitted Discretion;
(d) any Loan Party shall default in the performance of
any covenant, condition or provision of Section 7.1(c), 7.1(e), 7.1(f),
7.1(i), 7.2 or 7.3;
(e) a default or event of default shall occur under any
of the other Purchase Documents, beyond any applicable notice or cure
periods;
(f) any Loan Party shall default in the performance of
any other covenant, condition or provision of this Agreement, the Notes
or the other Purchase Documents, and such default shall not be remedied
to Agent's or Required Purchasers' satisfaction for
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a period of thirty (30) days of the earlier of (i) written notice from
a Agent of such default or (ii) actual knowledge by any Loan Party of
such default;
(g) a proceeding shall have been instituted (including
the filing of a notice of intention or respect thereof) in a court
having jurisdiction in the premises seeking a decree or order for
relief in respect of any Loan Party in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of any Loan
Party or for any substantial part of its property, or for the
winding-up or liquidation of their affairs, and such proceeding shall
remain undismissed or unstayed and in effect for a period of sixty (60)
days;
(h) any Loan Party shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief
in an involuntary case under any such law, or shall consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of any Loan Party or for any substantial part of their property, or
shall make a general assignment for the benefit of creditors, or shall
fail generally to pay their debts as they become due or shall admit in
writing that it is insolvent, or shall take any action in furtherance
of any of the foregoing;
(i) both the following events shall occur; (i) a
Reportable Event, the occurrence of which would have a Material Adverse
Effect which could cause the imposition of a Lien under Section 4068 of
ERISA, shall have occurred with respect to any Plan or Plans; and (ii)
the aggregate amount of the then "current liability" (as defined in
Section 412(l)(7) of the Internal Revenue Code of 1986, as amended) of
all accrued benefits under such Plan or Plans exceeds the then current
value of the assets allocable to such benefits by more than $250,000 at
such time;
(j) a final judgment which, with other undischarged final
judgments against any Loan Party, exceeds $250,000 individually, or an
aggregate of $750,000 (excluding judgments to the extent the applicable
Loan Party is fully insured or the deductible or retention limit does
not exceed $250.000 individually or $750,000 in the aggregate and with
respect to which the insurer has assumed responsibility in writing),
shall have been entered against any Loan Party if, within thirty (30)
days after the entry thereof, such judgment shall not have been
discharged or execution thereof stayed pending appeal, or if, within
thirty (30) days after the expiration of any such stay, such judgment
shall not have been discharged;
(k) any Transaction Document or Security Document shall
at any time after the Closing Date cease for any reason to be in full
force and effect or shall cease to create perfected security interests
in favor of Agent in the collateral subject or purported to be subject
thereto, subject to no other Liens other than Permitted Liens, or such
collateral shall have been transferred to any Person without the prior
written consent of the holders of a majority in principal amount of the
outstanding Notes, except as permitted by Section 7.2(f);
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(l) a requirement from the Minister of National Revenue
for k pursuant to Section 224 or any successor section of the Income
Tax Act (Canada) or Section 317, or any successor section of the Excise
Tax Act (Canada) or any comparable provision of similar legislation
shall have been received by the Agent, any Purchaser or any other
Person in respect of any Loan Party or otherwise issued in respect of
any Loan Party; and
(m) a Change of Control shall have occurred.
8.2. Consequences of Event of Default.
(a) Bankruptcy. If an Event of Default specified in
paragraphs (g) or (h) of Section 8.1 hereof shall occur, the unpaid
balance of the Notes and interest accrued thereon and all other
liabilities of the Loan Parties to the holders thereof hereunder and
thereunder shall be immediately due and payable, without presentment,
demand, protest or (except as expressly required hereby) notice of any
kind, all of which are hereby expressly waived.
(b) Other Defaults. If any other Event of Default shall
occur, Required Purchasers may at their option, by written notice to
the Loan Parties, declare the entire unpaid balance of the Notes, and
interest accrued thereon and all other liabilities of the Loan Parties
hereunder and thereunder to be forthwith due and payable, and the same
shall thereupon become immediately due and payable, without
presentment, demand, protest or (except as expressly required hereby)
notice of any kind, all of which are hereby expressly waived; provided,
that in the case of a default specified in clause (ii) of paragraph (a)
of Section 8.1 hereof shall occur, any holder of a Note may declare the
entire unpaid balance of such Note (but only such Note) and other
amounts due hereunder and thereunder with regard to such Note to become
immediately due and payable.
(c) Penalty Interest. Following the occurrence and during
the continuance of any Event of Default, the holders of the Notes shall
be entitled to receive, to the extent permitted by applicable law,
interest on the outstanding principal of, and premium and overdue
interest, if any, on, the Notes at a rate per annum equal to the
interest rate thereon (determined as provided in Section 3.1) plus two
hundred (200) basis points.
(d) Premium. In the event of any acceleration of Notes
pursuant to Section 8.2(b) hereof, the Loan Parties shall also pay to
Agent, for the ratable benefit of Purchasers the prepayment premium
that would otherwise be payable upon any voluntary prepayment of such
Notes.
(e) Appointment of Receiver. With respect to Collateral
located in Canada or any other Collateral of the Canadian Loan Parties,
the Agent and Purchasers may appoint, remove and reappoint any person
or persons, including any employee or agent of Agent and the Purchasers
to be a receiver (the "Receiver") which term shall include a receiver
and manager of, or agent for, all or any part of the Collateral located
in Canada or any other Collateral of such Canadian Loan Party. Any such
Receiver shall, as far as concerns responsibility for his acts, be
deemed to be the agent of the Loan Parties and not of the Agent or any
Purchaser, and the Agent and the Purchasers shall not in any way be
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responsible for any misconduct, negligence or non-feasance of such
Receiver, its employees or agents. Except as otherwise directed by the
Agent and the Purchasers, all money received by such Receiver shall be
received in trust for and paid to Agent for the benefit of the
Purchasers. Such Receiver shall have all of the powers and rights of
the Agent and the Purchasers described in Section 8.2. The Agent may,
either directly or through its agents or nominees, exercise any or all
powers and right of a Receiver.
8.3. Security. Payments of principal of, and premium, if any, and
interest on, the Notes and all other obligations of the Loan Parties under this
Agreement or the Notes are secured pursuant to the terms of the Security
Documents.
ARTICLE 9
THE AGENT
9.1. Authorization and Action. Each Purchaser and each subsequent
holder of any Note by its acceptance thereof, hereby designates and appoints
ACFS as Agent hereunder and authorizes ACFS to take such actions as agent on its
behalf and to exercise such powers as are delegated to Agent by the terms of
this Agreement and the other Purchase Documents, together with such powers as
are reasonably incidental thereto. Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Purchaser, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of Agent shall
be read into this Agreement or otherwise exist for Agent. In performing its
functions and duties hereunder, Agent shall act solely as agent for Purchasers
and does not assume, nor shall be deemed to have assumed, any obligation or
relationship of trust or agency with or for the Loan Parties or any of their
respective successors or assigns. Agent shall not be required to take any action
that exposes Agent to personal liability or that is contrary to this Agreement
or applicable Laws. The appointment and authority of Agent hereunder shall
terminate at the indefeasible payment in full of the Notes and related
obligations.
9.2. Delegation of Duties. Agent may execute any of its duties
under this Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
9.3. Exculpatory Provisions. Neither Agent nor any of its
directors, officers, agents or employees shall be (a) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement (except for its, their or such Person's own gross negligence or
willful misconduct or, in the case of Agent, the breach of its obligations
expressly set forth in this Agreement, unless such action was taken or omitted
to be taken by Agent at the direction of the Required Purchasers), or (b)
responsible in any manner to any of Purchasers for any recitals, statements,
representations or warranties made by the Loan Parties contained in this
Agreement or in any certificate, report, statement or other document referred to
or provided for in, or received under or in connection with, this Agreement for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other document furnished in connection herewith, or for
any failure of any of the Loan Parties to perform their respective obligations
hereunder, or for the satisfaction of any condition specified in Article 4.
