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10.13
Series B Preferred Stock Purchase Agreement
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TABLE OF CONTENTS
Page No.
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ARTICLE I - PURCHASE AND SALE OF THE SECURITIES...................................................................1
1.1 Purchase and Sale of the Securities; Purchase Price.............................................1
1.2 Closing.........................................................................................1
ARTICLE 2 - CONDITIONS TO THE OBLIGATIONS OF......................................................................2
2.1 Representations and Warranties; Performance Covenants...........................................2
2.2 Proceedings.....................................................................................2
2.3 Compliance Certificate..........................................................................2
2.4 Secretary's Certificates........................................................................2
2.5 Documents.......................................................................................2
2.6 Purchase of Securities Permitted by Applicable Laws.............................................3
2.7 Opinion of Counsel..............................................................................3
2.8 Consents and Approvals..........................................................................3
2.9 Registration Rights Agreement...................................................................3
2.10 Stockholders Agreement..........................................................................3
2.11 Certificate of Incorporation, Certificate of Amendment and Bylaws;..............................3
2.12 No Material Judgment or Order...................................................................4
2.13 Good standing Certificates......................................................................4
2.14 No Litigation...................................................................................4
ARTICLE 3 - CONDITIONS TO THE OBLIGATIONS.........................................................................4
3.1 Representations and Warranties..................................................................4
3.2 Compliance with this Agreement..................................................................4
3.3 Consents and Approvals..........................................................................4
3.4 No-Material Judgment or Order...................................................................4
3.5 No Litigation...................................................................................5
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................5
4.1 Corporate Organization, Existence and Power.....................................................5
4.2 Corporate Authorization; No Contravention.......................................................5
4.3 Governmental Authorization; Third Party Consents................................................6
4.4 Binding Effect; Enforceability..................................................................6
4.5 No Legal Bar....................................................................................6
4.6 Litigation......................................................................................6
4.7 Compliance with Laws............................................................................7
4.8 Title to Properties.............................................................................7
4.9 Use of Real Property............................................................................7
4.10 Taxes...........................................................................................8
4.11 Financial Condition.............................................................................8
4.12 ERISA -- Employee Benefit Plans.................................................................9
4.13 Disclosure.....................................................................................10
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4.14 Absence of Certain Changes or Events...........................................................10
4.15 Subsidiaries...................................................................................10
4.16 Capitalization; Stockholders' List.............................................................10
4.17 Private Offering...............................................................................11
4.18 Broker's, Finder's or Similar Fees.............................................................12
4.19 Patents, Trademarks, Etc.......................................................................12
4.20 Potential Conflicts of Interest................................................................12
4.21 Outstanding Borrowings.........................................................................13
4.22 Material Contracts.............................................................................13
4.23 Insurance......................................................................................13
4.24 Registration Rights............................................................................13
4.25 Labor Agreements and Actions; Employee Compensation............................................13
4.28 Environmental Compliance.......................................................................14
4.29 Operating Company..............................................................................15
4.28 Small Business Matters.........................................................................15
ARTICLE 5 -......................................................................................................15
5.1 Authorization; No Contravention................................................................15
5.2 Binding Effect.................................................................................15
5.3 No Legal Bar...................................................................................16
5.4 Accredited Investor............................................................................16
5.5 Purchase for Own Account.......................................................................16
5.6 Broker's, Finder's or Similar Fees.............................................................16
5.7 Governmental Authorization; Third Party Consent................................................16
ARTICLE 6 - AFFIRMATIVE COVENANTS................................................................................16
6.1 Financial Statements and Other Information.....................................................16
6.2 Compliance with Laws...........................................................................19
6.3 Reservation of Shares..........................................................................19
6.4 Inspection; Confidential Treatment.............................................................19
6.5 Insurance......................................................................................19
6.6 Books and Records..............................................................................20
6.7 Granting of Management Options.................................................................20
6.8 Business Activities............................................................................20
6.9 Qualified Small Business Stock.................................................................20
6.10 Tax Election...................................................................................20
6.11 SBIC Regulatory Provisions.....................................................................20
ARTICLE 7 - MISCELLANEOUS........................................................................................20
7.1 Survival of Representations and Warranties.....................................................20
7.2 Notices........................................................................................21
7.3 Successors and Assigns.........................................................................21
7.4 Amendment and Waiver...........................................................................22
7.5 Signatures; Counterparts.......................................................................22
7.6 Headings.......................................................................................22
7.7 GOVERNING LAW..................................................................................22
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7.8 JURISDICTION, WAIVER OF JURY TRIAL, ETC......................................22
7.9 Severability.................................................................23
7.10 Rules of Construction........................................................23
7.11 Entire Agreement.............................................................23
7.12 Certain Expenses.............................................................23
7.13 Publicity....................................................................24
7.14 Further Assurances...........................................................24
7.15 No Strict Construction.......................................................24
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EXECUTION COPY
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT ("AGREEMENT"), dated as of
March 16, 2001, by and between TBM Holdings, Inc. (the "COMPANY"), a Florida
corporation, and the purchasers set forth on SCHEDULE I attached hereto (each, a
"PURCHASER" and collectively, the "PURCHASERS").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to the Purchasers, and the
Purchasers wish to purchase from the Company 944,508 shares (the "PURCHASERS
SHARES" OR THE "SECURITIES") of 10% Series B Cumulative Convertible Preferred
Stock, $.001 par value per share, of the Company (the "SERIES B PREFERRED
STOCK"), upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF THE SECURITIES
1.1 PURCHASE AND SALE OF THE SECURITIES; PURCHASE PRICE. Subject to the terms
and conditions herein set forth, the Company agrees that it will issue and sell
to the Purchasers, and each of the Purchasers, severally and not jointly, agrees
that it will acquire from the Company, the Shares set forth opposite such
Purchaser's name on Schedule I attached hereto, on the Closing Date. The Shares
shall have the powers, rights and preferences set forth in the Articles of
Amendment to the Articles of Incorporation of the Company, a copy of which is
attached hereto as Exhibit A (the "Articles of Amendment"). The aggregate
purchase price for the Shares shall be $3,000,000.
1.2 CLOSING. The purchase and issuance of the Shares shall take place at a
closing (the "Closing") to be held at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local time, on March 16,
2001, or at such other time and place as the Company and the Purchasers may
agree (the "Closing Date"). At the Closing, the Company shall deliver stock
certificates evidencing the Shares to the Purchasers against delivery by the
Purchasers to the Company of the purchase price therefor. Payment of such
purchase price shall be by wire transfer.
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ARTICLE 2
CONDITIONS TO THE OBLIGATIONS OF
THE PURCHASER TO PURCHASE THE SECURITIES
The obligations of each of the Purchasers to purchase the Shares, to pay the
purchase price therefor at the Closing and to perform any obligations hereunder
shall be subject to the satisfaction as determined by, or waived by, such
Purchaser of the following conditions on or before the Closing Date; provided,
however, that any waiver of a condition shall not be deemed a waiver of any
breach of any representation, warranty, agreement, term or covenant or of any
misrepresentation by the Company, except to the extent expressly so waived.
2.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE COVENANTS. The representations
and warranties of the Company contained in Article 4 hereof shall be true and
correct at and as of the date hereof and the Closing Date as if made at and as
of each such date, and the Company shall have performed and complied with all of
its agreements and conditions set forth or contemplated herein that are required
to be performed by, or complied with by the Company on or before the Closing
Date.
2.2 PROCEEDINGS. All corporate and other proceedings taken or required to be
taken by the Company and the Company's stockholders in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to each of the Purchasers.
2.3 COMPLIANCE CERTIFICATE. The Purchasers shall have received at the Closing a
certificate, dated the Closing Date, and executed by the Chief Executive
Officer, the President or a Vice President of the Company, certifying that the
conditions specified in Section 2.1 hereof have been fulfilled in their entirety
and stating that there has been no material adverse change in the business,
affairs, operations, properties, assets or condition of the Company since the
date of the most recent balance sheet included in the Financial Statements (as
defined in Section 4.11 hereof) of the Company, which were delivered to the
Purchaser prior to Closing.
