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EXHIBIT 10.43
DEBENTURE PURCHASE AGREEMENT
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This DEBENTURE PURCHASE AGREEMENT (the "Agreement") entered into the
11th day of July, 1997, by and between UNIVERSAL AUTOMOTIVE INDUSTRIES, INC. a
Delaware corporation (the "Company"), and SIRROM CAPITAL CORPORATION d/b/a
Tandem Capital, a Tennessee corporation (the "Purchaser").
WITNESSETH:
WHEREAS, the Company desires to obtain additional capital for use in
connection with its business through the issue and sale of certain obligations,
and Purchaser is willing to purchase such obligations from the Company, on the
terms and conditions set forth herein.
NOW, THEREFORE, in mutual consideration of the premises and the
respective representations, warranties, covenants and agreements contained
herein, the parties agree as follows:
1. SALE AND PURCHASE OF DEBENTURES.
1.1 Debentures. The Company has authorized the issue and sale
of Four Million Five Hundred Thousand ($4,500,000.00) aggregate principal amount
of its 12.25% Subordinated Debentures due July 11, 2002 (the "Debentures"), to
be dated the date of issue, to bear interest from such date at the rate of
12.25% per annum, payable quarterly by automatic debit on the first day of each
March, June, September, and December in each year, commencing September 1, 1997,
and at maturity, to mature on July 11 1, 2002, and to bear such other terms as
are set forth in the form attached hereto as Exhibit A-1. Interest on the
Debentures shall be computed on the basis of a 360day year of twelve 30-day
months. The Debentures are subject to prepayment or redemption at the option of
the Company prior to their expressed maturity without penalty and as provided
herein. The term "Debenture" as used herein shall include each Debenture
delivered pursuant to this Agreement. Capitalized terms shall have the meanings
assigned by Section II unless otherwise defined herein.
1.2 Initial Warrants. At the closing of the purchase and sale
of the Debentures, the Company shall grant, issue, and deliver to Purchaser its
Stock Purchase Warrant, dated July 11, 1997, in the form attached hereto as
Exhibit A-2 (the "Initial Warrant"), entitling Purchaser to purchase 450,000
Shares of Common Stock at an Exercise Price equal to 80% of the average bid
price of the Company's Common Stock for the 20 trading days preceding July 11,
1998, at any time and from time to time during the five year period beginning on
July 11, 1997.
1.3 Additional Warrants. Until the indebtedness evidenced by
the Debenture has been paid in full, the Company shall grant, issue, and deliver
to Purchaser additional Stock Purchase Warrants, in the form of Exhibit A-3 (the
"Additional Warrants"), entitling Purchaser to purchase Shares of Common Stock
at an Exercise Price equal to 80% of the average bid price of the Company's
Common Stock for the 20 trading days preceding the date of issue, at any time
and from time to time during the five year period beginning on the date of issue
of each Additional Warrant, such-Additional Warrants to be issued the 11th day
of the following months and with respect to the following numbers of Shares of
Common Stock.
Issue Date Number of Shares
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August 1998 225,000
February 1999 225,000
August 1999 225,000
August 2000 225,000
August 2001 225,000
Provided that the Additional Warrants issuable in 1999, 2000, and 2001
shall be prorated to the extent the Debentures have been prepaid, if no Event of
Default has occurred and is continuing on the issue date.
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1.4 Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to Purchaser, and
Purchaser agrees to purchase from the Company, Debentures in the aggregate
principal amount of Four Million Five Hundred Thousand Dollars ($4,500,000.00)
at a price of 100% of the principal amount thereof. Delivery of the Debentures
will be made at the offices of Tandem Capital, Inc., Nashville, Tennessee,
against payment therefor by federal funds wire transfer in immediately available
funds and to the accounts and in the amounts set forth in the Company's wire
instructions in the form of Exhibit B hereto, at 10:00 A.M., Nashville time, on
July 11, or such later date as the Company and Purchaser shall agree (the
"Closing Date"). The Debentures delivered to Purchaser on the Closing Date will
be delivered to Purchaser in the form of a single registered Debenture for the
full amount of such purchase (unless different denominations are specified by
Purchaser), registered in Purchaser's name or in the name of such nominee as
Purchaser may specify and, with appropriate insertions, in the form attached
hereto as Exhibit A-1, all as Purchaser may specify at least 24 hours prior to
the date fixed for delivery,
1.5 Processing Fee. The Company shall pay to Purchaser on or before the
Closing Date a processing fee in an amount equal to $90,000.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Purchaser as follows:
2.1 Corporate Status.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and has the corporate
power to own and operate its properties, to carry on its business as now
conducted and to enter into and to perform its obligations under this Agreement,
the Debentures, the Initial Warrant, the Registration Rights Agreement, and any
other document executed and delivered by the Company in connection herewith or
therewith (collectively, the "Operative Documents"). The Company is qualified to
do business and-is in good standing in each state or other jurisdiction in which
such qualification is necessary under applicable law, except where the failure
to so qualify would not have a Material Adverse Effect on the financial
condition or results of operations of the Company. The states or other
jurisdictions in which the Company is so qualified are set forth on Schedule 2.
hereto.
(b) Schedule 2.1 Unmarked Box -- sets forth a complete list of each
corporation, partnership, joint venture, limited liability company or other
business organization in which the Company owns, directly or indirectly, any
capital stock or other equity interest (the "Subsidiary" or, collectively, the
"Subsidiaries"), or with respect to which the Company or any Subsidiary, alone
or in combination with others, is in a control position, which list shows the
jurisdiction of incorporation or other organization and the percentage of stock
or other equity interest of each Subsidiary owned by the Company. Each
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of incorporation or other organization as indicated on
Schedule 2. 1 (b), each has all requisite power and authority and holds all
material licenses, permits and other required authorizations from government
authorities necessary to own its properties and assets and to conduct its
business as now being conducted, and each is qualified to do business as a
foreign corporation (or business organization) and is in good standing in every
jurisdiction in which such qualification is necessary under applicable law,
except where the failure to so qualify would not have a Material Adverse Effect
on the financial condition or results of operations of the Company. All of the
outstanding shares of capital stock, or other equity interest, of each
Subsidiary owned, directly or indirectly, by the Company have been validly
issued, are fully paid and nonassessable, and are owned by the Company free and
clear of all liens, charges, security interests, or encumbrances.
2.2 Capitalization.
(a) The authorized capital stock of the Company consists of
(i) 1,000,000 shares of Preferred Stock, S.01 par value, none of which are
issued and outstanding, and (ii) 15,000,000 shares of Common Stock, [???] par
value, 6,729,425 of which are issued and outstanding as of the date hereof. The
Company is in the process of issuing an additional 40,000 shares of Common
Stock, which may be issued prior to the Closing, and upon which issuance a total
of 6,769,425 shares of Common Stock will be issued, and 6,769,425 will be
outstanding. All shares of Common Stock outstanding have been validly issued and
are fully paid and nonassessable. There are no statutory or contractual
preemptive rights, rights of first refusal, antidilution rights, or any similar
rights held by any party
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with respect to the issuance of the Debentures.
(b) The Company has not granted, or agreed to grant or issue, any
options, warrants or rights to purchase or acquire from the Company any shares
of capital stock of the Company, there are no securities outstanding or
committed to be issued by the Company or any Subsidiary which are convertible
into or exchangeable for any shares of capital stock or other securities of the
Company, and there are no contracts, commitments, agreements, understandings,
arrangements or restrictions as to which the Company is a party, or by which it
is bound, relating to any shares of capital stock or other securities of the
Company, whether or not outstanding except for (i) the Debentures to be issued
pursuant to this Agreement, (ii) the Initial Warrants and Additional Warrants to
be issued pursuant to this Agreement, and (iii) such options, warrants and other
rights to acquire capital stock of the Company set forth on Schedule 2.2(b).
Except as set forth on Schedule 2.2(b), all such shares have been duly reserved
for issuance, have been duly and validly authorized, and upon issuance in
accordance with the terms of the respective instruments and receipt of payment
therefor, will be validly issued, fully paid, and nonassessable.
2.3. Authorization. The Company has full legal right, power and
authority to enter into and perform its obligations under this Agreement and the
Operative Documents without the consent or approval of any other person, firm,
governmental agency, or other legal entity, except LaSalle National Bank, whose
approval has been obtained, subject to the simultaneous payoff of all
obligations due and owing to American National Bank & Trust Company of Chicago.
The execution and delivery of this Agreement, the issuance of the Debentures
hereunder, the execution and delivery of each other document in connection
herewith or therewith to which the Company is a party, and the performance by
the Company of its obligations hereunder or thereunder are within the corporate
powers of the Company and have been duly authorized by all necessary corporate
action properly taken, have received all necessary governmental approvals, if
any were required, and do not and will not contravene or conflict with (i) the
Certificate of Incorporation or Bylaws of the Company, (ii) any material
agreement to which the Company or any of its Subsidiaries is a party or by which
any of them or their properties is bound, or constitute a default thereunder, or
result in the creation or imposition of any lien, charge, security interest, or
encumbrance of any nature upon any of the property or assets of the Company or
any of its Subsidiaries pursuant to the terms of any such agreement or
instrument, or (iii) violate any provision of law or any applicable judgment,
ordinance, regulation or order of any court or governmental agency. The officer
executing this Agreement, the Debentures, and any other document executed and
delivered by the Company in connection herewith or therewith, is duly authorized
to act on behalf of the Company.