Agent shall not be under any obligation to any Purchaser to ascertain or to
inquire as to the observance or
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performance of any of the agreements or covenants contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of any of the
Loan Parties.
9.4. Reliance. Agent shall in all cases be entitled to rely, and
shall be fully protected in relying, upon any document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Loan Parties), independent
accountants and other experts selected by Agent. Agent shall in all cases be
fully justified in failing or refusing to take any action under this Agreement
or any other document furnished in connection herewith unless it shall first
receive such advice or concurrence of the Required Purchasers or all of
Purchasers, as applicable, as it deems appropriate or it shall first be
indemnified to its satisfaction by Purchasers; provided, that, unless and until
Agent shall have received such advice, Agent may take or refrain from taking any
action, as Agent shall deem advisable and in the best interests of Purchasers.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, in accordance with a request of the Required Purchasers or all of
Purchasers, as applicable, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all Purchasers.
9.5. Non-Reliance on Agent and Other Purchasers. Each Purchaser
expressly acknowledges that neither Agent, nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by Agent or hereafter taken, including,
without limitation, any review of the affairs of the Loan Parties, shall be
deemed to constitute any representation or warranty by Agent. Each Purchaser
represents and warrants to Agent that it has and will, independently and without
reliance upon Agent or any other Purchaser and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other conditions and creditworthiness of the Loan Parties and made its own
decision to enter into this Agreement.
9.6. Agent in its Individual Capacity. Agent, and each of its
Affiliates may make loans to, purchase securities from, provide services to,
accept deposits from and generally engage in any kind of business with the Loan
Parties or any Affiliate of the Loan Parties as though Agent were not Agent
hereunder.
9.7. Successor Agent. Agent may, upon forty-five (45) days' notice
to the Loan Parties and Purchaser, and Agent will, upon the direction of the
Required Purchasers (other than Agent, in its individual capacity), resign as
Agent. If Agent shall resign, then the Required Purchasers during such
fifteen-day period shall appoint a successor Agent and if the Required
Purchasers direct Agent to resign, such direction shall include an appointment
of a successor Agent. If for any reason no successor Agent is appointed by the
Required Purchasers during such fifteen-day period, then effective upon the
expiration of such fifteen-day period, Purchasers shall perform all of the
duties of Agent hereunder and the Loan Parties shall make all payments in
respect of the Notes directly to the applicable Purchaser and for all purposes
shall deal directly with Purchasers. After any retiring Agent's resignation
hereunder as Agent, the provisions of Article 9 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
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9.8. Collections and Disbursements.
(a) Agent will have the right to collect and receive all
payments of the Notes, and to collect and receive all reimbursements
due hereunder, together with all fees, charges or other amounts due
under this Agreement and the other Purchase Documents with regard to
the Notes, and Agent will remit to each Purchaser, according to its pro
rata percentage, all such payments actually received by Agent in
accordance with the settlement procedures established from time to
time. Settlements shall occur on such dates as Agent may elect in its
sole discretion, but which shall be no later than two (2) Business Days
following receipt thereof.
(b) If any such payment received by Agent is rescinded or
otherwise required to be returned for any reason at any time, whether
before or after termination of this Agreement or the other Purchase
Documents, each Purchaser will, upon written notice from Agent,
promptly pay over to Agent its pro rata percentage of the amounts so
rescinded or returned, together with interest and other fees thereon so
rescinded or returned.
(c) All payments by Agent and Purchasers to each other
hereunder shall be in immediately available funds. Agent will at all
times maintain proper books of accounts and records reflecting the
interest of each Purchaser in the Notes, in a manner customary to
Agent's keeping of such records, which books and records shall be
available for inspection by each Purchaser at reasonable times during
normal business hours, at such Purchaser's sole expense. Agent may
treat the payees of any Note as the holder thereof until written notice
of the transfer thereof shall have been received by Agent in accordance
with Section 6.3. In the event that any Purchaser shall receive any
payment in reduction of the Notes in an amount greater than its
applicable pro rata percentage in respect of obligations to Purchaser
evidenced hereby (including, without limitation amounts obtained by
reason of setoffs) such Purchaser shall hold such excess in trust for
Agent (on behalf of all other Purchasers) and shall promptly remit to
Agent such excess amount so that the amounts received by each Purchaser
hereunder shall at all times be in accordance with its applicable pro
rata percentage. If, however, any Purchaser that has received any such
excess amount fails to remit such amount to the Agent, the Agent shall
reallocate the amounts paid on the next payment date to each Purchaser
so that, after giving effect to such payments, the pro rata obligations
owed by the Loan Parties to each Purchaser shall be in an amount equal
to the pro rata amount owed by the Loan Parties before the date of the
payment of such excess amount. In no event shall any Purchaser be
deemed to have a participation or other right in, to or against any
other Purchaser's Note as a result of the payment of any excess amount.
9.9. Reporting. During the term of this Agreement, Agent will
promptly furnish each Purchaser with copies of all notices and financial
statements of the Loan Parties required to be delivered or obtained hereunder
and such other financial statements and reports and other information in Agent's
possession as any Purchaser may reasonably request. Agent will immediately
notify Purchasers when it receives actual knowledge of any Event of Default
under the Purchaser Documents.
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9.10. Consent of Purchasers.
(a) Except as expressly provided herein, Agent shall have
the sole and exclusive right to service, administer and monitor the
Notes and the Purchase Documents related thereto, including, without
limitation, the right to exercise all rights, remedies, privileges and
options under this Agreement and under the other Purchase Documents,
including, without limitation, the credit judgment with respect to the
purchasing of the Notes and the determination as to the basis on which
and extent to which purchases of Notes may be made.
(b) Notwithstanding anything to the contrary contained in
Section 9.10(a) above, Agent shall not without the prior written
consent of all Purchasers then holding Notes: (i) extend any payment
date under the Notes, (ii) reduce any interest rate applicable to any
of the Notes or any fee payable to Purchasers hereunder, (iii) waive
any Event of Default under Section 8.1 (a), (iv) compromise or settle
all or a portion of the Indebtedness under the Notes, (v) release any
obligor from the Indebtedness under the Notes except in connection with
full payment and satisfaction of all Indebtedness under the Notes, (vi)
amend the definition of Required Purchasers, or (vii) amend this
Section 9.10(b).
(c) Notwithstanding anything to the contrary contained in
Section 9.10(a) above, and subject to any applicable limitation set
forth in Section 9.10(b) above, Agent shall not, without the prior
written consent of Required Purchasers: (i) waive any Event of Default;
(ii) consent to any Loan Party's taking any action that, if taken,
would constitute an Event of Default under this Agreement or under any
of the other Purchase Documents; or (iii) amend or modify or agree to
an amendment or modification of this Agreement or other Purchase
Documents.
(d) After an acceleration of the Indebtedness, Agent
shall have the sole and exclusive right, after consultation (to the
extent reasonably practicable under the circumstances) with all
Purchasers and, unless otherwise directed in writing by Required
Purchasers, to exercise or refrain from exercising any and all rights,
remedies, privileges and options under this Agreement or the other
Purchase Documents and available at law or in equity to protect the
rights of Agent and Purchaser and collect the Indebtedness under the
Notes, including, without limitation, instituting and pursuing all
legal actions brought against any Loan Party or to collect the
Indebtedness under the Notes, or defending any and all actions brought
by any Loan Party or other Person; or incurring expenses or otherwise
making expenditures to protect the collateral, the Notes or Agent's or
any Purchaser's rights or remedies.
9.11. This Article Not Applicable to Loan Parties. This Article 9 is
included in this Agreement solely for the purpose of determining certain rights
as between Agent and Purchasers and does not create, nor shall it give rise to,
any rights in or obligations on the part of the Loan Parties and all rights and
obligations of the Loan Parties (other than as specifically set forth herein)
under this Agreement shall be determined by reference to the provisions of this
Agreement other than this Article 9.