2.4 SECRETARY'S CERTIFICATES. The Purchaser shall have received a certificate
from the Company, dated the Closing Date and signed by the Secretary or an
Assistant Secretary of the Company, certifying (a) that the attached copies of
the Articles of Incorporation of the Company (the "Articles of Incorporation"),
the Bylaws of the Company (the "Bylaws"), and resolutions of the Board of
Directors of the Company approving this Agreement, the Articles of Amendment,
the Stockholders Agreement (as hereinafter defined), the Registration Rights
Agreement (as hereinafter defined) and the transactions contemplated hereby and
thereby are all true, complete and correct and remain unamended and in full
force and effect, and (b) the incumbency and specimen signature of each officer
of the Company executing each such document or any other document delivered in
connection herewith or therewith on behalf of the Company.
2.5 DOCUMENTS. The Purchaser shall have received true, complete and correct
copies of such agreements, schedules, exhibits, certificates, documents,
financial information and filings as it may request in connection with or
relating to the transactions contemplated hereby, all in form
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and substance satisfactory to the Purchaser, including, without limitation, (a)
duly completed and executed SBA Forms 480, 652 and Parts A and B of 1031,(b) a
business plan showing the Company's financial projections (including balance
sheets and income and cash flow statements), and (c) a written certification
from the Company regarding its intended use of the proceeds of the Financing (as
defined in Section 4.28).
2.6 PURCHASE OF THE SHARES PERMITTED BY APPLICABLE LAWS. The acquisition of and
payment for the Shares to be acquired by each of the Purchasers hereunder and
the consummation of the transactions contemplated hereby (a) shall not be
prohibited by the Company's Articles of Incorporation or any Federal, state or
local statute, rule, regulation or other law (collectively, "Laws"), (b) shall
not subject the Purchasers to any penalty or other onerous condition under or
pursuant to any Law, and (c) shall be permitted by all Laws to which the
Purchasers or the transactions contemplated by or referred to herein or in the
other documents and agreements contemplated hereby (such documents and
agreements, together with this Agreement, the "Transaction Documents") are
subject; and the Purchasers shall have received such certificates or other
evidence as they may reasonably request to establish compliance with this
condition.
2.7 OPINION OF COUNSEL. The Purchasers shall have received an opinion of outside
counsel to the Company and its subsidiaries (if any), dated as of the Closing
Date, relating to the transactions contemplated by or referred to herein, in
form and substance satisfactory to the Purchaser.
2.8 CONSENTS AND APPROVALS. All consents, exemptions, authorizations, or other
actions by, or notices to, or filings with, governmental entities and
authorities and other persons, necessary, desirable, or required to be obtained,
made or given in connection with the execution, delivery or performance by the
Company, or enforcement against the Company, of the agreements and other
documents to which it entered into as part of or in contemplation of the
transactions contemplated hereby and be in full force and effect, and the
Purchaser shall have been furnished with appropriate evidence thereof, and all
waiting periods shall have lapsed without extension or the imposition of any
conditions or restrictions.
2.9 REGISTRATION RIGHTS AGREEMENT. The Company shall have duly executed and
delivered the Registration Rights Agreement (the "Registration Rights
Agreement"), in the form attached hereto as Exhibit B.
2.10 STOCKHOLDERS AGREEMENT. The Stockholders Agreement (the "Stockholders
Agreement") shall have been duly executed and delivered by all of the parties
thereto, in the form attached hereto as Exhibit C.
2.11 ARTICLES OF INCORPORATION, ARTICLES OF AMENDMENT AND BYLAWS. The Company
shall have (a) filed the Articles of Amendment, containing the rights,
preferences and privileges of the Series B Preferred Stock, in substantially the
form attached hereto as Exhibit A, and (b) otherwise amended its Articles of
Incorporation and Bylaws in form and substance satisfactory to the Purchasers.
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2.12 NO MATERIAL JUDGMENT OR ORDER. There shall not be on the Closing Date any
judgment or order of a court of competent jurisdiction or any ruling of any
governmental entity or authority or any condition imposed under any Law which,
in the judgment of the Purchasers, would prohibit the purchase of the Shares
hereunder or subject the Purchasers to any penalty or other onerous condition
under or pursuant to any Law if the Securities were to be purchased hereunder.
2.13 GOOD STANDING CERTIFICATES. The Company shall have delivered to the
Purchasers as of the Closing Date a good standing certificate for the Company
and its subsidiaries (if any) with respect to their respective jurisdictions of
incorporation.
2.14 NO LITIGATION. No action, suit or proceeding before any court or any
governmental entity or authority shall have been commenced or threatened, no
investigation by any governmental entity or authority shall have been commenced
and no action, suit or proceeding by any governmental entity or authority shall
have been threatened against the Purchasers, or the Company (a) seeking to
restrain, prevent or change the transactions contemplated hereby or questioning
the validity or legality of any of such transactions, or (b) which would, if
resolved adversely to the Purchasers or the Company, severally or in the
aggregate, materially and adversely affect the condition of the Company.
ARTICLE 3
CONDITIONS TO THE OBLIGATIONS
OF THE COMPANY TO ISSUE AND SELL THE SECURITIES
The obligations of the Company to issue and sell the Shares and to perform its
other obligations hereunder relating thereto shall be subject to the
satisfaction as determined by, or waived by, the Company of the following
conditions on or before the Closing Date:
3.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of each
of the Purchasers contained in Article 5 hereof shall be true and correct at and
as of the date hereof and the Closing Date as if made at and as of each such
date.
3.2 COMPLIANCE WITH THIS AGREEMENT. Each of the Purchasers shall have performed
and complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by such Purchaser on
or before the Closing Date.
3.3 CONSENTS AND APPROVALS. All consents, exemptions, authorizations, or other
actions by, or notices to, or filings with, governmental entities and
authorities and other persons, necessary, desirable, or required to be obtained,
made or given in connection with the execution, delivery or performance by the
Company, or enforcement against the Company, of the agreements and other
documents to which it entered into as part of or in contemplation of the
transactions contemplated hereby and be in full force and effect and all waiting
periods shall have lapsed without extension or the imposition of any conditions
or restrictions.
3.4 NO MATERIAL JUDGMENT OR ORDER. There shall not be on the Closing Date any
judgment or order of a court of competent jurisdiction or any ruling of any
governmental entity or authority or any condition imposed under any Law which,
in the judgment of the Company, would prohibit
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the purchase of the Shares hereunder or subject the Company to any penalty or
other onerous condition under or pursuant to any Law if the Securities were to
be purchased hereunder.
3.5 NO LITIGATION. No action, suit or proceeding before any court or any
governmental entity or authority shall have been commenced or threatened, no
investigation by any governmental entity or authority shall have been commenced
and no action, suit or proceeding by any governmental entity or authority shall
have been threatened against the Purchasers or the Company (a) seeking to
restrain, prevent or change the transactions contemplated hereby or questioning
the validity or legality of any of such transactions, or (b) which would, if
resolved adversely to the Purchasers or the Company, severally or in the
aggregate, materially and adversely affect the condition of the Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule (the "DISCLOSURE SCHEDULE")
attached hereto as Schedule A, the Company hereby represents and warrants to the
Purchaser as follows:
4.1 CORPORATE ORGANIZATION, EXISTENCE AND POWER. The Company and each of its
subsidiaries (if any): (a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation; (b)
has all requisite corporate power and authority to own and operate its property,
to lease the property it operates as lessee and to conduct the business in which
it is currently engaged; (c) is, duly qualified as a foreign corporation,
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to so qualify
would not have a material adverse effect on the condition of the Company; and
(d) has the corporate power and authority to execute, deliver and perform its
obligations under this Agreement, the Registration Rights Agreement, the
Stockholders Agreement and the other Transaction Documents.
