Exhibit 10.2
SENIOR SUBORDINATED NOTE, PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 30, 1998
AMONG
XXXXXXXXX SIGN COMPANY
CONTINENTAL ILLINOIS VENTURE CORPORATION,
MIG PARTNERS VIII
AND
THE MANAGEMENT PURCHASERS LISTED HEREIN
TABLE OF CONTENTS
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Section 1. Authorization and Closing. . . . . . . . . . . . . . . . . . . . . . . 1
1A. Authorization of Notes, Warrants and Series A Preferred. . . . . . 1
1B. Purchase and Sale of the Notes, the Warrants and Series A
Preferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1C. The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1D. Closing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Conditions of the Purchasers' Obligation at the Closing. . . . . . . . 2
2A. Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2B. Share Purchase Option Transaction. . . . . . . . . . . . . . . . . 2
2C. Stockholders Agreement and Registration Agreement. . . . . . . . . . 3
2D. Representations and Warranties; Covenants. . . . . . . . . . . . . . 3
2E. Certificate of Designation . . . . . . . . . . . . . . . . . . . . . 3
2F. Delivery of Notes, Warrants and Series A Preferred . . . . . . . . . 3
2G. Resignation of Directors . . . . . . . . . . . . . . . . . . . . . . 3
2H. Termination of Registration Rights Agreement . . . . . . . . . . . . 4
2I. Securities Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2J. No Pending Action. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2K. No Materially Adverse Effect . . . . . . . . . . . . . . . . . . . . 4
2L. Indebtedness; No Default.. . . . . . . . . . . . . . . . . . . . . . 4
2M. Environmental Reports. . . . . . . . . . . . . . . . . . . . . . . . 4
2N. Liquidity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2O. Opinion of Counsel.. . . . . . . . . . . . . . . . . . . . . . . . . 4
2P. Closing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2Q. The Purchasers' Fees and Expenses. . . . . . . . . . . . . . . . . . 6
2R. Total Transaction Fees . . . . . . . . . . . . . . . . . . . . . . . 6
2S. Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2T. Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2U. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 7
3A. Business Maintenance . . . . . . . . . . . . . . . . . . . . . . . . 7
3B. Financial Statements and Other Information . . . . . . . . . . . . . 8
3C. Inspection of Property . . . . . . . . . . . . . . . . . . . . . . . 10
3D. Compliance with Certain Agreements . . . . . . . . . . . . . . . . . 10
3E. Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . 11
3F. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . 11
3G. ERISA Notices and Requests . . . . . . . . . . . . . . . . . . . . . 11
3H. SBIC Regulatory Provisions . . . . . . . . . . . . . . . . . . . . . 12
3I. Current Public Information . . . . . . . . . . . . . . . . . . . . . 14
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Section 4. Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4A. Financial Covenants When Notes Outstanding . . . . . . . . . . . . . 14
4B. Financial Covenants When Series A Preferred Outstanding. . . . . . . 16
Section 5. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5A. Acquisition; Consolidation; Reorganization . . . . . . . . . . . . . 18
5B. Sale, Lease or Transfer of Assets. . . . . . . . . . . . . . . . . . 19
5C. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5D. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5E. Limitations on Indebtedness. . . . . . . . . . . . . . . . . . . . . 20
5F. Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . 20
5G. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5H. Amendment to the Company's Articles of Incorporation and Bylaws;
Stock Splits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5I. Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . 20
5J. Affiliated Transactions. . . . . . . . . . . . . . . . . . . . . . . 21
5K. Restrictive Agreements; Conflicting Agreements . . . . . . . . . . . 21
5L. Public Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . 21
5M. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5N. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5O. Amendment of Indebtedness. . . . . . . . . . . . . . . . . . . . . . 21
5P. Equity Issuances . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5Q. ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6. Representations and Warranties of the Company. . . . . . . . . . . . . 23
6A. Organization and Corporate Power . . . . . . . . . . . . . . . . . . 23
6B. Capital Stock and Related Matters. . . . . . . . . . . . . . . . . . 23
6C. Subsidiaries; Partnerships . . . . . . . . . . . . . . . . . . . . . 24
6D. Authorization; No Breach . . . . . . . . . . . . . . . . . . . . . . 24
6E. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 24
6F. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . 25
6G. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . 25
6H. Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6I. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . 26
6J. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 26
6K. Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6L. Contracts and Commitments. . . . . . . . . . . . . . . . . . . . . . 26
6M. Trademarks, Patents. . . . . . . . . . . . . . . . . . . . . . . . . 28
6N. Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6O. No Forfeiture. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6P. Small Business Matters . . . . . . . . . . . . . . . . . . . . . . . 29
6Q. Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6R. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6S. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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6T. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . 30
6U. Affiliated Transactions. . . . . . . . . . . . . . . . . . . . . . . 30
6V. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6W. Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6X. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6Y. Environmental and Safety Matters . . . . . . . . . . . . . . . . . . 32
6Z. Real Property Holding Corporation Status . . . . . . . . . . . . . . 33
6AA. Certain Government Regulations . . . . . . . . . . . . . . . . . . . 33
6BB. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7. Representations and Warranties of BA Purchasers. . . . . . . . . . . . 33
7A. Due Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . 34
7B. Consents and Approvals.. . . . . . . . . . . . . . . . . . . . . . . 34
Section 8. Representations and Warranties and Covenants of all Purchasers.. . . . 34
8A. Investment Intent. . . . . . . . . . . . . . . . . . . . . . . . . . 34
8B. Access: Sophistication: etc... . . . . . . . . . . . . . . . . . . . 34
Section 9. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9A. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9B. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10A. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . 47
10B. Default Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . 50
10C. Remedy if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . 50
10D. Remedy if Other Event of Default . . . . . . . . . . . . . . . . . . 50
10E. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10F. Right of Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11A. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11B. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11C. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11D. Usury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11E. Consent to Amendments. . . . . . . . . . . . . . . . . . . . . . . . 53
11F. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 53
11G. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11H. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11I. Descriptive Headings; Interpretation . . . . . . . . . . . . . . . . 54
11J. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11K. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11L. Survival of Agreement; Indemnities . . . . . . . . . . . . . . . . . 55
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11M. Taxes and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11N. Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . 56
11O. Waiver of Right to Jury Trial. . . . . . . . . . . . . . . . . . . . 57
11P. Consideration for the Warrants and Warrant Stock . . . . . . . . . . 57
11Q. No Strict Construction . . . . . . . . . . . . . . . . . . . . . . . 57
11R. Complete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 58
11S. Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11T. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . 58
11U. Confidentiality of Information . . . . . . . . . . . . . . . . . . . 58
Schedules and Exhibits:
List of Exhibits
List of Disclosure Schedules
Schedule of Purchasers
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SENIOR SUBORDINATED NOTE, PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT
THIS AGREEMENT (the "AGREEMENT") is made as of September 30,
1998 by and among Continental Illinois Venture Corporation, a Delaware
corporation ("CIVC"), MIG Partners VIII, a Delaware partnership ("MIG"),
Xxxxxxxxx Sign Company, a Texas corporation (the "COMPANY") and certain
members of the Company's management listed on the signature pages hereto as
the "Management Purchasers" (the "MANAGEMENT PURCHASERS"). CIVC and MIG are
referred to herein collectively as the "BA PURCHASERS" and each is referred
to herein individually as a "BA PURCHASER." The BA Purchasers and the
Management Purchasers are referred to herein collectively as the "PURCHASERS"
and each is referred to herein individually as a "PURCHASER." Except as
otherwise indicated herein, capitalized terms used herein are defined in
SECTION 9 hereof.
The Company is initiating a plan to recapitalize its existing
debt and equity structure through a series of transactions including, but not
limited to, refinancing of funded debt, repurchase of stock from certain
shareholders, issuance of capital stock and restructuring certain rights held
by certain stockholders of the Company (the "RECAPITALIZATION"). The
Purchasers are entering into this Agreement to provide financing for the
Company's Recapitalization.
In connection with the Recapitalization, the Company is
entering into a Second Amended and Restated Revolving Credit and Term
Agreement, dated as of the date hereof (the "LOAN AGREEMENT"), with Comerica
Bank-Texas, a Texas banking association (the "BANK"), pursuant to which the
Bank has agreed to make available to the Company a revolving credit facility
of $17,000,000 (the "REVOLVER") and a term loan facility in the amount of
$2,000,000 (the "TERM A LOAN"), a term loan facility in the amount of
$1,000,000 (the "TERM B LOAN") and a term loan facility in the amount of
$3,500,000 (the "TERM C LOAN"), and together with the Term A Loan and Term B
Loan, the "TERM LOANS").
In consideration of the mutual covenants and promises contained
herein and for the good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Authorization and Closing.
1A. AUTHORIZATION OF NOTES, WARRANTS AND SERIES A PREFERRED.
The Company shall authorize the issuance and sale to the Purchasers of (i)
12.00% Senior Subordinated Notes, in the form attached hereto as EXHIBIT A
(any such note, a "NOTE" and all notes issued hereunder or in respect of any
Note, collectively, the "NOTES"), in the aggregate principal amount of
$4,000,000, (ii) stock purchase warrants, in the form attached hereto as
EXHIBIT B (any such warrant, a "WARRANT" and all warrants issued pursuant to
this CLAUSE (ii), or in respect of any such Warrant, collectively, the
"WARRANTS") initially exercisable to 1,197,194 shares of Common Stock and
(iii) 52,500 shares of the Company's Series A Preferred Stock, par value
$0.01 per share (the
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"SERIES A PREFERRED"), having the rights and preferences set forth in EXHIBIT
C attached hereto. The Notes, Series A Preferred, the Warrants and Warrant
Stock sometimes are referred to herein collectively as the "SECURITIES."
1B. PURCHASE AND SALE OF THE NOTES, THE WARRANTS AND SERIES
A PREFERRED. At the Closing (as defined in SECTION 1C below) the Company
shall issue to each of the Purchasers and, subject to the terms and
conditions set forth herein, each of the Purchasers shall severally and
independently (and not jointly) purchase from the Company, (i) Notes in the
aggregate principal amount set forth opposite such Purchaser's name on the
attached SCHEDULE OF PURCHASERS, in each case, at a purchase price equal to
the price set forth opposite such Purchaser's name on the attached SCHEDULE
OF PURCHASERS, (ii) Warrants initially exercisable to acquire the aggregate
number of shares of Common Stock set forth opposite such Purchaser's name on
the attached SCHEDULE OF PURCHASERS, in each case, at a purchase price equal
to the price set forth opposite such Purchaser's name on the attached
SCHEDULE OF PURCHASERS, and (iii) the number of shares of Series A Preferred
set forth opposite such Purchaser's name on the attached SCHEDULE OF
PURCHASERS, in each case, at a purchase price equal to the price set forth
opposite such Purchaser's name on the attached SCHEDULE OF PURCHASERS.
1C. THE CLOSING. The sale of the Notes, the Series A
Preferred and the Warrants to each Purchaser hereunder shall constitute
separate sales hereunder. The closing of the purchase and sale of the
Securities (the "CLOSING") shall take place on September 30, 1998 (the
"CLOSING DATE") at the offices of Xxxxxxxx & Xxxxx or at such other place or
on such other date as may be mutually agreeable to the Company and the
Purchasers. At the Closing, the Company shall deliver to each of the
Purchasers instruments and certificates for the Notes, Series A Preferred and
the Warrants to be purchased by such Purchaser, issued to such Purchaser,
registered in such Purchaser's or its nominee's name, upon payment of the
purchase price therefor by wire transfer of immediately available funds, to
accounts designated by the Company in the amount set forth opposite such
Purchaser's name on the attached SCHEDULE OF PURCHASERS.
1D. CLOSING FEES. On the Closing Date, the Company shall
pay to the BA Purchasers for their own account a closing fee (the "CLOSING
FEE") in an aggregate amount of $200,000, by wire transfer of immediately
available funds to accounts specified by the BA Purchasers in the respective
amounts set forth opposite each BA Purchaser's name on the attached SCHEDULE
OF PURCHASERS.
Section 2. CONDITIONS OF THE PURCHASERS' OBLIGATION AT THE
CLOSING. The obligation of each Purchaser to purchase and pay for Securities
issued hereunder at the Closing is subject to the satisfaction as of the
Closing of the following conditions to such Purchaser's satisfaction in its
sole discretion:
2A. LOAN AGREEMENT. The Loan Agreement and all other
documents and agreements contemplated thereby shall be in form and substance
satisfactory to the Purchasers and their counsel, without amendment or
modification thereof, and shall be in full force and effect, all conditions
to the obligations of the Banks to make loans thereunder shall have been
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satisfied, and the Banks shall have agreed to advance to the Company
immediately following the Closing or simultaneously therewith all amounts
under the Term Loans and up to $17,000,000 under the Revolver (excluding the
aggregate amount of unused availability thereunder).
2B. SHARE PURCHASE OPTION TRANSACTION. (i) Each of the
Company and Xxxxx Xxxxxxxx shall have entered into a share purchase option
agreement in the form of EXHIBIT D attached hereto (the "SHARE PURCHASE
OPTION AGREEMENT") with Geneve Securities Holding Corp. ("GSH"), Southern
Investors Corp. ("SIC"), Southern Mortgage Holding Corporation ("SMHC"),
Geneve Securities Portfolio Corp. ("GENEVE") and First International
Reinsurance Company, Inc. ("FIRC") and such Share Purchase Option Agreement
shall not have been amended or modified and shall be in full force and effect
as of the Closing, (ii) the Company and Xxxxx Xxxxxxxx shall have entered in
a share purchase agreement in the form of EXHIBIT E attached hereto (the
"XXXXXXXX PURCHASE AGREEMENT") and such Xxxxxxxx Purchase Agreement shall not
have been amended or modified and shall be in full force and effect as of the
Closing, and (iii) the Company and Xxxxxxxx shall have entered into the side
agreement in the form of EXHIBIT F attached hereto (the "XXXXXXXX SIDE
AGREEMENT") and such Xxxxxxxx Side Agreement shall not have been amended or
modified and shall be in full force and effect as of the Closing.
2C. STOCKHOLDERS AGREEMENT AND REGISTRATION AGREEMENT. The
Stockholders Agreement in the form of EXHIBIT G hereto and the Registration
Agreement in the form of EXHIBIT H hereto shall have been duly authorized,
executed and delivered by each other party thereto and shall be in full force
and effect as of the Closing.
2D. REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties contained in SECTION 6 hereof shall be true
and correct at and as of the Closing as though then made, the Company shall
have performed prior to the Closing all of the covenants required to be
performed by it hereunder and under the other documents, agreements and
instruments executed in connection herewith that are to be complied with or
performed by the Company prior to the Closing.
2E. CERTIFICATE OF DESIGNATION. The Company shall have duly
adopted, executed and filed with the Secretary of State of Texas a
Certificate of Designation establishing the terms and the relative rights and
preferences of each of (i) the Series A Preferred in the form set forth in
EXHIBIT C attached hereto (the "SERIES A CERTIFICATE OF DESIGNATION"), (ii)
the Series B Preferred in the form set forth on EXHIBIT I attached hereto
(the "SERIES B CERTIFICATE OF DESIGNATION"), and (iii) the Series C Preferred
in the form set forth in EXHIBIT J attached hereto (the "SERIES C CERTIFICATE
OF DESIGNATION," and together with the Series A Certificate of Designation
and the Series B Certificate of Designation, the "CERTIFICATES OF
DESIGNATION"), and the Company shall not have adopted or filed any other
document designating terms, relative rights or preferences of its preferred
stock. The Certificates of Designation shall be in full force and effect as
of the Closing under the laws of Texas and shall not have been amended or
modified.
2F. DELIVERY OF NOTES, WARRANTS AND SERIES A PREFERRED. The
Company shall have simultaneously sold to each Purchaser the Notes, Series A
Preferred and the Warrants to be
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purchased by such Purchaser hereunder at the Closing and shall have received
payment therefor in full.
2G. RESIGNATION OF DIRECTORS. The Company shall have
received resignations effective as of the Closing of Xxxxx Xxxxx and Xxx X.X.
Xxxxx as members of the Company's board of directors (the "BOARD"), and
Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx shall have been elected to the Board.
2H. TERMINATION OF REGISTRATION RIGHTS AGREEMENT. The
Registration Rights Agreement, dated as of December 1, 1996 (the "RIGHTS
AGREEMENT"), among the Company, GSH, SIC, SMHC, Geneve, and FIRC shall have
been terminated without any liability to the Company.
2I. SECURITIES LAW. The Company shall have made all filings
under any applicable Securities Laws necessary to consummate, in compliance
with such Laws, all issuances of the Notes, Series A Preferred, and the
Warrants and other securities pursuant to this Agreement, the Share Purchase
Option Agreements, or as contemplated hereby or thereby and the issuance of
the Common Stock upon exercise of the Warrants.
2J. NO PENDING ACTION. No action, suit, proceeding or
governmental investigation shall be pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
stockholders which (a) if adversely determined could have a Materially
Adverse Effect or (b) seeks to or could restrain, prevent or, in the judgment
of the Purchasers, impose any adverse condition upon the financing
contemplated herein.
2K. NO MATERIALLY ADVERSE EFFECT. Since December 31, 1997,
there shall not have occurred a Materially Adverse Effect.
2L. INDEBTEDNESS; NO DEFAULT. The Company shall be free
from all Indebtedness, except for the Senior Indebtedness and the Notes
issued hereby. The consummation of the transactions contemplated by this
Agreement will not result in, nor shall there exist any Event of Default or
event which, with the giving of notice or lapse of time or both, would be an
Event of Default or breach under or with respect to any Indebtedness of the
Company, after giving effect to the transactions contemplated by this
Agreement, the Share Purchase Option Agreements or the Loan Agreement, and
there shall not exist any failure by the Company to observe or perform in any
material respect any covenant, condition or agreement to be observed or
performed pursuant to the terms of any of the foregoing.
2M. ENVIRONMENTAL REPORTS. The environmental reviews and
audits delivered by the Company to the Purchasers shall be in form, scope and
substance satisfactory to the Purchasers with respect to all of the real
estate and businesses of the Company.
2N. LIQUIDITY. After giving effect to the Recapitalization,
the receipt by the Company of proceeds of the issuance of the Securities
hereunder and payment of all estimated legal, investment banking, accounting
and other fees related to the financing contemplated herein, the Company
shall have unused availability under the Loan Agreement of at least
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$1,500,000.