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ARTICLE 10
PUT OPTION
10.1. Grant of Option. Parent hereby grants to the collective
holders of Subject Securities (each, a "Holder") an option to sell to Parent,
and Parent is obligated to purchase from each Holder under such option (the "Put
Option"), all (or such portion as is designated by any such Holder pursuant to
Section 10.3 below, which such portion shall not be less than 50% in the
aggregate) of the Subject Securities then owned by the Holders. Subject to
Section 10.4, the Put Option will be exercisable by the Majority of the Holders
only one time. The Put Option will be effective at any time and from time to
time after the earliest to occur of (a) the seventh anniversary of the Closing
Date, (b) the date of the payment in full of the outstanding principal, interest
and fees in respect of the Notes and/or the redemption or repurchase in full of
all outstanding Shares of the Preferred Stock, (c) upon acceleration of the
Senior Financing, (d) the sale of Parent or of at least 40% of its assets as
part of a single transaction or series of related transactions, or (e) the
occurrence of a Change of Control.
10.2. Put Price. In the event that the Holders exercise the Put
Option, the price (the "Put Price") to be paid to each such Holder pursuant to
this Agreement will be the sum of the amount determined by multiplying the
number of shares of Subject Securities (or, in the case of any Warrant, the
number of shares of Underlying Common Stock into which such Warrant is
convertible) for which the Put Option is being exercised (collectively, the "Put
Shares") by the Fair Market Value therefor less the exercise price paid of such
Warrant.
10.3. Exercise of Put Option. If the majority of the Holders elect
to exercise the Put Option, such Holders shall give notice to Parent and each
other Holder of such Holders' election to exercise the Put Option, specifying,
among other things, the date on which the Put Option Closing (as hereinafter
defined) shall occur, which date shall not be less than twenty-one (21) days
after the date of such notice. If a Holder receives such notice of such other
Holders' exercise of such other Holders' Put Options and the Put Option of the
Holder receiving such notice is effective pursuant to Section 10.1, the Holder
receiving such notice may elect to exercise its Put Option and designate a Put
Option Closing simultaneous with that of such other Holders. Parent will provide
each Holder desiring to exercise its Put Option with the name and address of
each other Holder.
10.4. Certain Remedies. In the event that Parent defaults on its
obligation to purchase all or any portion of the Put Shares upon exercise of the
Put Option by the Holders, the Holders may elect, in addition to any other
rights or remedies of Holders, either to (a) rescind the exercise of the Put
Option, in which case the Put Option will continue in full force and effect, or
(b) receive a Note or Notes in the form attached hereto as Exhibit A-1, duly
executed by the US Loan Parties, payable to the Holders in the principal amount
of the Put Price, which Notes shall constitute a "Note" for all purposes
hereunder and under the Transaction Documents; provided, however, that such Note
shall bear interest on the outstanding principal thereof at a rate per annum
equal to twelve and one-half percent (12.5%); provided, further, that the Loan
Parties shall repay the unpaid principal balance of such Notes in full, together
with all accrued and unpaid interest, fees and other amounts due thereunder, in
twelve (12) consecutive equal monthly payments commencing on the first Business
Day of the first full month following the execution of such Notes and there
shall be no premium charged for prepaying such Notes.
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10.5. Put Option Closing. Each closing for the purchase and sale of
the Put Shares as to which the Holders have notified Parent of such Holders'
intention to exercise the Put Option (a "Put Option Closing") shall occur on the
date specified in such notice of exercise. At any Put Option Closing, to the
extent applicable, the Holders of the Put Shares will deliver the certificate or
certificates evidencing the Put Shares being purchased, duly endorsed in blank.
In consideration therefor, Parent will deliver to the Holders the Put Price,
which will be payable by wire transfer of immediately payable funds to an
account designated by each such Holder, or, at the option of such Holder in its
sole discretion by a Note in the form attached hereto as Exhibit A-1, duly
executed by the US Loan Parties, payable to such Holder in the principal amount
of the Put Price which Note shall constitute a "Note" for all purposes hereunder
and under the Transaction Documents. In the event multiple Holders have
exercised the Put Option and there is insufficient cash available to pay each
such Holder the full amount of funds they have requested pursuant to the
preceding sentence, any payment of cash will be made on a pro rata basis among
such Holders in proportion to their respective number of Put Shares.
10.6. Transfer. The Put Option shall not be transferable by ACAS or
its Affiliates upon the transfer by ACAS or any of its Affiliates of their
Warrants, unless such Warrants are transferred in conjunction with the transfer
of all or any reasonably similar portion of the Notes. Any transfer of the Put
Option not made in accordance with the foregoing sentence shall be null and void
and of no force and effect. Upon any transfer of any Subject Securities other
than a transfer to an Affiliate of ACAS and other than in a privately negotiated
transaction not involving a Public Offering, the Put Right with respect to such
transferred Subject Securities shall terminate and shall be null and void and of
no further force and effect and such transferred Subject Securities shall no
longer be deemed Subject Securities for all purposes of this Article 10.
10.7. Subordination. Notwithstanding any provision to the contrary,
the rights and obligations of the Holders and the Loan Parties under this
Article 10 are subject to the terms and conditions of the Senior Subordination
Agreement.
ARTICLE 11
PREEMPTIVE RIGHTS
11.1. Limited Preemptive Rights. If after the date of this
Agreement, Parent authorizes the issuance and sale of any Newly Issued
Securities (other than in connection with a Public Offering or the issuance of
such securities in exchange for the securities or assets of another Person as a
part of an acquisition of a business as a going concern) at any time that any
Purchaser holds any Common Stock of Parent or Warrants, Parent will offer to
sell to each Purchaser a portion of such securities equal to the percentage
determined by dividing (a) the number of shares of Common Stock of Parent and
Underlying Common Stock (without duplication) then held by such Purchaser by (b)
the number of shares of Common Stock of Parent then outstanding (on a fully
diluted basis). For purposes of clause (b) above, a share of Common Stock of
Parent acquirable upon exercise or conversion of options or rights to acquire
any shares of Common Stock of Parent shall be deemed outstanding only if the
applicable conversion price, exercise price or other acquisition price is equal
to or less than the then current Market Price of a share of Common Stock of
Parent. Each Purchaser will be entitled to purchase such stock or securities at
the same price and on the same terms as such stock or securities are to
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be offered to any other Person. Each Purchaser must exercise its purchase rights
within thirty (30) days after receipt of written notice from Parent describing
in reasonable detail the stock or securities being so offered, the purchase
price thereof, the payment terms and each Purchaser's percentage allotment. Upon
the expiration of such period of thirty (30) days, Parent will be free to sell
such stock or securities which Purchasers have not elected to purchase during
the one hundred twenty (120) days following such expiration on terms and
conditions no more favorable to purchasers thereof than those offered to
Purchasers. Any stock or securities offered or sold by Parent after such one
hundred twenty (120) day period must be reoffered to each Purchaser pursuant to
the terms of this Section 11.1. Any stock or securities purchased by a Purchaser
from Parent pursuant to this Section 11.1 shall, upon such purchase and
thereafter be deemed to be Securities and Registrable Securities for all
purposes of this Agreement.
11.2. Transfer. The preemptive rights granted in Section 11.1 shall
not be transferable by ACAS or its Affiliates upon the transfer by ACAS or any
of its Affiliates of their Warran ts, unless such Warrants are transferred in
conjunction with the transfer of all or any reasonably similar portion of the
Notes. Any transfer of the preemptive rights not made in accordance with the
foregoing sentence shall be null and void and of no force and effect.
ARTICLE 12
REGISTRATION RIGHTS
12.1. Piggyback Registrations. Subject to the rights of the Prior
Holders, whenever Parent proposes to register any of its securities under the
Securities Act and the registration form (other than a registration statement on
Form S-4 or S-8 or any successor form thereto) to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), Parent will
give prompt written notice (in any event within three Business Days after its
receipt of notice of any exercise of demand registration rights other than under
this Agreement) to all holders of Registrable Securities with respect of the
proposed offering at least twenty (20) days before the initial filing with the
SEC of such registration statement, and offer to include in such filing such
Registrable Securities as any such holder may request. Each such holder of
Registrable Securities desiring to have Registrable Securities registered under
this Section 12.1 shall advise Parent in writing within fifteen (15) days after
the date of receipt of such notice from Parent, setting forth the amount of such
Registrable Securities for which registration is requested. Parent shall
thereupon include (subject to clauses (b) and (c) below) in such filing the
number of Registrable Securities for which registration is so requested, and
shall use its best efforts to effect registration under the Securities Act of
such Registrable Securities.
