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EXHIBIT 10.2
_______________________________________________________
SUBORDINATED NOTE AND
EQUITY PURCHASE AGREEMENT
between
SPECIALTY TRANSPORTATION SERVICES, INC.,
AND
AMERICAN CAPITAL STRATEGIES, LTD.
January 30, 1998
_______________________________________________________
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SUBORDINATED NOTE AND
EQUITY PURCHASE AGREEMENT
$5,500,000 PRINCIPAL AMOUNT SENIOR SUBORDINATED NOTES
DUE 2006 OF SPECIALTY TRANSPORTATION SERVICES, INC.
$2,500,000 PRINCIPAL AMOUNT JUNIOR SUBORDINATED NOTES
DUE 2006 OF SPECIALTY TRANSPORTATION SERVICES, INC.
500,000 SHARES OF COMMON STOCK
OF SPECIALTY TRANSPORTATION SERVICES, INC.
PRIMARY WARRANTS TO PURCHASE 500,000 SHARES OF COMMON STOCK OF
SPECIALTY TRANSPORTATION SERVICES, INC.
CONDITIONAL WARRANTS TO PURCHASE COMMON STOCK
OF SPECIALTY TRANSPORTATION SERVICES, INC.
THIS SUBORDINATED NOTE AND EQUITY PURCHASE AGREEMENT, dated
as of January 30, 1998, is between SPECIALTY TRANSPORTATION SERVICES, INC., an
Illinois corporation (the "Company"), and AMERICAN CAPITAL STRATEGIES LTD., a
Delaware corporation ("ACS" or the "Purchaser"). Capitalized terms used and
not defined elsewhere in this Agreement are defined in Article 1, below.
RECITALS
A. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Executive") and ▇▇▇▇ ▇▇▇▇
Transport, Inc., an Indiana corporation ("JGT") have entered into that certain
Asset Purchase Agreement dated September 24, 1997, as amended by amendment
dated as of January 2, 1998 (the "Asset Purchase Agreement").
▇. ▇▇▇▇▇▇▇▇ assigned certain of his rights and
interests in the Asset Purchase Agreement to Aasche Transportation Services,
Inc., a Delaware corporation ("Investor"), pursuant to a certain Assignment of
Asset Purchase Agreement dated as of September 29, 1997 (the "Assignment")
which Assignment was consented to by JGT by a consent dated as of October 15,
1997.
C. Aasche assigned all of its rights and interests in
the Asset Purchase Agreement to the Company pursuant to a certain Assignment of
Asset Purchase Agreement dated as of January 30,1998 ("Aasche Assignment")
which Assignment was consented to by JGT by a consent dated as of January 30,
1998, pursuant to which the Company shall acquire from JGT (the "Acquisition")
the municipal solid and special waste
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segment of JGT (the "Business"). (The Asset Purchase Agreement, the Assignment
and the Aasche Assignment are hereinafter referred to collectively as the
Acquisition Agreement).
D. In order to induce the Purchaser to purchase the
Notes and Common Stock to be issued pursuant to this Agreement, the Company has
agreed to issue to the Purchaser primary stock purchase warrants exercisable
for 500,000 shares of Common Stock and conditional stock purchase warrants
exercisable for additional shares of Common Stock, in each case subject to the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the
premises and their mutual covenants and agreements herein set forth and
intending to be legally bound hereby, covenant and agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. In addition to other words and
terms defined elsewhere in this Agreement, the following words and terms shall
have the meanings set forth below:
"Acquisition" shall have the meaning assigned to such term
in the recitals hereto.
"Acquisition Agreement" shall have the meaning assigned to
such term in the recitals hereto.
"ACS" shall have the meaning assigned to such term in the
preamble hereto.
"ACSCIC" shall mean ACS Capital Investments Corporation, a
subsidiary of ACS.
"Additional Senior Indebtedness" shall have the meaning set
forth in Section 6.2(a)(2).
"Affiliate" shall mean with respect to any Person, any
other Person which is directly or indirectly controlling, controlled by or
under common control with such Person or entity or any of its Subsidiaries, and
the term "control" (including the terms "controlled by" and "under common
control with") means having, directly or indirectly, the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of
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voting securities or by contract or otherwise. Without limiting the foregoing,
the ownership of five percent (5%) of the voting securities of a Person shall
be deemed to constitute control and notwithstanding anything to the contrary
herein, neither Purchaser nor any of its Affiliates shall be deemed to be
Affiliates of the Company by virtue of the transactions contemplated in this
Agreement.
"Agreement" shall mean this Subordinated Note and Equity
Purchase Agreement and all other agreements, instruments and documents attached
hereto or delivered by the Company in connection herewith as any or all of the
foregoing may be supplemented or amended from time to time.
"Approved Lease Form" shall mean a form of lease which is
satisfactory to the Purchaser and which, in any event, (i) does not provide for
any obligation of the Company with respect to residual value (or the
equivalent) of greater than 40% of original cost for tractors, 25% of original
cost for trailers, a percentage of original cost reasonably satisfactory to the
Purchaser in the case of toppers or 20% of original cost for other equipment
and (ii) which has no event of default comprising a cross default (as opposed
to a cross acceleration) and which has no representations, warranties,
covenants or events of default or prepayment that relate to any other Person or
that relate to the Company's operations or condition (financial or otherwise)
generally (as opposed to those that relate solely to leased equipment). For
avoidance of doubt, (x) defaults with respect to particular equipment under a
master equipment lease agreement to which the Company is a party shall not be
deemed to be cross defaults with respect to other equipment under the same
master lease agreement and (y) adding additional schedules in form theretofore
approved by the Purchaser to a master lease agreement theretofore approved by
the Purchaser shall not require separate approval of the Purchaser.
"▇▇▇▇▇ Tractor Debt" shall mean a non-interest bearing note
payable of the Borrower to ▇▇▇▇▇ Transfer, Inc. in an amount not exceeding
$408,250 on account of the deferred purchase price in the ▇▇▇▇▇ Tractor Debt
Transaction, as to which no payments will or may be made to ▇▇▇▇▇ Transfer,
Inc. or any other Person until such time as the Borrower's Tangible Net Worth
is equal to an amount equal to $650,000 plus 50% of the sum of Net Income (not
to be reduced by losses) for each fiscal quarter during the period from the
Closing Date through and including the last day of the then most recently
completed fiscal quarter, and as to which no
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such payment will or may be made if the making of such payment would result in
an Event of Default or would reduce the Borrower's Tangible Net Worth below an
amount equal to $650,000 plus 50% of the sum of Net Income (not to be reduced
by losses) for each fiscal quarter during the period from the Closing Date
through and including the last day of the then most recently completed fiscal
quarter.
"▇▇▇▇▇ Tractor Debt Transaction" shall mean the purchase by
the Borrower from ▇▇▇▇▇ Transfer, Inc., of 12 power units (tractors) for an
aggregate purchase price not exceeding $408,250 and the assumption by the
Borrower of purchase money indebtedness of ▇▇▇▇▇ Transfer, Inc. relating
thereto in an amount not exceeding $11,775, which purchase price shall be
deferred in full by incurrence of the ▇▇▇▇▇ Tractor Debt.
"Banks" shall mean, collectively, Mellon Bank, N.A. and its
successors and assigns pursuant to the Credit Agreement.
"Business" shall have the meaning assigned to such term in
the recitals hereto.
"Business Day" shall mean any day other than a Saturday,
Sunday or public holiday under the laws of the State of Maryland or other day
on which banking institutions are authorized or obligated to close in the State
of Maryland.
"Calculation Period" for the last day of any fiscal quarter
shall mean (a) for June 30, 1998, September 30, 1998 and December 31, 1998, the
period from the Closing Date through such date and (b) for each last day of a
fiscal quarter thereafter, the period of four consecutive fiscal quarters
ending on such last day.
"Call" shall have the meaning assigned to such term in
Section 10.1 hereof.
"Call Closing" shall have the meaning assigned to such term
in Section 10.7 hereof.
"Call Notice" shall have the meaning assigned to such term
in Section 10.1 hereof.