4.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents to which it is or will be a party and the consummation of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Securities: (a) have been duly authorized by all necessary
corporate, and if required, stockholder action; (b) do not and will not
contravene the terms of the Articles of Incorporation, the Articles of Amendment
or the Bylaws of the Company or any of its subsidiaries (if any), or any
amendment thereof or any Laws applicable to the Company and its subsidiaries (if
any) or their assets, business or properties; (c) do not and will not (i) in a
material respect conflict with, contravene, result in any violation or breach of
or default under (with or without the giving of notice or the lapse of time or
both), (ii) create in any other person or entity a right or claim of termination
or amendment, or (iii) require modification, acceleration or cancellation of any
provision of any security issued by such person or entity in any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument or
arrangement (whether in writing or otherwise) to which such person or entity or
its property is bound, or any amendment of any of the foregoing (collectively,
"Contractual Obligations"); and (d) except as contemplated by this Agreement or
the other Transaction
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Documents, do not and will not result in the creation of any mortgage, deed of
trust, pledge, hypothecation, assignment, lien (statutory or otherwise), charge,
claim, restriction or preference, security interest or preferential arrangement
or any other encumbrance (or obligation to create a lien) of any kind or nature
(collectively, "Liens") against any property, asset or business of the Company
or any of its subsidiaries (if any) or the suspension, revocation, impairment,
forfeiture or non renewal of any material permit, license, authorization or
approval applicable to the Company or any of its subsidiaries (if any), or their
businesses or operations or any of their assets or properties.
4.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. No approval, consent,
compliance, exemption, authorization, or other action by, or notice to, or
filing with, any governmental entity or authority or any other person or entity
in respect of any Law or Contractual Obligation, and no lapse of a waiting
period under any Law or Contractual Obligation, is necessary or required in
connection with the execution, delivery or performance by (including, without
limitation, the issuance of shares of capital stock upon the conversion of the
Securities), or enforcement against, the Company of this Agreement and the other
Transaction Documents to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
4.4 BINDING EFFECT; ENFORCEABILITY. This Agreement has been, and each of the
other Transaction Documents to which the Company will be a party to will be,
duly executed and delivered by the Company, and this Agreement constitutes, and
such other Transaction Documents will constitute, the legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability.
4.5 NO LEGAL BAR. Neither the execution, delivery and performance of this
Agreement and the other Transaction Documents, nor the issuance of or
performance of the terms of the Securities will violate any Law or any
Contractual Obligation of the Company or any of its subsidiaries (if any). The
Company has not previously entered into any agreement which is currently in
effect or to which the Company is currently bound, granting any rights to any
person or entity which are inconsistent with the rights to be granted by the
Company herein or in the other Transaction Documents.
4.6 LITIGATION. Except as disclosed in the Company's SEC Reports, there are no
legal actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Company, threatened, at law, in equity, in arbitration or
before any governmental entity or authority against or affecting the Company,
other than routine litigation incidental to the business of the Company or which
alone or in the aggregate would not reasonably be expected to have a material
adverse effect on the condition of the Company. No injunction, writ, temporary
restraining order, decree or any order of any nature has been issued by any
court or other governmental entity or authority purporting to enjoin or restrain
the execution, delivery or performance of this Agreement or the other
Transaction Documents. Except as set forth on the Disclosure Schedule, the
Company has not commenced nor does it currently intend to initiate any action,
suit, proceeding, claim or dispute.
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4.7 COMPLIANCE WITH LAWS. The Company is in material compliance with all Laws
applicable to the Company.
4.8 TITLE TO PROPERTIES. The Disclosure Schedule contains a true, complete and
correct list of all real property used in connection with the businesses of the
Company and its subsidiaries (if any). The Company and its subsidiaries (if any)
have good and marketable title in and to all real property reflected on the
Disclosure Schedule as owned by the Company or its subsidiaries (if any), as the
case may be, free and clear of all Liens, liabilities and rights. The Disclosure
Schedule contains a list of all real property leases used in connection with the
businesses of the Company and its subsidiaries (if any). The Company and its
subsidiaries (if any) hold all of the right, title and interest of the tenant
under the leases reflected free and clear of all Liens, liabilities and rights.
Except as set forth on the Disclosure Schedule, the Company and/or its
subsidiaries have good title to all properties reflected on the Pro Forma
Balance Sheet (as defined below) or used in connection with their respective
businesses, free and clear of all Liens, liabilities and rights.
4.9 USE OF REAL PROPERTY. The owned and leased real properties reflected on the
Disclosure Schedule, are used and operated in compliance and conformity with all
Contractual Obligations and Laws, except to the extent that the failure so to
comply would not, individually or in the aggregate, materially adversely affect
the condition of the Company and its subsidiaries (if any), taken as a whole;
the Company has not received notice of violation of any applicable zoning or
building regulation, ordinance or other law, order, regulation or other Law
relating to the operations of the Company; and, to the knowledge of the Company,
there is no such violation. All structures, improvements and other buildings
that are owned or covered by leases reflected on the Disclosure Schedule, comply
in all material respects with all applicable ordinances, codes, regulations and
other Laws, have a valid and subsisting certificate of occupancy for their
present use, and the Company has not received any written notice from any
governmental entity or authority which is still outstanding of any failure to
obtain any certificate, permit, license or approval with respect to the real
property, or any intended revocation, modification or cancellation of same, and
no Law presently in effect or condition precludes or materially restricts
continuation of the present use of such properties. Each lease relating to
leased real property reflected on the Disclosure Schedule, is in full force and
effect and the Company and its subsidiaries (if any) enjoy peaceful and
undisturbed possession thereunder. There is no default on the part of the
Company or its subsidiaries (if any) or event or condition which (with notice or
lapse of time, or both) would constitute a default on the part of the Company
under any such lease. There are no pending or, to the knowledge of the Company,
threatened condemnation or eminent domain proceedings that would affect any part
of the real property or the leased property reflected on the Disclosure
Schedule. There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against the real property or the leased
property on the Disclosure Schedule or used in connection with the businesses of
the Company and its subsidiaries (if any), at law or in equity, before any
Federal, state, municipal or governmental department, commission, board, bureau,
agency or instrumentality which would in any way affect title to such real
property or the leased property.
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4.10 TAXES.
(a) The Company and its subsidiaries (if any) have filed all
Federal, state, local and foreign tax returns (collectively, the "TAX RETURNS")
they were required to file prior to the Closing Date. All such Tax Returns are
true correct and complete in all material respects. All taxes owed by the
Company and its subsidiaries (if any) (whether or not shown on any Tax Return)
have been paid. Neither the Company nor its subsidiaries (if any) currently is
the beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by a governmental entity or authority in a jurisdiction
where the Company or its subsidiaries (if any) does not file Tax Returns that
the Company or its subsidiaries (if any) is or may be subject to taxation by
that jurisdiction. There are no Liens on any of the assets of the Company or its
subsidiaries (if any) that arose in connection with any failure (or alleged
failure) to pay any tax. Each of the Company and its subsidiaries (if any) has
withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractors,
creditor, stockholder, or other third party. The Company has not waived any
statute of limitations in respect of taxes or agreed to any extension of time
with respect to a tax assessment or deficiency.
(b) Except as set forth on the Disclosure Schedule, giving effect to
the transactions contemplated by this Agreement, to the knowledge of the Company
after due investigation, neither the Company nor any Subsidiary is, or expects
to become, a "controlled foreign corporation" within the meaning of Section 957
of the Code ("CFC"), a "foreign personal holding company" within the meaning of
Section 552 of the Code ("FPHC"), or a "passive foreign investment company"
within the meaning of Section 1297 of the Code ("PFIC").
(c) For U.S. tax classification purposes pursuant to Treasury
Department Regulation Section 301.7701-2, the Company is classified as an
association taxable as a corporation. No election has been made under Treasury
Regulation Section 301.7701-3 to treat the Company or any subsidiary as a
partnership or disregarded entity for U.S. tax purposes.