(a) The registration expenses of the holders of
Registrable Securities will be paid by Parent in all Piggyback
Registrations to the extent provided in Section 12.6.
(b) If a Piggyback Registration is an underwritten
primary registration on behalf of Parent, and the managing underwriters
advise Parent in writing that in their opinion the number of securities
requested to be included by holders of Registrable Securities in such
registration exceeds the number which can be sold in an orderly manner
in such offering within a price range acceptable to Parent, Parent will
include in such registration: (i) first, the securities Parent proposes
to sell, (ii) second, the Registrable Securities requested to be
included in such registration, and the securities
71
requested to be included in such registration by the Prior Holders on a
pro rata basis, and (iii) third, the securities requested to be
included in by any other Person on a pro rata basis.
(c) Subject to the rights of the Prior Holders, if a
Piggyback Registration is an underwritten secondary registration on
behalf of holders of Parent's securities, and the managing underwriters
advise Parent in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number that
can be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration,
Parent will include in such registration: (i) first, the securities
proposed to be sold by the holders initially requesting such
registration on a pro rata basis, (ii) second, the Registrable
Securities requested to be included in such registration and the
securities requested to be included in such registration by the Prior
Holders on a pro rata basis, and (iii) third, the securities requested
to be included in such registration by any other Person on a pro rata
basis.
(d) If Parent has previously filed a registration
statement in connection with an underwritten Public Offering made
pursuant to the exercise by any Person of its demand registration
rights, and if such previous registration has not been withdrawn or
abandoned, Parent will not effect, if requested in writing by the
managing underwriter or underwriters for such underwritten offering,
any of its equity securities or securities convertible or exchangeable
into or exercisable for its equity securities under the Securities Act
(except on Form S-4 or Form S-8 or any successor form), for its own
account during the period beginning on the 30th day prior to and ending
on the 120th day after the effective date of any such underwritten
offering.
12.2. Demand Registration Rights.
(a) If, and no sooner than eighteen (18) months following
the Closing Date, Parent receives a written request by the holders of a
majority of the Registrable Securities to effect the registration under
the Securities Act ("Demand"), Parent shall follow the procedures
described in this Section 12.2. Parent shall not be required to (i)
effect more than one (1) Demand pursuant to this Section 12.2 and (ii)
effect any registration if Parent is not a Reporting Company under
Section 12 of the Securities Exchange Act at such time. Within five (5)
days of its receipt of such request, Parent shall give written notice
of such proposed registration (a "Demand Registration") to all holders
of Registrable Securities, and thereupon, Parent shall, as
expeditiously as reasonably practicable, use its best reasonable
efforts to effect the registration on a form of general use under the
Securities Act of the shares it has been requested to register in the
Demand and in any response to such notice given to Parent within twenty
(20) days after Parent's giving of such notice; provided, however, that
Parent shall not be required to effect a Demand Registration if the
value of the Registrable Securities and the value of all other
securities to be included in such offering are less than $30,000,000,
and in such case the Demand will not expire.
(b) Parent shall not be required to effect a registration
pursuant to this Section 12.2 during the first 180 days after the
effective date of any registration statement
72
filed by Parent under Section 12.1 if the holders of Registrable
Securities requesting registration have been afforded the opportunity
to register in such registration all or a majority of their Registrable
Securities requested to be so registered.
(c) Parent may include in any registration under this
Section 12.2 any other shares of Common Stock of Parent (including
issued and outstanding shares of stock as to which the holders thereof
have contracted with Parent for "piggyback" registration rights) so
long as the inclusion in such registration of such shares will not, in
the opinion of the managing underwriter of the shares of the holder's
or holders' first demanding registration (if the offering is
underwritten), interfere with the successful marketing in accordance
with the intended method of sale or other disposition of all the stock
sought to be registered by such demanding holder or holders pursuant to
this Section 12.2.
(d) If any Demand Registration is an underwritten
offering, the investment banker(s) and manager(s) for the offering
shall be selected by the holders of a majority of the Registrable
Securities who request to be included in such Demand Registration.
12.3. [Intentionally Omitted.]
12.4. Holdback Agreements. Each holder of Registrable Securities
agrees not to effect any public sale or distribution (including sales pursuant
to Rule 144) of equity securities of Parent, or any securities convertible into
or exchangeable or exercisable for such securities, during the seven days prior
to and the 90-day period (or such longer period, not to exceed 90 additional
days, as the managing underwriter shall require) beginning on the effective date
of any underwritten Piggyback Registration in which Registrable Securities are
included or Demand Registration (except as part of such underwritten
registration), unless the underwriters managing the registered Public Offering
otherwise agree.
(a) Parent agrees not to effect any public sale or
distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, for its own
account during the period beginning on the 30th day prior to and ending
on the 120th day after the effective date of any underwritten or Demand
Registration (except as part of such underwritten registration or
pursuant to registrations on Form S-4 or Form S-8 or any successor form
unless the underwriters managing the registered Public Offering
otherwise agree.
12.5. Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, Parent will use reasonable efforts to effect the registration
and the sale of such Registrable Securities in accordance with the intended
method of disposition thereof (including the registration of Warrants held by a
holder of Registrable Securities requesting registration as to which Parent has
received reasonable assurances that only Registrable Securities will be
distributed to the public), and pursuant thereto Parent will as expeditiously as
possible:
(a) prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use
reasonable efforts to cause such registration statement to become
effective (provided that before filing a registration statement or
prospectus or any
73
amendments or supplements thereto, Parent will furnish to the counsel
selected by the holders of a majority of the Registrable Securities
covered by such registration statement copies of all such documents
proposed to be filed, which documents will be subject to the review of
such counsel);
(b) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such seller;
(c) use reasonable efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions as any seller of Registrable Securities reasonably
requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate
the disposition in such jurisdictions of the Registrable Securities
owned by such seller (provided that Parent will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdictions, (iii) consent to
general service of process in each such jurisdiction or (iv) undertake
such actions in any jurisdiction other than the states of the United
States of America and the District of Columbia);
(d) notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and, at the request of any
such seller, Parent will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading;
(e) use its best efforts, if the Common Stock is then
listed or quoted on any securities exchange or quotation system, to
cause all such Registrable Securities to be listed or quoted on such
securities exchange;
(f) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(g) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions as the holders of a majority of the Registrable Securities
being sold or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities
(including, without limitation, effecting a stock split or a
combination of shares);
(h) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement and
74
any attorney, accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate
documents and properties of Parent, and cause Parent's officers,
directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement; provided, however that any records, information or documents
that are designated by Parent in writing as confidential shall only be
provided if such person executed a confidentiality agreement reasonably
satisfactory to Parent;
(i) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months beginning with
the first day of Parent's first full calendar quarter after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(j) permit any holder of Registrable Securities which
holder, in its sole and exclusive judgment, might be deemed to be an
underwriter or a controlling person of Parent, to participate in the
preparation of such registration or comparable statement and to require
the insertion therein of material, furnished to Parent in writing,
which in the reasonable judgment of such holder and its counsel should
be included; and
(k) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any
order suspending or preventing the use of any related prospectus or
suspending the qualification of any Common Stock of Parent included in
such registration statement for sale in any jurisdiction, Parent will
use its reasonable best efforts promptly to obtain the withdrawal of
such order. If any such registration or comparable statement refers to
any holder by name or otherwise as the holder of any securities of
Parent and if in its sole and exclusive judgment such holder is or
might be deemed to be a controlling person of Parent, such holder shall
have the right to require (i) the insertion therein of language, in
form and substance satisfactory to such holder and presented to Parent
in writing, 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 Parent's securities covered thereby and that
such holding does not imply that such holder will assist in meeting any
future financial requirements of Parent, (ii) in the event that such
reference to such holder by name or otherwise is not required by the
Securities Act or any similar federal statute then in force, the
deletion of the reference to such holder; provided that with respect to
this clause (ii) such holder shall furnish to Parent an opinion of
counsel to such effect, which opinion and counsel shall be reasonably
satisfactory to Parent.