"Call Price" shall have the meaning assigned to such term
in Section 10.2 hereof.
"Capital Expenditures" of any Person shall mean, for any
period, all expenditures (whether paid in cash
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or accrued as liabilities during such period) of such Person during such period
which would be classified as capital expenditures in accordance with GAAP
(including, without limitation, expenditures for maintenance and repairs which
are capitalized, and Capitalized Leases to the extent an asset is recorded in
connection therewith in accordance with GAAP).
"Capitalized Leases" shall mean, with respect to any
Person, leases of any property (whether real, personal or mixed) by such Person
as lessee that, in accordance with GAAP (as defined in Section 1.2, below),
either would be required to be classified and accounted for as capital leases
on a balance sheet of such Person or otherwise be disclosed as such in a note
to such balance sheet.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9604, et seq.), as
amended, and rules and regulations issued thereunder.
"Change of Control" shall have the meaning assigned to such
term in Section 9.6 hereof.
"Charter Documents" with respect to any entity, shall mean
the certificate of incorporation, articles of incorporation or similar
evidences of corporate establishment of such entity, together with all
amendments or supplements thereto.
"Closing" shall mean the closing of the separate purchases
and sales of the Purchased Securities and the Notes pursuant to this Agreement.
"Closing Date" shall mean the date and time for delivery
and payment of the Securities as finally determined pursuant to Section 2.4
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall mean the property from time to time
subject to or purported to be subject to the Liens of the Security Documents.
"Commitment Fees" shall mean the aggregate commitment fees
equal to $78,334 which have became due and payable and paid by the Company to
ACSCIC prior to the date hereof.
"Common Stock" shall mean the Company's common stock, $.01
par value.
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"Company" shall have the meaning assigned to such term in
the preamble hereto.
"Conditional Warrant" shall have the meaning assigned to
such term in Section 2.2 hereof.
"Contractual Obligations" shall mean, for any Person, any
provisions of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which it or any
of property is bound.
"Controlled Group" shall mean the "controlled group of
corporations" as that term is defined in Section 1563 of the Internal Revenue
Code of 1986, as amended, of which JGT is a part as of the date hereof or the
Company is a part now or from time to time.
"Credit Agreement" shall mean the loan agreement among the
Company and the Banks described in Section 3.1(i) hereof and the collateral
documents entered into in connection therewith, each as in effect on the
Closing Date, as the same may be amended from time to time in accordance with
the Subordination Agreement.
"Default" shall mean any event or condition that, but for
the giving of notice or the lapse of time (as such), or both, would constitute
an Event of Default.
"Dividend" shall mean any distribution with respect to
capital stock whether in cash, securities (including common and preferred
stock) or other property but excluding any such distribution payable in the
form of securities of the same class of capital stock with respect to which
such distribution is made.
"EBIT" for any period, with respect to the Company, shall
mean (a) Net Income for such period, plus (b) Interest Expense for such period,
plus (c) charges against income for foreign, federal, state and local income
taxes for such period, minus (d) extraordinary gains to the extent included in
determining such Net Income for such period, all as determined in accordance
with GAAP.
"EBITDA" for any period, with respect to the Company, shall
mean (a) EBIT for such period, plus (b) depreciation expense for such period,
plus (c) amortization expense for such period, all as determined in accordance
with GAAP.
"Employment Agreement" shall have the meaning set forth in
Section 3.1(h).
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"Environmental Laws" shall mean any laws which address, are
related to, or are otherwise concerned with environmental, health, or safety
issues, including any laws relating to any emissions, releases or discharges of
Pollutants into ambient air, surface water, ground water or land or otherwise
relating to the manufacture processing, distribution, use, treatment, storage,
disposal, transport, handling, clean-up or control of Pollutants or any
exposure or impact on worker health and safety.
"Environmental Liabilities" shall mean any obligations or
liabilities (including any claims, suits or other assertions of obligations or
liabilities) that are:
(a) related to environmental, health or safety issues
(including on-site or off-site contamination by
Pollutants of surface or subsurface soil or water, and
occupational safety and health); and
(b) based upon or related to (i) any provision of past,
present or future United States Environmental Law
(including CERCLA and RCRA) or common law, or (ii) any
judgment, order, writ, decree, permit or injunction
imposed by any court, administrative agency, tribunal
or otherwise.
The term "Environmental Liabilities" includes: (1) fines,
penalties, judgments, awards, settlements, losses, actual damages,
out-of-pocket costs, fees (including reasonable attorneys' and consultants'
fees), expenses and disbursements; (2) defense and other responses to any
administrative or judicial action (including claims, notice letters,
complaints, and other assertions of liability); and (3) financial
responsibility for (1) cleanup costs and injunctive relief, including any
Removal, Remedial or other Response actions, and natural resource damages, and
(2) any other necessary compliance or remedial measures.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may from time to time be amended, and the rules and
regulations of any governmental agency or authority, as from time to time in
effect, promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, any
(i) corporation which is a member of the same Controlled Group as such Person;
(ii) partnership, trade or business under common control (within the meaning of
Section 414(c) of the Code) with such Person and (iii) solely for purposes of
liability under Section 412(c)(11) of the Code, for the lien created under
Section 412(n) of the Code or for a tax imposed for failure to meet minimum
funding standards
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under Section 4971 of the Code, member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as such Person, any
corporation described in clause (i) above or any partnership, trade or business
described in clause (ii) above.
"Event of Default" shall mean any of the Events of Default
described in Section 7.1 hereof.
"Executive" shall mean ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"Exercise Date" shall have the respective meanings assigned to
such term in Sections 9.1 and 10.1 hereof.
"Fair Market Value" shall have the meaning assigned to such term
in Section 9.2 hereof.
"Financing Statements" shall have the meaning assigned to such
term in Section 3.1(f) hereof.
"Fixed Charges" shall mean for any period, with respect to the
Company, the (a) Interest Expense for such period, plus (b) scheduled principal
payments with respect to any outstanding Indebtedness for such period, plus (c)
charges against income for foreign, federal, state and local taxes for such
period, plus (or minus) (d) any net increase (or decrease) in deferred taxes
for such period, plus (e) dividends paid in respect of preferred stock or
common stock during such period, plus (f) Rental Expense for such period, plus
(g) management fees paid to the Investor and the Purchaser, all as determined
in accordance with GAAP.
"Fixed Charges Coverage Ratio" shall mean for any period (a) (i)
EBITDA for such period, plus (ii) Rental Expense for such period, minus (iii)
Capital Expenditures for such period, divided by (b) Fixed Charges for such
period, all as determined in accordance with GAAP.
"Fully Diluted Basis" shall have the meaning assigned to such
term in Section 9.2 hereof.
"GAAP" shall have the meaning assigned to such term in Section
1.2 hereof.
"Governmental Authority" shall have the meaning assigned to such
term in Section 4.1(j) hereof.
"Guaranty" shall mean any guaranty of the payment or performance
of any Indebtedness or other obligation and any other arrangement whereby
credit is extended to one obligor on the basis of any promise of another
Person, whether that promise is expressed in terms of an obligation to pay the
Indebtedness of such obligor, or to purchase an obligation owed by such
obligor, or to purchase goods and services from
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such obligor pursuant to a take-or-pay contract, or to maintain the capital,
working capital, solvency or general financial condition of such obligor,
whether or not any such arrangement is listed in the balance sheet of such
other Person, firm or corporation, or referred to in a footnote thereto, but
shall not include endorsements of items for collection in the ordinary course
of business. For the purpose of all computations made under this Agreement,
the amount of a Guaranty in respect of any obligation shall be deemed to be
equal to the maximum aggregate amount of such obligation or, if the Guaranty is
limited to less than the full amount of such obligation, the maximum aggregate
potential liability under the terms of the Guaranty.
"Guaranty of Accuracy" shall have the meaning assigned to such
term in Section 3.1(h) hereof.