2.4 Validity and Binding Effect. Each of the Operative Documents is the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to such limitations on
enforceability as may exist under equitable principles of law or the application
of bankruptcy or insolvency laws.
2.5 Other Agreements. Except as disclosed on Schedule 2.5, there are no
(i) outstanding loans, liens, pledges, security interests, agreements,
indentures, or instruments defining the rights of security holders, under any
securities or other financings upon which the Company or any Subsidiary is
obligated or by which the Company is bound, or (ii) other contracts required to
be filed by the Company with the Securities and Exchange Commission ("SEC") as
an exhibit pursuant to Item 601(b)(10) of Regulation S-K under the Securities
Act (each instrument identified in Schedule 2.5 individually being an
"Applicable Contract"). Consummation of the transactions hereby contemplated and
the performance of the obligations of the Company under and by virtue of the
Operative Documents, will not result in any breach of, or constitute a default
under, or require the consent of any person under, any Applicable Contract or
for which the Company has not obtained an effective waiver.
2.6 Litigation. Except as set forth on Schedule 2.6, there is no
litigation, arbitration, claim. proceeding or investigation pending or
threatened in writing which the Company or any Subsidiary is a party or to which
any of its respective properties or assets is the subject which, if determined
adversely to the Company or such Subsidiary, would individually or in the
aggregate have a Material Adverse Effect on the financial position, results of
operations, or business of the Company and its Subsidiaries.
2.7 Financial Statements. The consolidated financial statements of the
Company and its Subsidiaries for the fiscal years ended December 31, 1996, 1995,
and 1994, and the unaudited consolidated financial
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statements as of and for the five months ended May 31, 1997, and the related
notes, copies of which the Company previously has delivered to Purchaser, fairly
present the financial position, results of operations, cash flows and changes in
stockholders' equity of the Company and its consolidated Subsidiaries, at the
respective dates of and for the periods to which they apply in such financial
statements, and have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied throughout the periods
indicated, subject, in the case of interim financial statements. to normal
recurring year-end adjustments (the effect of which will not, individually or in
the aggregate, be materially adverse) and the absence of notes (that, if
presented, would not differ materially, from those included in the most recent
audited consolidated financial statements). No financial statements of any other
person(s) are required by GAAP to be included in the consolidated financial
statements of the Company.
2.8 SEC Reports. The Company's Common Stock is listed for trading on
The Chicago Stock Exchange, and NASDAQ SmallCap Market and has been duly
registered with the SEC under the Securities Exchange Act of 1934. as amended
(the "Exchange Act"). Since January 1, 1994, the Company has timely filed all
reports, registrations, proxy or information statements, and all other
documents, together with any amendments required to be made thereto, required to
be filed with the SEC under the Securities Act and the Exchange Act
(collectively, the "SEC Reports"). The Company previously has furnished to
Purchaser true copies of all the SEC Reports, together with all exhibits thereto
that Purchaser has requested. The financial statements contained in the SEC
Reports fairly presented the financial position of the Company as of the dates
mentioned and the results of operations, changes in stockholders' equity and
changes in financial position or cash flows for the periods then ended, in
conformity with GAAP applied on a consistent basis throughout the periods
involved. As of their respective dates, the SEC Reports complied (or will
comply, as the case may be) in all material respects with all rules and
regulations promulgated by the SEC and did not (or will not, as the case may be)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2.9 Absence of Changes. Since May 31, 1997, (i) neither the Company nor
any of its Subsidiaries have incurred any liabilities or obligations, direct or
contingent, or entered into any transactions. not in the ordinary course of
business, that are material to the Company or any of its Subsidiaries, (ii)
neither the Company nor any of its Subsidiaries have purchased any of its
outstanding capital stock or declared, or paid any dividend or other
distribution or payment in respect of its capital stock, (iii) there has not
been any change in the authorized or issued capital stock, long-term debt, or
short-term debt of the Company, and (iv) there has not been any material adverse
change in or affecting the business, operations, properties, prospects, assets,
or condition (financial or otherwise) of the Company or any Subsidiary, and no
event has occurred or circumstance exists that may result in such a material
adverse change.
2.10 No Defaults. Except as set forth on Schedule 2.10 and except where
a default or event of default does not and would not constitute a Material
Adverse Event, no default or event of default by the Company or any Subsidiary
exists under this Agreement or any of the other Operative Documents, or under
any Applicable Contract, or other material instrument or agreement to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or its respective properties may be bound or, to the knowledge of the Company,
affected, and no event has occurred and is continuing that with notice or the
passage of time or both would constitute a default or event of default
thereunder.
2.11 Compliance With Law. The Company and any Subsidiary are in
compliance with all foreign, federal, state or local laws, regulations, decrees
and orders applicable to them (including but not limited to the Foreign Corrupt
Practices Act, occupational and health standards and controls, antitrust,
monopoly, restraint of trade or unfair competition) to the extent that
noncompliance. in the aggregate, cannot reasonably be expected to cause a
Material Adverse Event.
2.12 Taxes. Except as set forth on Schedule 2.12, the Company and its
Subsidiaries have filed or caused to be filed all federal, state and local
income, excise and franchise tax returns required to be filed (except for
returns that have been appropriately extended), and have paid, or provided for
the payment of, all taxes shown to be due and payable on said returns and all
other taxes, impositions, assessments, fees or other charges imposed on it by
any governmental authority, agency or instrumentality, prior to any delinquency
with respect thereto (other than taxes, impositions, assessments, fees and
charges currently being contested in good faith by appropriate proceedings, for
which appropriate amounts have been reserved), and the Company does not know of
any proposed assessment
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for additional taxes or any basis therefor. No tax liens have been filed against
the Company, or its Subsidiaries or any of their properties. The Company's
federal income tax liability has been finally determined by the Internal Revenue
Service and satisfied for all taxable years up to and including the taxable year
ended December 31, 1993, or closed by applicable statutes of limitation.
2.13 Certain Transactions. Except as set forth on Schedule 2.13(i) and
except as to indebtedness incurred in the ordinary course of business and
approved by the Board of Directors of the Company, neither the Company nor any
Subsidiary is indebted, directly or indirectly, to any of its officers or
directors, or to their respective spouses or children, or to any affiliate, in
excess of an aggregate amount as set forth on Schedule 2, and none of such
officers or directors or any members of their immediate families or affiliates,
are indebted to the Company or any Subsidiary in excess of an aggregate amount
of $25,000, or have any direct or indirect ownership interest in any firm or
corporation with which the Company or any Subsidiary is affiliated or with which
the Company has a business relationship, or any firm or corporation which
competes with the Company or any Subsidiary. Except as set forth in Schedule
2.13(ii), no officer or director of the Company or any Subsidiary or any member
of their immediate families is, directly or indirectly, interested in any
material contract with the Company or any Subsidiary. Except as set forth on
Schedule 2.13(iii), neither the Company nor any Subsidiary is a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
2.14 Title to Property. The Company and each Subsidiary has good and
marketable title to all of real and personal property owned by it, free and
clear of all liens, security interests, pledges, encumbrances, equities, claims
and restrictions of every kind and nature whatsoever, except as disclosed on
Schedule 2.14. Any real property and buildings held under lease by the Company
or any Subsidiary are held under valid existing and enforceable leases, and to
the best of the Company's knowledge no default has occurred or is continuing
thereunder which might result in any material adverse change in the business,
prospects, financial conditions or results of operations of the Company. The
Company enjoys peaceful and undisturbed possession under all such leases, except
as disclosed on Schedule 2.14 or which are not material and do not interfere
with the use to be made of such buildings or property by the Company.