12.6. Registration Expenses. All expenses incident to Parent's
performance of or compliance with this Article 12, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery expenses,
and fees and disbursements of counsel for Parent and all independent certified
public accountants of Parent, underwriters (excluding discounts and commissions)
and other Persons retained by Parent (all such expenses, excluding underwriting
discounts and
75
commissions, being herein called "Registration Expenses"), will be borne by
Parent. Parent will bear the cost of one set of counsel for the Holders of
Registrable Securities participating in any Piggyback Registration or Demand
Registration. All underwriting discounts and commissions will be borne by the
seller of the securities sold pursuant to the registration.
12.7. Indemnification.
(a) Parent agrees to indemnify, to the extent permitted
by law, each holder of Registrable Securities, its officers and
directors and each Person who controls such holder (within the meaning
of the Securities Act) against all losses, claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto
or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in
any information furnished in writing to Parent by such holder expressly
for use therein or by such holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements
thereto after Parent has furnished such holder with a sufficient number
of copies of the same. In connection with an underwritten offering,
Parent will indemnify such underwriters, their officers and directors
and each Person who controls such underwriters (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.
(b) In connection with any registration statement in
which a holder of Registrable Securities is participating, each such
holder will furnish to Parent in writing such information and
affidavits as Parent reasonably requests for use in connection with any
such registration statement or prospectus and, to the extent permitted
by law, will indemnify Parent, its directors and officers and each
Person who controls Parent (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading but only to the extent
that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such holder;
(c) Any Person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of any claim
with respect to which it seeks indemnification and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnifying party will not be
subject to any liability for any settlement made by the indemnified
party without its consent (but such consent will not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim will not be obligated to pay the fees
and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to
76
such claim, unless in the reasonable judgment of any indemnified party
a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director
or controlling Person of such indemnified party and will survive the
transfer of securities. Parent also agrees to make such provisions, as
are reasonably requested by any indemnified party, for contribution to
such party in the event Parent `s indemnification is unavailable for
any reason.
12.8. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
ARTICLE 13
MISCELLANEOUS
13.1. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, except that (a) the Loan Parties may not assign or transfer their
rights hereunder or any interest herein or delegate their duties hereunder and
(b) Purchasers shall have the right to assign their rights hereunder and under
the Securities in accordance with Article 6.
13.2. Modifications and Amendments. The provisions of this Agreement
may be modified, waived or amended, but only by a written instrument signed by
each of the Loan Parties to be bound thereby, and to the extent such
modification, amendment or waiver relates (a) to the Notes, such instrument must
be executed by Agent on behalf of Purchasers upon satisfaction of the conditions
set forth in Section 9.10 and (b) to the Warrants or the Underlying Common
Stock, such instrument must be executed by the holders of at least seventy-five
percent (75%) of the Warrant Shares.
13.3. No Implied Waivers; Cumulative Remedies; Writing Required. No
delay or failure in exercising any right, power or remedy hereunder shall affect
or operate as a waiver thereof; nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such a right, power or
remedy preclude any further exercise thereof or of any other right, power or
remedy. The rights and remedies hereunder are cumulative and not exclusive of
any rights or remedies that Agent or Purchasers or any holder of Notes, Warrants
or Warrant Shares would otherwise have. Any waiver, permit, consent or approval
of any kind or character of any breach or default under this Agreement or any
such waiver of any provision or condition of this Agreement must be in writing,
satisfy the conditions set forth in Section 9.10 and shall be effective only to
the extent in such writing specifically set forth.
13.4. Reimbursement of Expenses. The Loan Parties upon demand shall
pay or
77
reimburse Agent and Purchasers for all fees and expenses incurred or
payable by Agent or Purchasers (including, without limitation, reasonable fees
and expenses of special counsel for Agent and Purchasers), from time to time (a)
arising in connection with the negotiation, preparation and execution of this
Agreement, the Notes, the other Purchase Documents and all other instruments and
documents to be delivered hereunder or thereunder or arising in connection with
the transactions contemplated hereunder or thereunder, (b) relating to any
amendments, waivers or consents pursuant to the provisions hereof or thereof,
and (c) arising in connection with the enforcement of this Agreement or
collection of the Notes.
13.5. Holidays. Whenever any payment or action to be made or taken
hereunder or under the Notes shall be stated to be due on a day which is not a
Business Day, such payment or action shall be made or taken on the next
following Business Day, and such extension of time shall be included in
computing interest or fees, if any, in connection with such payment or action.
13.6. Notices. All notices and other communications given to or made
upon any party hereto in connection with this Agreement shall, except as
otherwise expressly herein provided, be in writing (including telecopy, but in
such case, a confirming copy will be sent by another permitted means) and mailed
via certified mail, telecopied or delivered by guaranteed overnight parcel
express service or courier to the respective parties, as follows:
to the Loan Parties:
c/o Corrpro Companies, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attn: Chief Financial Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxx Xxxxxx & Parks, LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attn: F. Xxxxxx X'Xxxxx, Esq.
Telecopier: (000) 000-0000
78
to Agent:
American Capital Financial Services, Inc.
0 Xxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Compliance Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxx, Esq.
Telecopier: (000) 000-0000
and to:
American Capital Strategies, Ltd.
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. XxxXxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
to Purchasers:
As set forth on Annex A
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
courier or overnight parcel express service; in the case of certified mail,
three (3) Business Days after the date sent; or in the case of telecopy, when
received.
13.7. Survival. All representations, warranties, covenants and
agreements of the Loan
79
Parties contained herein or made in writing in connection herewith shall survive
the execution and delivery of this Agreement and the purchase of the Notes and
the Warrants and shall continue in full force and effect so long as any Note or
Warrant is outstanding and until payment in full of all of the Loan Parties'
obligations hereunder or thereunder. All obligations relating to indemnification
hereunder shall survive any termination of this Agreement and shall continue for
the length of any applicable statute of limitations.
13.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
13.9. Jurisdiction, Consent to Service of Process.
(a) THE LOAN PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMIT, FOR THEMSELVES AND THEIR PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT
OF THE UNITED STATES OF AMERICA SITTING IN THE STATE OF NEW YORK, AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
PURCHASE DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,
AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL
COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT
AGENT AND PURCHASERS MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER PURCHASE
DOCUMENT AGAINST THE LOAN PARTIES OR THEIR PROPERTIES IN THE COURTS OF
ANY JURISDICTION.
THE LOAN PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE,
TO THE FULLEST EXTENT THEY MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES OR ANY OTHER PURCHASE DOCUMENT IN ANY NEW YORK OR
FEDERAL COURT LOCATED IN THE STATE OF NEW YORK. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.
80
EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 13.6 HEREOF.
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS
AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
13.10. Jury Trial Waiver. THE LOAN PARTIES HEREBY IRREVOCABLY WAIVE
ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND
ANY RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR (II) ARISING FROM ANY
DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT AND
AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
13.11. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
13.12. Headings. Article, section and subsection headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
13.13. Indemnity. The Loan Parties hereby agree to indemnify, defend
and hold harmless Agent and Purchasers and their officers, directors, employees,
agents and representatives, and their respective successors and assigns in
connection with any losses, claims, damages, liabilities and expenses, including
reasonable attorneys' fees, to which Agent or any Purchaser may become subject
(other than as a result of the gross negligence or willful misconduct of any
such Person), insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or by reason of any investigation, litigation
or other proceedings related to or resulting from any act of, or omission by,
the Loan Parties or their Affiliates or any officer, director, employee, agent
or representative of the Loan Parties or their Affiliates with respect to the
Transactions, the Notes, Charter Documents, the Bylaws or any agreements entered
into in connection with any such agreements, instruments or documents and to
reimburse Agent and Purchasers and each such Person and Affiliate, upon demand,
for any legal or other expenses incurred in connection with investigating or
defending any such loss, claim, damage, liability, expense or action. To the
extent that the foregoing undertakings may be unenforceable for any reason, the
Loan Parties agree to make the maximum contribution to the payment and
satisfaction of indemnified liabilities set forth in this Section 13.13 which is
permissible under applicable law.