4.11 FINANCIAL CONDITION.
(a) Financial Statements. Included in the Disclosure Schedule are
true and complete copies of the draft audited consolidated balance sheets of the
Company and its subsidiaries (if any) as of December 31, 2000, and the related
statements of income, and stockholders' equity and cash flow, together with the
notes thereto of the Company and its subsidiaries (if any), for the year then
ended (the "YEAR-END FINANCIAL STATEMENTS"), and the unaudited balance sheet of
the Company and its subsidiaries (if any) as of January 31, 2001 and the related
statements of income, and stockholders' equity and cash flow, together with the
notes thereto, of the Company and its subsidiaries (if any) for the one month
period ended January 31, 2001 (the "2001 FINANCIAL STATEMENTS," and collectively
with the Year-End Financial Statements, the "FINANCIAL STATEMENTS"). The
Financial Statements fairly present, in all material respects, the financial
position of the Company and its subsidiaries (if any) as of the respective dates
thereof, and the results of operations and cash flows of the Company and its
subsidiaries (if any) as of the respective dates or for the respective periods
set forth therein, all in conformity with GAAP (as defined below) consistently
applied during the periods involved, except as otherwise set forth in the notes
thereto and subject, in the case of the 2001 Financial Statements,
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to normal year-end audit adjustments. As of the dates of the Financial
Statements, the Company had no obligation, indebtedness or liability (whether
accrued, absolute, contingent or otherwise, known or unknown, and whether due or
to become due), which was not reflected or reserved against in the balance
sheets or the notes thereto which are part of the Financial Statements, except
for those incurred in the ordinary course of business and which are fully
reflected on the Company's books of account and which, individually or in the
aggregate, would not materially and adversely affect the condition of the
Company.
(b) Pro Forma Balance Sheet. Included in the Disclosure Schedule is
a copy of a Pro Forma Balance Sheet (the "PRO FORMA BALANCE SHEET"), which sets
forth the assets and liabilities of the Company and its subsidiaries (if any) as
of the Closing Date on a pro forma consolidated basis after taking into account
the consummation of the transactions contemplated in this Agreement and the
other Transaction Documents. The Pro Forma Balance Sheet has been prepared by
the Company and its subsidiaries (if any), in accordance with GAAP, consistently
applied, and fairly presents in all material respects the assets and liabilities
of the Company and its subsidiaries (if any), reflecting the consummation of the
transactions contemplated in this Agreement and the other Transaction Documents
and based on the assumptions set forth therein as of the Closing Date.
(c) Budget. A copy of the budget of the Company and its subsidiaries
(if any) heretofore delivered to the Purchasers are included in the Disclosure
Schedule.
4.12 ERISA -- EMPLOYEE BENEFIT PLANS.
(a) Section 4.12 of the Disclosure Schedule sets forth an accurate
and complete list of each "employee benefit plan" (as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")
and each other material employee benefit plan, program or arrangement at any
time maintained, sponsored, or contributed to by the Company. Each such item
listed on Schedule 4.12 is referred to herein as an "Employee Benefit Plan" and
collectively as the "Employee Benefit Plans."
(b) The Company does not maintain, contribute to, or have any
liability or potential liability under (or with respect to) any "defined benefit
plan" (as defined in Section 3(35) of ERISA), or any "multiemployer plan" (as
defined in Section 3(37) of ERISA). No asset of the Company is subject to any
lien under ERISA or the Code. There are no pending or, to the knowledge of the
Company, threatened actions, suits, investigations or claims with respect to any
Employee Benefit Plan (other than routine claims for benefits) which could
result in material liability to the Company.
(c) Each Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has received a determination from the Internal
Revenue Service that such Employee Benefit Plan is so qualified, and nothing has
occurred since the date of such determination that could adversely affect the
qualified status of such Employee Benefit Plan.
(d) Each of the Employee Benefit Plans and all related trusts,
insurance contracts and funds have been maintained, funded and administered in
compliance with their terms and in compliance with the applicable provisions of
ERISA, the Code, and any other applicable laws. With respect to each Employee
Benefit Plan, all required payments, premiums,
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contributions, distributions, or reimbursements for all periods ending prior to
or as of the Closing Date have been made or properly accrued.
(e) Each Employee Benefit Plan which is subject to the health care
continuation requirements of Part 6 of Subtitle B of Title I of ERISA or Section
4980B of the Code ("COBRA") has been administered in compliance with such
requirements. No Employee Benefit Plan provides medical or life or other welfare
benefits to any current or future retired or terminated employee (or any
dependent thereof) of the Company other than as required pursuant to COBRA or
applicable State law.
4.13 DISCLOSURE. This Agreement, together with the Disclosure Schedule and all
exhibits hereto, and the agreements, certificates and other documents furnished
to the Purchaser by the Company at the Closing, (including, without limitation,
the other Transaction Documents) do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which they were made, not misleading.
4.14 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on the Disclosure
Schedule, since December 31, 2000, there has not been any change in the assets,
liabilities, financial condition or operating results of the Company and its
subsidiaries (if any), taken as a whole, other than those changes which occurred
in the ordinary course of business that have not had a material adverse effect
on the condition of the Company and its subsidiaries (if any), taken as a whole,
or the ability of the Company or its subsidiaries (if any) to perform their
respective obligations under this Agreement and the other Transaction Documents
or any other Contractual Obligation.
4.15 SUBSIDIARIES. Except as set forth on the Disclosure Schedule, the Company
does not own of record or beneficially, directly or indirectly, (a) any shares
of outstanding capital stock or securities convertible into capital stock of any
other corporation, or (b) any equity, voting or participating interest in any
limited liability company, partnership, joint venture or other non-corporate
business enterprises.
4.16 CAPITALIZATION; STOCKHOLDERS' LIST.
(a) As of the Closing Date, the authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, $.001 par value per share
(the "COMMON STOCK") and 15,000,000 shares of Preferred Stock $.001 par value
per share, 1,000,000 shares have been designated as Series B Preferred Stock and
1,000,000 have been designated as Series C Redeemable Preferred Stock. No shares
of Series A-1 Preferred Stock are authorized and no such shares were ever issued
by the Company. The Company has no shares of capital stock held in treasury. As
of the Closing Date, after giving effect to the transactions contemplated hereby
and in the other Transaction Documents, there will be: (i) 944,508 shares of
Series B Preferred Stock issued and outstanding; (ii) 5,595,089 shares of Common
Stock issued and outstanding; 375,000 shares of Common Stock reserved for
issuance pursuant to the exercise of stock options issuable in accordance with
the terms of one or more stock option plans of the Company, which plans shall
have been approved by the Board of Directors of the Company and by the
Purchasers ("MANAGEMENT OPTIONS"). The Company has reserved for issuance from
its authorized but unissued shares of the Series C Redeemable Preferred Stock
and Common Stock that number of
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shares as shall be necessary to permit the full conversion of the Series B
Preferred Stock which are then outstanding, or otherwise comply with the terms
of the Articles of Amendment. The Management Options and all outstanding shares
of capital stock of the Company have been duly authorized by all necessary
corporate and stockholder action. All outstanding shares of capital stock of the
Company are, and the Securities, and shares of Common Stock and Series C
Redeemable Preferred Stock issuable upon conversion of the Securities and the
Common Stock issuable upon exercise of the Management Options, when issued, will
be, validly issued, fully paid and nonassessable and shall be free and clear of
all Liens and the issuance of the foregoing has not been or will not be, as the
case may be, (other than as set forth in the Stockholders Agreement) subject to
preemptive rights in favor of any person or entity and will not result in the
issuance of any additional shares of capital stock of the Company or the
triggering of any anti-dilution or similar rights contained in any options,
warrants, debentures or other securities or agreements of the Company. The
Disclosure Schedule provides an accurate list as of the Closing Date, after
giving effect to the transactions contemplated hereby and the other Transaction
Documents of (A) all stockholders owning the issued and outstanding shares of
Series B Preferred Stock, Series A-1 Preferred Stock and all holders of 5% or
more of Common Stock, together with the number held by each, and (B) all of the
holders of warrants, options, rights and securities convertible into capital
stock, together with the number of shares of capital stock to be issued upon the
exercise or conversion of such warrants, options, rights and convertible
securities.
(b) On the Closing Date, except for the Securities, and the
Management Options, there will be no outstanding securities convertible into or
exchangeable for capital stock of the Company or options, warrants or other
rights to purchase or subscribe to capital stock of the Company or contracts,
commitments, agreements, understandings or arrangements of any kind to which the
Company is a party relating to the issuance of any capital stock of the Company,
any such convertible or exchangeable securities or any such options, warrants or
rights.