2.15 Intellectual Property. Except as set forth in Schedule 2.15, the
Company is the lawful owner or has a valid right to use the proprietary
information used in its business free and clear of any claim, right, trademark,
patent or copyright protection of any third party. As used herein, "proprietary
information" includes without limitation (i) any computer software and related
documentation, inventions, technical and nontechnical data related thereto, and
(ii) other documentation, inventions and data related to patterns, plans,
methods, techniques, drawings, finances, customer lists, suppliers, products,
special pricing and cost information, designs, processes, procedures, formulas,
research data owned or used by the Company or any Subsidiary or marketing
studies conducted by the Company, all of which the Company considers to be
commercially important and competitively sensitive and which generally has not
been disclosed to third parties other than customers in the ordinary course of
business. Except as set forth in Schedule 2.15, the Company has good and
marketable title to or has a valid right to use all patents, trademarks, trade
names, service marks, copyrights or other intangible property rights, and
registrations or applications for registration thereof, owned by the Company or
any Subsidiary or used or required by the Company or any Subsidiary in the
operation of its business as presently being conducted. The Company has no
knowledge of any infringements or conflict with asserted rights of others with
respect to copyrights, patents, trademarks, service marks, trade names, trade
secrets or other intangible property rights or know-how which could cause a
Material Adverse Event. To the Company's knowledge, no products or processes of
the Company infringe or conflict with any nights of patent or copyright, or any
discovery, invention product or process, that is the subject of a patent or
copyright application or registration known to the Company. The Company has
adopted and follows such procedures as the Company deems necessary or
appropriate to provide reasonable protection of the Company's trade secrets and
proprietary rights in intellectual property of all kinds. To the knowledge of
the Company, no person employed by or affiliated with the Company has employed
or proposes to employ any trade secret or any information or documentation
proprietary to any former employer, and to the knowledge of the Company, no
person employed by or affiliated with-the Company has violated any confidential
relationship that such person may have had with any third person, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Company.
2.16 Debt. Schedule 2.16 sets forth (i) a complete and correct list of
all loans, credit agreements, indentures, purchase agreements, promissory notes
and other evidences of indebtedness, Guaranties,
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capital leases and other instruments, agreements and arrangements presently in
effect providing for or relating to extensions of credit (including agreements
and arrangements for the issuance of letters of credit or for acceptance
financing) in respect of which the Company, any Subsidiary, or any of their
properties, is in any manner directly or contingently obligated; (ii) the
maximum principal or face amounts of the credits in question that are
outstanding and that can be outstanding are correctly stated; and (iii) all
liens, pledges or security interests of any nature given or agreed to be given
as security therefor or in connection therewith are correctly described or
indicated in such Schedule.
2.17 Significant Contracts. Schedule 2.17 sets forth a complete and
correct list of all contracts, agreements and other documents pursuant to which
the Company or any Subsidiary either (i) receives revenues or (ii) makes payment
to any third Person(s), in excess of $ 100,000 per fiscal year. Each such
contract, agreement and other document is in full force and effect as of the
date hereof and the Company knows of no reason why such contracts, agreements
and other documents would not remain in full force and effect pursuant to the
terms thereof.
2.18 Environmental Matters. The Company has duly complied in all
material respects with, and its business, operations, assets, equipment,
property, leaseholds or other facilities are in compliance in all material
respects with, the provisions of all federal, state and local environmental,
health, and safety laws, codes and ordinances, and all rules and regulations
promulgated thereunder, except to the extent that the violation thereof would
not reasonably be expected to cause a Material Adverse Event. The Company has
been issued and will maintain all required material federal, state and local
permits, licenses, certificates and approvals relating to (i) air emissions;
(ii) discharges to surface water or groundwater; (iii) noise emissions; (iv)
solid or liquid waste disposal; (v) the use, generation, storage, transportation
or disposal of toxic or hazardous substances or wastes (which shall include any
and all such materials listed in any federal, state or local [???] code or
ordinance and all rules and regulations promulgated thereunder as hazardous or
potentially hazardous); or (vi) other environmental, health or safety matters,
except to the extent that the violation thereof would not reasonably be expected
to cause a Material Adverse Event. Except as Noted on Schedule 2.18, the Company
has not received notice of, does not know of, and does not suspect facts which
might constitute a material violation of any federal, state or local
environmental, health or safety laws, codes or ordinances, and any rules or
regulations promulgated thereunder with respect to its businesses, operations,
assets, equipment, property, leaseholds, or other facilities. Except in
accordance with a valid governmental permit, license, certificate or approval,
there has been no emission, spill, release or discharge into or upon (i) the
air; (ii) soils, or any improvements located thereon; (iii) surface water or
groundwater; or (iv) the sewer, septic system or waste treatment, storage or
disposal system servicing the premises, of any toxic or hazardous substances or
wastes at or from the premises, except to the extent that the violation thereof
would not reasonably be expected to cause a Material Adverse Event. There has
been no complaint, order, directive, claim, citation or notice by any
governmental authority or any person or entity with respect to (i) air
emissions; (ii) spills, releases or discharges to soils or improvements located
thereon, surface water, groundwater or the sewer, septic system or waste
treatment, storage or disposal systems servicing the premises; (iii) noise
emissions; (iv) solid or liquid waste disposal; (v) the use, generation,
storage, transportation or disposal of toxic or hazardous substances or waste;
or (vi) other environmental, health or safety matters affecting the Company or
its business, operations, assets, equipment, property, leaseholds or other
facilities. The Company does not have any material indebtedness, obligation or
liability (absolute or contingent, matured or not matured), with respect to the
storage, treatment, cleanup or disposal of any solid wastes, hazardous wastes or
other toxic or hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current regulation,
law or statute regarding such storage, treatment, cleanup or disposal).
2.19 Accounting Matters. The books of account, minute books, stock
record books and other records of the Company and its Subsidiaries are complete
and correct, have been maintained in accordance with sound business practices,
and accurately and fairly reflect the transactions and dispositions of the
assets of the Company. The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (1) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain accountability for the assets of the Company and each of its
Subsidiaries; (iii) access to the assets of the Company and each of its
Subsidiaries is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets of the
Company and each of its Subsidiaries are compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
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differences.
2.20 Distributions to Company. No Subsidiary of the Company is
currently prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distributions on such Subsidiary's capital stock,
from repaying to the Company any loans or advances to such Subsidiary, or from
transferring any of such Subsidiary's property or assets to the Company or any
other Subsidiary of the Company.
2.21 Prior Sales. All offers and sales of the Company's capital stock
prior to the date hereof were at all relevant times (1) exempt from the
registration requirements of the Securities Act or were duly registered under
the Securities Act, and (ii) were duly registered or were the subject of an
available exemption from the registration requirements of all applicable state
securities or Blue Sky laws.
2.22 Regulatory Compliance. Except as set forth on Schedule 2.22, the
conduct of the business and the ownership of the assets of the Company do not
require any license, permit approved, waiver or other authorization of any
federal, state or local governmental or regulatory body, and except as set forth
on Schedule 2.12 such business is not subject to the regulation of any federal,
state or local government or regulatory body by reason of the nature of the
business being conducted. All licenses, permits and authorizations set forth on
Schedule 2.22 are in full force and effect.
2.23 Margin Regulations. The Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock. No
proceeds received pursuant to this Agreement will be used to purchase or carry
any equity security of a class which is registered pursuant to Section 12 of the
Exchange Act.
2.24 1940 Act Compliance. The Company is an "eligible portfolio
company" as such term is defined in Section 2(a)(46) of the Investment Company
Act of 1940, as amended (the "Investment Company Act"), and the issuance and
sale by the Company of the Debentures does not constitute a "public offering" as
such term is used in Section 55(a)(1) thereof.
2.25 Limited Offering. Subject in part to the truth and accuracy of
Purchaser's representations set forth in this Agreement, the offer, sale and
issuance of the Debentures and the Warrant are exempt from the registration
requirements of the Securities Act, and neither the Company nor any authorized
agent acting on its behalf has taken or will take any action hereafter that
would cause the loss of such exemption.
2.26 Registration Obligations. Except as described in Schedule 2.26,
the Company is not under any obligation to register under the Securities Act or
the Trust Indenture Act of 1939, as amended, any of its presently outstanding
securities or any of its securities that are proposed to be subsequently issued.
2.27 Insurance. The Company has maintained, and has caused each
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers with respect to their respective properties and business in such forms
and amounts and against such risks, casualties and contingencies as are
customary for corporations of comparable size and condition (financial and
otherwise) engaged in the same or a similar business and owning and operating
similar properties.
2.28 Governmental Consents. No consent, approval, qualification, order
or authorization of, or filing with, any local, state, or federal governmental
authority is required on the part of the Company in connection with the
Company's valid execution, delivery, or performance of this Agreement or the
offer, sale or issuance of the Debenture by the Company.
2.29 Manufacturing Rights. Except as described on Schedule 2.29, the
Company has not granted rights to manufacture, produce, assemble, license,
market, or sell its products to any other person and is not bound by any
agreement that affects the Company's exclusive right to develop, manufacture,
assemble, distribute, market, or sell its products.
2.30 Employees. Schedule 2.30 sets forth the number of
full-time employees and full-time equivalent employees of the Company and each
Subsidiary as of the most recent payroll date, which date is set forth therein.