13.14. Environmental Indemnity. The Loan Parties, and their
successors and assigns, hereby release and discharge, and agree to defend,
indemnify and hold harmless, Agent, Purchasers, their Affiliates, and their
officers, directors, employees, agents and representatives and the successors
and assigns of all of the foregoing, and their respective officers, employees
and agents) from and against any and all Environmental Liabilities, whenever and
by whomever asserted, to the extent that such Environmental Liabilities are
based upon, or otherwise relate to:
81
(a) any Condition at any time in, at, on, under, a part of, involving or
otherwise related to the Properties and Facilities (including any of the
properties, materials, articles, products, or other things included in or
otherwise a part of the Properties and Facilities); (b) any action or failure to
act of any Person, including any prior owner or operator of the Properties and
Facilities (including any of the properties, materials, articles, products, or
other things included in or otherwise a part of the Properties and Facilities),
involving or otherwise related to the Properties and Facilities or operations of
the Loan Parties; (c) the Management of any Pollutant, material, article or
product (including Management of any material, article or product containing a
Pollutant) in any physical state and at any time, involving or otherwise related
to the Properties and Facilities or any property covered by clause (d)
(including Management either from the Properties and Facilities or from any
property covered by clause (d), and Management to, at, involving or otherwise
related to the Properties and Facilities or any property covered by clause (d));
(d) Conditions, and actions or failures to act, in, at, on, under, a part of,
involving or otherwise related to any property other than the Properties and
Facilities, which property was, at or prior to the Closing Date, (i) acquired,
held, sold, owned, operated, leased, managed, or divested by, or otherwise
associated with, (A) the Loan Parties, (B) any of the Loan Parties' Affiliates,
or (C) any predecessor or successor organization of those identified in (A) or
(B); or (ii) engaged in any tolling, contract manufacturing or processing, or
other similar activities for, with, or on behalf of the Loan Parties; (e) any
violation of or noncompliance with or the assertion of any Lien under the
Environmental Laws, (f) the presence of any toxic or hazardous substances,
wastes or contaminants on, at or from the past and present properties and
facilities, including, without limitation, human exposure thereto; (g) any
spill, release, discharge or emission affecting the past and present properties
and facilities, whether or not the same originates or emanates from such
properties and facilities or any contiguous real estate, including, without
limitation, any loss of value of such properties and facilities as a result
thereof; or (h) a misrepresentation in any representation or warranty or breach
of or failure to perform any covenant made by the Loan Parties in this
Agreement. This indemnity and agreement to defend and hold harmless shall
survive any termination or satisfaction of the Notes or the sale, assignment or
foreclosure thereof or the sale, transfer or conveyance of all or part of the
past and present properties and facilities or any other circumstances which
might otherwise constitute a legal or equitable release or discharge, in whole
or in part, of the Loan Parties under the Notes.
13.15. Counterparts. This Agreement may be executed in any number of
counterparts and by either party hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original or a facsimile of the
original, but all such counterparts shall together constitute one and the same
instrument.
13.16. Integration. This Agreement and the other Purchase Documents
set forth the entire understanding of the parties hereto with respect to all
matters contemplated hereby and supersede all previous agreements and
understandings among them concerning such matters. No statements or agreements,
oral or written, made prior to or at the signing hereof, shall vary, waive or
modify the written terms hereof.
13.17. Subordination. THE OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THE SENIOR
SUBORDINATION AGREEMENT, TO THE INDEBTEDNESS AND OTHER LIABILITIES
82
OWED BY THE LOAN PARTIES UNDER AND PURSUANT TO THE SENIOR CREDIT AGREEMENT, AND
EACH RELATED "LOAN DOCUMENT" (AS DEFINED THEREIN), AND EACH HOLDER HEREOF, BY
ITS ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF
THE SENIOR SUBORDINATION AGREEMENT.
13.18. Judgment Currency. If, for the purposes of obtaining judgment
in any court in any jurisdiction with respect to this Agreement, the Notes or
under any of the Security Documents (collectively, the "Documents"), it becomes
necessary to convert into the currency of such jurisdiction (the "Judgment
Currency") any amount due under the applicable Document in any currency other
than the Judgment Currency (the "Currency Due"), then conversion shall be made
at the rate of exchange prevailing on the Business Day before the day on which
judgment is given. For this purpose "rate of exchange" means the rate at which
Agent is able, on the relevant date, to purchase the Currency Due with the
Judgment Currency in accordance with its normal practice at its head office in
New York . In the event that there is a change in the rate of exchange
prevailing between the Business Day before the day on which the judgment is
given and the date of receipt by Agent of the amount due, the relevant Loan
Party will on the date of receipt by Agent, pay such additional amounts, if any,
or be entitled to receive reimbursement of such amount, if any, as may be
necessary to ensure that the amount received by Agent on such date is the amount
in the Judgment Currency which when converted at the rate of exchange prevailing
on the date of receipt by Agent is the amount then due under this Agreement in
the Currency Due.
13.19. Confidentiality and Publicity. So long as all or any of the
principal amount of the Notes or any interest thereon shall remain outstanding,
and thereafter, so long as any of the Purchasers own any Warrants, the Put Notes
or Underlying Common Stock:
(a) Agent and each Purchaser reserve the right to review
and approve all materials that the Loan Parties or any of their
Affiliates prepare that contain Agent's or such Purchaser's name or
describe or refer to any Purchase Document, any of the terms thereof or
any of the transactions contemplated thereby, which approval shall not
be unreasonably withheld or delayed. The Loan Parties shall not, and
shall not permit any of their Affiliates to, use either Agent's or any
Purchaser's name (or the name of any of Agent's or any Purchasers'
Affiliates) in connection with any of its business operations,
provided, that Loan Parties may disclose the Purchasers' names, the
aggregate principal amount of the Loans outstanding and other principal
terms of such Loans to (x) prospective purchasers of debt or equity
securities of Loan Parties (other than Parent) so long as such Loan
Parties inform such prospective purchasers of the confidential nature
of such information and such Persons agree in writing not to disclose
the same to any other Person and to be bound by the confidentiality
provisions of this Agreement, (y) Governmental Authorities regulating
the Business in accordance with applicable legal requirements and (z)
any other Person to which such disclosure may be necessary in response
to any court order, subpoena or other legal process or formal
investigative demand. Nothing contained in any Purchase Document is
intended to permit or authorize any Loan Party or any of its Affiliates
to contract on behalf of Agent or any Purchaser. The Loan Parties agree
that Agent or any Affiliate of Agent may (i) disclose a general
description of transactions arising under the Purchase Documents for
advertising,
83
marketing or other similar purposes, and (ii) use any Loan Party's
name, logo or other indicia germane to such party in connection with
such advertising, marketing or other similar purposes, provided Agent
or Affiliate delivers a copy of such materials to Parent at least five
(5) Business Days prior to its initial publication and Parent does not
object to such materials prior to the publication date.
(b) Anything herein to the contrary notwithstanding,
"non-public information" shall not include, and Agent and each
Purchaser may disclose to any and all Persons, without limitation of
any kind, any information with respect to the "tax treatment" and "tax
structure" (in each case, within the meaning of Treasury Regulation
Section 1.6011-4) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that
are provided to Agent or such Purchaser relating to such tax treatment
and tax structure; provided that with respect to any document or
similar item that in either case contains information concerning the
tax treatment or tax structure of the transaction as well as other
information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax
structure of the Notes and transactions contemplated hereby and by the
other Purchase Documents.