4.17 PRIVATE OFFERING. No form of general solicitation or general advertising
was used by the Company, or its representatives in connection with the offer or
sale of the Securities. No registration of the Securities or Common Stock
issuable upon conversion of the Securities pursuant to the provisions of the
Securities Act of 1933, as amended (the "Securities Act") or the state
securities or "blue sky" laws will be required for the offer, sale or issuance
of the Securities pursuant to this Agreement or of the Common Stock issuable
upon the conversion of the Securities. The Company agrees that neither it, nor
anyone acting on its behalf, will offer or sell the Securities or any other
security so as to require the registration of the Securities or Common Stock
issuable upon conversion of the Securities pursuant to the provisions of the
Securities Act or any state securities or "blue sky" laws, unless such
Securities or Common Stock issuable upon conversion of the Securities are so
registered.
4.18 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage commissions,
finder's fees or similar fees or commissions payable in connection with the
transactions contemplated hereby or by the other Transaction Documents based on
any agreement, arrangement or understanding with the Company, or any action
taken by the Company.
4.19 PATENTS, TRADEMARKS, ETC. The Disclosure Schedule contains a true, complete
and correct list of all patents, trademarks, service marks, trade names,
copyrights, licenses, franchises
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and other rights, including, without limitation, with respect to all software
developed, owned or licensed by the Company (collectively, the "Rights"), being
used to conduct the businesses of the Company and its subsidiaries (if any) as
now operated. The Company and its subsidiaries (if any) own or are licensed or
otherwise have the right to use all Rights. The Disclosure Schedule sets forth a
true, complete and correct list of licenses or other Contractual Obligations
relating to the Company's and its subsidiaries' (if any) Rights and of
registrations of patents, trademarks, service marks and copyrights including any
applications therefor constituting such Rights. No Right or product, process,
method, substance or other material presently sold by or employed by the Company
or its subsidiaries (if any), infringes upon the Rights that are owned by
others. Neither the Company nor its subsidiaries (if any) have any obligation to
compensate any person or entity for the use of any Rights and neither the
Company nor its subsidiaries (if any) have granted any license or other right to
use any of the Rights of the Company or any of its subsidiaries (if any),
whether requiring the payment of royalties or not. The Company and its
subsidiaries (if any) have taken all reasonable measures to protect and preserve
the security, confidentiality and value of their Rights, including trade secrets
and other confidential information, including, without limitation, all
algorithms, methods, technology or know-how incorporated or embedded in, or
underlying, software licensed by the Company to third parties. All trade secrets
and other confidential information of the Company and its subsidiaries (if any)
are protectible and the Company has taken all commercially reasonable steps to
maintain and protect such rights and, to the knowledge of the Company, are not
part of the public domain or knowledge, nor to, the knowledge of the Company,
have they been used, divulged or appropriated for the benefit of any person or
entity other than the Company or its subsidiaries (if any) or otherwise to the
detriment of the Company or its subsidiaries (if any). To the knowledge of the
Company, no employee or consultant of the Company or its subsidiaries (if any)
has used any trade secrets or other confidential information of any other person
or entity in the course of his work for the Company or its subsidiaries (if
any). To the knowledge of the Company, no patent, invention, device, principle
or any statute, law, rule, regulation, standard or code is pending or proposed
which would restrict the Company's or its subsidiaries' (if any) ability to use
any of the Rights.
4.20 POTENTIAL CONFLICTS OF INTEREST. Except as set forth on the Disclosure
Schedule, no officer, director or other security holder of the Company or any of
its subsidiaries (if any): (a) owns, directly or indirectly, any interest in
(excepting less than 5% stock holdings for investment purposes in securities of
publicly held and traded companies), or is an officer, director, employee or
consultant of, any person or entity that is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent or customer of,
or lender to or borrower from, the Company or its subsidiaries (if any); (b)
owns, directly or indirectly, in whole or in part, any tangible or intangible
property that the Company or its subsidiaries (if any) uses in the conduct of
business; or (c) has any cause of action or other claim whatsoever against, or
owes or has advanced any amount to, the Company or its subsidiaries (if any),
except for claims in the ordinary course of business such as for accrued
vacation pay, accrued benefits under employee benefit plans, and similar matters
and agreements existing on the date hereof.
4.21 OUTSTANDING BORROWINGS. The Disclosure Schedule lists (i) the amount of all
outstanding borrowings of the Company and its subsidiaries (if any) as of the
Closing, (ii) the Liens that relate to such outstanding borrowings and that
encumber the assets of the Company,
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(iii) the name of each lender thereof, and (iv) the amount of any unfunded
commitments available to the Company and its subsidiaries (if any) in connection
with any outstanding borrowings.
4.22 MATERIAL CONTRACTS. Neither the Company nor its subsidiaries (if any) are a
party to any Contractual Obligation, or is subject to any charge, corporate
restriction, judgment, injunction or decree materially adversely affecting the
condition of the Company. The Disclosure Schedule lists all material contracts,
agreements, commitments and other Contractual Obligations of the Company,
whether written or oral, as of the Closing Date which have not previously been
disclosed in any prior SEC Reports of the Company, other than (a) this Agreement
and the other Transaction Documents, (b) purchase orders in the ordinary course
of business, and (c) any other contracts, agreements, commitments and other
Contractual Obligations of the Company or its subsidiaries (if any) that do not
extend beyond one year and involve the receipt or payment of not more than
$25,000. Each of the contracts, agreements, commitments and other Contractual
Obligations of the Company or its subsidiaries (if any) required to be set forth
on the Disclosure Schedule is in full force and effect. The Company has
satisfied in all material respects or provided in all material respects for all
of its liabilities and obligations under each material contract requiring
performance prior to the date hereof in all material respects, and is not in
default under any of them, nor, to the knowledge of the Company, does any
condition exist that with notice or lapse of time or both would constitute such
a default. To the knowledge of the Company, no other party to any such material
contract is in default thereunder, nor does any condition exist that with notice
or lapse of time or both would constitute such a default. Except as set forth on
the Disclosure Schedule, no approval or consent of any person or entity is
needed for all of the material contracts to continue to be in full force and
effect.
4.23 INSURANCE. The Disclosure Schedule accurately summarizes all of the
insurance policies or programs of the Company and its subsidiaries (if any) in
effect as of the date hereof, and indicates the insurer's name, policy number,
expiration date, amount of coverage, type of coverage, annual premiums,
exclusions and deductibles, and also indicates any self-insurance program that
is in effect. All such policies are in full force and effect, are underwritten
by financially sound and reputable insurers, and are sufficient to satisfy all
applicable Laws and otherwise are in compliance with the criteria set forth in
Section 6.5 hereof. All such policies will remain in full force and effect and
will not in any way be affected by, or terminate or lapse by reason of any of
the transactions contemplated hereby.
4.24 REGISTRATION RIGHTS. Except as set forth on the Disclosure Schedule and
except as provided in the Registration Rights Agreement, the Company has not
granted or agreed to grant any registration rights, including piggyback
registration rights, to any person or entity.
4.25 LABOR AGREEMENTS AND ACTIONS; EMPLOYEE COMPENSATION. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.
Except as set forth on the Disclosure Schedule, the employment of each officer
and employee of the Company is terminable at the will of the Company. To the
best of its knowledge, the Company has complied in all material respects with
all applicable state and Federal equal employment opportunity and other Laws
related to employment.
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4.26 ENVIRONMENTAL COMPLIANCE.
(a) No Environmental Claims. Except as set forth in the Disclosure
Schedule, (i) there are no claims, liabilities, judgments or orders, or
investigations, litigation or administrative proceedings relating to any
Hazardous Materials (collectively called "ENVIRONMENTAL CLAIMS"), now pending
or, to the knowledge of the Company, threatened, against the Company or any of
its subsidiaries or relating to any real property currently or formerly owned,
leased or operated by the Company or any of its subsidiaries; (ii) none of the
Company or any of its subsidiaries or any other person has caused or permitted
any Hazardous Material to be used, generated, reclaimed, transported, released,
treated, stored or disposed of in a manner which could form the basis for any
Environmental Claim against the Company or any of its subsidiaries; and (iii)
none of the Company or any of its subsidiaries has assumed (by contract or by
operation of law) any liability of any person for cleanup, remediation,
compliance or required capital expenditures in connection with any Environmental
Claim.