To the best of the Company's knowledge, there is no strike, labor dispute or
union organization activities pending or threatened between it and its
employees. None of the Company's employees belongs to any union or
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collective bargaining unit, except the employees of the Company's Hungarian
Subsidiary. The Company has complied in all material respects with all
applicable state and federal equal opportunity and other laws related to
employment. To the best of the Company's knowledge, no employee of the Company
is or will be in violation of any judgment, decree, or order, or any term of any
employment contract, patent disclosure agreement, or other contract or agreement
relating to the relationship of any such employee with the Company, or any other
party because of the nature of the business conducted or presently proposed to
be conducted by the Company or to the use by the employee of his or her best
efforts with respect to such business the Company is not a party to or bound by
any employment contract, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement, or other employee compensation
agreement, except its employment contract with Xxxxx Xxxxx. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate employment with the Company, nor does the Company have a
present intention to terminate the employment of any of the foregoing. Subject
to general principles related to wrongful termination of employees, the
employment of each officer and employee of the Company is terminable at the will
of the Company.
2.31 ERISA. The Company is in compliance in all material respects with
all applicable provisions of Title IV of the Employee Retirement Income Security
Act of 1974, Pub. L. No. 93-406, September 2, 1974, 00 Xxxx. 000, 00 X.X.X.X. SS
1001 et seq. (1975), as amended from time to time ("ERISA"). Except as disclosed
in Schedule 2.31, neither a reportable event nor a prohibited transaction (as
defined in ERISA) has occurred and is continuing with respect to any t1pension
plan" (as such term is defined in ERISA, a "Plan"); no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds entitling the Pension Benefit
Guaranty Corporation (together with any entity succeeding to or all of its
functions, the "PBGC") to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings;
neither the Company nor any commonly controlled entity (as defined in ERISA) has
completely or partially withdrawn from a multiemployer plan (as defined in
ERISA). The Company and each commonly controlled entity has met its minimum
funding requirements under ERISA with respect to all of its Plans and the
present fair market value of all Plan property exceeds the present value of all
vested benefits under each Plan, as determined on the most recent valuation date
of the Plan and in accordance with the provisions of ERISA and the regulations
thereunder for calculating the potential liability of the Company or any
commonly controlled entity to the PBGC or the Plan under Title IV or ERISA; AND
NEITHER THE COMPANY NOR any commonly controlled entity has incurred any
liability to the PBGC under ERISA.
2.32 Fees/Commissions. The Company has not agreed to pay any finder's
fee, commission, origination fee or other fee or charge to any person or entity
with respect to or as a result of the consummation of the transactions
contemplated hereunder, except for the processing fee due to Purchaser under
Section 1,5.
2.33 Disclosure. No representation or warranty made as of the date
hereof by the Company contained in this Agreement or any Schedule attached
hereto or any statement in any document, certificate or other instrument
furnished or to be furnished to the Purchaser pursuant hereto, taken as a whole,
contains or will (as of the time so furnished) contain any untrue statement of a
material fact, or omits or will (as of the time so furnished) omit to state any
material fact which is necessary in order to make the statements contained
herein or therein not misleading.
2.34 Survival. The representations and warranties of the Company
contained in this Agreement shall survive until this Agreement terminates in
accordance with Section 12.5 hereof
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser
hereby represents to the Company as follows:
3.1 Corporate Status. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Tennessee
and has the corporate power to own and operate its properties, to carry on its
business as now conducted and to enter into and to perform its obligations under
this Agreement and any other document executed or delivered by Purchaser in
connection herewith.
3.2 Authorization. Purchaser has full legal right, power and authority
to enter into and perform its obligations under this Agreement and any other
document executed and delivered by Purchaser in connection herewith, without the
consent or approval of any other person, firm, governmental agency or other
legal entity. The execution and delivery of this Agreement and any other
document executed and delivered by Purchaser
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in connection herewith, and the performance by Purchaser of its obligations
hereunder and/or thereunder are within the corporate powers of Purchaser, have
received all necessary governmental approvals, if any were required, and do not
and will not contravene or conflict with (i) the Charter or Bylaws of Purchaser,
(ii) any material agreement to which Purchaser is a party or by which it or any
of its properties is bound, or constitute a default thereunder, or result in the
creation or imposition of any lien, charge, security interest or encumbrance of
any nature upon any of the property or assets of Purchaser pursuant to the terms
of any such agreement or instrument, or (iii) violate any provision of law or
any applicable judgment, ordinance, regulation or order of any court or
governmental agency. The officer(s) executing this Agreement and any other
document executed and delivered by Purchaser in connection herewith, is duly
authorized to act on behalf of Purchaser.
3.3 Validity and Binding Effect. This Agreement and any other document
executed and delivered by Purchaser in connection herewith are the legal, valid
and binding obligations of the Purchaser, enforceable against it in accordance
with their respective terms.
3.4 Accredited Investor, Investment Intent. Purchaser is a registered
company under the Investment Company Act and as such is an "accredited investor"
under Rule 501(u) under the Securities Act. Purchaser is acquiring the
Debentures for its own account, for investment, and not with a view to the
distribution or resale thereof in whole or in part, in violation of the
Securities Act or any applicable state securities law, and Purchaser has no
present intention of selling, negotiating or otherwise disposing of the
Debentures; it being understood that Purchaser intends to transfer and assign
the Debentures and all Purchaser's rights and obligations under this Agreement
to one or more wholly-owned Subsidiaries of Purchaser.
3.5 Survival. The representations and warranties of the Purchaser
contained in this Agreement shall survive until this Agreement terminates in
accordance with Section 12.5 hereof
4. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER. The
obligation of Purchaser to purchase and pay for the Debentures on the Closing
Date shall be subject to the fulfillment on or before the Closing Date of each
of the following conditions:
4.1 Representations and Warranties. The representations and warranties
of the Company contained in this Agreement and in any Schedule hereto or any
document or instrument delivered to Purchaser or its representatives hereunder,
shall have been true and correct when made and shall be true and correct as of
the Closing Date as if made on such date, except to the extent such
representations and warranties expressly relate to a specific date. The Company
shall have duly performed all of the covenants and agreements to be performed by
it hereunder on or prior to the Closing Date.
4.2 Officer's Certificate. The Company shall have delivered to
Purchaser a certificate, dated the Closing Date, signed by the President of the
Company, substantially in the form attached hereto as Exhibit C.
4.3 Secretary's Certificate. All proceedings taken in connection with
the transactions contemplated by this Agreement, and all documents necessary to
the consummation thereof, shall be satisfactory in form and substance to
Purchaser and Purchaser's counsel, and the Company shall have delivered to
Purchaser a certificate, dated the Closing Date, signed by the Secretary of the
Company, substantially in the form attached hereto as Exhibit D.
4.4 Legal Opinion. Purchaser shall have received the opinion of Xxxxxxx
& Xxxxxxxx Ltd., counsel for the Company, dated the Closing Date, addressed to
Purchaser, in form and substance satisfactory to Purchaser's counsel, and
covering the matters set forth in Exhibit E hereto.
4.5 Authorization Agreement. The Company shall have delivered to
Purchaser an Authorization Agreement for Pre-Authorized Payments (Debit), dated
the Closing Date, executed by a duly authorized officer(s) of the Company, in
the form attached hereto as Exhibit F.
4.6 Existence and Authority. The Company shall have delivered to
Purchaser the following certificates of public officials, in each case as of a
date within ten days of the Closing Date:
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(a) the certificate or articles of incorporation of the
Company and each of the Subsidiaries (except the Hungarian Subsidiary),
certified by the Secretary of State or other appropriate official in the
jurisdiction by which each such entity is incorporated;
(b) a certificate as to the legal existence and good standing
of the Company and each of the Subsidiaries issued by the Secretary of State or
other appropriate official of the jurisdiction by which each such entity is
incorporated; and
(c) a certificate as to the qualification to do business as a
foreign corporation and good standing of the Company and each of the
Subsidiaries, as appropriate, issued by the Secretary of State or other
appropriate official of each jurisdiction listed in Schedule 2.1 (a) and
Schedule 2.1
4.7 Delivery of Operative Documents. The Company shall have delivered
to Purchaser the following documents, executed by the Company and dated the
Closing Date:
(a) the Debenture;
(b) the Initial Warrant;
(c) the Registration Rights Agreement between the Company
and the Purchaser; and
(d) the Subordination Agreement between the Purchaser,
LaSalle National Bank and the Company.
4.8 Closing of Required Transaction. The closing of the Senior Credit
Facility shall have occurred simultaneously with the closing hereunder.
4.9 Required Consents. Any consents or approvals required to be
obtained from any third party, including any holder of indebtedness or any
outstanding security of the Company, and any amendments of agreements which
shall be necessary to permit the consummation of the transactions contemplated
hereby on the Closing Date, including the consents set forth on Schedule 2.5,
shall have been obtained and all such consents or amendments shall be
satisfactory in form and substance to Purchaser and Purchaser's counsel.