2O. OPINION OF COUNSEL. The Purchasers shall have received
from Xxxxxxx Xxxxxx L.L.P., counsel for the Company, opinions with respect to
the matters set forth in EXHIBIT K attached hereto, which shall be addressed
to the Purchasers, dated the date of the Closing and in form and substance
reasonably satisfactory to the Purchasers and their counsel.
2P. CLOSING DOCUMENTS. The Company shall have delivered to
the Purchasers all of the following documents:
(a) an Officer's Certificate of the Company, dated the
date of the Closing, stating that (i) the conditions specified in SECTION
2 have been fully satisfied; (ii) since December 31, 1997 there has been
no Materially Adverse Effect or event, development, circumstance or other
matter which may impose any materially adverse condition upon the
consummation of the financing contemplated hereby and (iii) such Person
has delivered to the Purchasers at least one day prior to the Closing all
environmental reviews and audits with respect to all of the real estate
and businesses of such entity;
(b) copies of the resolutions duly adopted by the board
of directors of the Company authorizing the execution, delivery and
performance of this Agreement, the issuance of the Securities, the Share
Purchase Option Agreement, the Xxxxxxxx Purchase Agreement, the Xxxxxxxx
Side Letter, the Stockholders Agreement, the Registration Agreement and
each of the other agreements contemplated hereby or thereby to which the
Company is a party, the reservation of 1,197,194 shares of Common Stock
for issuance upon exercise of the Warrants, and the filing of the
Certificates of Designation contemplated by SECTION 2E above accompanied
by an Officer's Certificate of the Company certifying that the same are
in full force and effect without modification or amendment, accompanied
by a certification of the incumbency of each individual executing any
agreement or document contemplated hereby in the name of the Company;
(c) copies of the Articles of Incorporation and bylaws
of the Company as in effect as of the Closing, certified by an officer of
the Company together with a certificate of status or similar evidence
from the State of Texas and each jurisdiction in which the Company is
then qualified to do business as a foreign corporation or in which the
ownership of its assets or the conduct of its business would reasonably
require it to so qualify, in each case dated a recent date prior to the
Closing Date;
(d) copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the
transactions contemplated hereunder (including all environmental
disclosures, blue sky filings and waivers of preemptive rights and rights
of first refusal);
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(e) copies of the Loan Agreement and the Share Purchase
Option Agreements, each as in effect at the Closing, in each case
certified by an officer of the Company;
(f) the Stockholders Agreement and the Registration
Agreement, executed by the Company;
(g) evidence satisfactory to the Purchasers of the
payment in full of all Indebtedness and related obligations owing or owed
by the Company (other than pursuant to the Loan Agreement and the Notes),
the entire amount of which will be paid contemporaneously with the
Closing;
(h) evidence of insurance coverage regarding the Company
reasonably satisfactory in terms, amount and scope and provided by
insurers all reasonably satisfactory to the Purchasers;
(i) the audited consolidated balance sheet of the
Company as of December 31, 1997 and December 31, 1996 and the related
consolidated and consolidating statements of earnings and cash flows as
of and for the Fiscal Years then ended;
(j) for each Purchaser which is an SBIC, duly completed
and executed XXX Xxxxx 000, 000, xxx 0000 (Xxxx X) together with a
five-year business plan showing the Company's financial projections
(including balance sheets and income and cash flows statements) for
each five-year period and a written statement from the Company regarding
its intended use of the proceeds from the financing;
(k) the STOCKHOLDERS SCHEDULE, which shall include a
list of each of the following after giving effect to the transactions
contemplated by this Agreement: (a) the name of each of the Company's
directors, (b) the name and title of each of the Company's officers,
(c) a list from the Company's transfer agent setting forth the name of
each record holder of the Company's Common Stock and the number of shares
held by such holder as of the record date of the May 23, 1998
shareholders meeting and (d) the name of each of the Company's other
stockholders setting forth the number and class of shares held; and
(l) such other documents relating to the transactions
contemplated by this Agreement as either the BA Purchasers or Xxxxxxxx &
Xxxxx, as special counsel to the Purchasers, may reasonably request.
2Q. THE PURCHASERS' FEES AND EXPENSES. The Company shall
have paid the Closing Fee to the BA Purchasers as contemplated by SECTION 1D
above and shall have reimbursed them for expenses incurred in connection with
the transactions contemplated herein, as contemplated by SECTION 11A below.
2R. TOTAL TRANSACTION FEES. The total amount of transaction
fees and expenses
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payable by the Company in connection with the transactions contemplated
hereby shall in no event exceed the fees set forth on the TRANSACTION FEES
SCHEDULE attached hereto.
2S. LEGAL INVESTMENT. Each Purchaser shall be satisfied
that this Agreement and the Securities shall be in full compliance with all
Laws, and all necessary governmental and third-party approvals will have been
obtained which are applicable to the transactions contemplated hereby. The
issuance by the Company and the purchase by the Purchasers, of the Securities
shall not be prohibited by any applicable Laws and shall not adversely impact
or subject the Company or any BA Purchaser to any penalty or liability
pursuant to any applicable Laws.
2T. PROCEEDINGS. All corporate and other proceedings taken
or required to be taken by the Company in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto shall be satisfactory in form and substance to the
Purchasers and Xxxxxxxx & Xxxxx, as special counsel to the BA Purchasers.
2U. WAIVER. Any condition specified in this SECTION 2 may
be waived by the Purchasers if consented to by the Purchasers; PROVIDED that
no such waiver shall be effective against the Purchasers unless it is set
forth in a writing executed by each Purchaser.
Section 3. AFFIRMATIVE COVENANTS. For so long as any Notes or
Series A Preferred are outstanding, unless otherwise indicated in this
SECTION 3, the Company will comply at all times with the following
affirmative covenants and will cause each of its Subsidiaries to comply at
all times with the following affirmative covenants:
3A. BUSINESS MAINTENANCE.
(a) at all times cause to be done all things necessary
to maintain, preserve and renew its corporate existence and good standing
in the jurisdiction of its incorporation, to qualify and to remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is required, except where the failure to be so qualified
would not have a Materially Adverse Effect, and use its reasonable
efforts to maintain, preserve and renew all material contracts, licenses,
authorizations and permits necessary to the conduct of its businesses;
(b) maintain and keep its properties that are used in,
or that are useful to and material to, its businesses in good repair,
working order and condition, and from time to time make all such repairs,
renewals and replacements, so that its businesses may be properly and
advantageously conducted in all respects at all times in a manner
consistent with the Company's past practices;
(c) continue in force insurance policies (including
self-insurance retention plans consistent with past practices) with
financially sound and reputable insurance companies covering risks of
such types and covering casualties, risks and
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contingencies of such types and in amounts not less than as are
customary for prudent corporations of similar size engaged in similar
lines of business under similar circumstances;
(d) pay and discharge when payable all Taxes,
assessments and governmental charges imposed upon its properties or upon
the income or profits therefrom (in each case before the same becomes
delinquent and before penalties accrue thereon) and all material claims
for labor, materials or supplies that if unpaid might by law become a
lien upon any of its property, unless and to the extent that the same are
being contested in good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with GAAP) have been established on
its books with respect thereto;
(e) comply with all other obligations that it incurs
pursuant to any material contract or agreement, whether oral or written,
express or implied, as such obligations become due, unless and to the
extent that the same are being contested in good faith and by appropriate
proceedings and adequate reserves (as determined in accordance with GAAP)
have been established on its books with respect thereto;
(f) comply in all material respects with all applicable
Laws; and
(g) maintain true and proper books of record and account
that fairly present its financial condition and results of operations and
make provisions on its financial statements for all such proper reserves
as in each case are required in accordance with GAAP.
3B. FINANCIAL STATEMENTS AND OTHER INFORMATION. Deliver to
a representative or representatives designated by the Majority Holders (or,
in the absence of any such designation, the BA Purchasers):
(a) as soon as available, but in any event within 30
days after the end of each fiscal month (except for months which end a
fiscal quarter, in which case within 45 days of such quarter end and
except for months which end the fiscal year, in which case within 90 days
of such year end), (i) a copy of the unaudited consolidated and
consolidating balance sheets of the Company and its Subsidiaries as of
the end of such month and the related consolidated and consolidating
statements of earnings, retained earnings and cash flows for such month
and for the portion of the Fiscal Year ending as of the end of such
month, all in reasonable detail and prepared in accordance with GAAP
(subject to normal year-end adjustments and the exclusion of such
footnotes as may be required in accordance with GAAP) accompanied in each
case by comparisons to the corresponding periods in the preceding Fiscal
Year (other than for the Fiscal Year ending December 31, 1998) and (ii)
so long as any Notes or Series A Preferred are outstanding, an Officer's
Certificate executed by the Chief Financial Officer of the Company
certifying
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that to such officer's knowledge no Default or Event of Default, or
default or event of default with respect to the Loan Agreement or any
other material Contract to which the Company or any of its Subsidiaries
is subject has occurred during the period in question or is continuing
or, if a Default or Event of Default or any such default or event of
default under the Loan Agreement has so occurred or is continuing, a
statement as to the nature thereof and any action which has been taken
or is proposed to be taken with respect thereto;
(b) as soon as available, but in any event within 90
days after the close of each Fiscal Year, a copy of the audited
consolidated and consolidating financial statements of the Company and
its Subsidiaries, consisting of an audited consolidated and consolidating
balance sheet as at the end of such Fiscal Year and audited consolidated
and consolidating statements of earnings, retained earnings and cash
flows for such Fiscal Year, setting forth in comparative form in each
case the audited consolidated and consolidating figures for the previous
Fiscal Year, which financial statements shall be prepared in accordance
with GAAP, certified without qualification by a nationally recognized
firm of independent certified public accountants;
(c) simultaneously with the delivery of the financial
statements referred to in SECTION 3B(a) prepared with respect to or as of
the end of any month included in any Fiscal Year, an Officer's
Certificate executed by the Chief Financial Officer of the Company (a)
setting forth in reasonable detail, and certifying to such officer's
knowledge the accuracy of, computations demonstrating compliance with the
covenants set forth in SECTION 4 or SECTION 5E, and (b) certifying that
all such financial statements are complete and correct in all material
respects and present fairly in accordance with GAAP (subject to normal
year-end adjustments and the exclusion of such footnotes as may be
required in accordance with GAAP) the consolidated and consolidating
financial position, the consolidated and consolidating results of
operations and cash flows and changes in stockholders' equity of the
Company and its Subsidiaries as of the end of such period and for the
period then ended;
(d) as soon as practicable, but in any event within (a)
two Business Days after the Company becomes aware of the existence of any
Event of Default or any Default, or default or event of default under the
Loan Agreement, or any development (including litigation) or other
information which could reasonably be expected to have a Materially
Adverse Effect or (b) two Business Days after the Company receives notice
of the existence of any default or event of default with respect to any
other material agreement to which the Company or any of its Subsidiaries
is subject, telephonic notice specifying the nature of such condition,
event, development or information, including the anticipated effect
thereof, which notice shall be promptly confirmed in writing within two
days, which writing shall set forth the details of such condition, event,
development or information and the action which is proposed to be taken
by the Company and its Subsidiaries with respect thereto;
(e) promptly upon receipt thereof, copies of any reports
submitted to
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the Company or any of its Subsidiaries by its independent auditor in
connection with the examination of the financial statements of the
Company or any of its Subsidiaries made by such auditor, including
reports arising out of any separate audit or other accounting or
financial review of the Company or any Subsidiary of the Company;
(f) promptly after the commencement thereof, notice of
all actions, suits, and proceedings before any Government Entity
affecting the Company or any of its Subsidiaries which the Company
believes, if adversely determined, could have a Materially Adverse
Effect;
(g) promptly after the commencement thereof or promptly
after the Company or any Subsidiary of the Company becomes aware of the
commencement or threat thereof, notice of any Forfeiture Proceeding;
(h) promptly after the sending or filing thereof, copies
of all proxy statements, financial statements and reports which the
Company sends to its stockholders, and copies of all regular, periodic or
special reports, and all registration statements, which the Company files
with the Securities and Exchange Commission or any other securities
exchange or securities market;
(i) promptly after the furnishing thereof, copies of any
statement or report furnished to any holder of Senior Indebtedness
pursuant to the terms of the Loan Agreement (or any refining of or
substitution thereof), and not otherwise required to be furnished to the
Majority Holders pursuant to any other paragraph of this SECTION 3B;
(j) promptly after the receipt thereof, a copy of any
notice, summons, or citation concerning any liabilities or investigatory,
remedial or corrective obligations arising under Environmental and Safety
Requirements and any subsequent material correspondence or other document
relating thereto which could have a Materially Adverse Effect; and
(k) such other information respecting the Company's or
its Subsidiaries' business or financial condition as any Majority Holder
may, from time to time, request in writing.
Each of the financial statements referred to in SECTIONS 3B(a) or 3B(b)
(including the notes thereto, if any) shall be accurate and complete in all
material respects, consistent with the books and records of the Company and
its Subsidiaries (which, in turn, are accurate and complete in all material
respects), present fairly the consolidated financial position, results of
operations and cash flows of the Company and its Subsidiaries, and prepared
in accordance with GAAP, consistently applied, as of the dates and for the
periods set forth therein, subject in the case of the unaudited financial
statements to the lack of footnote disclosure and changes resulting from
normal year-end audit adjustments (none of which would, alone or in the
aggregate, have a Materially Adverse Effect), and except as disclosed on the
FINANCIAL STATEMENTS SCHEDULE, such financial statements shall be complete
and correct in all material respects and shall be prepared
-15-
on a basis consistent with the basis on which the financial statements
referenced in SECTION 6E were prepared.
3C. INSPECTION OF PROPERTY. Permit any Majority Holder or
any of their representatives, upon reasonable prior notice, during normal
business hours and at such party's expense to (i) visit and inspect any of
the properties of the Company and any of its Subsidiaries, and (ii) examine
the corporate and financial records of the Company and any of its
Subsidiaries and make copies thereof or extracts therefrom.
3D. COMPLIANCE WITH CERTAIN AGREEMENTS. (i) Perform and
observe all of its obligations to each Securityholder and each holder of
Registrable Securities (as defined in the Registration Agreement) pursuant to
this Agreement, the Notes, the Warrants, the Registration Agreement, the
Stockholders Agreement, the Company's Articles of Incorporation and each
other agreement or document executed and delivered to the Purchasers or any
Securityholder pursuant hereto and (ii) subject to the terms and conditions
set forth therein, perform and observe all of its rights and obligations
under the Share Option Purchase Agreement, including without limitation, the
exercise of each of the options to purchase the shares pursuant to the terms
thereof, and perform and observe all of its rights and obligations under the
Xxxxxxxx Purchase Agreement.
3E. PROPRIETARY RIGHTS. Possess and maintain all material
Proprietary Rights necessary to the conduct of its business and own all
right, title and interest in and to, or have a valid license for, all
material Proprietary Rights used by the Company and/or its Subsidiaries, in
the conduct of their respective businesses. None of the Company or any of
its Subsidiaries shall take any action, or fail to take any action, which
would result in the invalidity, abuse, misuse or unenforceability of any of
such material Proprietary Rights.
3F. ENVIRONMENTAL MATTERS. Comply in all material respects
with all Environmental and Safety Requirements and all material permits,
licenses or other authorizations issued thereunder; respond immediately to
any Release or threatened Release of any Hazardous Material at any of the
properties of the Company or any of its Subsidiaries or related to the
operations of the Company or any of its Subsidiaries in a manner which
complies in all material respects with all Environmental and Safety
Requirements and reasonably mitigates any risk to human health or the
environment; and provide such documents or information relating to matters
arising under the Environmental and Safety Requirements as any Purchaser may
reasonably request.
3G. ERISA NOTICES AND REQUESTS.
(a) Provide written notice to the Securityholders as
soon as practicable, and in any event within five Business Days, in the
event that (i) the Company or any of its ERISA Affiliates discovers that
any of them fails to comply in all material respects with any applicable
Laws with respect to any Plan which could reasonably be expected to
result in liability to the Company or any of its ERISA Affiliates in
excess of
-16-
$250,000, (ii) the Company or any member of its Controlled Group
receives notice from the IRS or the DOL that the Company or any ERISA
Affiliate failed to meet the minimum funding requirements of any Plan,
and include therewith a copy of such notice, (iii) the Company or any
member of its Controlled Group gives or is required to give notice to
the PBGC of any "reportable event" (as defined in Title IV of ERISA) in
respect of any Plan or Multiemployer Plan which might constitute grounds
for a partial or complete termination of such Plan or Multiemployer Plan
under Title IV of ERISA, or knows that the plan administrator of any Plan
or Multiemployer Plan has given or is required to give notice of any such
reportable event, (iv) a notice of intent to terminate any Plan is filed
with the PBGC, (v) proceedings are instituted by the PBGC under Section
4042 of ERISA to terminate or to appoint a trustee to administer any Plan
or the Company or any member of its Controlled Group receives a notice
from a Multiemployer Plan that such action has been taken by the PBGC
with respect to such Multiemployer Plan, (vi) the Company or any member
of its Controlled Group withdraws in a complete or partial withdrawal
from any Multiemployer Plan or any Plan which is a "multiple employer
plan" within the meaning of Section 4063 of ERISA, or incurs any
withdrawal liability under Section 4204 of ERISA, (vii) any prohibited
transaction occurs to the knowledge of the Company after due inquiry
involving the assets of any Plan for which the Company could reasonably
be expected to incur liability in excess of $250,000, (viii) the Company
or any member of its Controlled Group receives a notice from a
Multiemployer Plan that such Plan is in reorganization or insolvent
pursuant to Sections 4241 or 4245 of ERISA or that such Plan intends to
terminate or has terminated under Section 4041A of ERISA, (ix) the
Company or any member of its Controlled Group receives a notice from a
Multiemployer Plan of the institution of a proceeding by a fiduciary of a
Multiemployer Plan against the Company or any member of its Controlled
Group to enforce Section 515 of ERISA, (x) the adoption of an amendment
to any Plan of the Company or any member of its Controlled Group that
could result in the termination of such Plan pursuant to Section 4041(e)
of ERISA or require the Company or any member of its Controlled Group to
provide security to such Plan pursuant to Section 401(a)(29) of the IRC
or Section 307 of ERISA, (xi) the Company or any member of its Controlled
Group fails to make a required installment or other payment to any Plan
if such failure would result in the imposition of a Lien upon the
property of the Company pursuant to Section 412(n) of the IRC, or (xii)
the incurrence of any increase in the contingent liability of the Company
or a member of its Controlled Group with respect to any Plan determined
in accordance with GAAP.