"Indebtedness" shall mean, for any Person, (i) all obligations
for borrowed money, (ii) all obligations arising from installment purchases of
property or representing the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor
or otherwise (other than trade payables and other current liabilities incurred
in the ordinary course of business on terms customary in the trade), (iii) all
issued by such person, or arising out of letters of credit issued for such
Person's account, (iv) all obligations, whether or not assumed, secured by any
Lien or payable out of the proceeds or production from any property or assets
now or hereafter owned or acquired by such Person, (v) all obligations for
which such Person is obligated pursuant to a Guaranty, (vi) the capitalized
portion of lease obligations under Capitalized Leases, (vii) all obligations
for which such Person is obligated pursuant to any Interest Rate Protection
Agreements or derivative agreements or arrangements; provided, however, that
for purposes of section 6.3, the ▇▇▇▇▇ Tractor Debt shall be deemed not to be
Indebtedness.
"Interest Coverage Ratio" shall mean for any period (a) EBITDA
for such period, divided by (b) Interest Expense for such period.
"Interest Expense" shall mean for any period the total interest
expense of the Company for such period which the Company was obligated to pay
as determined in accordance with GAAP.
"Interest Rate Protection Agreement" shall mean any interest
rate swap, interest rate cap, interest rate collar or other interest rate
hedging agreement or arrangement.
"Investment" as applied to any Person shall mean the amount paid
or agreed to be paid or loaned, advanced or
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contributed to other Persons, and in any event shall include (i) any direct or
indirect purchase or other acquisition of any notes, obligations, instruments,
stock, securities or ownership interest (including partnership interests and
joint venture interests) and (ii) any capital contribution to any other Person.
"Investor" shall mean Aasche Transportation Services, Inc.
"Issuer" shall have the meaning assigned to such term in Section
5.2 hereof.
"JGT" shall have the meaning assigned to such term in the
recitals hereto.
"Junior Subordinated Note" shall have the meaning assigned to
such term in Section 3.1(d) hereof.
"Latest Balance Sheet" shall have the meaning set forth in
Section 4.1(g).
"Laws" shall mean all U.S. and foreign federal, state or local
statutes, laws, rules, regulations, ordinances, codes, requirements, standards,
guidelines, policies, rules of common law, and the like, now or hereafter in
effect, including any judicial or administrative interpretations thereof, and
any judicial or administrative orders, consent decrees or judgments.
"Leased Properties" shall have the meaning assigned to such term
in Section 4.1(r) hereof.
"Lien" shall mean any security interest, pledge, bailment,
mortgage, deed of trust, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance or other
similar arrangement or interest in real or personal property, whether such
interest is based on common law, statute or contract.
"Life Insurance" shall have the meaning assigned to such term in
Section 3.1(g) hereof.
"Manage" and "Management" shall mean generation, production,
handling, distribution, processing, use, storage, treatment, operation,
transportation, recycling, reuse and/or disposal, as those terms are defined in
CERCLA, RCRA and other Environmental Laws (including as those terms are further
defined, construed, or otherwise used in rules, regulations, standards,
guidelines and publications issued pursuant to, or otherwise in implementation
of, such Environmental Laws).
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"Material Adverse Effect" shall mean a material adverse effect
on the business, properties, assets, liabilities, condition (financial or
otherwise) or prospects of the Company taken as a whole.
"Multiemployer Plan" shall mean a multiemployer plan (within the
meaning of Section 3(37) of ERISA) that has been or is maintained for the
benefit of the employees of JGT working in the Business, employees of the
Company or employees of any their ERISA Affiliates working in the Business.
"Net Income" shall mean for any period the net earnings (or
loss) after taxes of the Borrower for such period determined in accordance with
GAAP.
"Net Worth" shall mean, as of any date, the amount of the
Company's shareholders equity determined from its balance sheet as of such date
prepared in accordance with GAAP.
"Notes" shall mean the notes described in Section 2.1 hereof.
"Organic Change" shall have the meaning assigned to such term in
Section 10.4 hereof.
"Organic Change Value" shall have the meaning assigned to such
term in Section 10.3 hereof.
"Owned Properties" have the meaning assigned to such term in
Section 4.1(r).
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA, or any other
governmental agency, department or instrumentality succeeding to the functions
thereof.
"Permitted Liens" shall have the meaning assigned to such term
in Section 6.2(b) hereof.
"Person" shall mean any individual, partnership, limited
partnership, corporation, limited liability company, association, joint stock
company, trust, joint venture, unincorporated organization or governmental
entity or department, agency or political subdivision thereof.
"Piggyback Registrations" shall have the meaning assigned to
such term in Section 11.1(a) hereof.
"Plan" shall mean any employee benefit plan (within the meaning
of Section 3(3) of ERISA), other than a Multiemployer Plan, established or
maintained by JGT, with regard to the Business, the Company or any of their
ERISA Affiliates in relation to the Business.
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"Pledge Agreement" shall have the meaning assigned to such term
in Section 3.1(k) hereof.
"Pollutant" shall include any "hazardous substance" and any
"pollutant or contaminant" as those terms are defined in CERCLA; any "hazardous
waste" as that term is defined in RCRA; and any "hazardous material" as that
term is defined in the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et seq.), as amended (including as those terms are further
defined, construed, or otherwise used in rules and regulations issued pursuant
to, or otherwise in implementation of, said Environmental Laws); and including
without limitation any petroleum product or byproduct, solvent, flammable or
explosive material, radioactive material, asbestos, polychlorinated biphenyls
(PCBs), dioxins, dibenzofurans, heavy metals, and radon gas; and including any
other substance or material that is reasonably determined under Environmental
Law to present a threat, hazard or risk to human health or the environment.
"Price Protection Period" shall have the meaning assigned to
such term in Section 10.3 hereof.
"Primary Warrant" shall have the meaning assigned to such term
in Section 2.2 hereof.
"Prime Rate" shall mean the rate of interest which under current
practice is listed as such under the heading "Money Rates" in the Eastern
Edition of the Wall Street Journal, and if a range of rates is listed, the
highest such rate; should such practice change, such other indication of the
prevailing prime rate of interest as may reasonably be chosen by the Purchaser.
"Processing Fees" shall mean the aggregate processing fees and
commitment fees equal to $330,000 payable by the Company to ACSCIC upon the
execution and delivery of this Agreement by the Company to the Purchaser.
"Properties and Facilities" shall have the meaning collectively
of all Owned Properties and Leased Properties, including the improvements
thereon.
"Proprietary Rights" shall mean all patents, patent
applications, trademarks, trade names, service marks, copyrights, inventions,
production methods, formulas, know-how and trade secrets.
"Purchase Documents" shall mean this Agreement, the Notes, the
Purchased Securities, the Stockholders Agreement and the Security Documents and
all certificates, instruments and other documents delivered pursuant hereto or
contemplated hereby.
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"Purchased Securities" shall have the meaning assigned to such
term in Section 2.2 hereof.
"Purchaser" shall have the respective meanings assigned to such
term in the preamble hereto and in Section 5.3 hereof.
"Put" shall have the meaning assigned to such term in Section
9.1 hereof.
"Put Closing" shall have the meaning assigned to such term in
Section 9.3.
"Put Notice" shall have the meaning assigned to such term in
Section 9.1 hereof.
"Put Price" shall have the meaning assigned to such term in
Section 9.2 hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), as amended, and all rules and regulations issued
thereunder.
"Registrable Securities" means (i) any Common Stock purchased
pursuant hereto, (ii) any Common Stock or any stock acquired upon exercise or
conversion of any securities containing options or rights to acquire any shares
of Common Stock, in either case, acquired pursuant to Article 8 hereof, (iii)
any Common Stock issued upon exercise of the Warrants, and (iv) any Common
Stock issued or issuable with respect to the securities referred to in clauses
(i), (ii) and (iii) by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Securities, such securities
will cease to be Registrable Securities when they have been distributed to the
public pursuant to an offering registered under the Securities Act or sold to
the public through a broker, dealer or market maker in compliance with Rule 144
under the Securities Act (or any similar rule then in force).
"Removal," "Remedial" and "Response" actions shall have the
include the types of activities covered by CERCLA, RCRA, and other comparable
Environmental Laws, and whether the activities are those which might be taken
by a government entity or those which a government entity or any other person
might seek to require of waste generators, handlers, distributors, processors,
users, storers, treaters, owners, operators, transporters, recyclers, reusers,
disposers, or other persons under "removal," "remedial," or other "response"
actions.