4.10 Waiver of Conditions. If on the Closing Date the Company fails to
tender to Purchaser the Debentures to be issued to Purchaser, or if the
conditions specified in this Article IV have not been fulfilled, Purchaser may
thereupon elect to be relieved of all further obligations under this Agreement
and (i) shall retain the processing fee provided by Section 1.5, and (ii) be
entitled to reimbursement for its expenses as provided by Section 12. 1. Without
limiting the foregoing, if the conditions specified in this Article IV have not
been fulfilled, Purchaser may waive compliance by the Company with any such
condition to such extent as Purchaser, in Purchaser's sole discretion, may
determine. Nothing in this Section 4.10 shall operate to relieve the Company of
any of its obligations hereunder or to waive any of Purchaser's rights against
the Company, provided, however Purchaser's sole remedy shall be to retain the
processing fee and its expense reimbursement as liquidated damages if for any
reason whatsoever the transactions contemplated hereby are not closed within 30
days after the scheduled Closing Date.
5. COVENANTS OF COMPANY. From and after the Closing Date and
continuing so long as any amount remains unpaid on any of the Debentures,
5.1 Use of Proceeds. The Company shall use the proceeds of the
Debentures only for the purposes set forth on Schedule 5.1 attached hereto. Not
later than 90 days after the sale of the Debentures, the Company shall furnish
Purchaser a certificate, executed by the President of the Company, itemizing the
use of proceeds from the Debentures.
5.2 Payment of Debentures. The Company shall pay the indebtedness
evidenced by the Debentures according to the terms thereof and shall timely pay
or perform all of the other obligations of the Company under this Agreement.
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5.3 Optional Redemptions of Debentures, Procedures.
(a) The Debentures may be redeemed, repaid or repurchased by
the Company or any Subsidiary or Affiliate, at the option of the Company, at any
time. The Debentures shall be subject to redemption, at the Company's option, in
whole at any time or in part from time to time, provided that in case of each
redemption at the Company's option hereunder, the Company will give written
notice thereof to each holder of a Debenture to be redeemed not less than 10 nor
more than 75 days prior to the date fixed for such redemption (the "Redemption
Date"), in each case specifying the Redemption Date, the aggregate principal
amount of the Debentures to be redeemed on such date and the principal amount of
Debentures held by such holder to be redeemed on such date.
(b) Neither the Company nor any Subsidiary or Affiliate,
directly or indirectly, may repurchase or make any offer to repurchase any
Debentures unless the offer has been made to repurchase Debentures, pro rata,
from all holders of the Debentures at the same time and upon the same terms and
in accordance with the provisions of Section 5.3(a). If the Company repurchases
or otherwise acquires any Debentures, such Debentures shall immediately
thereafter be canceled, and no Debentures shall be issued in substitution
therefor. Without limiting the foregoing, upon the purchase or other acquisition
of any Debentures by the Company or any Subsidiary or Affiliate, such Debentures
shall no longer be outstanding for purposes of any Section of this Agreement
relating to the taking by the holders of the Debentures of any actions with
respect hereto, including, without limitation, Sections 9.3 and 10.1.
5.4 Corporate Existence, Etc. The Company will preserve and
keep in force and effect, and will cause each Subsidiary to preserve and keep in
force and effect, its corporate existence and-good standing in the state of
incorporation thereof, its qualification and good standing as a foreign
corporation in each jurisdiction where such qualification is required by
applicable law except where the failure to so qualify would not have a Material
Adverse Effect on the financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole, and all licenses and permits
necessary to the proper conduct of its business.
5.5 Maintenance, Etc. The Company will maintain, preserve and keep, and
will cause each Subsidiary to maintain, preserve and keep, its properties and
assets which are necessary in the conduct of its business (whether owned in fee
or pursuant to a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained.
5.6 Nature of Business. Neither the Company nor any Subsidiary will
engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by the Company and
its Subsidiaries would be substantially changed from the general nature of the
business engaged in by the Company and its Subsidiaries on the date of this
Agreement.
5.7 Insurance. The Company will maintain, and will cause each
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers with respect to their respective properties and business in such forms
and amounts and against such risks, casualties and contingencies as are
customary for corporations of comparable size and condition (financial and
otherwise) engaged in the same or a similar business and owning and operating
similar properties.
5.8 Taxes, Claims for Labor and Materials. The Company will promptly
pay and discharge, and will cause each Subsidiary promptly to pay and discharge,
(i) all lawful taxes, assessments and governmental charges or levies imposed
upon the property or business of the Company or such Subsidiary, respectively,
(ii) all trade accounts payable in accordance with usual and customary business
terms, and (iii) all claims for work, labor or materials, which if unpaid might
become a lien or charge upon any property of the Company or such Subsidiary;
provided the Company or such Subsidiary shall not be required to pay any such
tax, assessment, charge, levy, account payable or claim if (i) the validity,
applicability or amount thereof is being contested in good faith by appropriate
actions or proceedings which will prevent the forfeiture or sale of any property
of the Company or such Subsidiary or any material interference with the use
thereof by the Company or such Subsidiary, and (ii) the Company or such
Subsidiary shall set aside on its books, reserves deemed by it to be adequate
with respect thereto, subject to the terms of Section 5.8 hereof.
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5.9 Compliance with Laws. Agreements, Etc. Except where failure to do
so does not and would not constitute a Material Adverse Event, the Company shall
maintain its business operations and property owned or used in connection
therewith in compliance with (i) all applicable federal, state and local laws,
regulations and ordinances, and such laws, regulations and ordinances of foreign
jurisdictions, governing such business operations and the use and ownership of
such property, and (ii) all agreements, licenses, franchises, indentures and
mortgages to which the Company is a party or by which the Company or any of its
properties is bound. Without limiting the foregoing, the Company shall pay all
of its indebtedness promptly and substantially in accordance with the terms
thereof, subject to the terms of Section 5.8.
5.10 ERISA Matters. If the Company has in effect, or hereafter
institutes, a pension plan that is subject to the requirements of Title IV of
ERISA (a "Plan"), then the following covenants shall be applicable during such
period as any such Plan shall be in effect: (i) throughout the existence of the
Plan, the Company's contributions under the Plan will meet the minimum funding
standards required by ERISA and the Company will not institute a distress
termination of the Plan; and (ii) the Company will send to Purchaser a copy of
any notice of a reportable event (as defined in ERISA) required by ERISA to be
filed with the Labor Department or the PBGC, at the time that such notice is so
filed.
5.11 Books and Records: Rights of Inspection. The Company will keep,
and will cause each Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary, in
accordance with GAAP consistently maintained. The Company shall permit a
representative of Purchaser to visit any of its properties and inspect its
corporate books and financial records, and will discuss its accounts, affairs
and finances with a representative of Purchaser, during reasonable business
hours, at all such times as Purchaser may reasonably request.
5.12 Reports. The Company will furnish to Purchaser the following:
(a) Monthly Statements. Within 20 days after the end of each
month, beginning the month of June, 1997, monthly internal financial reports
which at a minimum shall consist of a balance sheet of the Company as of the
close of such month and related statements of income and cash flows for the
one-month period then ended, as well as any additional financial reports for
such period routinely prepared with respect to the Company and the Subsidiaries;
(b) Quarterly Statements. As soon as available and in any
event within 20 days after the end of each quarterly fiscal period (except the
last) of each fiscal year, copies of.
(i) consolidated and consolidating balance sheets of
the Company and Subsidiaries as of the close of the three-month period
then ended, setting forth in comparative form the consolidated figures
at the end of the preceding fiscal year,
(ii) consolidated and consolidating statements of
income and retained earnings of the Company and Subsidiaries for the
three-month period then ended, setting forth in comparative form the
consolidated figures for the corresponding period of the preceding
fiscal year, and
(iii) consolidated and consolidating statements of
cash flows of the Company and Subsidiaries for the portion of the
fiscal year ending with such three-month period, setting forth in
comparative form the consolidated figures for the corresponding period
of the preceding fiscal year,
all in reasonable detail and accompanied by a certificate of an authorized
financial officer of the Company that such financial statements fairly present
the financial condition and results of operations and cash flows of the Company
at and for the periods presented, subject to normal year end adjustment;
(c) Annual Statements. As soon as available and in any event
within 90 days after the close of each fiscal year of the Company, copies of.
(i) consolidated and consolidating balance sheets of
the Company and Subsidiaries
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as of the close of such fiscal year, and
(ii) consolidated and consolidating statements of
income and retained earnings and cash flows of the Company and Subsidiaries for
such fiscal year,
in each case setting forth in comparative form the consolidated figures for the
preceding fiscal year, all in reasonable detail and accompanied by an
unqualified report thereon of a firm of independent public accountants of
recognized national standing;
(d) Audit Reports. Promptly upon receipt thereof, one copy of
each interim or special audit made by independent accountants of the books of
the Company or any Subsidiary;
(e) SEC and Other Reports. Promptly upon their becoming
available, one copy of each financial statement, report, notice or proxy
statement sent by the Company to stockholders generally and of each periodic or
current report, and any registration statement or prospectus filed by the
Company to any Subsidiary with any securities exchange or the SEC or any
successor agency, and copies of any orders in any proceedings to which the
Company or any of its Subsidiaries is a party, issued by any governmental
agency, federal or state, having jurisdiction over the Company or any of its
Subsidiaries. The Company specifically covenants to timely file each such item
required to be filed with the SEC and each state requiring securities laws
filings; and
(f) Requested Information. With reasonable promptness, such
financial data and other information relating to the business of the Company as
Purchaser may from time to time reasonably request.