(b) Deliver to each Securityholder copies of any request
for a waiver of the funding standards or any extension of the
amortization periods required by Sections 303 and 304 of ERISA or
Section 412 of the IRC with respect to any Plan as soon as practicable
but in any event within five Business Days after the submission of such
request with the DOL and/or IRS in the case of a Plan of the Company and
within five Business Days after the Company knows or has reason to know
that such request has been submitted to the DOL and/or IRS in the case of
a Plan of the Company's ERISA Affiliates.
-17-
3H. SBIC REGULATORY PROVISIONS.
(a) NUMBER OF STOCKHOLDERS. As long as an SBIC Holder holds
in excess of 5% of the outstanding shares of Common Stock on a fully-diluted
basis, the Company shall notify each SBIC Holder (i) at least 15 days prior
to taking any action after which members of the Company's management would
cease to own at least 25% of the outstanding voting securities of the Company
and (ii) of any other action or occurrence after which members of the
Company's management would cease to own at least 25% of the outstanding
voting securities of the Company, as soon as practicable after the Company
becomes aware that such other action or occurrence has occurred or is
proposed to occur.
(b) USE OF PROCEEDS. At such time as any SBIC Holder
reasonably requests, the Company shall deliver to each SBIC Holder a written
statement certified by the Company's president or Chief Financial Officer
describing in reasonable detail the use of the proceeds of the Financing
hereunder by the Company and its Subsidiaries. In addition to any other
rights granted hereunder, the Company shall grant each SBIC Holder and the
SBA access to the Company's books and records upon reasonable notice during
normal business hours for the purposes of (i) verifying the use of such
proceeds from the Financing, (ii) verifying the certifications made by the
Company in SBA Forms 480 and 652 delivered pursuant to SECTION 2O(j) herein
and (iii) determining whether the Company has become "ineligible by reason of
a change in its business activity" as set forth in Section 107.760(b)(i) of
the SBIC Regulations.
(c) REGULATORY VIOLATION.
(1) Upon the occurrence of a Regulatory Violation (as
defined below), in addition to any other rights and remedies to which it
may be entitled (whether under this Agreement or any other agreement, the
Articles of Incorporation or otherwise), such SBIC Holder shall have the
right, to the extent required under Section 107.760(b) of the SBIC
Regulations, to demand the immediate repurchase of all of the outstanding
Securities owned by such SBIC Holder at a price equal to, with respect to
the Notes, the aggregate unpaid principal amount (plus all accrued and
unpaid interest thereon), with respect to the Series A Preferred, the
aggregate liquidation preference thereon (plus all accrued and unpaid
dividends thereon, whether or not declared) and with respect to the
Warrants and the Warrant Stock, the purchase price paid by such SBIC
Holder for such Warrants and Warrant Stock, by delivering written notice
of such demand to the Company. The Company shall pay the purchase price
for such Securities by a cashier's or certified check or by wire transfer
of immediately available funds to such SBIC Holder within 30 days after
the Company's receipt of the demand notice, and, upon such payment, such
SBIC Holder shall deliver the certificates evidencing the Securities
being repurchased duly endorsed for transfer or accompanied by duly
executed forms of assignment.
(2) In addition to the foregoing, upon the occurrence of
a Regulatory Violation of the type described in clause (iii) of the
definition thereof, the SBIC Holder shall have the right to transfer all
(or any portion of) the outstanding Equity Interests
-18-
owned by such SBIC Holder to a transferee without regard to any
restriction on transfer set forth in this Agreement or any other
agreement executed pursuant to this Agreement or in the Stockholders
Agreement or any other agreements delivered pursuant hereto or thereto
(provided that the transferee agrees to become a party to this Agreement,
the Stockholders Agreement and the Registration Agreement), and the
Company shall take all such actions as are reasonably requested by the
SBIC Holder in order to (i) effectuate and facilitate any transfer by the
SBIC Holder of any Equity Interests then held by the SBIC Holder to any
Person designated by the SBIC Holder, (ii) permit the SBIC Holder (or any
of its Affiliates) to exchange all or any portion of any Equity Interests
that are voting securities then held by it on a share-for-share basis
for shares of a nonvoting security of the Company, which nonvoting
security shall be identical in all respects to the voting security
exchanged for it, except that it shall be nonvoting and shall be
convertible into a voting security on such terms as are requested by the
SBIC Holder in light of regulatory considerations then prevailing,
(iii) continue and preserve the respective allocations of the voting
interests with respect to the Company arising out of the SBIC's
ownership of voting securities and provided in the Stockholders
Agreement before the transfers and amendments referred to above
(including entering into such additional agreements as are requested by
the SBIC Holder to permit any Person(s) designated by the SBIC Holder to
exercise any voting power which is relinquished by the SBIC Holder) and
(iv) amend this Agreement, the Articles of Incorporation, the Bylaws and
related agreements and instruments to effectuate and reflect the
foregoing. The Company will obtain the written agreement of each of its
stockholders to vote their shares of Company voting stock in favor of
such amendments and actions.
(3) For purposes of this Agreement, "REGULATORY
VIOLATION" means (i) a diversion of the proceeds of such Financing from
the reported use thereof on the use of proceeds statement delivered by
the Company, (ii) a change in the "business activity" of the Company and
its Subsidiaries as described in Section 107.760(b) of the SBIC
Regulations, such that the Company and its Subsidiaries become
"ineligible for financing" as such term is used in Section 107.720 of the
SBIC Regulations, if such change occurs within one year after the date of
the initial Financing hereunder, or (iii) any set of facts or
circumstances wherein it has been asserted by any governmental regulatory
agency that the SBIC Holder is not entitled to hold, or exercise any
significant right with respect to, the Notes, the Warrants, Series A
Preferred or the Warrant Stock; and "FINANCING" shall have the meaning
set forth in Section 107.50 of the SBIC Regulations.
(d) ECONOMIC IMPACT INFORMATION. At such time as any SBIC
Holder reasonably requests, the Company shall deliver to each SBIC Holder a
written assessment of the economic impact of such SBIC Holder's investment in
the Company, specifying the full-time equivalent jobs created or retained in
connection with the investment, the impact of such SBIC Holder's Financing on
the revenues and profits of the Company and its Subsidiaries and on taxes
paid by the Company and its employees.
-19-
3I. CURRENT PUBLIC INFORMATION. The Company shall file all
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission thereunder and shall take such further action as any holder or
holders of Common Stock may reasonably request, all to the extent required to
enable such holders to sell Common Stock pursuant to (i) Rule 144 or Rule
144A adopted by the Securities and Exchange Commission under the Securities
Act (as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the Securities and Exchange Commission or
(ii) a registration statement on Form S-2 or S-3 or any similar registration
form hereafter adopted by the Securities and Exchange Commission. Upon
request, the Company shall deliver to any holder of Common Stock a written
statement as to whether it has complied with such requirements.
Section 4. FINANCIAL COVENANTS.
4A. FINANCIAL COVENANTS WHEN NOTES OUTSTANDING. So long as
any Notes are outstanding, or any Obligations with respect to the Notes have
not been indefeasibly paid in full in cash, the Company will comply with all
of the provisions of this SECTION 4A:
(a) MAXIMUM CAPITAL EXPENDITURES AND LEASES. The
Company shall ensure that neither the Company nor any of its Subsidiaries
shall make or commit to make any Capital Expenditure, or commit to any
obligation under any Operating Lease, with respect to any Fiscal Year if
the sum (without duplication) of (i) the aggregate amount of all Capital
Expenditures for such Fiscal Year, plus (ii) the aggregate value (as
evidenced by an invoice or other evidence satisfactory to the Purchasers)
of any assets delivered to, or made available for use by, any of the
Company and its Subsidiaries under any Operating Leases with respect to
such Fiscal Year (such sum of (i) and (ii), the "Expended Amount"), shall
exceed the amount set forth below for such period:
Fiscal Year Ending Maximum Permissible Amount
------------------ --------------------------
December 31, 1998 $1,000,000
December 31, 1999 $1,800,000
December 31, 2000 $2,400,000
December 31, 2001 and thereafter $1,200,000
PROVIDED, HOWEVER, that if the Expended Amount for any Fiscal Year is less
than the amount set forth above as permitted pursuant to this SECTION 4A for
such Fiscal Year (the "SCHEDULED AMOUNT"), then in addition to the amounts
authorized for the next Fiscal Year, the Company may make Capital
Expenditures or commit to obligations under Operating Leases during the first
six months of the next Fiscal Year, to the extent the Scheduled Amount for
such prior Fiscal Year exceeded the Expended Amount in such prior Fiscal
Year.
(b) INTEREST COVERAGE RATIO. The Company's Interest
Coverage Ratio, calculated as of the last day of any fiscal quarter, for
the Measurement Period ending on that date, shall not be less than:
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(i) 1.75 to 1.0 for the Measurement Period ending on
December 31, 1998 or any date thereafter through September
30, 1999;
(ii) 2.00 to 1.0 for the Measurement Period ending on
December 31, 1999 or any date thereafter through September
30, 2000;
(iii) 2.25 to 1.0 for the Measurement Period ending on
December 31, 2000 or any date thereafter through September
30, 2001;
(iv) 2.50 to 1.0 for the Measurement Period ending on
December 31, 2001 or any date thereafter through September
30, 2002; and
(v) 2.75 to 1.0 for the Measurement Period ending on
December 31, 2002 and thereafter.
(c) MAXIMUM CASH FLOW LEVERAGE RATIO. The Company's
Cash Flow Leverage Ratio as of the end of each fiscal quarter for the
Measurement Period ending on that date will not be greater than:
(i) 5.50 to 1.0 for the Measurement Period ending on
December 31, 1998;
(ii) 5.0 to 1.0 for the Measurement Period ending on
March 31, 1999 or any date thereafter through September 30,
1999;
(iii) 4.50 to 1.0 for the Measurement Period ending on
December 31, 1999 or any date thereafter through September
30, 2000;
(iv) 4.00 to 1.0 for the Measurement Period ending on
December 31, 2000 or any date thereafter through September
30, 2001;
(v) 3.25 to 1.0 for the Measurement Period ending on
December 31, 2001 or any date thereafter through September
30, 2002;
(vi) 2.75 to 1.0 for the Measurement Period ending on
December 31, 2002 and thereafter.
(d) NET WORTH. The Company shall maintain a Net Worth
not less than:
(i) negative $5,000,000 during the fiscal quarter ending
on December 31, 1998 and on each date thereafter through
September 30, 1999;
(ii) negative $4,500,000 during the fiscal quarter ending
on December 31, 1999 and on each date thereafter through
September 30, 2000;
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(iii) negative $2,000,000 during the fiscal quarter ending
on December 31, 2000 and on each date thereafter through
September 30, 2001;
(iv) $1,000,000 during the fiscal quarter ending on
December 31, 2001 and on each date thereafter through
September 30, 2002;
(v) $4,000,000 during the fiscal quarter ending on
December 31, 2002; and
(vi) on each date after December 31, 2002, $4,000,000
plus 50% of the cumulative amount of the Company's
consolidated net income computed in accordance with GAAP,
determined without taking into account any net losses for
any period.
4B. FINANCIAL COVENANTS WHEN SERIES A PREFERRED OUTSTANDING.
So long as any Series A Preferred is outstanding, or any Obligations with
respect to the Series A Preferred have not been indefeasibly paid in full in
cash, the Company will comply with all of the provisions of this SECTION 4B.
(a) MAXIMUM CAPITAL EXPENDITURES AND LEASES. The
Company shall ensure that neither the Company nor any of its Subsidiaries
shall make or commit to make any Capital Expenditure, or commit to any
obligation under any Operating Lease, with respect to any Fiscal Year if
the sum (without duplication) of (i) the aggregate amount of all Capital
Expenditures for such Fiscal Year, plus (ii) the aggregate value (as
evidenced by an invoice or other evidence satisfactory to the Purchasers)
of any assets delivered to, or made available for use by, any of the
Company and its Subsidiaries under any Operating Leases with respect to
such Fiscal Year (such sum of (i) and (ii), the "Expended Amount"), shall
exceed the amount set forth below for such period:
Fiscal Year Ending Maximum Permissible Amount
------------------ --------------------------
December 31, 1998 (partial) $1,200,000
December 31, 1999 $2,000,000
December 31, 2000 $2,700,000
December 31, 2001 and thereafter $1,400,000
PROVIDED, HOWEVER, that if the Expended Amount for any Fiscal Year is less
than the amount set forth above as permitted pursuant to this SECTION 4B for
such Fiscal Year (the "SCHEDULED AMOUNT"), then in addition to the amounts
authorized for the next Fiscal Year, the Company may make Capital
Expenditures or commit to obligations under Operating Leases during the first
six months of the next Fiscal Year, to the extent the Scheduled Amount for
such prior Fiscal Year exceeded the Expended Amount in such prior Fiscal
Year.
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(b) INTEREST COVERAGE RATIO. The Company's Interest
Coverage Ratio, calculated as of the last day of any fiscal quarter, for
the Measurement Period ending on that date, shall not be less than:
(i) 1.50 to 1.0 for the Measurement Period ending on
December 31, 1998 or any date thereafter through September
30, 1999;
(ii) 1.75 to 1.0 for the Measurement Period ending on
December 31, 1999 or any date thereafter through September
30, 2000;
(iii) 2.00 to 1.0 for the Measurement Period ending on
December 31, 2000 or any date thereafter through September
30, 2001;
(iv) 2.25 to 1.0 for the Measurement Period ending on
December 31, 2001 or any date thereafter through September
30, 2002; and
(v) 2.50 to 1.0 for the Measurement Period ending on
December 31, 2002 and thereafter.
(c) MAXIMUM CASH FLOW LEVERAGE RATIO. The Company's
Cash Flow Leverage Ratio as of the end of each fiscal quarter for the
Measurement Period ending on that date will not be greater than:
(i) 6.50 to 1.0 for the Measurement Period ending on
December 31, 1998;
(ii) 6.0 to 1.0 for the Measurement Period ending on
March 31, 1999 or any date thereafter through September 30,
1999;
(iii) 5.50 to 1.0 for the Measurement Period ending on
December 31, 1999 or any date thereafter through September
30, 2000;
(iv) 4.50 to 1.0 for the Measurement Period ending on
December 31, 2000 or any date thereafter through September
30, 2001;
(v) 3.75 to 1.0 for the Measurement Period ending on
December 31, 2001 or any date thereafter through September
30, 2002;
(vi) 3.25 to 1.0 for the Measurement Period ending on
December 31, 2002 and thereafter.
(d) NET WORTH. The Company shall maintain a Net Worth
not less than:
(i) negative $7,000,000 during the fiscal quarter ending
on December
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31, 1998 and on each date thereafter through September 30,
1999;
(ii) negative $6,500,000 during the fiscal quarter ending
on December 31, 1999 and on each date thereafter through
September 30, 2000;
(iii) negative $4,000,000 during the fiscal quarter ending
on December 31, 2000 and on each date thereafter through
September 30, 2001;
(iv) negative $1,000,000 during the fiscal quarter ending
on December 31, 2001 and on each date thereafter through
September 30, 2002;
(v) $2,000,000 during the fiscal quarter ending on
December 31, 2002; and
(vi) on each date after December 31, 2002, $2,000,000
plus 50% of the cumulative consolidated net income computed
in accordance with GAAP, determined without taking into
account any net loss for any period.
Section 5. NEGATIVE COVENANTS. Until such time as all
Obligations with respect to the Notes and the Series A Preferred have been
indefeasibly paid in full in cash without the prior consent of the Majority
Holders the Company shall not, and shall ensure that each of its Subsidiaries
shall not:
5A. ACQUISITION; CONSOLIDATION; REORGANIZATION. (i) Merge
or consolidate with any Person (except for the merger of any Wholly-Owned
Subsidiary of the Company with the Company, with the Company surviving, or
with another Wholly-Owned Subsidiary of the Company, so long as after giving
effect to such merger or consolidation, no Default or Event of Default would
exist), (ii) subject to the proviso following clause (iv) of this SECTION 5A,
acquire, directly or indirectly, in any transaction or series of
transactions, all or substantially all of the stock, equity interests, or
(other than as permitted pursuant to SECTIONS 4A and 4B) assets or business
of any Person; (iii) subject to the proviso following clause (iv) of this
SECTION 5A, except as permitted pursuant to SECTIONS 4A and 4B, acquire,
directly or indirectly through Subsidiaries, assets (other than current
assets in the ordinary course of business); or (iv) liquidate, dissolve or
effect a reorganization in any form of transaction (including, without
limitation, any reorganization into partnership form), except for a
liquidation of a Wholly-Owned Subsidiary of the Company; PROVIDED HOWEVER,
that subject to the limitations set forth in SECTION 4, the Company may
acquire assets and may make Investments so long as the aggregate purchase
price amount thereof does not exceed $250,000 in cash in any twelve-month
period or $500,000 in cash in total from and after the Closing.
5B. SALE, LEASE OR TRANSFER OF ASSETS. Sell, lease,
transfer or otherwise dispose of any of its properties or assets, except (i)
sales of inventory and accounts receivable in the ordinary course of business
consistent with past practice, (ii) sales of other assets so long as (a)
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the proceeds from such sales by any of the Company and its Subsidiaries of
the assets sold in each period of 12 consecutive months is less than
$200,000, and (b) within 90 days of the receipt of the proceeds of such
sales, (x) it has used or entered into a binding commitment to use such
proceeds to purchase replacement assets or (y) such proceeds are used to
repay Senior Indebtedness or (iii) any transactions contemplated by the Net
Lease between the Company and Penn Silver Fund related to the Kodak Road
property; PROVIDED, FURTHER, that, if any such proceeds are not used to
purchase replacement assets, then if and to the extent that the Senior
Indebtedness has been paid in full, the Company shall offer to apply such
proceeds to repay the Obligations with respect to the Notes and, unless the
Majority Note Holders shall decline such repayment by written notice, shall
pay such proceeds to holders of the Notes pro rata according to the principal
amount of Notes held.
5C. DISTRIBUTIONS. Directly or indirectly pay, make or set
apart any Restricted Payment; PROVIDED THAT, notwithstanding the foregoing,
the Company may (i) repurchase Common Stock from any employee of the Company
and/or any of its Subsidiaries; PROVIDED THAT (a) no Default or Event of
Default is in existence immediately prior to or immediately after such
repurchase or payment, (b) the purchase price paid in such repurchase or the
amount of such payment does not exceed the fair market value of the stock
repurchased or is in an amount calculated pursuant to the terms of a
repurchase or employment agreement between the Company and such employee
entered into in connection with the commencement of such employee's
employment, (c) such purchase occurs after the first anniversary of the
Closing and (d) the aggregate amount paid or payable in any Fiscal Year in
respect of all such purchases from employees does not exceed $250,000 in cash
and (ii) after all Obligations with respect to the Notes and the Series A
Preferred have been indefeasibly paid in full in cash, pay cash dividends pro
rata to the holders of Common Stock of the Company; and provided that
Subsidiaries may make distributions to the Company.