"Rental Expense" shall mean for any period the aggregate rent
and lease payments made by the Company
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pursuant to operating leases for the same period determined in accordance with
GAAP.
"Reportable Event" shall mean any of the events which are
reportable under Section 4043 of ERISA and the regulations promulgated
thereunder, other than an occurrence for which the 30-day notice contained in
29 C.F.R. Section 2615.3(a) is waived.
"Restricted Securities" shall have the meaning assigned to such
term in Section 5.1 hereof.
"SEC" shall mean the Securities and Exchange Commission and any
governmental body or agency succeeding to the functions thereof.
"Securities" shall have the meaning assigned to such term in
Section 2.2 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Security Agreement" shall have the meaning assigned to such
term in Section 3.1(f) hereof.
"Security Documents" shall mean the Security Agreement, the
Financing Statements, the Guaranties of Accuracy, the Pledge Agreement, the
Mortgages, landlord waivers and consents and all other documents, instruments
and other materials necessary to create or perfect the security interests
created pursuant thereto.
"Senior Debt" shall mean all obligations and liabilities of the
Borrower to the Banks under the Credit Agreement.
"Senior Notes" shall mean the revolving and term notes of the
Company issued under the Credit Agreement as in effect on the Closing Date,
together with such amendments, modifications or extensions thereof in whole or
in part to the extent permitted by the Subordination Agreement.
"Specified Senior Indebtedness" shall have the meaning set forth
in Section 6.2(a)(ii).
"Stockholders Agreement" shall have the meaning assigned to such
term in Section 3.1 hereof.
"Stock Purchase" shall mean any redemption, acquisition or other
retirement of the capital stock of the Company (including preferred stock) or
of warrants, rights or
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other options to purchase such stock, other than upon conversion thereof into,
or exchange thereof for, other shares of capital stock.
"Subordination Agreement" shall have the meaning assigned to
such term in Section 3.1(h) hereof.
"Subject Securities" shall have the meaning assigned to such
term in Section 9.1 hereof.
"Subsidiary" of any corporation shall mean any other corporation
of which the outstanding capital stock possessing a majority of voting power in
the election of directors (otherwise than as the result of a default) is owned
or controlled by such corporation directly or indirectly through Subsidiaries.
"Tangible Net Worth" shall mean at any time the total amount of
stockholders' equity of the Company at such time determined in accordance with
GAAP, except that there shall be deducted therefrom the book value of all
intangible assets and deferred charges and prepaid expenses of the Company at
such time determined in accordance with GAAP, and except that there shall be
added thereto the outstanding amount of ▇▇▇▇▇ Tractor Debt.
"Termination Event" shall mean (i) a Reportable Event with
respect to any Plan of JGT, the Company or any of their ERISA Affiliates, or
(ii) the withdrawal of JGT, the Company or any of their Affiliates from a Plan
during a plan year in which it was a "substantial employer" as defined in
Section 3001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of 20% of Plan participants who are employees of JGT,
the Company or any of their ERISA Affiliates or (iii) the occurrence of an
obligation of JGT, with regard to the Business, the Company or any of their
ERISA Affiliates arising under Section 4041 of ERISA to provide affected
parties with a written notice of an intent to terminate a Plan in a distress
termination described in Section 4041(c) of ERISA, or (iv) the PBGC's
institution of proceedings to terminate a Plan of JGT, the Company or any of
their ERISA Affiliates, or (v) any event or condition which would reasonably be
expected to constitute grounds under Section 4041A or 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan of JGT, the Company or any of their ERISA Affiliates, or
(vi) the partial or complete withdrawal (as defined in Section 4203 and 4205 of
ERISA) of JGT, the Company or any of their ERISA Affiliates from a
Multiemployer Plan, or (vii) the existence in a Multiemployer Plan of a
material potential withdrawal liability of JGT, the Company or any of their
ERISA Affiliates, or (viii) the occurrence of any nonexempt "prohibited
transaction" with respect to any Plan under
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Section 406 of ERISA or Section 4975 of the Code or (ix) as of the last day of
any Plan year, the present value of the benefit liabilities (determined in
accordance with Statement of Financial Accounting Standards No. 35) of any Plan
of JGT, the Company or any of their ERISA Affiliates, as determined by the
Plan's independent actuaries, exceeds the aggregate value as of such date, as
determined by such actuaries, of all assets of such Plan by more than $100,000
as to all Plans in the aggregate.
"Total Leverage Ratio" shall mean for any period (a) the sum of
(i) aggregate Indebtedness of the Company on the last day of such period plus
(ii) an amount equal to Rental Expense for such period multiplied by four,
divided by (b) the sum of EBITDA for such period plus Rental Expense for such
period, all as determined in accordance with GAAP; provided, that in
calculating the Total Leverage Ratio as of June 30, 1998, September 30, 1998
and December 31, 1998, EBITDA and Rental Expense for the applicable Calculation
Period shall be multiplied by the reciprocal of a fraction, the numerator of
which fraction is the number of months then completed after the Closing Date
and the denominator of which fraction is 12.
"Transaction Documents" shall have the meaning assigned to such
term in Section 4.1(d) hereof.
"Transactions" shall mean the Acquisition and the incurrence of
debt and the issuance of equity in connection therewith, as contemplated by
this Agreement, the Notes, the Stockholders Agreement, the Acquisition
Agreement, the Credit Agreement as in effect on the date hereof, the Senior
Notes as in effect on the date hereof, the Stockholders Agreement and all other
agreements contemplated hereby and thereby.
"Underlying Common Stock" shall mean (i) the Common Stock issued
or issuable upon exercise of the Warrants, (ii) the Common Stock purchased
pursuant hereto and (iii) any equity securities issued or issuable with respect
to the securities referred to in clause (i) and (ii) above by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. Any Person
who holds a Warrant will be deemed to be the holder of the Underlying Common
Stock obtainable upon exercise of the Warrant and regardless of any restriction
on the exercise of the Warrant for purposes of the preemptive or other rights
specifically provided for in this Agreement. Notwithstanding the foregoing, a
Warrant shall not entitle the holder thereof to any voting rights or other
rights as a stockholder of the Company.
"UST" shall mean an underground storage tank, including as that
term is defined, construed and otherwise
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used in RCRA and in rules, regulations, standards, guidelines and publications
issued pursuant to RCRA and comparable state and local laws.
"Valuation Date" shall have the meaning assigned to such term in
Section 9.2 hereof.
"Voting Trust Agreement" shall have the meaning set forth in
Section 3.1(e).
"Warrant" shall have the meaning assigned to such term in
Section 2.2 hereof.
1.2 Accounting Principles. The character or amount of any
asset, liability, capital account or reserve and of any item of income or
expense to be determined, and any consolidation or other accounting computation
to be made, and the construction of any definition containing a financial term,
pursuant to this Agreement shall be determined or made in accordance with
generally accepted accounting principles in the United States of America
consistently applied ("GAAP") from and after the Closing Date.
1.3 Other Definitional Provisions; Construction. Whenever the
context so requires, neuter gender includes the masculine and feminine, the
singular number includes the plural and vice versa. The words "hereof"
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not in any particular
provision of this agreement, and references to section, article, annex,
schedule, exhibit and like references are references to this Agreement unless
otherwise specified. A Default or Event of Default shall "continue" or be
"continuing" until such Default or Event of Default has been either cured as
permitted hereunder or waived by Purchaser. References in this Agreement to
any Persons shall include such Persons, successors and permitted assigns.
Other terms contained in this Agreement (which are not otherwise specifically
defined herein) shall have meanings provided in Article 9 of the Maryland
Uniform Commercial Code on the date hereof to the extent the same are used or
defined therein.