5.13 Limitations on Debt and Obligations. Except as to (i) Indebtedness
existing on the date hereof and reflected on (a) the Company's unaudited balance
sheet as of May 31, 1997, and (b) Schedule 2.16 (which includes the Senior
Credit Facility), as the same Indebtedness may be extended or renewed (but not
increased); (ii) the Indebtedness incurred pursuant to the Debentures; (iii)
accounts payable and other trade payables incurred in the ordinary course of
business; (iv) purchase money indebtedness incurred by the Company in the
purchase of equipment and other property used by the Company in the ordinary
course of business, such purchase money indebtedness not to exceed an aggregate
amount of principal and accrued interest thereon of $1,000,000 at any time
outstanding; (v) obligations of the Company pursuant to capitalized leases; (vi)
Indebtedness that refinances secured Indebtedness under clause (i) above,
provided that the collateral for such new Indebtedness is the collateral for the
refinanced secured Indebtedness and the aggregate principal amount of such
Indebtedness does not exceed the principal amount outstanding under the
refinanced Indebtedness; (vii) Indebtedness incurred in connection with the
acquisition of a business (including the assets of a business), provided such
Indebtedness is secured solely by the assets of the business so acquired;
neither the Company nor any Subsidiary shall incur additional indebtedness in
excess of an aggregate amount of principal and interest thereon of $50,000 at
any time outstanding. Notwithstanding the foregoing, the aggregate principal
amount of any Indebtedness secured by the accounts receivable and/or inventory
of the Company and its Subsidiaries (whether such Indebtedness is permitted
under clause (i) or clause (vi)), may be increased based upon the amount of the
accounts receivable and/or inventory eligible as collateral, so long as the
ratio of the outstanding principal amount of such Indebtedness to "eligible
receivables" and/or "inventory" remains the same (howsoever such terms are
defined but provided such definitions remain consistent).
5.14 Guaranties. Without the prior written consent of Purchaser, the
Company will not, and will not pen-nit any Subsidiary to, become or be liable in
respect of any Guaranty except Guaranties by Company which are limited in
maximum financial exposure to the amounts set forth in, and are incurred in
compliance with, the provisions of Section 5.13 of this Agreement.
5.15 Limitation on Liens. Without the prior written consent of
Purchaser, the Company will not, and will not permit any Subsidiary to, create
or incur, or suffer to be incurred or to exist, any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (collectively, "Liens") on its
or their property or assets, whether now owned or hereafter acquired, or upon
any income or profits therefrom, or transfer any property for the purpose of
subjecting the same to the payment of obligations in priority to the payment of
its or their general creditors, or acquire or agree to acquire, or permit any
Subsidiary to acquire, any property or assets upon conditional sales agreement
or other title retention devices, except those Liens which exist as of the date
hereof as set forth on Schedule 2.14, and except:
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(a) purchase money liens on and security interests in
equipment hereafter acquired securing Indebtedness permitted by Section 5.13(iv)
of this Agreement, provided that such liens and security interests attach only
to the equipment so acquired and do not encumber any other property of the
Company or any Subsidiary;
(b) liens for taxes (excluding federal and state income taxes)
not yet payable or being contested in good faith by appropriate proceedings and
provided on the books of the Company or a Subsidiary; for which adequate
reserves have been
(c) mechanics', materialmen's, warehousemen's, carriers or
other like liens arising in the ordinary course of business of the Company or
any Subsidiary, if any, arising with respect to obligations which are not
overdue for a period longer than 30 days or which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided on the books of the Company or a Subsidiary;
(d) deposits or pledges to secure the performance of bids,
tenders, contracts, leases, public or statutory obligations, surety or appeal
bonds or other deposits or pledges for purposes of a like general nature or
given in the ordinary course of business by the Company or any Subsidiary; and
(e) other encumbrances consisting of zoning restrictions,
easements, restrictions on the use of real property or minor irregularities in
the title thereto, which do not arise in connection with the borrowing of, or
any obligation for the payment of, money and which, in the aggregate, do not
materially detract from the value of the premises or the business, properties or
assets of the Company or any Subsidiary; and
(f) the liens and security interests created or permitted by
the Senior Credit
5.16 Restricted Payments. The Company will not, without the prior
written consent of Purchaser and except as hereinafter provided:
(a) declare or pay any dividends, either in cash or property,
on any shares of its capital stock of any class except dividends or other
distributions payable solely in shares of Common Stock of Company; or
(b) directly or Indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its capital
stock (other than in exchange for or out of the net proceeds to the Company from
the substantially concurrent issue or sale of other shares of capital stock of
the Company or warrants, rights or options to purchase or acquire any shares of
its capital stock), provided that the Company may redeem or repurchase its
capital stock (i) In settlement of the claims listed on .Schedule 5.16, with the
consent of Purchaser, which consent shall not be unreasonably withheld, and (ii)
if the purchase price to be paid by the Company is no greater than 75% of the
fair market value of such stock at the time of purchase; or
(c) make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock, provided,
that distributions from a Subsidiary to the Company, or from a Subsidiary to
another Subsidiary, shall be permitted.
5.17 Investments. The Company will not, and will not permit any
Subsidiary to, make any Investments outside the ordinary course of business for
the Company or any Subsidiary, without the prior written consent of Purchaser,
except:
(a) Investments in direct obligations of the United States of
America, or any agency or instrumentality of the United States of America, the
payment or guaranty of which constitutes a full faith and credit obligation of
the United States of America, in either case maturing in twelve months or less
from the date of acquisition thereof,
(b) Investments in certificates of deposit maturing within one
year from the date of origin, issued by a bank or trust company organized under
the laws of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $100,000,000 and whose long-term
certificates of deposit are, at
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the time of acquisition thereof by Company or a Subsidiary, rated AA or better
by Standard & Poor's Corporation or AA or better by Xxxxx'x Investors Service,
Inc.;
(c) Investments in commercial paper maturing in 270 days or
less from the date of issuance which, at the time of acquisition by the Company
or any Subsidiary, is accorded the highest rating by Standard & Poor's
Corporation, Xxxxx'x Investors Service, Inc. or another nationally recognized
credit rating agency of similar standing;
(d) loans or advances in the usual and ordinary course of
business to officers, directors and employees for expenses (including moving
expenses related to a transfer) incidental to carrying on the business of the
Company or any Subsidiary; and
(e) receivables arising from the sale of goods and services in
the ordinary course of business of the Company and its Subsidiaries.
(f) acquisitions, mergers and consolidations permissible under
Section 5.18(a)(ii).
5.18 Mergers. Consolidations and Sales of Assets.
(a) Without the prior written consent of Purchaser, the
Company will not, and will not permit any Subsidiary to (i) consolidate with or
be a party to a merger or share exchange with any other corporation, or (ii)
sell, lease or otherwise dispose of all or any substantial part (as defined in
paragraph (d) of this Section 5.18) of the assets of Company and its
Subsidiaries; provided, however, that:
(i) any Subsidiary may merge or consolidate with or
into the Company or any Wholly-owned Subsidiary so long as in any
merger or consolidation involving the Company, the Company shall be the
surviving or continuing corporation; and
(ii) the Company may consolidate or merge with any
other corporation, or acquire all or a substantial portion of the
assets of any other entity, provided that such corporation or entity is
engaged primarily in the Company's general line of business as
conducted on the date hereof, and further provided that (A) Company
shall be the surviving or continuing corporation, (B) at the time of
such consolidation or merger and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing, (C)
such consolidation or merger shall be deemed in the good faith estimate
of the Board of Directors to be a consolidation or merger that will be
accretive to earnings per share not later than the third full quarter
following the consolidation or merger, and (D) such consolidation or
merger shall be unanimously approved by the Company's Board of
Directors; and
(iii) any Subsidiary may sell, lease or otherwise
dispose of all or any substantial part of its assets to the Company or
any other Wholly-owned Subsidiary.
(b) Without the prior written consent of Purchaser, the
Company will not permit any Subsidiary to issue or sell any shares of stock of
any class (including as "stock" for the purposes of this Section 5.18, any
warrants, rights or options to purchase or otherwise acquire stock or other
Securities exchangeable for or convertible into stock) of such Subsidiary to any
Person other than the Company or a Wholly-owned Subsidiary, except for the
purpose of qualifying directors, or except in satisfaction of the validly
preexisting preemptive rights of minority shareholders in connection with the
simultaneous issuance of stock to the Company and/or a Subsidiary whereby the
Company and or such Subsidiary maintain their same proportionate interest in
such Subsidiary.