(b) Storage of Hazardous Materials. Except as set forth in the
Disclosure Schedule, no Hazardous Materials are or were stored or otherwise
located, and no underground storage tanks or surface impoundments are or were
located, on real property currently or formerly owned, leased or operated by the
Company or any of its subsidiaries, other than in a manner which is in material
compliance with all applicable Environmental Laws; and no part of such real
property, including the groundwater located thereon, is presently contaminated
by Hazardous Materials in a manner which could require investigation and/or
remediation pursuant to, or otherwise result in liability under, applicable
Environmental Laws.
(c) Compliance with Environmental Laws. Except as set forth in the
Disclosure Schedule, each of the Company and its subsidiaries has been and is
currently in compliance in all material respects with all applicable
Environmental Laws, including obtaining and maintaining in effect all permits,
licenses and other authorizations required by applicable Environmental Laws, the
failure to comply with would have, or could reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries, if any, taken as a whole.
(d) Definitions. The terms "ENVIRONMENTAL LAWS" shall mean any
federal, state or local law, rule, regulation or order relating to pollution,
waste disposal, industrial hygiene, land use or the protection of human health
or safety, plant life or animal life, natural resources or the environment. The
term "HAZARDOUS MATERIALS" shall mean any of the following: (a) substances that
are defined or listed in, or otherwise classified pursuant to any applicable
laws or regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances" or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity or "EP
toxicity"; (b) oil, petroleum or petroleum synthetic gas and drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (c) any flammable
substances or explosives or any radioactive materials; or (d) asbestos in any
form or electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million.
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4.27 OPERATING COMPANY. The Company is "an entity that is primarily engaged,
directly or through a majority owned subsidiary or subsidiaries, in the
production or sale of a product or service other than the investment of capital"
within the meaning of the U.S. Department of Labor plan asset regulations, 29
C.F.R. Section 2510.3-101.
4.28 SMALL BUSINESS MATTERS. The Company acknowledges that each of LEG Partners
III SBIC, L.P. and LEG Partners Debenture SBIC, L.P. (the "SBIC Holders") is
federally licensed by the United States Small Business Administration (the
"SBA") as a Small Business Investment Company ("SBIC") under the Small Business
Investment Act of 1958, as amended (the "SBIC Act"). The information regarding
the Company and its affiliates set forth in SBA Form 480, Form 652 and Parts A
and B of Form 1031 delivered at the Closing is accurate and complete in all
material respects. Neither the Company nor any of its subsidiaries presently
engages in, or shall hereafter engage in, any activities, nor shall the Company
or any of its subsidiaries use the proceeds received in connection with its sale
of the Series B Preferred Stock (the "Financing") directly or indirectly for any
purpose, for which an SBIC is prohibited from providing funds by SBIC
Regulations (including 13 CFR '107.720). "SBIC Regulations" shall mean SBIC Act
and the regulations issued by the SBA thereunder, codified at Title 13 of the
Code of Federal Regulations ("13 CFR"), Parts 107 and 121.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers, severally and not jointly, hereby represents and
warrants as to itself as follows:
5.1 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by
it of this Agreement and each of the Transaction Documents to which it is a
party: (a) is within its power and authority and has been duly authorized by all
necessary action; (b) does not contravene the terms of its organizational
documents or any amendment thereof; and (c) will not violate, conflict with or
result in any breach or contravention of any of its Contractual Obligations, or
any order or decree directly relating to it.
5.2 BINDING EFFECT. This Agreement has been, and each of the Transaction
Documents to which it will be a party will be, duly executed and delivered by it
and this Agreement constitutes and such other Transaction Documents will
constitute its legal, valid and binding obligations, enforceable against it in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
5.3 NO LEGAL BAR. The execution, delivery and performance of this Agreement by
it will not violate any Law applicable to it.
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5.4 ACCREDITED INVESTOR. It is an "accredited investor" as such term is defined
in Regulation D under the Securities Act.
5.5 PURCHASE FOR OWN ACCOUNT. The Securities to be acquired by it pursuant to
this Agreement are being or will be acquired for its own account and with no
intention of distributing or reselling such securities or any part thereof in
any transaction that would be in violation of the securities laws of the United
States of America, or any state, without prejudice, however, to its right at all
times to sell or otherwise dispose of all or any part of the Securities under an
effective registration statement under the Securities Act, or under an exemption
from such registration available under the Securities Act, and subject,
nevertheless, to the disposition of its property being at all times within its
control. If such Purchaser should in the future decide to dispose of any of the
Securities, such Purchaser understands and agrees that it may do so only in
compliance with the Securities Act and applicable federal and state securities
laws, as then in effect.
5.6 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage commissions,
finder's fees or similar fees or commissions payable in connection with the
transactions contemplated hereby based on any agreement, arrangement or
understanding with it or any action taken by it.
5.7 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT. No approval, consent,
compliance, exemption, authorization, or other action by, or notice to, or
filing with, any governmental entity or authority or any other person or entity
in respect of any Law, and no lapse of a waiting period under any Law, is
necessary or required in connection with the execution, delivery or performance
by it or enforcement against it of this Agreement, the other Transaction
Documents, or the transactions contemplated hereby and thereby.
ARTICLE 6
AFFIRMATIVE COVENANTS
For so long as any shares of Series B Preferred Stock are outstanding, the
Company hereby covenants and agrees with the Purchasers as follows:
6.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall maintain, and
cause each of its subsidiaries (if any) to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with generally accepted
accounting principles in effect from time to time within the United States of
America, consistently applied ("GAAP"). Each of the financial statements
described below shall be prepared in accordance with GAAP, except that monthly
and quarterly financial statements need not contain full footnote disclosures
and may be subject to normal year-end adjustments. The Company shall deliver to
each Purchaser, for so long as such Purchaser owns any of the Securities, each
of the financial statements and other reports described below (in each case, two
(2) copies of each such financial statement or report, as the case may be, shall
be forwarded to the attention of Xx. Xxxxxx X. X'Xxxxx, the Chief Financial
Officer of the Whitney Funds, or such other person(s) as may be designated in
writing by the Purchasers from time to time):
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(a) Unaudited Monthly and Quarterly Financial Information. As soon
as available and in any event within thirty (30) days after the end of each
month, the Company shall deliver (i) the consolidated balance sheets of the
Company and its subsidiaries (if any), as at the end of such month and (ii) the
related consolidated statements of income, stockholders' equity and cash flow
for such month and for the period from the beginning of the then current fiscal
year of the Company to the end of such month (and, with respect to financial
statements delivered for months that are also the last month of any fiscal
quarter, accompanied by the related consolidated statements of income,
stockholders' equity and cash flow for such fiscal quarter).
(b) Audited Year-End Financial Information. As soon as available and
in any event within ninety (90) days after the end of the fiscal year of the
Company, the Company shall deliver (i) the consolidated balance sheets of the
Company and its subsidiaries (if any) as at the end of such year and the related
consolidated statements of income, stockholders' equity and cash flow for such
fiscal year, (ii) a schedule of the outstanding indebtedness for borrowed money
of the Company and its subsidiaries (if any) describing in reasonable detail
each such debt issue or loan outstanding and the principal amount and amount of
accrued and unpaid interest with respect to each such debt issue or loan, and
(iii) a report with respect to the Financial Statements from a nationally
recognized firm of certified public accountants selected by the Company and
reasonably acceptable to the Purchasers, which report shall be issued pursuant
to an audit conducted by such firm of certified public accountants in conformity
with GAAP.
(c) Accountants' Reports. Promptly upon receipt thereof, the Company
shall deliver copies of all significant reports submitted by the Company's firm
of certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or related
internal control systems of the Company and its subsidiaries (if any) made by
such accountants, including any comment letter submitted by such accountants to
management in connection with their services.