5D. INVESTMENTS. Make or hold any loans or advances to,
Guarantees for the benefit of, or any other Investment in, any Person, except
as provided in SECTION 5A and except for (a) extensions of trade credit made
in the ordinary course of business consistent with past custom and practice,
(b) Investments having a stated maturity no greater than one year in (i)
readily marketable direct obligations of the United States government or any
agency thereof or obligations guaranteed by the United States government,
(ii) certificates of deposit of U.S. commercial banks having combined capital
and surplus of at least $100,000,000 (iii) commercial paper with a rating
from a nationally recognized credit rating agency in such agency's highest
rating category, (iv) repurchase agreements relating to securities issued or
guaranteed as to principal and interest by the United States of America or
(v) other readily marketable investments in debt securities which are
satisfactory to the Majority Holders, and (c) travel and other expense
advances to management personnel and employees in the ordinary course of
business.
5E. LIMITATIONS ON INDEBTEDNESS. Create, incur, issue,
assume, suffer to exist, become liable with respect to or extend the maturity
of any Indebtedness, except:
(a) the Senior Indebtedness;
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(b) the Obligations with respect to the Notes;
(c) Capitalized Lease Obligations; provided that the
principal amount of such Capitalized Lease Obligations of the Company and
its Subsidiaries does not exceed $200,000 in the aggregate outstanding at
any time;
(d) deferred Taxes; and
(e) other Indebtedness of the Company or its
Subsidiaries with principal amount not in excess of $500,000 in the
aggregate outstanding at any time.
5F. CONTINGENT LIABILITIES. Become liable for any
Guarantees, except for (a) the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business, (b) Guarantees existing as of the date hereof and described on the
attached GUARANTEES SCHEDULE, and (c) Guarantees of Indebtedness which is
permitted under SECTION 5E hereof.
5G. LIENS. Create, incur, assume or suffer to exist any
Liens (except Permitted Liens) upon or with respect to any of its property or
assets, whether now owned or hereafter acquired, or on any income or profits
thereof, or assign or otherwise convey any right to receive income or other
property.
5H. AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION AND
BYLAWS; STOCK SPLITS. Make any amendment to the terms of the Company's
Articles of Incorporation or By-laws in any manner which adversely affects
the rights, powers or relative priorities of the holders of Series A
Preferred or Warrant Stock.
5I. CONDUCT OF BUSINESS. Enter into the ownership, active
management or operation of any business other than the business conducted by
the Company on the Closing Date, including without limitation the
manufacturing of outdoor corporate identification products and reasonable
extensions thereto, or engage in any activity which could result in a
Forfeiture Proceeding.
5J. AFFILIATED TRANSACTIONS. Except as set forth on the
AFFILIATED TRANSACTIONS SCHEDULE, enter into any agreement or transaction,
including the purchase, sale or exchange of property or the rendering of any
service, with any of its, or any Subsidiary's, officers, directors or
Affiliates or any individual related by blood or marriage to any such Person,
or any entity in which any such Person or individual owns a material
beneficial interest, except for transactions entered into after the Closing
Date upon fair and reasonable terms no less favorable to the Company or its
Subsidiaries than the terms the Company or its Subsidiaries would obtain in a
comparable arm's-length transaction with a Person not an Affiliate and
approved in advance by the board of directors of the Company.
5K. RESTRICTIVE AGREEMENTS; CONFLICTING AGREEMENTS. Either (a)
create, permit
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or otherwise cause or suffer to exist (except pursuant to the Senior
Indebtedness and any refinancing of the Senior Indebtedness) any encumbrance
or restriction on the ability of any Subsidiary of the Company (i) (A) to
make loans or advances to the Company or any other Subsidiary of the Company
or (B) to transfer any of its properties or assets to the Company, or (ii) to
pay dividends or make any other distributions in respect of any of its Stock
or any other interest or participation in, or measured by, its profits, or
pay any Indebtedness owed to, the Company or any other Subsidiary of the
Company, in each case other than encumbrances or restrictions existing under
the Notes or the Loan Agreement and any refinancing thereof, or (b) enter
into any agreement, or propose or commit to take any action or engage in any
omission which would constitute a violation of any covenant or agreement in
any of this Agreement, the Notes, the Warrants, the Registration Agreement,
the Stockholders Agreement or the Company's Articles of Incorporation or
bylaws and any of the agreements contemplated hereby or thereby.
5L. PUBLIC DISCLOSURES. Subject to the Company's
obligations under the federal securities laws, disclose any Purchaser's name
or identity as an investor in the Company in any press release or other
public announcement or in any document or material filed with any Government
Entity, without prior written notice to such Purchaser describing in
reasonable detail the proposed content of such disclosure and permitting such
Purchaser to review and comment upon the form and substance of such
disclosure and make reasonable changes thereto.
5M. USE OF PROCEEDS. Use any proceeds from the sale of any
Securities hereunder, or permit any of its Subsidiaries to use any of such
proceeds, directly or indirectly, (a) for the purposes of purchasing or
carrying any "margin securities" within the meaning of Regulation T, U or X
promulgated by the Board of Governors of the Federal Reserve Board, (b) 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" or (c) for any other purpose other than to effect the
Recapitalization.
5N. FISCAL YEAR. Change its fiscal year from the year
ending on December 31.
5O. AMENDMENT OF INDEBTEDNESS. Directly or indirectly amend,
supplement, extend, terminate, or permit to be amended, supplemented or
terminated, or waive any of the following terms which are applicable to any
Senior Indebtedness: (i) the amount or the date of any scheduled or mandatory
payment of principal or interest thereunder, except that (A) the Company may
borrow and reborrow from time to time under the Revolver and the Term B Loan
and the Revolver may be renewed from time to time providing for a new
maturity date, provided that in connection with any such renewal the Loan
Agreement shall be amended in a manner so as not to be on terms more
restrictive in any manner than the terms being renewed; provided further that
such new maturity date shall not, in the case of the Term B Loan, be after
the original maturity date of the Term B Loan, (B) any scheduled or mandatory
principal payment under the Term A Loan or the Term C Loan may be extended so
long as the weighted average life to maturity of the Term A Loan and the Term
C Loan, measured from the date of Closing and taking into account all
repayments of principal previously made in respect thereof as of the time of
such determination, if any, is not increased by more than six months from
that in effect at the Closing, and (C) such amendment may increase the
principal amount of Senior
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Indebtedness so long as the aggregate of all such increases pursuant to this
clause (C) from and after the date of the Closing shall not exceed $2,000,000
in the aggregate, (ii) the rate or rates at which interest accrues or the
methods of calculation thereof (including without limitation by amending any
provisions (including definitions) used in calculating such interest rates
such that a higher rate or margin may apply), (iii) any fees, indemnities,
expense reimbursements or other charges payable to the lenders thereunder, or
(iv) any representation, covenant or default or any other term or provision
in a manner which is more onerous or more restrictive on the holders of the
Notes or the Company or change any of the restrictions in the Loan Agreement
or other agreements delivered in connection therewith or relating to
performance by the Company of the Note Obligations (including restrictions
which prohibit or limit the payment or prepayment of any amount with respect
to the Notes or the Note Obligations).
5P. EQUITY ISSUANCES. Except as expressly contemplated by
this Agreement, authorize, issue or enter into any agreement providing for
the issuance (contingent or otherwise) of, (a) any capital stock or other
equity securities (or any securities convertible into or exchangeable for any
capital stock or other equity securities) or (b) any notes or debt securities
containing equity features (including, without limitation, any notes or debt
securities convertible into or exchangeable for capital stock or other equity
securities, issued in connection with the issuance of capital stock or other
equity securities or containing profit participation features); provided that
this SECTION 5P shall not limit the ability of the Board (or Compensation
Committee) to authorize the issuance of incentive based equity under the
Company's 1996 Stock Option Agreement, in effect as of the date hereof.
5Q. ERISA COMPLIANCE. Either (a) incur, or permit any ERISA
Affiliate to incur, any liability to the IRS, the DOL or PBGC (other than for
premiums due PBGC which will be paid when due) with respect to any Plan which
equals or exceeds $250,000 (b) withdraw (either partially or completely) from
any Multiemployer Plan, if the liabilities exceed the assets under such Plan,
or upon the complete or partial withdrawal from such Multiemployer Plan,
would equal or exceed $250,000, (c) provide, or permit any ERISA Affiliate to
provide, medical or life insurance benefits to former employees of the
Company or its Subsidiaries (other than in accordance with Section 601 of
ERISA or 4980B of the IRC or as may hereafter be required by law) or (d) with
respect to any Pension Plan, incur, or permit any ERISA Affiliate to incur, a
reporting obligation for any Reportable Event which could constitute grounds
for partial termination of any Pension Plan or termination by the PBGC of any
Pension Plan or for the appointment by the appropriate United States District
Court of a trustee to administer any Pension Plan.
Section 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. To
induce the Purchasers to purchase the Securities as herein provided, the
Company represents and warrants to the Purchasers that each and all of the
following statements are true, correct and complete as of the date of
execution and delivery of this Agreement and will be true, correct and
complete as of the Closing after giving effect to the transactions
contemplated hereby to occur on or prior to the Closing Date:
6A. ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly
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organized, validly existing and in good standing under the Laws of the state
of Texas, is qualified to do business in every jurisdiction in which its
ownership of property or conduct of business requires it to qualify except
where failure to so qualify would not have a Materially Adverse Effect; and
has the requisite corporate power and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease
the property it operates under lease, and to conduct its business as now,
heretofore and proposed to be conducted and to carry out the transactions
contemplated by this Agreement. The Company possesses all material licenses,
permits, consents and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently
proposed to be conducted. The stock certificate books and the stock record
books of the Company are correct and complete in all material respects. The
Company is in compliance with its Articles of Incorporation and bylaws, each
as amended, and the copies of the Company's Articles of Incorporation and
bylaws of the Company which have been furnished to Xxxxxxxx & Xxxxx, as
special counsel to the Purchasers, reflect all amendments made thereto at any
time prior to the date of this Agreement and are correct and complete and in
compliance with all applicable provisions of law.
6B. CAPITAL STOCK AND RELATED MATTERS.
(a) As of the Closing, the authorized capital stock of
the Company shall consist of (i) 15,000,000 shares of Common Stock, of
which 1,854,692 shares shall be issued and outstanding, and 1,197,914
shares shall be reserved for issuance upon exercise of the Warrants, (ii)
52,500 shares of Series A Preferred, all of which shall be issued and
outstanding, (iii) 7,000 shares of Series B Junior Preferred, all of
which shall be reserved for issuance to Xxxxx Xxxxxxxx pursuant to the
Xxxxxxxx Purchase Agreement, and (iv) 6,250 shares of Series C Preferred,
all of which shall be reserved for issuance to GHI, SIC, SMHC, Geneve,
and FIRC pursuant to the Share Option Purchase Agreement. As of the
Closing, all of the outstanding shares of the Company's Common Stock
shall be validly issued, fully paid and nonassessable, and upon payment
for the Series A Preferred and the Closing hereunder, all of the
outstanding shares of the Series A Preferred shall be validly issued,
fully paid and nonassessable.
(b) As of the Closing, and except as set forth on the
attached CAPITALIZATION SCHEDULE, the Company shall not have outstanding
any Stock or any stock appreciation or phantom stock rights or plans and
shall not be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any of its Stock, except
pursuant to the Stockholders Agreement and the Warrants.
(c) There are no statutory or contractual stockholders'
preemptive rights or rights of first offer or refusal with respect to the
issuance of the Notes, Series A Preferred and the Warrants hereunder, the
issuance of Common Stock upon exercise of the Warrants or with respect to
any other issuance of Stock of the Company or, except as provided in the
Stockholder Agreement. The Company has not violated any applicable
Securities Laws in connection with the offer, sale or issuance of any of
its Stock; and the offer, sale and issuance of the Notes, Series A
Preferred and the Warrants hereunder, and the offer, sale and issuance of
the Common Stock upon exercise of the Warrants do not
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and will not require registration under any applicable Securities Laws.
There are no proxies or agreements among the stockholders of the Company
with respect to the voting or transfer of the Stock or with respect to
any other aspect of Company's affairs, except this Agreement, the
Stockholders Agreement and the Registration Agreement.
6C. SUBSIDIARIES; PARTNERSHIPS. Except as described on the
attached SUBSIDIARIES SCHEDULE, the Company has no Subsidiaries, is not a
partner in any partnership and holds no Stock in any other Person.
6D. AUTHORIZATION; NO BREACH. The Company has duly
authorized the execution, delivery and performance of this Agreement, the
Notes, the Warrants, the Share Purchase Option Agreements, the Xxxxxxxx
Purchase Agreement, the Xxxxxxxx Side Letter, the Stockholders Agreement and
the Registration Agreement, and each other agreement, contemplated hereby or
thereby to which it is a party. This Agreement, the Notes, the Warrants, the
Share Purchase Option Agreements, the Xxxxxxxx Purchase Agreement, the
Xxxxxxxx Side Letter, the Stockholders Agreement, the Registration Agreement,
the Company's Articles of Incorporation and each other agreement contemplated
hereby and thereby to which the Company is a party constitutes a valid and
binding obligation of the Company enforceable against it in accordance with
its terms. Except as set forth on the attached RESTRICTIONS SCHEDULE, the
execution and delivery by the Company of this Agreement, the Notes, the
Warrants, Share Option Purchase Agreement, the Xxxxxxxx Purchase Agreement,
the Xxxxxxxx Side Letter, the Stockholders Agreement, the Registration
Agreement and all other agreements contemplated hereby and thereby to which
it is a party, the offering, sale and issuance of the Notes, Warrants and
Series A Preferred hereunder, the issuance of the Common Stock upon exercise
of the Warrants and the fulfillment of and compliance with the respective
terms hereof and thereof by the Company does not and will not (a) conflict
with or result in a breach of the terms, conditions or provisions of, (b)
constitute a default under, (c) result in the creation of any Lien upon the
stock or assets of the Company pursuant to, (d) give any third party the
right to modify, terminate or accelerate any obligation under, (e) result in
a violation of, or (f) require any authorization, consent, approval,
exemption or other action by or notice to any Government Entity pursuant to,
the Articles of Incorporation or bylaws of the Company, or any Law, statute,
rule or regulation to which the Company is subject, or any material
agreement, instrument, order, judgment or decree to which the Company is
subject.
6E. FINANCIAL STATEMENTS.
(a) Attached hereto as the FINANCIAL STATEMENTS SCHEDULE
are (i) the unaudited balance sheet of the Company as at August 30, 1998
and the related statement of income for the eight-month period then ended
(such balance sheet, the "LATEST BALANCE SHEET"); (ii) the audited
consolidated balance sheets of the Company as of December 31, 1995,
December 31, 1996 and December 31, 1997 (the balance sheet for December
31, 1997 being referred to as the "LATEST AUDITED STATEMENT") and the
related audited consolidated statement of earnings and cash flows for
each of the Fiscal Years then
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ended, and (iii) the estimated pro forma balance sheet of the Company
as of the Closing Date, reflecting the assets, liabilities and
stockholders' equity of the Company as of the Closing Date, adjusted
to reflect, as applicable, the effect of the Senior Indebtedness
incurred on the Closing Date, the issuance of the Notes and Series A
Preferred, and the costs and expenses related to the foregoing.
(b) Except as set forth on the attached FINANCIAL
STATEMENTS SCHEDULE, each of the foregoing financial statements
(including the notes thereto, if any), presents fairly the consolidated
financial position, results of operations and cash flows of the Company,
and is prepared in accordance with GAAP, consistently applied, as of the
dates and for the periods set forth therein, subject in the case of the
unaudited financial statements to the lack of footnote disclosure and
changes resulting from normal year-end adjustments.
6F. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth
on the attached LIABILITIES SCHEDULE, the Company has no obligation or
liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the Closing, or any action or
inaction at or prior to the Closing, or any state of facts existing at or
prior to the Closing other than: (a) liabilities fully disclosed and
adequately provided for in the Latest Balance Sheet, and (b) current
liabilities which have arisen, and obligations under agreements entered into,
after the date of the Latest Balance Sheet in the ordinary course of business
(none of which is a liability resulting from breach of contract, breach of
warranty, tort, infringement, claim or lawsuit).
6G. NO MATERIAL ADVERSE CHANGE. There has been no material
adverse change in the business, assets, operations, financial condition,
operating results, earnings, customer and supplier relations or employee and
sales representative relations of the Company since the date of the Latest
Audited Statement.
6H. ASSETS. Except as set forth on the attached ASSETS
SCHEDULE, the Company has good and indefeasible title to, or a valid
leasehold interest in, the properties and assets it uses, the properties and
assets shown on the Latest Balance Sheet or acquired thereafter and all
assets necessary for the conduct of its businesses as presently conducted and
as presently proposed to be conducted, free and clear of all Liens, except
for properties and assets disposed of in the ordinary course of business
since the date of the Latest Balance Sheet and except for Liens disclosed on
the Latest Balance Sheet (including any notes thereto). Except as described
on the attached ASSETS SCHEDULE, buildings, equipment and other tangible
assets of the Company are in good operating condition other than ordinary
wear and tear and are fit for use in the ordinary course of business.
6I. INVESTMENT COMPANY ACT. Neither the Company nor the
Company is an "investment company" or an "Affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended.
-31-
6J. MARGIN REGULATIONS. The Company does not own any
"margin security" as such term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "FEDERAL RESERVE BOARD"), and
none of the proceeds of the Notes or Warrants will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose
which might cause any of the securities purchased under this Agreement to be
considered "purpose credit" within the meaning of Regulations T, U or X of
the Federal Reserve Board. The Company has not taken or permitted, and will
not permit any agent acting on its behalf to take, any action which might
cause this Agreement or any document or instrument delivered hereunder to
violate such Regulation T, U or X, any other regulation of the Federal
Reserve Board, or Section 8 of the Exchange Act or any rule or regulation
thereunder. No proceeds of the issuance of Restricted Securities will be
used to acquire any security in any transaction which is subject to Section
13 or 14 of the Exchange Act, including Sections 13(d) and 14(d) thereof.