(c) Each of Agent and the Purchasers agrees, on behalf of
itself and each of its Affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential
information of the same nature and in accordance with safe and sound
commercial practices, any non-public information supplied to it by the
Loan Parties pursuant to this Agreement that is identified by such
Person as being confidential at the time the same is delivered to such
party, provided that nothing herein shall limit the disclosure of such
information (a) after such information shall have become public other
than through a violation of this Section 13.19(c), (b) to the extent
required pursuant to a subpoena, civil investigative demand (or similar
process), order, statute, rule or other legal requirement promulgated
or imposed by a court or by a judicial, regulatory, self-regulatory or
legislative body, organization, agency or committee or otherwise in
connection with any judicial or administrative proceeding (including,
without limitation, in response to oral questions, interrogatories or
requests for information or documents), (c) to counsel, auditors,
accountants, lenders, Affiliates, funding or financing sources for any
of the Agent or Purchasers, (d) to any regulatory authority having
jurisdiction over the Agent or any Purchasers, (e) to the Agent or any
other Purchaser, (f) in connection with any litigation to which any one
or more of the Agent or Purchasers is a party, or in connection with
the enforcement of rights or remedies hereunder or under any of the
Purchase Documents, (g) to any Subsidiary, Affiliate, partner,
director, officer or employee of the Agent or any Purchaser provided,
such parties agree to be bound by provisions substantially similar to
this Section 13.19(c), (h) to any assignee or participant (or
prospective assignee or participant) permitted pursuant to Section 13.1
and Article 6 so long as such assignee or participant agrees to be
bound by the provisions hereof, or (i) with the consent of Parent. Each
of the Agent and the Purchasers agrees that, to the extent Agent or
such Purchaser has received relevant non-public information supplied to
it by the Loan Parties pursuant to this Agreement that is identified by
such Person as being confidential at the time the same is delivered to
such party, it will not buy, sell, trade or
84
otherwise dispose of any Common Stock during any period that Parent has
instructed its directors, officers and employees that any trading is
prohibited, provided that such Agent or Purchasers has received notice
in the same manner as the directors, officers and employees of the
Parent. Each of the Agent and the Purchasers agrees that, to the extent
Agent or such Purchaser has received relevant non-public information
supplied to it by the Loan Parties pursuant to this Agreement that is
identified by such Person as being confidential at the time the same is
delivered to such party, it will not cause, induce or recommend to any
of its Affiliates to buy, sell, trade or otherwise dispose of any
Common Stock during any period that the Parent has instructed its
directors, officers and employees that any trading is prohibited,
provided that such Agent or Purchasers has received notice in the same
manner as the directors, officers and employees of Parent. Each of the
Agent and the Purchasers further agrees that it will, in accordance
with its customary practices, place the Common Stock on its restricted
list of securities, if any, which directors, officers and employees of
Agent and the Purchasers are instructed not to purchase or sell.
13.20. Compliance with Canadian Law. The Canadian Notes and other
Purchase Documents issued in connection therewith have been structured to comply
with subparagraph 212(1)(b)(vii) of the Canadian Income Tax Act (the "5/25
Exception"). In compliance with the 5/25 Exception, the parties hereto agree
that (i) all negotiations and dealings between the Agent and Purchasers, on the
one hand, and the Canadian Loan Parties, on the other hand, have been at on
arm's length basis and (ii) absent a breach or Default hereunder, under no
circumstances is more than 25% of the aggregate principal amount of the Canadian
Notes required to be repaid by the Canadian Loan Parties within five years from
the date of issuance.
ARTICLE 14
GUARANTY
14.1. Guaranty. Each US Loan Party hereby unconditionally and
irrevocably guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of each Canadian Loan
Party, including, without limitation, each Canadian Loan Party, now or hereafter
existing under any Purchase Document, whether for principal, interest
(including, without limitation, all interest that accrues after the commencement
of any proceeding of any Canadian Loan Party or any other Canadian Loan Party
under any Debtor Relief Laws), fees, commissions, expense reimbursements,
indemnifications or otherwise (such obligations, to the extent not paid by any
Canadian Loan Party or any other Canadian Loan Party, the "Guaranteed
Obligations"), and agrees to pay any and all costs, fees and expenses (including
reasonable counsel fees and expenses) incurred by Agent and Purchasers in
enforcing any rights under the guaranty set forth in this Article 14. Without
limiting the generality of the foregoing, each US Loan Party's liability shall
extend to all amounts that constitute part of the Guaranteed Obligations and
would be owed by any Canadian Loan Party or any other Canadian Loan Party to
Agent and Purchasers under any Purchase Document, but for the fact that they are
unenforceable or not allowable due to the existence of any proceeding under any
Debtor Relief Laws involving any Canadian Loan Party or any other Canadian Loan
Party.
14.2. Guaranty Absolute. Each US Loan Party guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Purchase Documents,
85
regardless of any law regulation or order now or hereafter in effect in any
jurisdiction affecting any such terms or the rights of Agent or Purchasers with
respect thereto. The obligations of each US Loan Party under this Article 14 are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against each US Loan Party to enforce such
obligations, irrespective of whether any action is brought against any Loan
Party or whether any Loan Party is joined in any such action or actions. The
liability of each US Loan Party under this Article 14 shall be irrevocable,
absolute and unconditional irrespective of, and each US Loan Party hereby
irrevocably waives any defenses it may now or hereafter have in any way relating
to, any or all of the following:
(a) any lack of validity or enforceability of any
Purchase Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Guaranteed Obligations,
or any other amendment or waiver of or any consent to departure from
any Purchase Document, including, without limitation, any increase in
the Guaranteed Obligations resulting from the extension of additional
credit to any Loan Party or otherwise;
(c) any taking, exchange, release or non-perfection of
any Collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;
(d) any change, restructuring or termination of the
corporate, limited liability company or partnership structure or
existence of any Loan Party; or
(e) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance
on any representation by Agent or Purchasers that might otherwise
constitute a defense available to, or a discharge of, any Loan Party or
any other guarantor or surety.
This Article 14 shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned to Agent or Purchasers or any other
Person upon the insolvency, bankruptcy or reorganization of any Canadian Loan
Party or otherwise, all as though such payment had not been made.
14.3. Waiver. Each US Loan Party hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Article 14 and any requirement that Agent or
Purchasers exhaust any right or take any action against any other Loan Party or
any other Person or any Collateral. Each US Loan Party acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated herein and that the waiver set forth in this Section 14.3 is
knowingly made in contemplation of such benefits. Each US Loan Party hereby
waives any right to revoke this Article 14, and acknowledges that this Article
14 is continuing in nature and applies to all Guaranteed Obligations, whether
existing now or in the future.
14.4. Continuing Guaranty; Assignments. This Article 14 is a
continuing guaranty and
86
shall (a) remain in full force and effect until the indefeasible cash payment in
full of the Guaranteed Obligations and all other amounts payable under this
Article 14, (b) be binding upon each US Loan Party, its successors and assigns
and (c) inure to the benefit of, and be enforceable by, Agent and Purchasers and
their successor, pledgees, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Purchaser may pledge, assign or
otherwise transfer all or any portion of its rights and obligations under this
Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted such Purchaser herein or
otherwise, in each case as provided in this Agreement.
14.5. Subrogation. No US Loan Party will exercise any rights that it
may now or hereafter acquire against any other Loan Party or any other guarantor
or that arise from the existence, payment, performance or enforcement of such US
Loan Party's obligations under this Article 14, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of Agent and
Purchasers against any other Loan Party or any other guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law including, without limitation, the right to take
or receive from any other Loan Party or any other guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until all of the Guaranteed Obligations and all other amounts payable under this
Article 14 shall have been indefeasibly paid in full in cash and all commitments
to lend hereunder shall have terminated; provided, however, that no Canadian
Loan Party shall have any rights hereunder against US Loan Party or any of its
Subsidiaries if all or any portion of the Guaranteed Obligations shall have been
satisfied with proceeds from the exercise of remedies in respect of the equity
securities of US Loan Party pursuant to a Pledge Agreement. If any amount shall
be paid to any US Loan Party in violation of the immediately preceding sentence,
such amount shall be held in trust for the benefit of Agent and Purchasers and
shall forthwith be paid to Agent to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Article 14, whether matured
or unmatured, in accordance with the terms of this Agreement, or to be held as
Collateral for any Guaranteed Obligations or other amounts payable under this
Article 14 thereafter arising. If (i) any US Loan Party shall make payment to
Agent and Purchasers of all or any part of the Guaranteed Obligations and (ii)
all of the Guaranteed Obligations and all other amounts payable under this
Article 14 shall be paid in full in cash, Agent and Purchasers will, at such US
Loan Party's request and expense, execute and deliver to such US Loan Party or
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such US Loan Party of an
interest in the Guaranteed Obligations resulting from such payment by such US
Loan Party.