(c) Without the prior written consent of Purchaser, the
Company will not sell, transfer or otherwise dispose of any shares of stock in
any Subsidiary (except the Hungarian Subsidiary and except to qualify directors)
or any indebtedness of any Subsidiary, and will not permit any Subsidiary to
sell, transfer or otherwise dispose of (except to the Company or a Whollyowned
Subsidiary) any shares of stock or any indebtedness of any other Subsidiary,
unless all of the following conditions are met:
(i) simultaneously with such sale, transfer or
disposition, all
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indebtedness of such Subsidiary at the time owned by the Company and by
every other Subsidiary shall be sold, transferred or disposed of as an
entirety;
(ii) the Board of Directors of the Company shall have
determined, as evidenced by a resolution thereof, that the retention of
such stock and indebtedness is no longer in the best interests of the
Company;
(iii) such stock and Indebtedness is sold,
transferred or otherwise disposed of to a Person, for a cash
consideration and on terms reasonably deemed by the Board of Directors
to be adequate and satisfactory;
(iv) the Subsidiary being disposed of shall not have
any continuing investment in the Company or any other Subsidiary not
being simultaneously disposed of, and
(v) such sale or other disposition does not Involve a
substantial part (as hereinafter defined) of the assets of the Company
and its Subsidiaries taken as a whole.
(d) As used in this Section 5.18, a sale, lease or other
disposition of assets shall be deemed to be a "substantial part" of the assets
of the Company and its Subsidiaries only if the book value of such assets, when
added to the book value of all other assets sold, leased or otherwise disposed
of by the Company and its Subsidiaries (other than in the ordinary course of
business) during the same twelve month period ending on the date of such sale,
lease or other disposition, exceeds 25 percent of the consolidated net tangible
assets of the Company and its Subsidiaries determined as of the end of the
immediately preceding fiscal year.
5.19 Transactions with Affiliates. Without the prior written consent of
Purchaser, the Company will not, and will not permit any Subsidiary to, enter
into or be a party to any transaction or arrangement with any officer, director
or Affiliate (including, without limitation, the purchase from, sale to, or
exchange of property with, or the rendering of any service by or for, any
Affiliate), except in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than could
be obtained in an arm's-length transaction with a Person other than an
Affiliate, in each case as determined in good faith by a majority of the
disinterested directors of the Company; provided, that existing transactions
with Affiliates listed on Schedule 2.13, and renewals of such transactions on
substantially similar terms, shall be permitted.
5.20 Notice. The Company shall promptly upon the discovery thereof give
written notice to Purchaser of (i) the occurrence of any default or Event of
Default or event which, with the passage of time, would constitute an Event of
Default, under this Agreement, (ii) the occurrence of any default or event of
default under any other agreement providing for Indebtedness of the Company or
any Subsidiary or under a capitalized lease obligation, (iii) any actions, suits
or proceedings instituted by any Person against the Company or a Subsidiary or
materially affecting any of the assets of the Company or any Subsidiary, or (iv)
any investigation initiated by, or any dispute between and any governmental
regulatory body, on the one hand, and the Company or any Subsidiary, on the
other hand, which dispute might interfere with the normal operations of the
Company or any Subsidiary; provided, however, that Purchaser shall not be
required by this Agreement to disclose any such information provided in (iii) or
(iv) above to any third party other than Purchaser's counsel and except to the
extent compelled by law or otherwise authorized by the Company.
5.21 Board of Directors, Observer Rights.
(a) As soon as practicable, and in no case later than 30 days
after the Closing of the transactions contemplated hereby, (i) the size of the
Board of Directors of the Company shall be increased to nine directors, and (ii)
a nominee of Purchaser shall be elected a director. For so long, as the initial
Purchaser or any Affiliate owns Debentures representing at least 25 percent of
the original principal amount of the Debentures, the Company agrees to include a
nominee of the initial Purchaser in management's slate of nominees to be elected
to the Board of Directors and to recommend to the stockholders the election of
such nominee. Any nominee of Purchaser hereunder shall be reimbursed for all
reasonable expenses incurred as a director and shall be entitled to receive such
compensation as may be received by other non-employee directors of the Company,
including indemnity and
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advancement of expenses to the fullest extent permitted under applicable law.
(b) For so long as the Purchaser or any Affiliate owns
Debentures representing at least 25% of the original principal amount of the
Debentures, provided that no nominee of the Purchaser is a director, the Company
shall invite one representative of Purchaser to attend, at the Company's
expense, all meetings of the Company's Board of Directors and all committees of
the Company's Board of Directors in a nonvoting observer capacity and, in this
respect, shall give such representative copies of all notices and meeting agenda
in advance of such meetings and shall permit such representative to review all
documents and other materials provided to directors at such meetings. The
Company shall also provide Purchaser, in advance, with copies of all actions
proposed to be taken by the Board of Directors in lieu of meeting.
5.22 Annual Plan. The Board of Directors shall adopt and the Company
will furnish to Purchaser, in such manner and form as approved by the Board of
Directors of the Company, no later than the first day of each fiscal year, a
financial plan for the Company, which shall include at least a projection of
income and expenses (including capital expenditures) and a projected cash flows
statement for each month in such fiscal year, and a projected balance sheet as
of the end of each month in such fiscal year (the "Annual Plan"). The Annual
Plan may only be amended or revised, in any material manner, with the approval
of the Board of Directors. The Company shall furnish to Purchaser each amendment
or revision to the Annual Plan promptly upon approval by the Board of Directors.
5.23 Further Assurances. The Company will take all actions reasonably
requested by Purchaser to effect the transactions contemplated by this Agreement
and the other Operative Documents.
6. SUBORDINATION OF DEBENTURES.
6.1 Subordination. The indebtedness evidenced by the Debentures,
including principal and interest, shall be subordinate and junior to the prior
payment of the indebtedness of the Company for borrowed money only as set forth
in that certain revolving line of credit permitting borrowings of up to
$20,000,000 and term loan permitting borrowings of up to $4,450,000 issued by
LaSalle National Bank (the "[???] of Indebtedness"), and the indebtedness
evidenced by the Debentures shall be senior in right of payment to all other
Indebtedness of the Company which is expressly stated to be subordinate or
junior in any respect to other Indebtedness of the Company, including the
Debentures,
6.2 Liquidation, Etc.
(a) Upon any distribution of assets of the Company in
connection with any dissolution, winding up, liquidation or reorganization of
the Company (whether in bankruptcy, insolvency, or receivership proceedings or
upon an assignment for the benefit of creditors or otherwise), the holders of
all Senior Indebtedness shall first be entitled to receive payment in full of
the principal thereof, premium, if any, and interest due thereon, and all costs
and expenses (including attorneys' fees) related thereto, before the holders of
the Debentures shall be entitled to receive any payment on account of the
principal of or interest on or any other amount owing with respect to the
Debentures (other than payment in shares of capital stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, which stock and
securities are subordinated to the payment of all Senior Indebtedness and
securities received in lieu thereof which may at the time be outstanding). Under
the circumstances provided herein, the holders of the Senior Indebtedness shall
have the right to receive and collect any distributions made with respect to the
Debentures until such time as the Senior Indebtedness is paid in full, and shall
have the further right to take such actions as may be deemed necessary or
required to so receive and collect such distributions including making or filing
any proofs of claim relating thereto.
(b) Without in any way modifying the provisions of this
Article VI or affecting the subordination effected hereby if such notice is not
given, the Company shall give prompt written notice to the Purchaser of any
dissolution, winding up, liquidation or reorganization of maker (whether in
bankruptcy, insolvency or receivership proceedings or upon an assignment for the
benefit of creditors or otherwise).
6.3 Senior Indebtedness Default. The Company shall not declare or pay
any dividends or
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make any distributions to the holders of capital stock of the Company, or
purchase or acquire for value, any of the Debentures if any default has occurred
and is continuing with respect to the payment of principal of premium if any or
interest on any Senior Indebtedness.
6.4 Subrogation. Upon the prior payment in full of all Senior
Indebtedness, the Purchaser shall be subrogated to the rights of the holders of
the Senior Indebtedness to receive payments or distributions of assets of the
Company applicable to the Senior Indebtedness until all amounts owing on the
Debentures shall be paid in fall, and for the purpose of such subrogation, no
payments or distributions to the Purchaser otherwise payable or distributable to
the holders of Senior Indebtedness shall, as between the Company, its creditors,
other than the holders of Senior Indebtedness, and Purchaser, be deemed to be
payment by the Company to or on account of the Debentures, it being understood
that the provisions of this Article VI are and are intended solely for the
purpose of defining the relative rights of Purchaser, on the one hand, and the
holders of the Senior Indebtedness, on the other hand.
6.5 Company's Obligations Not Impaired.
(a) Nothing contained in this Article VI or in the Debentures
is intended to or shall impair, as between the Company and Purchaser, the
obligation of the Company, which is absolute and unconditional, to pay the
Purchaser the principal of and interest on the Debentures as and when the same
shall become due and payable in accordance with the terms of the Debentures, or
is intended to or shall affect the relative rights of the Purchaser other than
with respect to the holders of the Senior Indebtedness, nor, except as expressly
provided in this Article VI, shall anything herein or therein prevent the
Purchaser from exercising all remedies otherwise permitted by applicable law
upon the occurrence of an Event of Default under this Agreement or under the
Debentures.