The purchase of the Notes will not constitute a violation of such Regulations
T, U or X.
6K. TAX MATTERS. Except as set forth on the TAX SCHEDULE
attached hereto, the Company has filed all Tax returns and other reports
which it is required to file under applicable Laws and regulations; all such
returns and reports are complete and correct in all material respects; the
Company has paid all Taxes due and owing by it and has withheld and paid over
all Taxes which it is obligated to withhold from amounts paid or owing to any
employee, stockholder, creditor or other third party, and has not waived any
statute of limitations with respect to Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency; no foreign, federal,
state, provincial or local Tax audits are pending or being conducted with
respect to the Company, no information related to Tax matters has been
requested by any foreign, federal, state, provincial or local Tax authority
and no notice indicating an intent to open an audit or other review has been
received by the Company from any foreign, federal, state, provincial or local
Tax authority; and there are no unresolved questions or claims concerning Tax
liability of the Company. Except as set forth on the TAX SCHEDULE, The
Company has not made an election under Section 341(f) of the IRC, is not a
party to any Tax sharing or allocation agreement, and has no liability for
the Taxes of any Person under Section 1.1502-6 of the Treasury Regulations
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract, or otherwise. The accrual for current Taxes on the
Latest Balance Sheet would be adequate to pay all of the current Tax
liabilities of the Company, if the current Tax year were treated as having
ended on the date of the Latest Balance Sheet consistent with past practices.
6L. CONTRACTS AND COMMITMENTS. Except as expressly
contemplated by this Agreement or as set forth on the attached CONTRACTS
SCHEDULE, the Company is not a party (including after giving effect to the
Company) to any written or oral:
(a) pension, profit sharing, stock option, employee
stock purchase or other plan or arrangement providing for deferred or
other compensation to employees or any other employee benefit plan or
arrangement, or any contract with any labor union, or any severance
agreements;
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(b) contract for the employment of any officer,
individual employee or other Person on a full-time, part-time, consulting
or other basis providing annual compensation in excess of $25,000 or
contract relating to loans to officers, directors or affiliates;
(c) contract under which the Company has advanced or
loaned any other Persons amounts in the aggregate exceeding $25,000;
(d) agreement or indenture relating to the borrowing of
money or the mortgaging, pledging or otherwise placing a Lien on any
material asset or group of assets of the Company;
(e) Guarantee of any obligation (other than by the
Company of a wholly-owned Subsidiary's debts or a guarantee by a
Subsidiary of the Company's debts or another Subsidiary's debts);
(f) lease or agreement under which the Company or any
Subsidiary is lessee of or holds or operates any property, real or
personal, owned by any other party, except for any lease of real or
personal property under which the aggregate annual rental payments do not
exceed $25,000;
(g) lease or agreement under which the Company or any
Subsidiary is lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by the Company or any
Subsidiary;
(h) contract or group of related contracts with the same
party or group of affiliated parties the performance of which involves
aggregate annual consideration in excess of $25,000 except purchase
orders from existing customers or to existing vendors, in either case in
the ordinary course of business;
(i) assignment, license, indemnification or agreement
with respect to any intangible property (including, without limitation,
any patent, trademark, trade name, copyright, know-how, trade secret or
confidential information);
(j) warranty agreement with respect to its services
rendered or its products sold or leased;
(k) agreement under which it has granted any Person any
registration rights (including piggyback rights);
(l) contract, agreement or other arrangement with any
officer, director, employee or Affiliate, or any Affiliate of any
officer, director or employee;
(m) contract or agreement prohibiting it from freely
engaging in any
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business or competing anywhere in the world; or
(n) any other agreement which is material to its
operations and business prospects or which involves a consideration in
excess of $25,000 annually.
Except as set forth on the CONTRACTS SCHEDULE, all of the
contracts, agreements and instruments required to be listed thereon are
valid, binding and enforceable in accordance with their respective terms.
Except as set forth on the CONTRACTS SCHEDULE, the Company and its
Subsidiaries are not in default or breach under any such contract,
agreement or instrument; no event has occurred which with the passage of
time or the giving of notice or both would result in a default, breach or
event of noncompliance under any such contract, agreement or instrument
listed on the CONTRACTS SCHEDULE; none of the Company and its
Subsidiaries has any present expectation or intention of not fully
performing all such obligations; none of the Company and its Subsidiaries
has any knowledge of any breach or anticipated breach by the other
parties to any such contract or commitment; and none of the Company and
its Subsidiaries is a party to any contract or commitment the performance
of which would have a Materially Adverse Effect.
6M. TRADEMARKS, PATENTS. Except as set forth on the
INTELLECTUAL PROPERTY SCHEDULE attached hereto the Company possesses or has
the right to use all of the patents, trademarks, trade names, service marks
and copyrights, and applications therefor, and all technology, know-how,
processes, methods and designs used in or necessary for the conduct of its
business, without known conflict with the rights of others; there have been
no written claims made upon the Company against the Company asserting the
invalidity, misuse or unenforceability of any Proprietary Right, and there
are no grounds for the same; the Company has not received a notice of
conflict with the asserted rights of others within the last five years; and
to the knowledge of the Company the conduct of the business of the Company
has not infringed or misappropriated nor infringes or misappropriates any
Proprietary Right of other Persons, nor would any future conduct as presently
contemplated infringe any Proprietary Right of other Persons and, to the
Company's knowledge, the Proprietary Rights owned by the Company have not
been infringed or misappropriated by other Persons.
6N. LITIGATION, ETC. Except as set forth on the attached
LITIGATION SCHEDULE, (i) there are no actions, suits, proceedings, orders,
investigations or claims pending or, to the Company's knowledge, threatened
against or affecting the Company or pending or threatened against or
affecting any of the officers, directors or employees of the Company with
respect to any of the Company's businesses or proposed business activities,
at law or in equity, or before or by any Government Entity which if adversely
determined, could have a Materially Adverse Effect, including any Litigation
with respect to the transactions contemplated by the Recapitalization, the
Loan Agreement or this Agreement; (ii) the Company is not subject to any
arbitration proceedings under collective bargaining agreements or otherwise
or, to the Company's knowledge, any governmental investigations or inquiries;
and (iii) to the best of the Company's knowledge, there is no reasonable
basis for any of the foregoing. The Company is not subject to
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any judgment, order or decree of any court or other governmental agency, and
the Company has not received any opinion or memorandum or legal advice from
legal counsel to the effect that it is exposed, from a legal standpoint, to
any liability or disadvantage which in any of such cases may have a
Materially Adverse Effect (including after giving effect to the
Recapitalization.
6O. NO FORFEITURE. The Company is not engaged in or
proposes to be engaged in the conduct of any business or activity which could
result in a Forfeiture Proceeding, and no Forfeiture Proceeding against any
of them is pending or, to the knowledge of the Company, is threatened.
6P. SMALL BUSINESS MATTERS. The Company, together with its
"affiliates" (as that term is defined in Section 121.401 of the SBIC
Regulations), is a "small business concern" within the meaning of the SBIC
Act and SBIC Regulations, including Section 121.802 of the SBIC Regulations.
The information regarding the Company and its affiliates set forth in the
Small Business Administration Form 480, Form 652 and Part A of Form 1031
delivered at the Closing is accurate and complete. Copies of such forms
shall have been completed and executed by the Company and delivered to each
Purchaser that is an SBIC at the Closing together with a written statement of
the Company regarding its planned use of the proceeds from the sale of the
Notes, the Series A Preferred and the Warrants. Neither the Company nor any
Subsidiary presently engages in, and it shall not hereafter engage in, any
activities, nor shall the Company or any Subsidiary use directly or
indirectly the proceeds from the sale of the Notes, the Series A Preferred
and the Warrants hereunder for any purpose, for which a SBIC is prohibited
from providing funds by the SBIC Act and the SBIC Regulations (including
Section 107.804 and Section 107.901 of the SBIC Regulations).
6Q. BROKERAGE. Except as set forth on the BROKERAGE
SCHEDULE attached hereto, there are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by the Recapitalization, the Loan Agreement or this Agreement
based on any arrangement or agreement binding upon the Company. The Company
shall pay, and hold the Purchasers harmless against, any and all liability,
loss or expense (including, without limitation, reasonable attorneys' fees
and out-of-pocket expenses) arising in connection with any such claims.
6R. INSURANCE. The Company is not in default with respect
to its obligations under any insurance policy maintained by it. The
insurance coverage of the Company is of customary type and covers casualties,
risks and contingencies of such types and in amounts not less than as are
customary for prudent corporations of similar size engaged in similar lines
of business under similar circumstances.
6S. EMPLOYEES. Except as set forth on the attached
EMPLOYEES SCHEDULE, (i) the Company is not aware that any executive or key
employee of the Company or any group of employees of the Company has any
plans to terminate employment with the Company; (ii) the Company has complied
and is compliance in all material respects with all Laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of any Taxes, and
the Company does not have any labor relations problems (including, without
limitation, any union organization activities, threatened or
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actual strikes or work stoppages or material grievances); and (iii) the
Company is not, and none of the employees of the Company is, subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreement relating to, affecting or in conflict with, the present or proposed
business activities of the Company.
6T. COMPLIANCE WITH LAWS. The Company has not violated any
Laws which violation has had or would reasonably be expected to have a
Materially Adverse Effect, and the Company has not received notice of any
such violation. No payments for political contributions or bribes, kickback
payments or other illegal payments have been made by the Company at any time.
6U. AFFILIATED TRANSACTIONS. Except as set forth on the
attached AFFILIATED TRANSACTIONS SCHEDULE, no Affiliate of the Company or any
officer, director, stockholder or employee of any such Affiliate (other than
any such as are also officers, directors or employees of the Company), any
individual related by blood or marriage to any such Person, or any entity in
which any such Person, directly or indirectly, owns any beneficial interest,
is a party to any agreement, contract, commitment, transaction or proposed
transaction with the Company or has any interest in any property used by the
Company.
6V. INDEBTEDNESS. The attached INDEBTEDNESS SCHEDULE sets
forth all outstanding Indebtedness of the Company owing to any Person or
group of affiliated Persons, or issued in any one transaction or series of
related transactions. The Company has no outstanding Indebtedness or is a
guarantor or otherwise contingently liable for any Indebtedness except as
disclosed on the attached INDEBTEDNESS SCHEDULE. There exists no default
under the provisions of any instrument evidencing such Indebtedness or of any
agreement relating thereto.
6W. LOAN AGREEMENT. No "default" or "event of default"
under the Loan Agreement is in existence or will result from the transactions
contemplated by this Agreement.
6X. ERISA. Except as set forth on the EMPLOYEE BENEFITS
SCHEDULE:
(a) MULTIEMPLOYER PLANS. The Company has no obligation
to contribute to (or any other liability, including current or potential
Withdrawal Liability, with respect to) any Multiemployer Plan. To the
extent that any Multiemployer Plan is set forth on the Employee Benefits
Schedule, the Company has no current or potential withdrawal liability
under such Multiemployer Plan.
(b) RETIREE WELFARE PLANS. The Company does not
maintain or have any obligation to contribute to (or any other liability
with respect to) any plan or arrangement whether or not terminated, which
provides medical, health, life insurance or other welfare-type benefits
for current or future retired or terminated employees, their spouses or
dependents (except for continued medical benefit coverage required to be
provided under Section 4980B of the IRC or as required under applicable
state Laws).
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(c) DEFINED BENEFIT PLANS. The Company does not
maintain, contribute to or have any liability under (or with respect to)
any employee plan which is a "defined benefit plan" (as defined in
Section 3(35) of ERISA), whether or not terminated.
(d) DEFINED CONTRIBUTION PLANS. The Company does not
maintain, contribute to or have any liability under (or with respect to)
any employee plan which is a "defined contribution plan" (as defined in
Section 3(34) of ERISA), whether or not terminated.
(e) OTHER PLANS. The Company does not maintain,
contribute to or have any liability under (or with respect to) any plan
or arrangement providing benefits to current or former employees,
including, without limitation, any bonus plan, plan for deferred
compensation, severance, employee health or other welfare benefit plan or
other arrangement, whether or not terminated and whether or not subject
to ERISA including, but not limited to "employee welfare benefit plans"
as defined in Section 3(1) of ERISA.
(f) THE COMPANY. For purposes of this SECTION 6X (other
than subsection (e) or (h), the terms "the Company" includes all
organizations under common control with the Company pursuant to Section
414 of the IRC. For purposes of liability under Title IV of ERISA, the
terms "the Company" shall include any member of its Controlled Group.
(g) UNFUNDED LIABILITY. No plan maintained by the
Company or to which the Company has an obligation to contribute, or with
respect to which the Company has any other liability, has unfunded
benefit obligations or any unfunded liability. All contributions,
premiums or payments under or with respect to a each plan which is set
forth on the attached Employee Benefits Schedule which are due on or
before the Closing Date have been paid.
(h) PLAN QUALIFICATION AND COMPLIANCE. Each employee
benefit plan set forth on the attached EMPLOYEE BENEFITS SCHEDULE that is
or has been maintained for the benefit of employees of the Company that
is intended to be qualified under Section 401(a) of the IRC has received
a favorable determination letter from the IRS as to the qualification of
such plan and, to the best knowledge of the Company after due inquiry,
nothing has occurred since the date of such determination letter that
could reasonably be expected to adversely affect the qualification of
such plan. Each employee benefit plan set forth on the attached EMPLOYEE
BENEFITS SCHEDULE that is or has been maintained for the benefit of
employees of the Company and all related trusts, insurance contracts and
funds have been maintained, funded and administered in compliance in all
material respects with their respective terms and with all applicable
Laws.
(i) The Company has not incurred and has no reason to
expect that it will incur, any liability to the Pension Benefit Guaranty
Corporation (other than premium payments) or otherwise under Title IV of
ERISA (including any withdrawal liability) or
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under the Code with respect to any employee pension benefit plan that
the Company or any ERISA Affiliate maintains or ever has maintained or
to which any of them contributes, ever has contributed, or ever has been
required to contribute.
6Y. ENVIRONMENTAL AND SAFETY MATTERS.
(a) Except as set forth in Section (i) of the
ENVIRONMENTAL SCHEDULE, the Company has complied with and is currently in
compliance in all material respects with all Environmental and Safety
Requirements the non-compliance with which will or threatens to impose a
material liability on the Company, and the Company has not received any
oral or written notice, report or information regarding any liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) or any
corrective, investigatory or remedial obligations arising under
Environmental and Safety Requirements which relate to the Company or any
of its properties or facilities.
(b) Except as set forth in Section (ii) of the
ENVIRONMENTAL SCHEDULE, without limiting the generality of the foregoing,
the Company has obtained and complied with, and is currently in
compliance in all material respects with, all material permits, licenses
and other authorizations that are required pursuant to any Environmental
and Safety Requirements for the occupancy of its properties or facilities
or the operation of its businesses.
(c) Except as set forth in Section (iii) of the
ENVIRONMENTAL SCHEDULE, neither this Agreement nor the consummation of
the transactions contemplated by this Agreement shall impose any
obligations on the Company for site investigation or cleanup, or
notification to or consent of any government agencies or third parties
under any Environmental and Safety Requirements (including, without
limitation, any so called "transaction-triggered" or "responsible
property transfer" laws and regulations).
(d) Except as set forth in Section (iv) of the
ENVIRONMENTAL SCHEDULE, none of the following exists at any property or
facility owned, occupied or operated by the Company:
(1) underground storage tanks or surface
impoundments;
(2) asbestos-containing materials friable; or
(3) materials or equipment containing friable
polychlorinated biphenyls.
(e) Except as set forth in Section (v) of the
ENVIRONMENTAL SCHEDULE, the Company has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled or
Released any Hazardous Materials, or owned, occupied or operated any
facility or property, so as to give rise to liabilities of the Company
for response costs, natural resource damages or attorneys fees pursuant
to CERCLA or any
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other Environmental and Safety Requirements.
(f) Without limiting the generality of the foregoing, to
the knowledge of the Company, no facts, events or conditions relating to
the past or present properties, facilities or operations of the Company
shall prevent, hinder or limit in any material respect continued
compliance with Environmental and Safety Requirements, give rise to any
corrective, investigatory or remedial obligations pursuant to
Environmental and Safety Requirements or give rise to any other
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental and Safety Requirements (including,
without limitation, those liabilities relating to onsite or offsite
Releases or threatened Releases of Hazardous Materials, substances or
wastes, personal injury, property damage or natural resources damage).
(g) Except as set forth in Section (vii) of the
ENVIRONMENTAL SCHEDULE, the Company has not, either expressly or by
operation of law, assumed or undertaken any liability or corrective,
investigatory or remedial obligation of any other Person relating to any
Environmental and Safety Requirements.
(h) No Environmental Lien has attached to any property
owned, leased or operated by the Company.
6Z. REAL PROPERTY HOLDING CORPORATION STATUS. Since its
date of incorporation, the Company has not been, and as of the date of the
Closing shall not be, a "United States Real Property Holding Corporation," as
defined in Section 897(c)(2) of the IRC and in Section 1.897-2(b) of the
Treasury Regulations issued thereunder. The Company has no current plans or
intentions which would cause it to become a "United States Real Property
Holding Company," and the Company has filed with the IRS all statements, if
any, with its United States income Tax returns which are required under
Section 1.897-2(h) of the Treasury Regulations.
6AA. CERTAIN GOVERNMENT REGULATIONS. The Company is not
subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, or any other Law which regulates the incurring of
Indebtedness by any of them, including Laws relating to common contract
carriers or the sale of electricity, gas, steam, water or other public
utility services.
6BB. CLOSING DATE. The representations and warranties of the
Company contained in this SECTION 6 and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
certificate or other writing delivered by, or on behalf of, the Company to
any of the Purchasers shall be correct and complete on the date of the
Closing as though made after giving effect to the transactions contemplated
hereby to occur on the Closing Date.
Section 7. REPRESENTATIONS AND WARRANTIES OF BA PURCHASERS.
Each BA
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Purchaser hereby represents and warrants severally, as to itself, to the
Company that each and all of the following statements are true and correct
and complete as of the date of execution and delivery of this Agreement and
will be true, correct and complete as of the Closing after giving effect to
the transactions contemplated hereby to occur on or prior to the Closing Date.