(d) Management Reports. Together with each delivery of financial
statements of the Company and its subsidiaries that are delivered pursuant to
subsections 6.1(a) and 6.1(b) for a month ending on a calendar quarter, the
Company will deliver a management report (i) describing the operations and
financial condition of the Company and its subsidiaries (if any) for the quarter
then ended and the portion of the current fiscal year then elapsed (or for the
fiscal year then ended in the case of year-end financials), (ii) setting forth
in comparative form the corresponding figures for the corresponding periods of
the previous fiscal year (if applicable) and the corresponding figures from the
most recent projections for the current fiscal year delivered pursuant to
subsection 6.1(e) and (iii) discussing the reasons for any significant
variations. The information above shall be presented in reasonable detail and
shall be certified by the Chief Financial Officer of the Company to the effect
that such information fairly presents the results of operations and financial
condition of the Company and its subsidiaries (if any) as at the dates and for
the periods indicated.
(e) Projections. No earlier than sixty (60) days prior nor later
than thirty (30) days prior to the end of each fiscal year beginning with the
current fiscal year, the Company shall prepare and deliver to the Purchasers
projections of the Company and its subsidiaries (if any) for the next succeeding
fiscal year, on a month to month basis and for the following two (2) fiscal
years on a quarter to quarter basis, including a balance sheet as at the end of
each relevant period and income statements and statements of cash flows for each
relevant period and for the period
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commencing at the beginning of the fiscal year and ending on the last day of
such relevant period.
(f) Events of Default, Etc. Promptly upon the Company obtaining
knowledge of any of the following events or conditions, the Company shall
deliver copies of all notices given or received by the Company or any of its
subsidiaries (if any) with respect to any such event or condition and a
certificate of the Company's Chief Executive Officer specifying the nature and
period of existence of such event or condition and what action the Company or
its subsidiaries (if any) have taken, are taking and propose to take with
respect thereto: (i) any condition or event that constitutes a breach of any
provision of this Agreement or any other Transaction Document; (ii) any notice
that any person has given to the Company or any subsidiary (if any), or any
other action, taken with respect to a claimed default in any agreement
evidencing indebtedness or any other material agreement to which the Company or
any subsidiary (if any) is a party; or (iii) any event or condition that could
reasonably be expected to result in any material adverse effect on the condition
of the Company and its subsidiaries (if any), taken as a whole.
(g) Litigation. Promptly upon any officer of the Company obtaining
knowledge of (i) the institution of any action, suit, proceeding, governmental
investigation or arbitration against or affecting the Company or its
subsidiaries (if any) or any property of the Company or its subsidiaries (if
any) not previously disclosed by the Company to the Purchasers or (ii) any
material development in any action, suit, proceeding, governmental investigation
or arbitration at any time pending against or affecting the Company or its
subsidiaries (if any) or any property of the Company or its subsidiaries (if
any) which, in each case, is reasonably possible to have a material adverse
effect on the condition of the Company and its subsidiaries (if any), taken as a
whole, the Company will promptly give notice thereof to the Purchasers and
provide such other information as may be reasonably available to them to enable
the Purchasers and their counsel to evaluate such matter.
(h) SEC Filings and Press Releases. Promptly upon their becoming
available, the Company shall deliver copies of (i) all SEC Reports (as
hereinafter defined) of the Company and each subsidiary, (ii) all financial
statements, reports, notices and proxy statements sent or made available by the
Company or any of its subsidiaries to their security holders, (iii) all regular
and periodic reports and all registration statements and prospectuses, if any,
filed by the Company or any of its subsidiaries with any securities exchange or
with the Securities and Exchange Commission or any other governmental or private
regulatory authority, and (iv) all press releases and other statements made
available by the Company or any of its subsidiaries to the public concerning
material developments in the business the Company or any of its subsidiaries.
For purposes of this Agreement "SEC REPORTS," with respect to any entity, shall
mean all forms, reports, statements and other documents (including exhibits,
annexes, supplements and amendments to such documents) required to be filed by
it, or sent or made available by it to its security holders, under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the Securities
Act, any national securities exchange or quotation system or comparable
governmental or regulatory entity or authority.
Other Information. With reasonable promptness, the Company shall deliver such
other information and data with respect to the Company or its subsidiaries (if
any) as from time to time may be reasonably required by the Purchaser.
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6.2 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause each of its
subsidiaries (if any) to comply, in all material respects with all Laws and with
the directions of each governmental entity or authority having jurisdiction over
them or their business or property (including, without limitation, all
applicable environmental Laws).
6.3 RESERVATION OF SHARES. The Company shall at all times reserve and keep
available out of its authorized capital stock, solely for the purpose of
issuance or delivery upon conversion of the Securities, the maximum number of
shares of capital stock that may be issuable or deliverable upon such conversion
(the "Conversion Shares"). The Conversion Shares shall, when issued or delivered
in accordance with the Articles of Amendment be duly and validly issued and
fully paid and non-assessable. The Company shall issue such capital stock in
accordance with the provisions of the Articles of Amendment and shall otherwise
comply with the terms thereof.
6.4 INSPECTION; CONFIDENTIAL TREATMENT. The Company will permit, and will cause
each of its subsidiaries (if any) to permit, representatives of the Purchasers
to visit and inspect any of their properties, to examine their corporate,
financial and operating records and make copies thereof or abstracts therefrom,
and to discuss their affairs, finances and accounts with their respective
directors, officers and independent public accountants, all at such reasonable
times during normal business hours and as often as may be reasonably requested,
upon reasonable advance notice; provided, however, that no such inspection,
examination or inquiry, the failure to conduct same, nor any knowledge of
Purchasers, including, without limitation, any knowledge obtained by any
Purchaser in connection with any such inspection, investigation or inquiry,
shall constitute a waiver of any rights the Purchasers may have under any
representation, warranty, covenant, term or agreement under this Agreement or
any of the other Transaction Documents. Each Purchaser agrees to hold all
confidential information of the Company (i.e., information which is proprietary
in nature to the Company, is not in the public domain, was not previously known
to such Purchaser prior to its disclosure by the Company to such Purchaser or
was not subsequently independently developed by such Purchaser) in confidence
and, unless required by Law, a court of competent jurisdiction or by a similar
entity or authority, and, except as necessary to protect or enforce their rights
under the Transaction Documents, not to disclose such confidential information
to any person other than (i) its officers, directors, partners, attorneys,
accountants, employees and agents, or (ii) any prospective or actual transferee
or participant in connection with any contemplated transfer of the Securities,
or any portion thereof, provided that such prospective transferee agrees to be
bound by the confidentiality provisions contained in this Section 6.4.
6.5 INSURANCE. The Company and its subsidiaries (if any) will maintain or cause
to be maintained with financially sound and reputable insurers, public liability
and property damage insurance with respect to their respective businesses and
properties against loss or damage of the kinds and in the coverage amounts
customarily carried or maintained by companies of established reputation engaged
in similar businesses and will upon request deliver evidence thereof to the
Purchasers.
6.6 BOOKS AND RECORDS. The Company shall, and shall cause each of its
subsidiaries (if any) to, keep proper books of record and account, in which full
and correct entries shall be made of all financial transactions and the assets
and businesses of the Company and its subsidiaries (if any)
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in accordance with GAAP consistently applied to the Company and its subsidiaries
(if any) taken as a whole.
6.7 GRANTING OF MANAGEMENT OPTIONS. The Company may grant up to an aggregate of
375,000 stock options. If such options are granted, the Company shall grant them
at an exercise price equal to at least the per share fair market value of the
Common Stock (as determined by the Company's Board of Directors) at the time of
such grant or grants, as the case may be.
6.8 BUSINESS ACTIVITIES. Neither the Company nor any of its subsidiaries (if
any) shall engage in any business or transaction other than the business in
which it is currently engaged and the transactions contemplated by, or permitted
under, the Transaction Documents.
6.9 QUALIFIED SMALL BUSINESS STOCK. The Company agrees that for so long as the
Securities are held by a Purchaser (or a transferee in whose hands the
Securities are eligible to qualify as Qualified Small Business Stock (as defined
in Section 1202(c) of the Internal Revenue Code of 1986, as amended (the
"Code")), it will use its reasonable best efforts to cause the Securities to
qualify as Qualified Small Business Stock and shall make all filings required
under Section 1202(d)(1)(c) of the Code.
6.10 TAX ELECTION. The Company will not make any elections to treat the Company
as anything other than an association taxable as a corporation for U.S. federal
income tax purposes.