(b) If any payment or distribution shall be received in
respect of the Debentures in contravention of the terms of this Article VI, such
payment or distribution shall be held in trust for the holders of the Senior
Indebtedness, and shall be immediately delivered to such holders in the same
form as received.
7. INTENTIONALLY OMITTED.
8. RESTRICTION OF TRANSFER REGISTRATION RIGHTS.
8.1 Legends: Restrictions on Transfer. Neither the Debentures nor the
shares of Common Stock issuable upon exercise of the Warrants have been
registered under the Securities Act or any state securities laws. Each Debenture
issued pursuant to this Agreement and each stock certificate issued upon
exercise of Warrants shall bear a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW,
AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 AND SUCH APPLICABLE STATE SECURITIES
LAWS, OR (11) AN OPINION OF COUNSEL ACCEPTABLE TO THE [CONVANY] THAT SUCH
REGISTRATION IS NOT REQUIRED.
8.2 Registration Rights. The Purchaser shall be entitled to register
Common Stock issuable upon exercise of the Warrants as provided in the
Registration Rights Agreement.
9. EVENTS OF DEFAULT: REMEDIES.
9.1 Events of Default. The occurrence of any one of the following shall
constitute an "Event of Default" under this Agreement:
(a) Default shall occur in the payment of interest on any
Debenture when the same shall have become due; or
(b) Default shall occur in the making of any payment of the
principal of any Debenture or the premium, if any, by the Company thereon at the
expressed or any accelerated maturity date or at any date fixed by the Company
for prepayment; or
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(c) Default shall be made in the payment of the principal of
or interest on any Indebtedness (other than the Debentures) of the Company or
any Subsidiary and such default shall continue beyond the period of grace, if
any, allowed with respect thereto; or
(d) Default or the happening of any event shall occur under
any contract, agreement, lease, indenture or other instrument under which any
Indebtedness (other than the Debentures) of the Company or any Subsidiary may be
issued and such default or event shall continue for a period of time sufficient
to permit the acceleration of the maturity of any such Indebtedness of the
Company or any Subsidiary outstanding thereunder; or
(e) Default shall occur in the observance or performance of
any covenant or agreement contained in Section 5.3 or Sections 5.13 through 5.22
hereof, or
(f) Default shall occur in the observance or performance of
any other provision of this Agreement which is not remedied within 30 days after
the earlier of (i) the date on which the Company first obtains knowledge of such
Default and (ii) the date on which written notice thereof is given to the
Company by the holder of any Debenture, provided, that such 30-day period shall
be extended to such longer period as is reasonably necessary to cure the
Default, as long as (A) the Company has taken substantial action to cure the
Default within such 30-day period, (B) the Company is proceeding diligently to
cure the Default, and (C) the Default can reasonably be expected to be cured
within 75 days after the earlier of (i) of (ii); or
(g) Any representation or warranty made by the Company herein,
or made by the Company in any statement or certificate furnished by the Company
in connection with the consummation of the issuance and delivery of the
Debentures or furnished by the Company pursuant hereto, is untrue in any
material respect as of the date of the issuance or making thereof, or
(h) Final judgment or judgments for the payment of money
aggregating in excess of $100,000, is or are outstanding against the Company or
any Subsidiary or against any property or assets of either and any one of such
judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of 30 days from the date of its entry; or
(i) The Company or any Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Company or any Subsidiary
applies for or consents to the appointment of a custodian, trustee, liquidator,
or receiver for the Company or such Subsidiary or for the major part of the
property of either; or
(j) A custodian, trustee, liquidator, or receiver is appointed
for the Company or any Subsidiary or for the major part of the property of
either and is not discharged within 60 days after such appointment; or
(k) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or similar law
or laws for the relief of debtors, are instituted by or against the Company or
any Subsidiary and, if instituted against the company or any Subsidiary, are
consented to or are not dismissed within 60 days after such institution.
9.2 Notice to Holders. When any Event of Default has occurred, or if
the holder of any Debenture or of any other evidence of indebtedness of the
Company gives any notice or takes any other action with respect to a claimed
default, the Company agrees to give notice within three Business Days of such
event to all holders of the Debentures then outstanding.
9.3 Acceleration of Maturities. When any Event of Default described in
paragraph (a), (b) or (c) of Section 9.1 has occurred and is continuing, any
holder of any Debenture may, and when any Event of Default described in
paragraphs (d) through (i), inclusive, of Section 9.1 has occurred and is
continuing, the holder or holders of 50% or more of the principal amount of
Debentures at the time outstanding may, by notice to the Company, declare the
entire principal and all interest accrued on all Debentures to be, and all
Debentures shall thereupon become, forthwith due and payable, without any
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived. When any Event of Default described in paragraph 0) or
(k) of Section 9.1
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has occurred, then all outstanding Debentures shall immediately become due and
payable without presentment, demand or notice of any kind, all of which are
hereby expressly waived. Upon the Debentures becoming due and payable as a
result of any Event of Default as aforesaid, the Company will forthwith pay to
the holders of the Debentures the entire principal and interest accrued on the
Debentures. No course of dealing on the part of any Debenture holder nor any
delay or failure on the part of any Debenture holder to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. The Company further agrees, to the fullest extent permitted
by law, to pay to the holder or holders of the Debentures all costs and
expenses, including reasonable attorneys' fees, incurred by them in the
collection of any Debentures upon any default hereunder or thereon.
10. AMENDMENTS, WAIVERS AND CONSENTS.
10.1 Consent Required. Any term, covenant, agreement or condition of
this Agreement may, with the consent of the Company, be amended or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively), if the Company shall have obtained the consent
in writing of the holders of at least 50% in aggregate principal amount of
outstanding Debentures; provided that without the written consent of the holders
of all of the Debentures then outstanding, no such waiver, modification,
alteration or amendment shall be effective (i) which will change the time of
payment of the principal of or the interest on any Debenture or reduce the
principal amount thereof or change the rate of interest thereon, (ii) which will
change any of the provisions with respect to optional prepayments, or (iii)
which will change the percentage of holders of the Debentures required to
consent to any such amendment, modification or waiver of any of the provisions
of Article IX or Article X.
10.2 Solicitation of Debenture Holders. The Company will not, directly
or indirectly, pay or cause to be paid, any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any holder of the
Debentures as consideration for or as an inducement to the entering into by any
holder of the Debentures of any waiver or amendment of any of the terms and
provisions of this Agreement, unless such remuneration is concurrently paid, on
the same terms, ratably to the holders of all of the Debentures then
outstanding.
10.3 Effect of Amendment or Waiver. Any such amendment or waiver shall
apply equally to all of the holders of the Debentures and shall be binding upon
them, upon each future holder of any Debenture, and upon the Company, whether or
not such Debenture shall have been marked to indicate such amendment or waiver.
No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
11. INTERPRETATION OF AGREEMENT, DEFINITIONS.
11.1 Definitions. As used herein.
"Affiliate" means any Person (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, the Company, (ii) which beneficially owns or holds 5 % or more of
any class of the Voting Stock of the Company or (iii) 5 % or more of the Voting
Stock (or in the case of a Person which is not a corporation, 5 % or more of the
equity interest) of which is beneficially owned or held by the Company or a
Subsidiary,
"Business Day" means any day other than a Saturday, Sunday, or other
day on which banks in Tennessee are authorized to close.
The term "control" (including the terms "controlling," "controlled by"
and "under common control") means the possession. directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of Voting Stock, by a contract, or
otherwise.
"Default" means any event or condition, the occurrence of which would,
with the lapse of time or the giving of notice, or both, constitute an Event of
Default as defined in Section 9.1.
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"Event of Default" shall have the meaning set forth in Section 9.1.
"Guaranties" by any Person means all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (A) for the purchase or payment of such Indebtedness or obligation, (B) to
maintain working capital or other balance sheet condition or (C) otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, or (iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Hazardous Substance" means any hazardous or toxic material, substance
or waste, pollutant or contaminant which is regulated under any statute, law,
ordinance, rule or regulation of any local, state, regional or Federal authority
having jurisdiction over the property of the Company and its Subsidiaries or its
use, including but not limited to any material, substance or waste which is: (i)
defined as a hazardous substance under Section 311 of the Federal Water
Pollution Control Act (33 U.S. C. SS 1317. 1) as amended: (11) regulated as a
hazardous waste under Section 1004 or Section 3001 of the Federal Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act (42
U.S.C. SS 6901 et seq.) as amended; (iii) defined as a hazardous substance under
Section 10 1 of the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. SS 9601 et seq.) as amended; or (iv) defined or
regulated as a hazardous substance or hazardous waste under any rules or
regulations promulgated under any of the foregoing statutes.
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