7A. DUE AUTHORIZATION. Such BA Purchaser has all requisite
power and authority to enter into this Agreement and the agreements
contemplated hereby and to consummate the transaction contemplated hereby and
thereby. The execution and delivery hereof and of each of the agreements
contemplated hereby, the performance by such BA Purchaser of its obligations
hereunder and thereunder and the consummation by such BA Purchaser of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action on the part of such BA Purchaser. No
other proceeding on the part of such BA Purchaser is necessary to authorize
the execution and delivery of this Agreement and the other agreements
contemplated hereby by such BA Purchaser or the performance by such BA
Purchaser of its obligations hereunder or thereunder or the consummation by
such BA Purchaser of the transactions contemplated hereby and thereby. Each
of this Agreement and the agreements contemplated hereby constitute, or when
executed and delivered will constitute, a valid and legally binding
obligation of such BA Purchaser enforceable against such BA Purchaser in
accordance with its terms.
7B. CONSENTS AND APPROVALS. Each BA Purchaser has obtained
all consents, approvals or authorizations from each Governmental Entity or
other Persons prescribed by any Law, contract or agreement which may be
required for the execution, delivery and performance of this Agreement and
the other agreements contemplated hereby by each BA Purchaser or the
consummation by each BA Purchaser of the transactions contemplated hereby and
thereby.
Section 8. REPRESENTATIONS AND WARRANTIES AND COVENANTS OF ALL
PURCHASERS. Each of the Purchasers represents and warrants severally, as to
itself, to the Company that each and all of the following statements are
true, correct and complete as of the date of execution and delivery of this
Agreement and will be true, correct and complete as of the Closing after
giving effect to the transactions contemplated hereby to occur on or prior to
the Closing Date.
8A. INVESTMENT INTENT. Such Purchaser represents and
warrants that acquiring the Securities purchased hereunder or acquired
pursuant hereto for its own account with the present intention of holding
such securities for purposes of investment and without a view of making a
distribution thereof within the meaning if the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and that such Purchaser has no intention of
selling such Securities in violation of applicable Securities Laws; PROVIDED
that (i) the disposition of any Securities held by such Purchaser shall at
all times be within such Purchaser's control and (ii) nothing contained
herein shall prevent such Purchaser and subsequent holders of Securities from
transferring such securities in compliance with the provisions hereof. Each
of the Purchasers hereby agrees that none of such Securities, or any shares
of Common Stock issued upon the exercise of the Warrants shall be sold or
transferred by such Purchaser in violation in the Securities Laws. Each of
the Purchasers is aware that none of the Securities have been registered
under the Securities Act or any other Securities Laws and that the Company is
not obligated to register such
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Securities except in accordance with the provisions of the Registration
Agreement, and that such Securities must be held indefinitely unless
subsequently registered or an exemption from such registration is available.
8B. ACCESS: SOPHISTICATION: ETC.. Such Purchaser is an
"accredited investor" as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act. Each Purchaser and its agents and
representatives have such knowledge and experience in financial and business
matters as to enable them to utilize the information made available to them
in connection with the purchases contemplated hereby, to evaluate the merits
and risks of an investment in the Company and to make an informed decision
with respect thereto and such an evaluation and informed decision has been
made. Such Purchaser represents that it has had an opportunity to ask
questions and receive answers from the Company, and examine such documents,
agreements and instruments, regarding the terms and conditions of the
offering of the Securities and the shares of Common Stock issuable upon
exercise of the Warrants, the Company's business plan and results of
operation, this Agreement, and the Agreements contemplated hereby, all
certificates delivered in connection therewith, and the business, properties,
prospects and financial condition of the Company. Such Purchaser represents
that each Purchaser is experienced in evaluating and investing in private
placement transactions of securities of companies in stages of development
similar to that of the Company, and that it has not been formed for the
purpose of acquiring the Securities. Such Purchaser acknowledges that it can
bear the economic risk of loss of all of its investment in the Company.
Notwithstanding the provision of this SECTION 8B, however, such Purchaser is
relying upon the representations and warranties of the Company contained in
this Agreement in connection with the decision of such Purchaser to enter
into this Agreement and consummate the transactions contemplated hereby.
Section 9. DEFINITIONS.
9A. DEFINED TERMS. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"AFFILIATE" shall mean, with respect to any Person, (i) each
Person that, directly or indirectly, owns or controls, whether beneficially,
or as a trustee, guardian or other fiduciary, 10% or more of the Stock having
ordinary voting power in the election of directors of, or 10% or more of the
common equity of, such Person, (ii) each Person that controls, is controlled
by or is under common control with, such Person or any Affiliate of such
Person, and (iii) each of such Person's officers, directors, joint venturers
and partners. For the purpose of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"AGENT" has the meaning set forth in the Recitals.
"AGREEMENT" has the meaning set forth in the Recitals.
"ARTICLES OF INCORPORATION" of any Person means the articles or
certificate of
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incorporation of such Person, as applicable, as in effect at the Closing or
as amended thereafter as permitted under this Agreement.
"BA PURCHASERS" has the meaning set forth in the Recitals.
"BANK" has the meaning set forth in the Recitals.
"BUSINESS DAY" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted by Law or other
action by a Government Entity to be closed in the State of Illinois.
"CAPITAL EXPENDITURES" means for any period, the sum of all
amounts that would, in accordance with GAAP, be included as additions to
property, plant and equipment on a consolidated statement of cash flows for
the Company during such period, in respect of (a) the acquisition,
construction, improvement, replacement or betterment of land, buildings,
machinery, equipment or of any other fixed assets or leaseholds, (b) to the
extent related to and not included in (a) above, materials, contract labor
(excluding expenditures properly chargeable to repairs or maintenance in
accordance with GAAP), and (c) other capital expenditures (including without
limitation Capitalized Leases) and other uses recorded as capital
expenditures or similar terms having substantially the same effect (including
expenditures for nonrecurrent tangible assets such as software).
"CAPITALIZED LEASE" means a lease of (or other agreement
conveying the right to use) real or personal property with respect to which
at least a portion of the rent or other amounts thereon constitute
Capitalized Lease Obligations.
"CAPITALIZED LEASE OBLIGATIONS" of a Person shall mean all
monetary obligations of such Person or any Subsidiary of such Person under a
lease or similar arrangement, which obligations would be classified and
accounted for as capital obligations on a consolidated balance sheet of such
Person under GAAP taken at the amount thereof accounted for as indebtedness
(net of interest expense) in accordance with such principles.
"CASH FLOW LEVERAGE RATIO" means, for any period of
determination, the ratio of (a) Interest-bearing Indebtedness of the Company
and its Subsidiaries (including but not limited to the aggregate principal
amount of all outstanding Capitalized Lease Obligations of the Company and
its Subsidiaries), all determined as of the last day of that period, to (b)
EBITDA for that period, in each case determined in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERTIFICATES OF DESIGNATION" has the meaning set forth in
SECTION 2E hereof.
"CHANGE OF OWNERSHIP" means any Management Purchaser ceases to
hold, beneficially and of record, at least 85% of the issued and issuable
capital stock of the Corporation
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that such Management Purchaser holds at Closing (as adjusted for any
subsequent stock splits, stock dividends, combinations of shares or similar
recapitalizations), other than Xxx Xxxxx in respect of sales of capital stock
to Xxxxx Xxxxxxxx.
"CHIEF FINANCIAL OFFICER" of any entity means the highest
ranking officer of such entity who is then in charge of the financial matters
of such entity.
"CIVC" has the meaning set forth in the Recitals.
"CLOSING" has the meaning set forth in SECTION 1C hereof.
"CLOSING DATE" has the meaning set forth in SECTION 1C hereof.
"CLOSING FEE" has the meaning set forth in SECTION 1D hereof.
"COMMON STOCK" means, collectively, the Company's common stock,
and any shares of any class of the Company's capital stock hereafter
authorized which is not limited to a fixed sum or percentage of par or stated
value in respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution
or winding up of the Company.
"COMPANY" means Xxxxxxxxx Sign Company, a Texas corporation.
"CONTROLLED GROUP" of any Person means all members of a
controlled group of corporations and all members of a controlled group of
trades or businesses (whether or not incorporated) which at the relevant time
are under common control which, together with such Person, as the case may
be, are treated as a single employer under Section 414(b), (c), (m) or (o) of
the IRC or Section 4001 of ERISA.
"DEFAULT" means an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an
Event of Default.
"DOL" shall mean the United States Department of Labor, or any
successor thereof.
"EBITDA" means, for any period of determination, an amount
equal to the consolidated net income of the Company before deductions for
income taxes, Interest Expense, depreciation and amortization.
"ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all federal,
state or local Laws, all contractual obligations and all common law, in each
case concerning public health and safety, pollution or protection of the
environment (including, without limitation, all those relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Release, threatened Release, control or
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cleanup of any Hazardous Materials, noise or radiation).
"ENVIRONMENTAL LIEN" means any Lien, whether recorded or
unrecorded, in favor of any Government Entity, relating to any liability of
the Company or any of its Subsidiaries arising under any Environmental and
Safety Requirements.
"EQUITY INTERESTS" means, collectively, the Series A Preferred,
the Warrants and Warrant Stock purchased hereunder and any securities issued
or issuable in respect thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time and
any regulations promulgated thereunder.
"ERISA AFFILIATE" means, with respect to any Person, any trade
or business (whether or not incorporated) which at the relevant time is under
common control with such Person and which, together with such Person, are
treated as a single employer within the meaning of Section 414(b), (c), (m)
or (o) of the IRC.
"ERISA EVENT" means, with respect to any Person or any member
of its Controlled Group (except with respect to clause (vi) of this paragraph
which shall be with respect to such Person or any of its ERISA Affiliates)
(i) a Reportable Event with respect to a Title IV Plan or a Multiemployer
Plan, (ii) the withdrawal of such Person, any of its Subsidiaries or any
Controlled Group member from a Title IV Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA, (iii) the complete or partial withdrawal of such
Person, any of its Subsidiaries or any Controlled Group member from any
Multiemployer Plan, (iv) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA, (v) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC, (vi) the failure to make
required contributions to a Title IV Plan or (vii) any other event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Title IV Plan or Multiemployer Plan or the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 10
hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.
"EXPENDED AMOUNT" has the meaning set forth in SECTION 4A
hereof.
"FEDERAL RESERVE BOARD" has the meaning set forth in SECTION 6J
hereof.
"FINANCING" has the meaning set forth in SECTION 3H hereof.
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"XXXX" xxx the meaning set forth in SECTION 2B hereof.
"FISCAL YEAR" means the fiscal year of the Company ending on
December 31.
"FORFEITURE PROCEEDING" means any action or proceeding
affecting the Company or any of its Subsidiaries before any Government Entity
which may result in the forced disposition (by the exercise of the power of
eminent domain, expropriation or otherwise), seizure, expropriation or
forfeiture of any property necessary for use in its business, or payment of a
penalty, or revocation, termination or suspension of a license or approval
necessary for use in its business which action or proceeding, if determined
adversely to the Company or its Subsidiaries, would reasonably be expected to
have a Materially Adverse Effect.
"GAAP" means generally accepted accounting principles in the
United States as in effect from time to time.
"GENEVE" has the meaning set forth in SECTION 2B hereof.
"GOVERNMENT ENTITY" means the United States of America or any
other nation, any state, province or other political subdivision thereof, or
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of government, including any Tribunal.
"GSH" has the meaning set forth in SECTION 2B hereof.
"GUARANTEE" by a Person shall include any guarantee 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 such Person, whether that promise is expressed in terms of an
obligation to pay the Indebtedness of such obligor, to provide reimbursement,
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 listed in the balance sheet
of such Person, or referred to in a footnote thereto, but shall not include
endorsements of items for collection in the ordinary course of business.
"HAZARDOUS MATERIALS" means anything that is a "hazardous
substance" pursuant to CERCLA, anything that is a "hazardous waste" or "solid
waste" pursuant to RCRA, and any other pollutant, contaminant, toxic
chemical, petroleum product or by-product, asbestos or polychlorinated
biphenyl.
"INDEBTEDNESS" with respect to any Person shall mean, without
duplication, (a) all indebtedness of such Person or any Subsidiary of such
Person in respect of money borrowed (including, without limitation,
indebtedness which represents the unpaid amount of the purchase price of any
property) and not constituting an account payable or expense accrual incurred
or
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assumed in the ordinary course of business of such Person or any of its
Subsidiaries, (b) all indebtedness of such Person or any Subsidiary of such
Person evidenced by a promissory note, bond or similar written obligation to
pay money, (c) all obligations of such Person upon which interest charges are
customarily paid or accrued, other than trade debt, (d) all such indebtedness
guaranteed by such Person or any Subsidiary of such Person (including
pursuant to any Guarantee) or for which such Person or any Subsidiary of such
Person is otherwise contingently liable, including, without limitation,
Guarantees in the form of an agreement to repurchase or reimburse, and any
commitment by which such Person or any Subsidiary of such Person assures a
creditor against loss, including contingent reimbursement obligations with
respect to letters of credit, (e) all obligations secured by a Lien on
property of such Person or any of its Subsidiaries (but shall not include
operating leases), (f) Capitalized Lease Obligations, (g) all obligations of
such Person in respect of interest rate protection agreements, (h) all
obligations of such Person, actual or contingent, as an account party in
respect of letters of credit or bankers' acceptances, (i) all obligations of
any partnership or joint venture as to which such Person is or may become
personally liable, and (j) all Contingent Obligations of such Person.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION
11C hereof.
"INDEMNITEE" has the meaning set forth in SECTION 11C hereof.
"INTEREST-BEARING INDEBTEDNESS" means Indebtedness with respect
to which the Company or any of its subsidiaries is obliged to make interest
payments from time to time, irrespective of whether such payments are paid,
accrued or waived from time to time (including without limitation Capitalized
Lease Obligations).
"INTEREST COVERAGE RATIO" means, for any period of
determination, the ratio of (a) EBITDA to (b) Interest Expense, in each case
determined for said period in accordance with GAAP.
"INTEREST EXPENSE" means, for any period of determination, that
aggregate amount, without duplication, of interest paid, accrued or scheduled
to be paid in respect of any Indebtedness of the Company or any of its
Subsidiaries for such period, including (a) all but the principal component
of payments in respect of conditional sale contracts, Capitalized Leases and
other title retention agreements, (b) commissions, discounts and other fees
and charges with respect to letters of credit and bankers' acceptance
financings and (c) dividends and distributions paid in respect of the Series
A Preferred, the Series B Preferred and the Series C Preferred, in each case
determined in accordance with GAAP.
"INVESTMENT" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes,
obligations, instruments, Stock, securities or ownership interest (including
partnership interests, limited liability company interests and joint venture
interests) of, or any loan by such Person to, any other Person and (ii) any
capital contribution by such Person to any other Person.
"IRC" means the Internal Revenue Code of 1986, as amended.
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"IRS" shall mean the Internal Revenue Service.
"LATEST AUDITED STATEMENT" has the meaning set forth in
SECTION 6E(A) hereof.
"LATEST BALANCE SHEET" has the meaning set forth in
SECTION 6E(A) hereof.
"LAWS" means all statutes, laws, ordinances, regulations,
rules, orders, judgments, writs, injunctions, acts or decrees of any
Government Entity (including Environmental and Safety Requirements).
"LIEN" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and including any lien or charge arising by statute or other Laws,
which secures the payment of a debt (including, without limitation, any Tax)
or the performance of an obligation.
"LITIGATION" means any action, proceeding, claim, order,
lawsuit and/or investigation conducted by or before any Government Entity.
"LOAN AGREEMENT" has the meaning set forth in the Recitals.
"MANAGEMENT PURCHASERS" has the meaning set forth in the
Recitals.
"MAJORITY HOLDERS" at any time means the Majority Note Holders
or, at such time as the Notes are no longer outstanding, the Majority Equity
Holders.
"MAJORITY NOTE HOLDERS" at any time means the holders of Notes
representing a majority of the aggregate principal amount of all Notes then
outstanding.
"MAJORITY EQUITY HOLDERS" at any time means the holders of a
majority of the Equity Interests in existence at such time.
"MAJORITY WARRANT HOLDERS" at any time means holders of a
majority of the Warrant Stock in existence at such time.
"MATERIALLY ADVERSE EFFECT" means an effect, resulting, or
which could result, from any occurrence or omission of whatever nature
(including any adverse determination in any litigation, arbitration or
governmental investigation or proceeding), materially adverse to the
business, condition (financial or otherwise) or operations of the Company and
its Subsidiaries taken as a whole.
"MEASUREMENT PERIOD" means, as of the last day of any fiscal
quarter, the four fiscal quarters ending on such date.
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"MIG" has the meaning set forth in the Recitals.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which any Person or any member
of such Person's Controlled Group is making, is obligated to make, has made
or been obligated to make, contributions on behalf of participants who are or
were employed by any of them.
"NET WORTH" means as of any date of determination, the sum of
the amounts set forth on the balance sheet of the Company and its
Subsidiaries, prepared in accordance with GAAP, for common stock, preferred
stock, additional paid-in capital and retained earnings of the Company and
its Subsidiaries (excluding treasury stock)
"NOTEHOLDER" at any time means the record holder of any Note,
as reflected on the records of the Company in accordance with the Notes.
"NOTES" has the meaning set forth in SECTION 1A hereof.
"OBLIGATION" means any obligation of the Company or its
Subsidiaries with respect to the repayment or performance of any obligation
(monetary or otherwise) of such party arising under or in connection with
this Agreement, the Notes, the Series A Preferred, the Warrants, the Warrant
Stock or any other document delivered in connection herewith, and
"OBLIGATIONS" means all of such Obligations collectively.
"OFFICER'S CERTIFICATE" of any Person means a certificate
signed on behalf of such Person by the chief executive officer, chief
operating officer or Chief Financial Officer (without any personal liability)
of such Person stating that (i) the officer signing such certificate has made
or has caused to be made such investigations as are reasonably necessary in
order to permit such officer to verify the accuracy of the information set
forth in such certificate, and (ii) to the best of such officer's knowledge,
such certificate does not misstate any material fact and does not omit to
state any fact necessary to make the certificate not misleading.
"OPERATING LEASE" means any lease of personal property other
than a Capitalized Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"PENSION PLAN" means a "pension plan," as such term is defined
in Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which
the Company or any corporation, trade or business that is, along with the
Company, a member of its respective Controlled Group, may have liability,
including any liability by reason of having been a substantial employer
within the meaning of Section 4063 of ERISA at any time during the preceding
five years, or by reason of
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being deemed to be a contributing sponsor under Section 4069 of ERISA.