ARTICLE 2
ISSUE AND SALE OF SECURITIES
2.1 Authorization and Issuance of the Notes. The Company has
duly authorized the issuance and sale to the Purchasers of (i) $5,500,000 in
aggregate principal amount of the Company's Senior Subordinated Notes due 2006
(the "Senior Subordinated Notes"), and (ii) $2,500,000 in aggregate principal
amount of the Company's Junior Subordinated Notes due 2006 (the "Junior
Subordinated Notes" and with the Senior
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Subordinated Notes, the "Notes," such term to include any notes issued in
substitution therefor pursuant to Sections 5.4 and 5.5 hereof), to be
substantially in the form of the Notes attached hereto as Exhibit A-1 and
Exhibit A-2, respectively.
2.2 Authorization and Issuance of the Purchased Securities.
The Company has duly authorized the issuance and sale to the Purchasers of (i)
500,000 shares of Common Stock (the "Purchased Shares"), (ii) the primary
warrants substantially in the form of the warrant attached hereto as Exhibit
B-1, evidencing the Purchaser's rights to acquire 500,000 shares of Common
Stock (the "Primary Warrants"), and (iii) the conditional warrant substantially
in the form of the warrant attached hereto as Exhibit B-2 (the "Conditional
Warrant" and with the Primary Warrant, the "Warrants") evidencing the
Purchaser's right to acquire additional shares of Common Stock under certain
circumstances. The Warrants and the Purchased Shares are sometimes referred to
herein collectively as the "Purchased Securities," and the Purchased Securities
and the Notes are sometimes referred to herein collectively as the
"Securities."
2.3 Sale and Purchase. Subject to the terms and conditions and
in reliance upon the representations, warranties and agreements set forth
herein, at the Closing, the Company shall sell to the Purchaser, and the
Purchaser shall purchase from the Company, (i) the Notes, (ii) the Warrants and
(iii) Purchased Shares.
2.4 The Closing. Delivery of and payment for the Securities
(the "Closing") shall be made at the offices of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, commencing at 9:00 a.m., local time, on
January 30, 1998, or at such place or on such other date as may be mutually
agreeable to the Company and the Purchaser. The date and time of the Closing
as finally determined pursuant to this Section 2.4 are referred to herein as
the "Closing Date." Delivery of the Securities shall be made to the Purchaser
against payment of the full purchase price therefor, less any unpaid Commitment
Fees, any unpaid Processing Fees and any other amounts payable pursuant to
Section 3.1(o) hereof, by wire transfer of immediately available funds to or at
the direction of the Company in the manner agreed to by the Company and the
Purchaser. The Notes shall be issued in such name or names and in such
permitted denomination or denominations as the Purchaser may request in writing
not less than two Business Days before the Closing Date; in the absence of such
request from the Purchaser, a single Senior Subordinated Note and a single
Junior Subordinated Note to be issued in the Purchaser's name. The Purchased
Securities shall be registered in such name or names as the Purchaser may
request in writing not less than two Business Days before the Closing Date; in
the absence of
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such a request from the Purchaser, the Purchased Securities will be registered
in the Purchaser's name.
ARTICLE 3
CONDITIONS AND AGREEMENTS
3.1 Conditions to Purchase of Securities. The obligation of
the Purchaser to purchase and pay for the Securities is subject to the
satisfaction prior to or at the Closing of the following conditions:
(a) Representations True. The representations and
warranties contained in Article 4 hereof shall be true and correct in all
material respects at and as of the Closing Date as though then made, except
where such representations and warranties speak as of a different date and
except to the extent of changes caused by the transactions expressly
contemplated or permitted herein. The representations and warranties of the
Company contained in the Credit Agreement, and the respective representations
and warranties of the Company, ▇▇▇▇▇▇▇▇ and JGT in the Acquisition Agreement,
shall be true and correct in all material respects at and as of the Closing
Date, except where such representations and warranties speak as of a different
date.
(b) No Material Adverse Change. Since January 2,
1998, there shall have been no Material Adverse Change in the business or
financial condition of the Company or the Business.
(c) Acquisition Agreement. The Acquisition
Agreement will be in full force and effect as of the Closing Date and will not
have been amended or modified. The conditions contained in Article 5 of the
Acquisition Agreement and the covenants of JGT contained in Article 7 of the
Acquisition Agreement will have been satisfied, performed or complied with (as
the case may be) in all material respects without reliance on any waiver by the
Company, JGT or ▇▇▇▇▇▇▇▇, and all of the transactions contemplated by the
Acquisition Agreement shall have been consummated.
(d) Security Documents. The Company and the
Purchasers shall have entered into a security agreement in form and substance
as set forth in Exhibit E attached hereto (the "Security Agreement"), and
mortgages substantially in the form and substance as set forth in Exhibit F
attached hereto. The Company shall have executed and delivered to the
Purchaser such financing statements ("Financing Statements") as shall be
reasonably necessary in order to perfect and maintain the continued perfection
of the security interests created by the Security Agreement.
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(e) Equity Investment. The Company shall have sold
to the Investor 4,500,000 shares of Common Stock at an aggregate purchase price
of $4,500,000, and will have received payment in full pursuant to Stockholders
Agreement in form and substance as set forth in Exhibit G attached hereto (the
"Stockholders Agreement"). The Investor will have executed a Voting Trust
Agreement with the Company as set forth in Exhibit H hereto (the "Voting Trust
Agreement") and a pledge agreement with regard to its shares of Common Stock
securing its obligations under the Guaranty of Accuracy and the obligations of
the Company hereunder in form and substance as set forth in Exhibit I hereto
(the "Pledge Agreement")
(f) Audited Financial Statements. The Purchaser
shall have received from Ernst & Young LLP (i) audited balance sheets of the
Business as of December 31, 1995, December 31, 1996 and September 30, 1997 and
(ii) audited statements of operations, shareholders' equity and cash flows for
the years ended December 31, 1995, December 31, 1996 and the nine-month period
ended September 30, 1997, in each case setting forth in comparative form the
corresponding figures for the preceding year or nine-month period, as the case
may be, together with appropriate notes and including an opinion of such
accountants without material exceptions or qualifications, all of which shall
be reasonably satisfactory to the Purchaser.
(g) Life Insurance. The Company shall have
delivered to the Purchaser a life insurance policy insuring the life of the
Executive in the amount of $5,000,000, naming the Company as the beneficiary
(the "Life Insurance"), and the Company shall have pledged its interest in such
policy pursuant to forms or instruments approved by the issuer of such policy.
(h) Employment Agreement. The Company shall have
entered into an employment agreement with the Executive with a minimum term of
five years, which shall be reasonably acceptable to Purchaser, and such
employment agreements shall be in full force and effect (the "Employment
Agreement"). Employment Agreement will provide that Executive will agree to
devote his full time and attention to the management of the Company and that he
will reside in the vicinity of Portage, Indiana, and it will contain customary
non-compete and non-disclosure provisions. The Company shall have entered into
non-competition and non-disclosure agreements, satisfactory to the Purchaser,
with key employees of the Company.
(i) Credit Agreement. The Company and the Banks
will have entered into the Credit Agreement providing for loans to the Company
in the aggregate original principal
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amount not greater than $23,000,000 in form and substance reasonably
satisfactory to the Purchaser, and the Credit Agreement will be in full force
and effect as of the Closing Date and will not have been amended or modified.
The Banks, the Company and the Purchaser shall have entered into a
subordination agreement in form and substance reasonably satisfactory to the
Purchaser and the Banks (the "Subordination Agreement").
(j) Title Insurance. The Company will have
delivered title insurance policies in amount, form and substance reasonably
satisfactory to the Purchaser, issued by an insurer of national reputation
satisfactory to the Purchaser, insuring that the lien in the Owned Properties
is a valid lien subject only to the Permitted Liens.
(k) Guaranty of Accuracy. The Executive and the
Investor shall have entered into a Guaranty of Accuracy with regard to the
representations and warranties of the Company set forth herein in form and
substance as set forth in Exhibit G attached hereto (the "Guaranty of
Accuracy").
(l) Environmental Reports. The Purchaser shall
have received Phase I and other environmental review reports covering all of
the Properties and Facilities in form and substance reasonably satisfactory to
the Purchaser regarding JGT's compliance with Environmental Laws.