6.11 SBIC REGULATORY PROVISIONS. At the same time the Company delivers its
annual audited financial statements hereunder and at such other times as any
SBIC Holder reasonably requests, the Company shall deliver to the SBIC Holders a
written statement certified by the Company's president or chief financial
officer describing in reasonable detail the use of the proceeds of the Financing
hereunder by the Company and its Subsidiaries. In addition to any other rights
granted hereunder, the Company shall grant each SBIC Holder and the SBA
reasonable access to the Company's books and records for the purpose of
verifying the use of such proceeds and the certifications made by the Company in
SBA Forms 480 and 652 delivered hereunder and for the purpose of determining
whether the principal business activity of the Company and its Subsidiaries
continues to constitute an eligible business activity (within the meaning of the
SBIC Regulations).
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ARTICLE 7
MISCELLANEOUS
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made herein (including in the Disclosure Schedule) and in any other
Transaction Document shall survive for eighteen (18) months following the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby; provided however that the representations and
warranties set forth in Sections 4.1, 4.2, 4.4, 4.5, 4.10, 4.15, 4.16, 4.18 and
4.26 shall survive the execution and delivery of this Agreement and forever
thereafter (subject only to any applicable statute of limitations). For the
avoidance of doubt, if a Purchaser notifies the Company of any breach of any
such representation and warranty within such survival period, such period shall
be extended with respect to such claim until such claim is finally resolved.
7.2 NOTICES. All notices, demands and other communications provided for or
permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier (with receipt
confirmed), courier service or personal delivery, if to the Purchasers, at the
address indicated for such Purchaser on Schedule I, attached hereto and if to
the Company:
TBM Holdings Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxx Xxxxxxxx P.C.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; when delivered by courier, if
delivered by commercial overnight courier service; if mailed, five business days
after being deposited in the mail, postage prepaid; or if telecopied, when
receipt is acknowledged.
7.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of the parties hereto. Subject
to applicable securities laws, the Purchasers may assign any of their rights
under any of the Transaction Documents to any person or entity and any holder of
the Securities or the Common Stock and Series C Redeemable Preferred Stock
issuable upon conversion of the Securities may assign, in whole or in part, the
Securities or the Common Stock and Series C Redeemable Preferred Stock issuable
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upon conversion of the Securities to any person or entity. The Company may not
assign any of its rights or obligations under this Agreement without the prior
written consent of the Purchasers, and any such purported assignment by the
Company without the written consent of the Purchasers shall be void and of no
effect. No person or entity other than the parties hereto and their successors
and permitted assigns is intended to be a beneficiary of any of the Transaction
Documents.
7.4 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of any of the parties hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the parties
hereto at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any provision
of this Agreement, any waiver of any provision of this Agreement, and any
consent to any departure by any party from the terms of any provision of this
Agreement, shall be effective (i) only if it is made or given in writing and
signed by all of the parties hereto, and (ii) only in the specific instance and
for the specific purpose for which made or given. No amendment, supplement or
modification of or to any provision of this Agreement or any of the other
Transaction Documents, or any waiver of any such provision or consent to any
departure by any party from the terms of any such provision may be made orally.
Except where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
7.5 SIGNATURES; COUNTERPARTS. Telefacsimile transmissions of any executed
original document and/or retransmission of any executed telefacsimile
transmission shall be deemed to be the same as the delivery of an executed
original. At the request of any party hereto, the other parties hereto shall
confirm telefacsimile transmissions by executing duplicate original documents
and delivering the same to the requesting party or parties. This Agreement may
be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
7.6 HEADINGS. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE
WITH, AND ENFORCED UNDER, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS OR INSTRUMENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN SUCH STATE.
7.8 JURISDICTION, WAIVER OF JURY TRIAL, ETC.
(a) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT THE
ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR
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RELATING TO THIS AGREEMENT, THE SECURITIES, OR ANY AGREEMENTS OR TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK
AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH
COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE
AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN
SECTION 7.2, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.
(b) EACH OF THE COMPANY AND ITS SUBSIDIARIES AND THE PURCHASERS
HEREBY WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE SECURITIES OR
ANY OF THE OTHER TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH OF THE
COMPANY AND ITS SUBSIDIARIES (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OF THE PURCHASERS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
ANY OF THE PURCHASERS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT EACH OF THE PURCHASERS HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO
WHICH IT IS PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
CONTAINED HEREIN.
7.9 SEVERABILITY. If any one or more of the provisions contained in this
Agreement, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions of this Agreement. The parties hereto
further agree to replace such invalid, illegal or unenforceable provision of
this Agreement with a valid, legal and enforceable provision that will achieve,
to the extent possible, the economic, business and other purposes of such
invalid, illegal or unenforceable provision.
7.10 RULES OF CONSTRUCTION. Unless the context otherwise requires, "or" is not
exclusive, and references to sections or subsections refer to sections or
subsections of this Agreement.
7.11 ENTIRE AGREEMENT. This Agreement, including the exhibits and schedules
hereto, and the other Transaction Documents, are intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein. This Agreement, together with the exhibits and schedules
hereto, and the other
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Transaction Documents supersede all prior agreements and understandings between
the parties with respect to such subject matter.
7.12 CERTAIN EXPENSES. The Company will pay all expenses of the Purchaser
(including, without limitation, reasonable fees, charges and disbursements of
counsel) in connection with (a) this Agreement, the other Transaction Documents
and the transactions contemplated hereby and thereby, and (b) any amendment,
supplement, modification or waiver of or to any provision of this Agreement or
any of the other Transaction Documents or any documents relating thereto
(including, without limitation, a response to a request by the Company for the
Purchaser's consent to any action otherwise prohibited hereunder or thereunder),
or consent to any departure from, the terms of any provision of this Agreement
or such other documents.
7.13 PUBLICITY. Except as may be required by applicable law, none of the parties
hereto shall issue a publicity release or announcement or otherwise make any
public disclosure concerning this Agreement or the transactions contemplated
hereby, without prior approval of the Company and each of the Purchasers. If any
announcement is required by law to be made by any party hereto, prior to making
such announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon. Notwithstanding the foregoing, any of the Purchasers and their
respective affiliates may list the Company's name and logo, and describe the
Company's business in their marketing materials and may post such information on
their website.
7.14 FURTHER ASSURANCES. Each of the parties shall execute such documents and
perform such further acts (including, without limitation, obtaining any
consents, exemptions, authorizations, or other actions by, or giving any notices
to, or making any filings with, any governmental entity or authority or any
other person or entity) as may be reasonably required or desirable to carry out
OR to perform the provisions of this Agreement, including, without limitation,
any post-closing assignment(s) by the Purchasers of a portion of the Securities
to a person or entity not currently a party hereto.
7.15 NO STRICT CONSTRUCTION. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and the other Transaction Documents.
In the event an ambiguity or question of intent or interpretation arises under
any provision of this Agreement or any Transaction Document, this Agreement or
such other Transaction Document shall be construed as if drafted jointly by the
parties thereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement or any other Transaction Document. No knowledge of, or
investigation, including without limitation, due diligence investigation,
conducted by, or on behalf of, the Purchasers shall limit, modify or affect the
representations set forth in Article 4 of this Agreement or the right of the
Purchasers to rely thereon.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their respective officers hereunto duly
authorized as of the date first above written.
TBM HOLDINGS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
X.X. XXXXXXX XX, L.P.
By: X.X. Xxxxxxx Equity Partners IV, L.L.C.,
Its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
A Managing Member
X.X. XXXXXXX III, L.P.
By: X.X. Xxxxxxx Equity Partners III, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Managing Member
WHITNEY STRATEGIC PARTNERS III, L.P.
By: X.X. Xxxxxxx Equity Partners, III, L.L.C.
Its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title:
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LEG PARTNERS III SBIC, L.P.
By: Xxxxx XX-XX, LLC,
its General Partner
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------
Xxxxxxxx X. Xxxxx, President
LEG PARTNERS DEBENTURE SBIC, L.P.
By: Xxxxx XX-XX, LLC,
its General Partner
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------
Xxxxxxxx X. Xxxxx, President
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
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