"PERMITTED LIENS" means (i) the security interests held by the
holders of the Senior Indebtedness under the Loan Agreement to secure the
repayment of Senior Indebtedness, (ii) Liens for Taxes or assessments and
similar charges, which either are (A) not delinquent or (B) being contested
diligently and in good faith by appropriate proceedings, and as to which the
Company has set aside reserves on its books in accordance with GAAP, (iii)
carriers', warehousemen's, mechanics', materialmen's or contractors' Liens or
any similar Liens for amounts not yet due and payable, (iv) Permitted
Purchase Money Liens, (v) Liens to secure the obligations of the Company
under the Rate Protection Agreements (as defined in the Note), (vi) Liens
existing on the date of this Agreement and disclosed on the LIEN SCHEDULE
attached hereto, (vii) deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social
security obligations, in the ordinary course of business of the Company and
its Subsidiaries, (viii) Liens incurred or deposits or pledges made or given
in connection with, or to secure payment of, indemnity, performance or other
similar bonds in the ordinary course of business, and (ix) Liens arising
solely by virtue of any statutory or common law provision relating to
bankers' liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a creditor depository
institution, provided that (A) such deposit account is not a dedicated cash
collateral account and is not subject to restriction against access by the
Company in excess of those set forth by regulations promulgated by the Board
of Governors of the Federal Reserve System, and (B) such deposit account is
not intended by the Company to provide collateral to the depository
institution.
"PERMITTED PURCHASE MONEY LIENS" means any purchase money Lien
on real property or equipment or other goods acquired (including any
acquisition pursuant to a Capitalized Lease) by the Company or any of its
Subsidiaries (a "PURCHASE MONEY LIEN") in the ordinary course of its business
so long as: (i) the transaction in which such Purchase Money Lien is proposed
to be created is not prohibited by this Agreement; (ii) such Purchase Money
Lien attaches only to the asset acquired (and to the extent applicable, any
insurance thereon) in such transaction and does not extend to or cover any
other assets of the Company or any of its Subsidiaries; (iii) the
Indebtedness secured or covered by such Purchase Money Lien does not exceed
100% of the cost to the Company and its Subsidiaries of the asset acquired;
and (iv) such Indebtedness is either (x) incurred on the date of acquisition
of the asset acquired or (y) incurred for the purpose of refinancing or
refunding any Indebtedness secured by a Permitted Purchase Money Lien, so
long as the unpaid balance thereof following such refinancing does not exceed
the amount thereof prior to such refinancing.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a Government Entity or any
department, agency or political subdivision thereof.
"PLAN" means, with respect to any Person or either any member
of its Controlled Group or any ERISA Affiliate, as required by the context at
any time, an employee benefit plan, as defined in Section 3(3) of ERISA,
which any Person or any of its Subsidiaries maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were
-49-
employed by any of them.
"PROPRIETARY RIGHTS" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service
marks, trade dress, trade names and corporate names and registrations and
applications for registration thereof, (iii) copyrights and registrations and
applications for registration thereof, (iv) mask works and registrations and
applications for registration thereof, (v) computer software, data and
documentation, (vi) trade secrets and other confidential information
(including, without limitation, ideas, formulas, compositions, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
know-how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial and marketing plans and
customer and supplier lists and information), (vii) other intellectual
property rights and (viii) copies and tangible embodiments of any of the
foregoing (in whatever form or medium).
"PURCHASER" has the meaning set forth in the Recitals.
"QUALIFIED PLAN" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401(a) of the IRC, and which the Company, any of its Subsidiaries or
any ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of
them.
"RCRA" means the federal Resource Conservation and Recovery
Act, as amended.
"RECAPITALIZATION" has the meaning set forth in the Recitals.
"REGISTRATION AGREEMENT" means the Registration Agreement,
dated as of the date hereof, among the Company and the Purchasers.
"REGULATORY VIOLATION" has the meaning set forth in SECTION 3H
hereof.
"RELEASE" has the meaning set forth in CERCLA.
"REPORTABLE EVENT" means any of the events listed in Section
4043 of ERISA.
"RESTRICTED PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of or with respect to any Stock
of the Company or any of its Subsidiaries (other than dividends and
distributions on the Series A Preferred, Series B Preferred or Series C
Preferred), (ii) loans, advances or other payments in respect of or in any
way related to any such Stock, including, without limitation, any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition
for value, direct or indirect, of all or any portion of any such Stock, and
(iii) any prepayment of principal, optional redemption, purchase, retirement
prior
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to stated maturity, defeasance, or similar optional payment with respect to
any Indebtedness of the Company or any of its Subsidiaries (other than
payments in respect of Senior Indebtedness or the Notes).
"RESTRICTED SECURITIES" means (i) the Notes issued hereunder,
(ii) the Series A Preferred issued hereunder, (iii) the Warrants issued
hereunder, (iv) the Common Stock issued or issuable upon exercise of the
Warrants and (v) any securities issued with respect to the securities
referred to in clauses (i) through (v) inclusive, above by way of a stock
dividend or stock split or in connection with a combination of stock,
recapitalization, merger, consolidation or other reorganization. As to any
particular Restricted Securities, such securities shall cease to be
Restricted Securities when they have (a) been effectively registered under
the Securities Act and disposed of in accordance with the registration
statement covering them, (b) become eligible for sale pursuant to Rule 144(k)
(or any similar provision then in force) under the Securities Act or (c) been
otherwise transferred and new certificates for them not bearing a Securities
Act legend have been delivered by the Company. Whenever any particular
securities cease to be Restricted Securities, the holder thereof shall be
entitled to receive from the Company, without expense, new securities of like
tenor not bearing a Securities Act legend.
"REVOLVER" has the meaning given such term in the Recitals.
"SBA" means the United States Small Business Administration,
and any successor agency performing the functions thereof.
"SBIC" means a Small Business Investment Company licensed by an
SBA under the SBIC Act.
"SBIC ACT" means the Small Business Investment Act of 1958, as
amended.
"SBIC HOLDER" means any SBIC holding any securities of the
Company.
"SBIC REGULATIONS" means the SBIC Act and the regulations
issued by the SBA thereunder, codified at Title 13 of the Code of Federal
Regulations ("13 CFR"), Parts 107 and 121.
"SCHEDULED AMOUNT" has the meaning set forth in SECTION 4A
hereof.
"SECURITIES" has the meaning set forth in SECTION 1A hereof.
"SECURITIES ACT" means the United States Securities Act of
1933, as amended.
"SECURITIES LAWS" at any time means the Securities Act,
Exchange Act and any similar securities laws of the United States or any
state thereof which are then in force.
"SECURITYHOLDER" means any holder of a Security.
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"SENIOR INDEBTEDNESS" has the meaning given to such term in the
Notes.
"SERIES A PREFERRED" has the meaning set forth in SECTION 1A
hereof.
"SERIES B PREFERRED" means the Company's Series B Preferred
Stock, par value $0.01 per share.
"SERIES C PREFERRED" means the Company's Series C Preferred
Stock, par value $0.01 per share.
"SHARE PURCHASE OPTION AGREEMENTS" has the meaning set forth in
SECTION 2B hereof.
"SIC" has the meaning set forth in SECTION 2B hereof.
"SMHC" has the meaning set forth in SECTION 2B hereof.
"STOCK" of any Person means any stock, equity or profits
interests, participations or other equivalents (however designated) of stock,
whether voting or nonvoting, including any notes or securities with profit
participation features, and any rights, warrants, options or other securities
directly or indirectly convertible into or exercisable or exchangeable for
any such stock, equity or profits interests, participations or other
equivalents, or such other securities, (or any equivalent ownership
interests, in the case of a Person which is not a corporation).
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, association or other business entity of which (i)
if a corporation, a majority of the total voting power of stock entitled
(irrespective of whether, at the time, shares of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof or (ii) if a partnership, association or
other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a partnership, association or
other business entity if such Person or Persons shall be allocated a majority
of partnership, association or other business entity gains or losses or shall
be or control the managing director or general partner of such partnership,
association or other business entity.
"TAX" means any federal, state, local, provincial, or foreign
income, gross receipts, license, payroll, employment, excise, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, unemployment, real property,
personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, or other tax, fee, assessment or charge of any
kind whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not.
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"TERM LOANS" has the meaning given such term in the Recitals.
"TITLE IV PLAN" means a Pension Plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA.
"TREASURY REGULATIONS" means the United States Treasury
Regulations promulgated under the IRC, and any reference to any particular
Treasury Regulation section shall be interpreted to include any final or
temporary revision of or successor to that section regardless of how numbered
or classified.
"TRIBUNAL" means any government, arbitration panel, court or
governmental department, commission, board, bureau, agency or instrumentality
of the United States of America, Canada or any state, province, commonwealth,
nation, territory, possession, county, parish, town, township, village,
municipality or other governmental entity, whether now or hereafter
constituted and/or existing.
"WARRANTS" has the meaning given such term in SECTION 1A hereof.
"WARRANT STOCK" means (i) the Common Stock issued or issuable
upon exercise of or with respect to the Warrants, (ii) any shares of Stock
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 stock, recapitalization, merger, consolidation or other
reorganization or otherwise pursuant to the Warrants. Any Person who holds
Warrants shall be deemed to be the holder of the Warrant Stock obtainable
upon exercise of the Warrants in connection with the transfer thereof or
otherwise regardless of any restriction or limitation on the exercise of the
Warrants.
"WITHDRAWAL LIABILITY" means, at any time, the aggregate amount
of the liabilities, if any, pursuant to Section 4021 of ERISA, and any
increase in contributions pursuant to Section 4243 of ERISA with respect to
all Multiemployer Plans.
"WHOLLY-OWNED SUBSIDIARY" of any Person means any corporation,
partnership, association or other business entity of which (i) if a
corporation, 100% of the stock and of the total voting power of stock
entitled (irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, 100% of the partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that
Person or a combination thereof.
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9B. ACCOUNTING TERMS. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the
meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed, unless otherwise
specifically provided herein, in accordance with GAAP consistently applied.
That certain terms or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the foregoing.
Financial statements and other information furnished pursuant to this
Agreement shall be prepared in accordance with GAAP as in effect at the time
of such preparation. To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Agreement,
such computation or determination shall be made as if such change in GAAP had
not occurred unless the Company and the Majority Holders agree in writing on
an adjustment to such computation or determination to account for such
change in GAAP.
Section 10. EVENTS OF DEFAULT.
10A. EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" shall
mean any of the following events:
(a) NON-PAYMENT OF PRINCIPAL OR INTEREST. The Company
shall (i) fail to pay when due any interest on any Note or any monetary
Obligation with respect to the Notes other than payment of unpaid
principal and the same shall continue unremedied for a period of 2 days,
or (ii) fail to pay when due all or any portion of the unpaid principal
on any Note.
(b) BREACH OF WARRANTY. Any representation or warranty
of the Company or any Subsidiary of the Company hereunder or under any
Security, certificate, report, financial statement or other writing
furnished by or on behalf of the Company or any Subsidiary of the Company
to any of the Purchasers or any other Securityholder for the purposes of
or in connection with this Agreement or any such other document is or
shall be incorrect in any material respect when made or deemed made;
PROVIDED, that for purposes of this SECTION 8A(b) each such
representation or warranty shall be deemed to have been amended to delete
each materiality standard included therein (including without limitation
to delete the words "material" and all references to "Materially Adverse
Effect").
(c) NON-PERFORMANCE OF OTHER OBLIGATIONS.
(1) The Company or any of its Subsidiaries shall
default in the due performance and observance of or otherwise
neglect or fail to perform, keep or observe any agreement
contained in any of the financial covenants contained in SECTION 4
or any of the negative covenants of SECTION 5 hereof.
(2) The Company or any of its Subsidiaries shall
default in the due performance or observance of or otherwise
neglect or fail to perform, keep or observe any other agreement
contained herein or in any of the Notes, the
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Warrants, the Stockholders Agreement and the Registration
Agreement, and the same shall continue unremedied for a period of
20 days (5 days in the case of SECTION 3B(d)) after a senior
officer of the Company shall have first become aware thereof.
(d) ACCELERATION OF OTHER INDEBTEDNESS. A default shall
occur in the performance or observance of any obligation or condition
relating to any Indebtedness in an aggregate amount exceeding $250,000
(whether under any mortgage, indenture or instrument or agreement
securing or relating to any such indentures or otherwise) of the Company
or any of its Subsidiaries and the effect of such default is to
accelerate the maturity or require the prepayment, redemption, repurchase
or defeasance of any such Indebtedness or to cause an offer to repay,
redeem, purchase or defease such Indebtedness to be required to be made,
or to require the making of any deposits in respect of any such
Indebtedness, prior to its expressed maturity, or a holder of such
Indebtedness otherwise applies or sets off assets of the Company or any
of its Subsidiaries held in such holder's possession, or exercises any
right to deposit and retain in an account, amounts to satisfy contingent
or unmatured obligations of the Company or any of its Subsidiaries to
such holder.
(e) BANKRUPTCY, INSOLVENCY, ETC. Any of the Company or
its Subsidiaries shall:
(1) become insolvent or generally fail to pay, or
admit in writing its inability to pay, debts as they become due;
(2) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, administrator, or other
custodian for the Company or any of its Subsidiaries or any
property thereof or make a general assignment for the benefit of
creditors;
(3) in the absence of such application, consent
or acquiescence, permit, or suffer to exist the appointment of a
trustee, receiver, administrator, liquidator, assignee, custodian,
or other similar official for the Company or any of its
Subsidiaries or property of any thereof for a period of 60 days;
(4) permit or suffer to exist the commencement of
any bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency Laws or any other
Laws for the benefit of the debtors, or any dissolution, winding
up or liquidation proceeding, in respect of the Company or any of
its Subsidiaries and, if such case or proceeding is not commenced
by the Company or any such Subsidiary, such case or proceeding
shall be consented to or acquiesced in by the Company or any such
Subsidiary or shall result in the entry of an order for relief or
shall remain for 60 days undismissed;
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(5) have concealed, removed or permitted to be
concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them or made or
suffered a transfer of any of its property or the incurring of an
obligation which may be fraudulent under any bankruptcy,
fraudulent conveyance or other similar Laws; or
(6) take any corporate action authorizing, or in
furtherance of, any of the foregoing.
(f) DISSOLUTION. Entry, rendering or filing of any
order, final judgment or decree decreeing the dissolution or split up of
the Company or any of its Subsidiaries, if such order remains in effect
for a period of more than 45 days without being vacated, discharged,
satisfied or stayed or bonded pending appeal.
(g) JUDGMENTS. A judgment or order, the uninsured
portion of which is in excess of $250,000, shall be rendered against the
Company or any of its Subsidiaries and, within 30 days after entry
thereof, such judgment or order shall not have been discharged or
execution thereof stayed pending appeal, or, within 30 days after the
expiration of any such stay, such judgment or order shall not have been
discharged in full.
(h) PENSION PLANS. The institution of any steps by the
Company or any member of its Controlled Group or any other Person to
terminate a Pension Plan if, as a result of such termination, the Company
or any such member of its Controlled Group could be required to make a
contribution to such Pension Plan, or could reasonably expect to incur a
liability or obligation to such Pension Plan in excess of $250,000.
(i) ERISA. (i) With respect to any Plan, a prohibited
transaction within the meaning of Section 4975 of the IRC or Section 406
of ERISA occurs which in the reasonable determination of the Majority
Noteholders could result in liability in excess of $50,000 to the Company
or any of its Subsidiaries; (ii) with respect to any Title IV Plan, the
filing of a notice to voluntarily terminate any such plan in a distress
termination; (iii) with respect to any Multiemployer Plan, the Company or
any of its Subsidiaries or any ERISA Affiliate shall incur any Withdrawal
Liability and, in the opinion of the Majority Noteholders, such
Withdrawal Liability would reasonably be expected to have a Materially
Adverse Effect; (iv) with respect to any Qualified Plan, the Company or
any of its Subsidiaries or any ERISA Affiliate shall incur an accumulated
funding deficiency or request a funding waiver from the IRS; or (v) with
respect to any Title IV Plan or Multiemployer Plan which has an ERISA
Event not described in (ii) - (iv) hereof, in the reasonable
determination of the Majority Note Holders there is a reasonable
likelihood for termination of any such plan by the PBGC; PROVIDED,
HOWEVER, that the events listed in clauses (i) - (v) hereof shall
constitute Events of Default only if the liability, deficiency or waiver
request of the Company or any of its Subsidiaries or any ERISA Affiliate,
whether or not assessed, exceeds $250,000 in any case set forth in (i) -
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(v) above, or exceeds $250,000 in the aggregate for all such cases.
(j) FORFEITURE PROCEEDING. The commencement of any
Forfeiture Proceeding, if such Forfeiture Proceeding continues for a
period of more than 30 days without being vacated, discharged, satisfied
or stayed or bonded pending appeal or there is an adverse decision in
such proceeding.
(k) VALIDITY OF AGREEMENTS. Any material provision of
this Agreement, the Notes, the Warrants, the Stockholders Agreement and
the Registration Agreement shall, for any reason, cease to be valid and
binding on the Company or the Company shall so claim in writing to any
Securityholder.
(l) CHANGE OF OWNERSHIP. If prior to repayment in full
of the Notes, a Change of Ownership shall occur.
10B. DEFAULT INTEREST RATE. Upon any Event of Default, the
interest rate per annum on the Notes shall increase immediately by an
increment of three percentage points (3%) to the extent permitted by law.
Any increase of the interest rate resulting from the operation of this
section shall terminate as of the close of business on the date on which no
Event of Default exists (subject to subsequent increases pursuant to this
section).
10C. REMEDY IF BANKRUPTCY. If any Event of Default described
in any of clause(s) (1) through (6) of SECTION 10A(e) shall occur, the
outstanding principal amount of all outstanding Notes and all other
Obligations to Noteholders or with respect to the Notes shall automatically
be and become immediately due and payable, without declaration, notice or
demand.
10D. REMEDY IF OTHER EVENT OF DEFAULT. If any Event of
Default (other than any Event of Default described in any of clauses (1)
through (6) of SECTION 10A(e)) shall occur for any reason, whether voluntary
or involuntary, and be continuing, the Majority Note Holders may, upon notice
or demand, declare all or any portion of the outstanding principal amount of
the Notes to be due and payable and any or all other Obligations with respect
to the Notes to be due and payable, whereupon the full unpaid amount of such
Notes and any and all other Obligations with respect to the Notes which shall
be so declared due and payable shall be and become immediately due and
payable, without further notice, demand, protest or presentment (all of which
are expressly waived by the Company).