(m) Closing Documents. The Company will have
delivered to the Purchaser all of the following documents in form and substance
reasonably satisfactory to each Purchaser:
(i) one or more Senior Subordinated Notes
and Junior Subordinated Notes (as designated by the
Purchaser pursuant to Section 2.4), duly completed and
executed by the Company;
(ii) one or more Primary Warrants and
Conditional Warrants (as designated by the Purchaser
pursuant to Section 2.4), duly completed and executed by
the Company;
(iii) one or more stock certificates (as
designated by the Purchaser, pursuant to Section 2.4)
evidencing the shares of Common Stock purchased pursuant
hereto, duly completed and executed by the Company;
(iv) a certificate of the secretary or the
assistant secretary of the Company, certifying the names
and true signatures of the officers of the Company
authorized to sign this
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Agreement and the other documents to be delivered by the
Company hereunder;
(v) certificate dated the Closing Date from
an officer of the Company stating that the conditions
specified in Section 3.1(a) through (p) have been fully
satisfied;
(vi) certified copies of the resolutions
duly adopted by the Company's board of directors
authorizing the execution, delivery and performance of this
Agreement and each of the other agreements, instruments and
documents contemplated hereby to which the Company is a
party, and the consummation of all other transactions
contemplated by this Agreement;
(vii) certified copies of the resolutions
duly authorized by the Investor's board of directors
authorizing the investment by the Investor in the Company
and authorizing the execution, the delivery and performance
of the Pledge Agreement, the Guaranty of Accuracy and the
Stockholders' Agreement and each of the other agreements
instruments and documents contemplated hereby to which the
Investor is a party;
(viii) certified copies of the Charter
Documents and Bylaws of the Company, each as in effect at
the Closing;
(ix) certified copies of the Charter
Documents and Bylaws of the Investor, each as in effect at
the Closing;
(x) copies of the Acquisition Documents, the
Credit Agreement, the Senior Notes, with all exhibits and
schedules thereto and all collateral or related agreements,
instruments or documents entered into or delivered in
connection therewith, each as in effect at the Closing;
(xi) the opinion, dated the Closing Date, of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd., counsel to the Company and
Investor, in form and substance reasonably satisfactory to
the Purchaser with respect to the matters set forth in
Exhibit K attached hereto;
(xii) evidence reasonably satisfactory to
the Purchaser of all insurance maintained by the Company
pursuant to Section 4.1(o), and the
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Purchaser shall be reasonably satisfied with the type and
extent of such coverage;
(xiii) evidence reasonably satisfactory to
the Purchaser of all labor contracts to which the Company
is a party, and the Purchaser shall be reasonably satisfied
with the terms and conditions of such labor contracts;
(xiv) a list of (A) the names of the
directors of the Company as of the Closing, (B) the names
and titles of the officers of the Company as of the
Closing, and (C) after giving effect to the Transactions,
the name of each of the stockholders and holders of other
equity interests of the Company setting forth the number,
type and class of shares or securities held;
(xv) certificates of good standing dated not
more than 10 days prior to the Closing Date for the Company
issued by the jurisdictions listed on the Qualifications
Schedule (as described in Section 4.1(a) hereof);
(xvi) landlord consents and waivers in form
and substance reasonably satisfactory to Purchaser with
respect to each of the Leased Premises; and
(xvii) such other documents relating to the
transactions contemplated by this Agreement as the
Purchaser or its special counsel may reasonably request.
(n) Purchaser's Fees and Expenses.
(i) Commitment Fees and Processing Fees. On
or prior to the Closing Date, the Company shall have paid
the Commitment Fees and the Processing Fees to the
Purchaser (and the Company hereby authorizes the Purchaser
to deduct from the aggregate proceeds from the sale of the
Notes and the Purchased Securities by the Company, the
unpaid amount of such Commitment Fees or such Processing
Fees); and
(ii) Other Fees and Expenses. On the
Closing Date, the Company shall have paid the fees and
expenses of the Purchaser, payable by the Company pursuant
to Section 12.4 hereof (and the Company hereby authorizes
the Purchaser to deduct from the aggregate proceeds of the
sale
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of the Notes and the Purchased Securities by the Company,
all such payable amounts).
(o) Legal Investment. On the Closing Date, the
Purchaser's purchase of the Notes and the Purchased Securities shall not be
prohibited by any applicable law, rule or regulation of any governmental
authority (including, without limitation, Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System) as a result of the promulgation or
enactment thereof or any changes therein, or change in the interpretation
thereof by any governmental authority, subsequent to the date of this
Agreement.
(p) Proceedings. All corporate and other
proceedings taken or required to be taken in connection with the transactions
contemplated hereby to be consummated at or prior the Closing and all documents
incident thereto will be reasonably satisfactory in form and substance to the
Purchaser and its special counsel.
(q) Waiver. Any condition specified in this
Section 3.1 may be waived if consented to by each Purchaser; provided that no
such waiver will be effective against any Purchaser unless it is set forth in a
writing executed by such Purchaser.
3.2 Taxes. Any and all payments by the Company hereunder
or under the Notes or other Purchase Documents which are made to or for the
benefit of the Purchaser shall be made free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges
or withholdings and penalties, interests and all other liabilities with respect
thereto (collectively, "Taxes"), excluding, taxes imposed on Purchaser's income
or capital and franchise taxes imposed on it by the jurisdiction under the laws
of which it is organized or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes"). If the
Company shall be required by law to deduct any Covered Taxes from or in respect
of any sum payable hereunder or under any Note or other Purchase Document to or
for the benefit of the Purchaser, the sum payable shall be increased as may be
necessary so that after making all required deductions of Covered Taxes
(including deductions of Covered Taxes applicable to additional sums payable
under this paragraph), the Purchaser receives an amount equal to the sum it
would have received had no such deductions been made. The Company shall make
such deductions and the Company shall pay the full amount so deducted to the
relevant taxation authority or other authority in accordance with
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applicable law. In addition, the Company agrees to pay any present or future
stamp, documentary, excise, privilege, intangible or similar levies that arise
at any time or from time to time from any payment made under any and all
Purchase Documents or from the execution or delivery by the Company or from the
filing or recording or maintenance of, or otherwise with respect to the
exercise by the Purchaser of its rights under any and all Purchase Documents
(collectively, "Other Taxes"). The Company will indemnify the Purchaser for
the full amount of Covered Taxes imposed on or with respect to amounts payable
hereunder and Other Taxes, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Payment of this
indemnification shall made within 30 days from the date the Purchaser provides
the Company with a certificate certifying and setting forth in reasonable
detail the calculation thereof as to the amount and type of such Taxes. Any
such certificates submitted by the Purchaser in good faith to the Company
shall, absent manifest error, be final, conclusive and binding on all parties.
The obligation of the Company under this Section 3.2 shall survive the payment
of the Notes and the termination of this Agreement. Within 30 days after the
Company having received a receipt for payment of Covered Taxes or Other Taxes,
the Company shall furnish to the Purchaser, the original or certified copy of a
receipt evidencing payment thereof.
3.3 Maximum Lawful Rate. This Agreement, the Notes and
the Other Purchase Documents are hereby limited by this Section 3.3. In no
contingency, whether by reason of acceleration of the maturity of the amounts
due hereunder or otherwise, shall interest and fees contracted for, charged,
received, paid or agreed to be paid to the Purchaser exceed the maximum amount
permissible under applicable law. If, from any circumstance whatsoever,
interest and fees would otherwise be payable to the Purchaser in excess of the
maximum amount permissible under applicable law, the interest and fees shall be
reduced to the maximum amount permitted under applicable law. If from any
circumstance, the Purchaser shall have received anything of value deemed
interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excess of interest shall be applied to the reduction of the
principal amount of the Notes, in such manner as may be determined by the
Purchaser, and not to the payment of fees or interest, or if such excessive
interest exceeds the unpaid balance of the principal amount of the Notes, such
excess shall be refunded to the Company.