14.6. Canadian Guarantors. Each Canadian Loan Party and each of its
Consolidated Subsidiaries unconditionally and irrevocably guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Canadian Obligations of each other Canadian Loan Party,
including, without limitation, Canadian Loan Party, now or hereafter existing
under any Purchase Document, pursuant to the terms and conditions of the
Canadian Guaranty.
* * * * *
87
SIGNATURE PAGE TO
NOTE AND EQUITY PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
US LOAN PARTIES:
CORRPRO COMPANIES, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
Chief Financial Officer
CCFC, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
Treasurer
OCEAN CITY RESEARCH CORP.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
Treasurer
CORRPRO INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx
Treasurer
S-1
CANADIAN LOAN PARTIES:
COMMONWEALTH XXXXXX HOLDINGS, LTD.
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxxx
President
CORRPRO CANADA, INC.
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxxx
President
XXXXX INSPECTIONS LTD.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxx
President
S-2
AGENT:
AMERICAN CAPITAL FINANCIAL SERVICES, INC.
By: /s/ J XxxXxxxxx
----------------------------------------
Xxxxxxx X. XxxXxxxxx
Vice President
PURCHASERS:
AMERICAN CAPITAL STRATEGIES, LTD.
By: /s/ J XxxXxxxxx
----------------------------------------
Xxxxxxx X. XxxXxxxxx
Vice President
S-3
ANNEXES
Annex A Purchaser and Payment Information
Annex B Financial Covenant Amounts
Annex C Adjusted EBITDA
SCHEDULES
"Permitted Depositions" (Section 1.1(a))
"Property Survey Schedule" (Section 4.1(d))
"Organizational Schedule" (Section 5.1(a))
"Financial Statements Exception Schedule" (Section 5.1(c))
"Litigation Schedule" (Section 5.1(j))
"Compliance Schedule" (Section 5.1(k))
"Environmental Schedule" (Section 5.1(l))
"Properties Schedule" (Section 5.1(q))
"Intellectual Property Schedule" (Section 5.1(r))
"Canadian Pension Plan Schedule" (Section 5.1(bb))
"Subsidiary Dissolution Schedule" (Section 7.1(v))
"Permitted Encumbrances Schedule" (Section 7.2(b)(iv))
EXHIBITS
EXHIBIT A-1 Form of US Note
EXHIBIT A-2 Form of Canadian Note
EXHIBIT B Form of Warrant
EXHIBIT C Form of Security Agreement
EXHIBIT D Form of IP Acknowledgement
EXHIBIT E Form of Mortgage
EXHIBIT F Form of Compliance Certificate
ANNEX A
INFORMATION RELATING TO PURCHASERS
Name and Address of Purchasers
AMERICAN CAPITAL STRATEGIES, LTD. Pro Rata Amount of US Notes:
2 Bethesda Metro Center $10,000,000
14th Floor Pro Rata Amount of Canadian Notes:
Xxxxxxxx, XX 00000 $4,000,000
All Notes issued to ACAS will be assigned to:
ACS FUNDING TRUST I
c/o AMERICAN CAPITAL STRATEGIES, LTD.,
as Servicer
0 Xxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
(1) All payments:
If by wire:
Beneficiary's Bank: Xxxxx Fargo
ABA #: 000000000
Account Name: ACS Funding Trust I
Account # : 4000037515
If by mail:
ACS Funding Trust I
NW 7941
X.X. Xxx 0000
Xxxxxxxxxxx XX 00000-0000
If by overnight parcel service (e.g., FedEx, UPS, etc):
ACS Funding Trust I #7941
C/O REGULUS
0000 Xxxxxx Xxxx
Xxxxx 000
Xx. Xxxx XX 00000
with sufficient information to identify the source and
application of such funds.
(2) All notices of payments and written confirmations of such wire
transfers:
American Capital Strategies, Ltd., as Servicer
0 Xxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Comptroller Officer
Telecopier: (000) 000-0000
(3) All other communications:
American Capital Strategies, Ltd., as Servicer
0 Xxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Compliance Officer
Telecopier: (000) 000-0000
and to:
American Capital Strategies, Ltd.
0000 Xxxx, Xxxxx 0000 Xxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. XxxXxxxxx
Telecopier: (000) 000-0000
ANNEX B
FINANCIAL COVENANT AMOUNTS
EBITDA
FISCAL MONTH ENDED: EBITDA
March 31, 2003 ($174,000)
April 30, 2003 $1,071,000
May 31, 2003 $1,287,000
June 30, 2003 $1,495,000
July 31, 2003 $1,458,000
August 31, 2003 $1,360,000
September 30, 2003 $1,316,000
October 31, 2003 $1,757,000
November 30, 2003 $1,002,000
December 31, 2003 $935,000
January 31, 2004 ($8,000)
February 29, 2004 ($189,000)
CAPITAL EXPENDITURES
FISCAL MONTH ENDED: CAPITAL EXPENDITURES
March 31, 2003 $ 38,431
April 30, 2003 $110,584
May 31, 2003 $ 3,313
June 30, 2003 $ 42,453
July 31, 2003 $ 68,462
August 31, 2003 $ 59,295
September 30, 2003 $ 6,574
October 31, 2003 $115,422
November 30, 2003 $ 24,866
December 31, 2003 $ 58,367
January 31, 2004 $ 1,267
February 29, 2004 $125,573
TOTAL DEBT SERVICE
FISCAL MONTH ENDED: PRINCIPAL INTEREST TOTAL DEBT SERVICE
April 30, 2003 $208,000 $335,167 $543,167
May 31, 2003 $208,000 $335,167 $543,167
June 30, 2003 $208,000 $335,167 $543,167
July 31, 2003 $208,000 $335,167 $543,167
August 31, 2003 $208,000 $335,167 $543,167
September 30, 2003 $208,000 $335,167 $543,167
October 31, 2003 $208,000 $335,167 $543,167
November 30, 2003 $208,000 $335,167 $543,167
December 31, 2003 $208,000 $335,167 $543,167
January 31, 2004 $208,000 $335,167 $543,167
February 29, 2004 $208,000 $335,167 $543,167
March 31, 2004 $208,000 $335,167 $543,167
ANNEX C
Adjusted EBITDA
Corrpro Companies, Inc. and its Consolidated Subsidiaries
Twelve Months Ended February 29, 2004
(U.S. Dollars in Thousands)
Operating Income $ 6,702
Depreciation & Amortization $ 1,858
EBITDA $ 8,560
MANAGEMENT ADJUSTMENTS
Alix Partners $ 193
Xxxx Xxxxx $ 000
Xxxxxxxxxx Professional Fees $ 82
Xxxxxxxxx Xxxxxx $ 00
Xxxx Xxxxxx Xxxxx $ 485
Xxxx Xxxxxxx & Xxxxxx $ 47
Xxxxxx Xxxxxx & White $ 6
Shareholder Lawsuit $ 000
Xxxxxxxxx Loss $ 97
Venezuela Operating Losses $ 36
UK Loss on WW Gulf $ (35)
UK CTA $ 187
Unfunded UK Pension Accrual $ 1,355
UK Divestiture Costs $ 54
Accrued Litigation Baltimore Aquarium $ 119
Expense Accrual For Louisiana Lawsuit $ 50
Reverse Litigation Reserve for Michigan Lawsuit $ (225)
Lack of Accured Pension for CEO $ 33
Directors Fees - Special Committee Only $ 114
Capitalized Inventory Variance $ 17
Inventory Shrink Reserve $ 143
Fringe Expense - Government Contracts $ 63
Adjusted EBITDA at February 29, 2004 $ 12,522