10E. WAIVERS. Except as otherwise provided for in this
Agreement and applicable law, the Company waives (a) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate
and notice of acceleration, (b) all rights to notice and a hearing prior to
any Noteholder's taking possession or control of, or to Noteholder's replevy,
attachment or levy upon, any bond or security which might be required by any
court prior to allowing any Noteholder to exercise any of its remedies and
(c) the benefit of all valuation, appraisal and exemption laws. The Company
acknowledges that it has been advised by counsel of its choice with respect
to this Agreement, the other documents contemplated
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hereby and the transactions evidenced by this Agreement and the other
documents contemplated hereby.
10F. RIGHT OF SETOFF.
(a) In the case that an Event of Default shall occur and
be continuing or shall exist, each Purchaser shall have the right, in
addition to all other rights and remedies available to them, upon 3
business days prior written notice to the Company, to Setoff against and
to appropriate and apply to the unpaid balance of the Notes, all accrued
interest thereon and all other obligations of the Company under and with
respect to the Notes, any debt owing to, and any other funds held in any
manner for the account of the Company or any of its Subsidiaries by such
Purchaser, including, without limitation, all funds in all deposit
accounts (general or special) now or hereafter maintained by the Company
or any of its Subsidiaries for their own accounts with such Purchaser.
(b) Such right shall exist whether or not such Purchaser
shall have made any demand under this Agreement, the Notes or the
Warrants and whether or not the Notes, the Warrants and such other
obligations are matured or unmatured, and shall be in addition to any
other rights and remedies which the Noteholder possess.
(c) The Company hereby confirms each Purchaser's (and
such other holder's) right of banker's lien and setoff and nothing in
this Agreement shall be deemed to be any waiver or prohibition of such
Purchaser's right of banker's lien and setoff.
Section 11. MISCELLANEOUS.
11A. EXPENSES. The Company shall pay, and hold the BA
Purchasers and each Noteholder or holder of any Securities harmless against
liability for the payment of (a) the reasonable fees and expenses of Xxxxxxxx
& Xxxxx arising in connection with the negotiation and execution of this
Agreement, any Securities, the Registration Agreement, each of the agreements
contemplated hereby or thereby and the consummation of the transactions
contemplated by this Agreement, in the amount set forth in an invoice
delivered to the Company by Xxxxxxxx & Xxxxx (which amounts shall be payable
at the Closing), (b) the fees and expenses reasonably incurred with respect
to any amendments or waivers (whether or not the same become effective) under
or in respect of any of this Agreement, the Stockholders Agreement, the
Registration Agreement, the Warrants, the Notes and the other agreements
contemplated hereby or thereby and the Company's Articles of Incorporation
(including in connection with any proposed merger, consolidation, sale or
recapitalization of the Company), and (c) the fees and expenses incurred with
respect to the enforcement of the rights granted under any of this Agreement,
the Notes, the Warrants, the Stockholders Agreement, the Registration
Agreement, the Company's Articles of Incorporation and the other agreements
contemplated hereby or thereby.
11B. REMEDIES. Each Noteholder, each holder of Series A
Preferred and each holder of Warrants and Warrant Stock shall have all rights
and remedies of Noteholders, holders of Series A Preferred and holders of
Warrants and Warrant Stock, respectively, set forth in this
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Agreement (including, without limitation, SECTIONS 10B and 10C above), the
Notes, the Warrants, the Stockholders Agreement, the Company's Articles of
Incorporation and all rights and remedies which such holders have been
granted at any time under any other agreement or contract and all of the
rights which such holders have under any Laws. Any Person having any rights
under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by Laws. All such rights and remedies shall
be cumulative and non-exclusive, and may be exercised singularly or
concurrently. One or more successive actions may be brought against the
Company, either in the same action or in separate actions, as often as any of
the Securityholders deems advisable, until all of the Obligations are paid
and performed in full.
11C. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by the Purchasers, the Company will indemnify,
exonerate and hold harmless each of the Purchasers and each other Noteholder,
holder of Series A Preferred or holder of Warrant Stock, and each of their
respective officers, directors, employees, partners and agents (collectively,
the "INDEMNITEES") from and against any and all actions, causes of action,
suits, losses, costs, liabilities and damages and expenses incurred in
connection therewith (irrespective of whether such Indemnitee is a party to
the action for which indemnification hereunder is sought), including
reasonable attorney's fees and disbursements including, without limitation,
any arising under or relating to Environmental and Safety Requirements or
relating to Hazardous Materials (collectively, the "INDEMNIFIED LIABILITIES")
incurred by any Indemnitee as a result of such Indemnitee's purchase of the
Notes, Warrants or Series A Preferred hereunder, arising out of or relating
to the operations of the Company's or any of its Subsidiaries' businesses
(other than on account of or relating to such Indemnitee's service as an
employee of the Company or any of its Subsidiaries) or the entering into and
performance of this Agreement, any of the Notes, any of the Warrants, the
Stockholders Agreement or the Registration Agreement. Notwithstanding the
foregoing, "Indemnified Liabilities" will not include as to any Indemnitee
any liabilities to the extent arising by reason of such Indemnitee's gross
negligence or willful misconduct. Further, if and to the extent that the
covenant included in this SECTION 11C may be unenforceable for any reason,
the Company hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable Laws.; provided that no Indemnitee shall be entitled to
indemnification under this SECTION 11C with respect to any Indemnified
Liability arising solely with respect breaches of the representations and
warranties of the Company set forth in SECTION 6 (other than SECTIONS 6A, 6B,
6D and 6Q) of this Agreement, unless such Indemnified Liability, together
will all other such Indemnified Liabilities, exceeds $250,0000, in which case
such Indemnitee shall be entitled to indemnification only for the amount of
such excess; it being understood, however, that the foregoing limitation
applies only to Indemnified Liabilities arising out of breaches of
representations and warranties contained in SECTION 6 (other than SECTIONS
6A, 6B, 6D and 6Q) and no other Liability for which indemnification may be
sought hereunder.
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11D. USURY. Anything herein, in the Notes or in any
agreement, certificate, instrument or other documents contemplated by this
Agreement to the contrary notwithstanding, the obligations of the Company
under this Agreement and the Notes will be subject to the limitation that
payments of interest will not be required to the extent that receipt thereof
would be contrary to provisions of law applicable to the Noteholder in
question limiting rates of interest which may be charged or collected by such
Noteholder.
11E. CONSENT TO AMENDMENTS. Except as otherwise expressly
provided herein, commencing on and after the Closing the provisions of this
Agreement may be amended or waived, and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed
by it, only if such Person has obtained the written consent of the Majority
Holders; provided that (x) any provision of the Notes (other than SECTION 2
of the Notes, the Redemption Premium Amount (as defined in the Notes), rate
of interest, maturity or principal amount, which may be amended with respect
to any Note only upon the written consent of the holders of such Note) may be
amended if and only if the Company has obtained the written consent of the
Majority Note Holders and only if the provisions of all outstanding Notes are
amended in the same manner; (y) any provisions of the Warrants (other than
SECTION 7 or 8 of the Warrants, the number of shares obtainable upon exercise
thereof and the exercise price thereof or the term thereof, which may be
amended with respect to any Warrant only with the prior written consent of
the holders of such Warrant) may be amended if and only if the Company has
obtained the written consent of the Majority Warrant Holders and only if the
provisions of all Warrants are amended in the same manner and (z) any
provision of this Agreement which would continue to apply after the Notes and
Series A Preferred are paid in full may be amended if and only if the Company
has obtained the written consent of the Majority Warrant Holders. No other
course of dealing between the Company and any Securityholder or any delay in
exercising any rights hereunder, under any of the Securities, under any other
agreement contemplated hereby or the Company's Articles of Incorporation
shall operate as a waiver of any rights of any such holders. For purposes of
this Agreement, the Notes and Warrant Stock held by the Company or any of its
Subsidiaries shall not be deemed to be outstanding or in existence. If the
Company directly or indirectly pays any consideration to any Securityholder
for such holder's consent to any amendment, modification or waiver hereunder,
the Company shall also pay each other holder of the same type of Securities
granting its consent hereunder equivalent consideration computed on a pro
rata basis.
11F. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by
or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not. In addition, and whether or not any express assignment has
been made, the provisions of this Agreement which are for the benefit of the
Purchasers as purchasers or Securityholders are also for the benefit of, and
enforceable by, any subsequent Securityholder.
11G. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable Laws, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable Laws, such
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provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
11H. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
11I. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement. Whenever the term "including"
is used in this Agreement, (whether or not that term is followed by the phrase
"without limitation" or words of similar effect) it will be interpreted to be
illustrative only and will not be interpreted as a limitation on, or an
exclusive listing. The "knowledge" or "awareness" of a Person means the actual
knowledge of such Person (which includes the actual knowledge of all officers,
directors and executive employees of such Person after reasonable inquiry).
11J. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF TEXAS
SHALL GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS AND
OBLIGATIONS OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF
THE STATE OF ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
11K. NOTICES. All notices, demands and other communications
given or delivered under this Agreement shall be in writing and shall be deemed
to have been given upon receipt when delivered personally or by telecopy, one
Business Day after being deposited with a reputable overnight courier service or
three Business Days after being deposited in the U.S. Mail. Notices, demands
and communications to the Purchasers and the Company, unless another address is
specified in writing, shall be sent to the address or telecopy number indicated
below and to the attention of such other persons indicated below or to such
other address or to the attention of such other person as the recipient party
has specified by prior written notice to the sending party:
IF TO THE PURCHASERS:
Bank of America National Trust and
Savings Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Xxxxxx X. Xxxxxxx
Telecopier: 312/828-6298
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with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
Telecopier: 312/861-2200
IF TO THE COMPANY:
Xxxxxxxxx Sign Company
0000 Xxx 00 Xxxx
Xxxxx, Xxxxx 00000
Attn: Chief Executive Officer
Telecopier: 903/535-7420
with a copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Telecopier: 214/953-5822
11L. SURVIVAL OF AGREEMENT; INDEMNITIES. All covenants,
agreements, representations and warranties made in this Agreement and in the
certificates delivered pursuant hereto shall survive the Closing hereunder and
the execution and delivery to the Purchasers of this Agreement, the Notes, the
Warrants, the Registration Agreement, the Stockholders Agreement and all other
documents delivered hereunder or contemplated hereby regardless of any
investigation made by any of the Purchasers or on behalf of any of the
Purchasers and, except as otherwise expressly provided herein, shall continue in
full force and effect so long as any of the Securities or other Obligations
remain outstanding, unperformed or unpaid, except that the representations and
warranties made herein shall continue only until the first anniversary of the
Closing Date. Notwithstanding anything to the contrary contained herein, the
Company and their Subsidiaries to indemnify the Purchasers (and the Indemnitees)
with respect to the expenses, damages, losses, costs and liabilities described
in SECTIONS 11A and 11D shall survive until all applicable statute of
limitations periods with respect to actions which may be brought against the
Purchasers (or Indemnitee) have run.
11M. TAXES AND FEES. Should any recording or filing fees, stamp
Taxes or comparable filings or fees become payable in respect of any of this
Agreement, the Notes, the
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Warrants, or any other document delivered hereunder, or any amendment,
modification or supplement thereof requested by the Company, the Company
agrees to pay the same on demand, together with any interest or penalties
thereon attributable to any delay by the Company in meeting the Purchaser's
demand, and agrees to hold the Purchasers harmless with respect thereto.
11N. JURISDICTION AND VENUE. ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST THE COMPANY OR ANY OF ITS SUBSIDIARIES WITH RESPECT TO THIS AGREEMENT,
ANY NOTE, ANY NOTE WARRANT, ANY SERIES A WARRANT, THE WARRANT STOCK, THE
STOCKHOLDERS AGREEMENT, THE REGISTRATION AGREEMENT OR ANY OTHER AGREEMENT
CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN XXXX COUNTY ILLINOIS, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT AND THE COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION
OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE COMPANY HEREBY WAIVES
ANY CLAIM THAT XXXX COUNTY ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER
FORUM BASED ON LACK OF VENUE. THE COMPANY DESIGNATES AND APPOINTS CT
CORPORATION SYSTEM, INC. (AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY
THE COMPANY WITH THE CONSENT OF THE MAJORITY HOLDERS) TO RECEIVE ON ITS BEHALF,
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY THE COMPANY TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. A COPY OF SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED
MAIL TO THE COMPANY AT ITS ADDRESS PROVIDED HEREIN, EXCEPT THAT UNLESS OTHERWISE
PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE
VALIDITY OF SERVICE OF PROCESS. TO THE EXTENT PERMITTED BY LAW, IF ANY AGENT
APPOINTED BY THE COMPANY REFUSES TO ACCEPT SERVICE, THE COMPANY HEREBY AGREES
THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN
SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF ANY OF THE PURCHASERS OR NOTEHOLDERS OR HOLDERS OF
WARRANT STOCK TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY
OTHER JURISDICTION. To the extent provided by law, should the Company, after
being so served, fail to appear or answer to any summons, complaint, process or
papers so served within the number of days prescribed by law after the mailing
thereof, the Company shall be deemed in default and an order and/or judgment may
be entered by the court against the Company as demanded or prayed for in such
summons, complaint, process or papers. The exclusive choice of forum for the
Company set forth in this SECTION 11N shall not be deemed to preclude the
enforcement by the Purchasers of any judgment obtained in any other forum or the
taking by the Purchasers of any action to enforce the same in any other
appropriate jurisdiction, and the Company each hereby waives the right to
collaterally attack any such judgment or action.
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11O. WAIVER OF RIGHT TO JURY TRIAL. THE COMPANY AND ITS
SUBSIDIARIES EACH ON BEHALF OF ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY in any
litigation in any court with respect to, in connection with, or arising out of
this Agreement, any Note, any Warrant, the Warrant Stock, the Stockholders
Agreement, the Registration Agreement, the Company's Articles of Incorporation
or any other agreement contemplated hereby or thereby or the validity,
protection, interpretation, collection or enforcement thereof. Notwithstanding
anything contained in this Agreement to the contrary, no claim may be made by
the Company against the Purchasers for any lost profits or any special, indirect
or consequential damages in respect of any breach or wrongful conduct (other
than willful misconduct constituting actual fraud) in connection with, arising
out of or in any way related this Agreement, to the transactions contemplated
hereunder, the Notes, the Warrants, the Warrant Stock, the Stockholders
Agreement, the Registration Agreement, the Company's Articles of Incorporation
or any act, omission or event occurring in connection therewith; and the Company
and its Subsidiaries each hereby waives, releases and agrees not to xxx upon any
such claim for any such damages. THE COMPANY AND ITS SUBSIDIARIES EACH AGREES
THAT THIS SECTION 11O IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND
ACKNOWLEDGES THAT THE PURCHASER WOULD NOT PURCHASE THE NOTES OR WARRANTS
HEREUNDER IF THIS SECTION 11O WERE NOT PART OF THIS AGREEMENT.
11P. CONSIDERATION FOR THE WARRANTS AND WARRANT STOCK. Each of
the Company and the Purchasers acknowledge and agree that the fair market value
of the Notes, Warrants, and Series A Preferred issued hereunder shall be as set
forth on the SCHEDULE OF PURCHASERS attached hereto, and that, for all purposes
(including tax and accounting), the consideration for the issuance of the
Warrants shall be allocated as set forth on the SCHEDULE OF PURCHASERS attached
hereto. Each of the Company and the Purchasers agree that all fees payable to
the Purchasers, as provided in SECTION 11A hereof, shall be reported for all tax
purposes as a reduction in the issue price of the debt issued to the Purchasers,
pro rata according to the principal treated by the parties as original issue
discount and reported as interest income and interest expense in accordance with
the applicable provisions of the Internal Revenue Code and the regulations
promulgated thereunder. The Company, its Subsidiaries and the Purchasers shall
file their respective federal, state and local tax returns in a manner which is
consistent with such valuation and allocation and shall not take any action or
position (whether in preparation of tax returns, financial statements or
otherwise) which is inconsistent with any of the above.
11Q. NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
11R. COMPLETE AGREEMENT. This Agreement, those documents
expressly
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referred to herein and other documents of even date herewith, embody the
complete agreement and understanding among the parties and supersede any
prior agreements or representations by or among the parties, written or oral,
which may have related to the subject matter hereof in any way.
11S. TIME OF ESSENCE. Time is of the essence for the
performance by the Company and the Company of the obligations set forth in this
Agreement, the Notes, the Warrant, the Registration Agreement, the Stockholders
Agreement, the Company's Articles of Incorporation or any document delivered
hereunder.
11T. NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the parties hereto and
their respective successors and assigns, as specified herein and to the extent
explicitly set forth herein, the holders of Senior Indebtedness.
11U. CONFIDENTIALITY OF INFORMATION. Each of the Purchasers
shall use reasonable efforts, consistent with such Purchaser's customary
practices, to assure that information about the Company and its operations,
affairs and financial condition not generally disclosed to the public or to
trade and other creditors, which is furnished to such Purchaser pursuant to the
provisions hereof is used only for the purposes of this Agreement and shall not
be divulged to any Person other than their Affiliates and their respective
officers, directors, employees and agents, except: (a) to their attorneys and
accountants, (b) in connection with the enforcement of the rights of such
Purchaser hereunder and under the Notes, the Warrants, the Stockholders
Agreement or the Registration Agreement or otherwise in connection with
applicable litigation, (c) in connection with the sale of securities so long as
the prospective purchasers thereof have agreed to be bound by the provisions of
this SECTION 11U as if they were a "Purchaser"), (d) as may otherwise be
required or requested by any regulatory authority having jurisdiction over such
Purchaser or by any applicable law, rule, regulation or judicial process,
reasonably believed by such Purchaser to be binding on the Purchaser.
* * * * *
-65-
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
XXXXXXXXX SIGN COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Its: Chairman
CONTINENTAL ILLINOIS
VENTURE CORPORATION
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: Xxxxxx Xxxxxxx
Its: Managing Director
MIG PARTNERS VIII
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: Xxxxxx Xxxxxxx
Its: General Partner
MANAGEMENT PURCHASERS:
/s/ Xxxxx Xxxxxxxx
------------------
Xxxxx Xxxxxxxx
/s/ Xxx Xxxxx
-------------
Xxx Xxxxx
/s/ Xxxxxxx Xxxxxxxxx
---------------------
Xxxxxxx Xxxxxxxxx
/s/ Xxxxxxx St. Onge
--------------------
Xxxxxxx St. Xxxx
/s/ Xxxx Xxxxxxx
----------------
Xxxx Xxxxxxx
/s/ Xxxx Xxxxxx
---------------
Xxxx Xxxxxx
-66-