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3.4 Capital Adequacy. If, after the date hereof, either
the introduction of or any change of the interpretation of any law or the
compliance by the Purchaser with any guideline or request from any governmental
authority (whether or not having the force of law) has or would have the affect
of reducing the rate of return on the capital or assets of the Purchaser as a
consequence of, as determined by the Purchaser in its sole discretion, the
existence of the Purchaser's obligations under this Agreement or any other
Purchase Documents, then, upon demand by the Purchaser, the Company immediately
shall pay to the Purchaser, from time as specified by the Purchaser, additional
amounts sufficient to compensate the Purchaser in light of such circumstances.
The obligations of the Company under this Section 3.4 shall survive the
payments of the Notes and the termination of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Representations and Warranties of the Company. As a
material inducement to the Purchaser to enter into this Agreement and purchase
the Notes and the Purchased Securities, the Company hereby represents and
warrants to each Purchaser as follows:
(a) Organization and Corporate Power. The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Illinois and is qualified to do business in the
jurisdictions listed on the attached "Qualifications Schedule," which list
includes every jurisdiction where the Borrower has operations or where such
registration is required under applicable law and, in the latter case, where
the failure to be so qualified would result in a Material Adverse Effect. The
Company has the requisite corporate power and authority to execute, deliver and
carry out its obligations under the Transaction Documents. The Company has all
requisite corporate power and authority necessary to own and operate its
properties, to carry on its businesses as now conducted and presently proposed
to be conducted and to carry out the Transactions. The copies of the Company's
Charter Documents and Bylaws which have been furnished to the Purchaser reflect
all amendments made thereto at any time prior to the date of this Agreement and
are correct and complete. Other than the Charter Documents, the Employment
Agreement, the Voting Trust Agreement, this Agreement and the Stockholders
Agreement, there are no contracts, understandings or
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agreements by and among any of the directors, officers or stockholders of the
Company related to the management, operation or governance of the Company.
(b) Capital Stock and Related Matters.
(i) As of the Closing and immediately
thereafter, the authorized capital stock of the Company
will consist of 10,000,000 shares of Common Stock,
5,000,000 shares of which shall be issued and outstanding
and not fewer than 3,333,334 shares of which shall be
reserved for issuance upon exercise of the Warrants. As of
the Closing, the Company will not have outstanding any
stock or securities convertible or exchangeable for any
shares of its capital stock, nor will it have outstanding
any rights or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into
or exchangeable for its capital stock, except as
specifically contemplated by this Agreement. As of the
Closing, the Company will not be subject to any obligation
(contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock, except
as set forth herein. As of the Closing, all of the
outstanding shares of the Company's capital stock will be
validly issued, fully paid and nonassessable.
(ii) There are no statutory or contractual
stockholders' preemptive rights with respect to the
issuance of the Purchased Securities hereunder. The
Company has not violated any applicable federal or state
securities laws in connection with the offer, sale or
issuance of any of its capital stock, and the offer, sale
and issuance of the Securities hereunder do not require
registration under the Securities Act or any applicable
state securities laws. There are no agreements between the
Company's stockholders with respect to the voting or
transfer of the Company's capital stock, except for the
Stockholders Agreement.
(c) Subsidiaries. The Company does not own or hold
any rights to acquire any shares of stock or any other security or interest in
any other Person, and the Company has never had any Subsidiary.
(d) Authorization; No Breach. The execution,
delivery and performance of this Agreement, the Notes the Purchased Securities,
the Security
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Documents, the Stockholders Agreement, the Acquisition Documents, the Credit
Agreement, the Senior Notes, all other agreements contemplated hereby and
thereby to which the Company is a party (collectively, the "Transaction
Documents"), and the consummation of the Transaction have been duly authorized
by the Company. The Transactions Documents have been duly and validly executed
and delivered by the Company and constitute legal, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms. The execution and delivery by the Company of the Transaction Documents
and the consummation of the Transactions do not and will not (i) conflict with
or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) except as created pursuant to the Credit
Agreement and the Security Documents, result in the creation of any lien,
security interest, change or encumbrance upon any of the Company's capital
stock or assets pursuant to, (iv) give any third party the right to accelerate
any obligation under, (v) result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other action by or notice to any
court or administrative or governmental body pursuant to the Charter Documents
or Bylaws of the Company, or any law, statute, rule or regulation to which the
Company is subject, or any material agreement, instrument, order, judgment or
decree to which the Company is a party or to which it or its assets are
subject.
(e) Governmental Approval. Except as specifically
provided by the Transaction Documents, no registration with or consent or
approval of, or other action by, any Federal, state or other governmental
agency, authority or regulatory body is or will be required in connection with
the consummation of the Transactions by the Company.
(f) Business. The Company is primarily engaged in
the business of providing municipal solid and special waste transportation.
(g) Financial Matters. The Company has heretofore
furnished to the Purchaser financial statements of the Business for the years
ending December 31, 1995, and December 31, 1996, and for the nine month period
ended September 30, 1997 (the "Latest Balance Sheet"), which financial
statements fairly present, in all material respects, the Business' financial
condition and results of operations as of the dates, and for the periods, set
forth therein. Such financial statements and the notes thereto, together with
the schedules to this Agreement, disclose all material liabilities, direct or
contingent, of the
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Company as of the dates thereof. The financial statements referred to in this
paragraph have been prepared in accordance with GAAP. Other than the
obligations of the Company listed on the Latest Balance Sheet or on the
attached "Obligations Schedule," the Company has no material liabilities or
obligations of any kind, whether liquidated or contingent, known or unknown;
for such purposes, the term "liabilities" shall include, without limitation,
any direct or indirect indebtedness, Guaranty, endorsement, claim, loss,
damage, deficiency, cost, expense, obligation or responsibility, known or
unknown, fixed or unfixed, ▇▇▇▇▇▇ or inchoate, or secured or unsecured.
(h) No Material Adverse Change. Since September 30,
1997, there has been no event or occurrence that could have a Material Adverse
Effect.
(i) Litigation. Except as described in the
"Litigation Schedule," there are no actions, suits or proceedings at law or in
equity or by or before any arbitrator or any governmental instrumentality or
other agency or regulatory authority now pending or, to the knowledge of the
Company, threatened against or affecting JGT, with regard to the Business, the
Investor, the Company or the officers or directors of the Investor or the
Company.
(j) Compliance with Laws. JGT, with regard to the
Business, has been and the Company is in compliance in all material respects
with, and neither are in default under, any Laws; neither JGT, with regard to
the Business, nor the Company is subject to any judgment, order, writ,
injunction, or decree that materially and adversely affects, or might in the
future reasonably be expected to materially and adversely affect, the Company,
the Business or the operations, foreseeable prospects, properties, assets or
condition of either (financial or otherwise). Neither JGT, with regard to the
Business, nor is the Company is in, and the consummation of the Transactions
will not cause any, default concerning any judgment, order, writ, injunction or
decree of any federal, state, or municipal court or other governmental
department, commission, board, bureau, agency or instrumentality, governmental
or quasi-governmental (collectively "Governmental Authorities"), and there is
no investigation pending or, to the Company's knowledge, threatened against or
affecting JGT, with respect to the Business, or the Company by any state or
federal governmental agency, department or instrumentality. During the ten
years preceding the date hereof, no person who is currently an officer or
director of the Company or the Investor (i) has been
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arrested for or convicted of a felony or crime related of fraud or moral
turpitude, (ii) has been the subject of a bankruptcy proceeding, or (iii) has
been an officer, director or partner of an entity which has been the subject of
a bankruptcy proceeding (other than Investor). JGT, with regard to the
Business, had, and the Company has all necessary permits, licenses, franchises,
approvals, certifications, registrations, consents and any other authorization
which may be issuable by any Governmental Authorities necessary or advisable
for the operation of the Business except for such permits, licenses, etc. which
if not obtained would not have a Material Adverse Effect, and the "Permits
Schedule" attached hereto is a complete and accurate listing of the same.
(k) Environmental Protection. Except as specified
in "Environmental Schedule" and after giving effect to the Transactions: (a)
the Business and the methods and means employed by JGT and the Company in the
operation thereof (including all operations and conditions at or in the
Properties and Facilities, and the assets owned, leased, managed, used, held,
controlled or operated by JGT, with regard to the Business, or the Company,
materially comply with all applicable Environmental Laws; (b) with respect to
the Properties and Facilities, and except as disclosed in the Environmental
Schedule, the Company has obtained, possesses, and is in full compliance with
and JGT had obtained, possessed and was in full compliance with, all permits,
licenses, reviews, certifications, approvals, registrations, consents, and any
other authorizations required under any Environmental Laws; and (c) neither JGT
nor the Company has received (i) any claim or notice of violation, lien,
complaint, suit, order or other claim or notice to the effect that it is or may
be liable to any Person as a result of (A) the environmental condition of any
of their respective properties or any other property related to the Business,
or (B) the release or threatened release of any Pollutant, or (ii) any letter
or request for information under Section 104 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section
9604), or comparable state laws, and none of the operations of JGT, with regard
to the Business, or the Company were or are the subject of any government
investigation evaluating whether any remedial action is needed to respond to a
release or threatened release of any Pollutant at JGT's or the Company's
properties or at any other location, including any location to which the JGT or
the Company have transported, or arranged for the transportation of, any
Pollutant; (d) with respect to the Properties and Facilities, and except as
disclosed in the
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Environmental Schedule, neither JGT, the Company, nor any prior owner or
operator has incurred in the past, or is now subject to, any Environmental
Liabilities; (e) except as disclosed in the Environmental Schedule, there are
no liens, covenants, deed restrictions, notice or registration requirements, or
other limitations applicable to the Properties and Facilities, based upon any
Environmental Laws or other legal obligations; (f) there are no USTs located
in, at, on, or under the Properties and Facilities other than the USTs
identified in the Environmental Schedule as USTs; and each of those USTs is in
full compliance with all Environmental Laws and other legal obligations; and
(g) except as disclosed in the Environmental Schedule, there are no PCBs, lead
paint, asbestos (of any type or form), or materials, articles or products
containing PCBs, lead paint or asbestos, located in, at, on, under, a part of,
or otherwise related to the Properties and Facilities (including, without
limitation, any building, structure, or other improvement that is a part of the
Properties and Facilities), and all of the PCBs, lead paint, asbestos, and
materials, articles and products containing PCBs, lead paint or asbestos
identified in the Environmental Schedule are in full compliance with all
Environmental Laws and other legal obligations.
(l) Legal Investments. The Company is not engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations G, T, U or X issued by the
Board of Governors of the Federal Reserve System), and no proceeds of the sale
of the Notes and the Purchased Securities will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
(m) Taxes. JGT, in connection with the Business,
the Investor and the Company have each filed or caused to be filed all Federal,
state and local tax returns which are required to be filed by either of them,
and each has paid or caused to be paid all Taxes shown to be due and payable on
such returns or on any assessments received by each of them, other than any
Taxes or assessments, the validity of which JGT, the Investor or the Company,
is contesting in good faith by appropriate proceedings, and with respect to
which the Company shall have set aside on its books adequate reserves.
(n) Labor and Employment. JGT, with regard to the
Business, has been and the Company is in compliance in all material respects
with those provisions of National Labor Relations Act, the Code,
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ERISA, the Age Discrimination in Employment Act and all other labor and
employment laws, and the regulations and published interpretations thereunder
which are applicable to the Business. There are no controversies, labor
disputes, work stoppages or strikes pending or, to the knowledge of the
Company, threatened or anticipated, between the Company and any of its
employees, other than employee grievances arising in the ordinary course of
business which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. The "Collective
Bargaining Schedule" attached hereto sets forth a complete list of all
collective bargaining agreements to which JGT, with regard to the Business, or
the Company is or was a party. Other than as set forth in the Collective
Bargaining Schedule, JGT and the Company are in full compliance in all material
respects with the terms of each such agreement. Other than as disclosed on the
Collective Bargaining Schedule, there are to the knowledge of the Company, no
efforts underway by any union to organize any of the employees of JGT, with
regard to the Business, or the Company.
(o) ERISA. JGT, the Company or their ERISA
Affiliates do not maintain or contribute to any Plan or Multiemployer Plan
other than a Plan or Multiemployer Plan listed on the "Plan Schedule" attached
hereto. Each Plan which is intended to be a qualified plan under Section
401(a) of the Code has been determined by the Internal Revenue Service to be so
qualified and each trust related to any such Plan has been determined to be
exempt from federal income tax under Subsection 501(a) of the Code, in each
case. Except as otherwise disclosed on the Plan Schedule, JGT, the Company and
their ERISA Affiliates have not maintained or contributed and do not maintain
or contribute to any employee welfare benefit plan within the meaning of
Subsection 3(1) of ERISA which provides medical benefits to retirees from the
Business, other than any continuation or conversion coverage which any such
retiree may have purchased at his own expense. Each Plan has been administered
in all material respects in accordance with its terms and the terms of ERISA,
the Code and all other statutes and regulations applicable thereto. JGT, the
Company and their ERISA Affiliates has not breached in any material respect any
of the responsibilities, obligations or duties imposed on them by ERISA or
regulations promulgated thereunder with respect to any Plan. No accumulated
funding deficiency (as defined in Section 302(a)(2) of ERISA and Section 412(a)
of the Code) exists in respect to any Plan. JGT, the Company and none of their
ERISA Affiliates, or any fiduciary of any Plan has engaged in a nonexempt
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"prohibited transaction" described in Section 406 of ERISA or Section 4975 of
the Code with respect to any Plan. No Termination Event has occurred which,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Schedule B to the most recent annual report filed
with the Internal Revenue Service with respect to each Plan has been furnished
to the Purchaser and is complete and accurate; since the date of each such
Schedule B, there has been no material adverse change in the funding status or
financial condition of the Benefit Plan relating to such Schedule B. JGT, the
Company and their ERISA Affiliates have not incurred any liability to the PBGC
with regard to any Plan or Multiemployer Plan which remains outstanding other
than for premium payments not yet due. JGT, the Company and their ERISA
Affiliates, have not (i) failed to make a required contribution or payment to a
Multiemployer Plan, or (ii) made partial withdrawal under Sections 4203 or 4205
of ERISA from a Multiemployer Plan for which JGT, the Company or their ERISA
Affiliates, has failed to make a required installment under Subsection 412(m)
of the Code or any other payment required under Section 412 of the Code on or
before the due date for such installment or other payment. JGT, the Company
and their ERISA Affiliates, are not required to provide security to a Plan
under Section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the plan year. The present value of the
benefit liabilities (determined in accordance with Statement of Financial
Accounting Standards No. 35) of each Plan as of the last day of the year for
such Plan, as determined by such Plan's independent actuaries, does not exceed
the aggregate value, as determined by such actuaries, of all assets under such
Plan by more than $100,000 in the aggregate.
(p) Investment Company Act: Public Utility Holding
Company Act. The Company is not (a) an "investment company" within the meaning
of the Investment Company Act of 1940, as amended or (b) a "holding company" or
a "subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(q) Personal Property.
(i) The "Equipment Schedule" attached hereto
contains a true and correct list of all machinery, vehicles
and equipment owned by the Company having a value in excess
of $1,000 per item. The Company has good and marketable
title
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to all of its machinery, vehicles and equipment (whether or
not disclosed in the Equipment Schedule), free and clear of
all liens, claims charges, security interests and other
encumbrances of any kind or nature, except Permitted Liens.
(ii) The Equipment Schedule contains a true
and correct description of all leases for machinery,
vehicles, equipment or other items of personal property
used or employed by the Company. Each of the leases
disclosed in the Equipment Schedule is in full force and
effect and there are no defaults or events of default, real
or claimed, or events which with notice or lapse of time or
both would constitute defaults thereunder. The assignment
to the Company by JGT of such Leases did not and does not
violate the terms of any such lease or all necessary
consents have been obtained with regard thereto.
(r) Real Property. The "Real Property Schedule"
attached hereto contains a true and correct description of all real properties
owned, leased, used, managed, controlled or operated by the Company,
identifying the nature of the Company's interest therein. True and correct
copies of all leases, contracts or similar documents concerning such real
property referenced in the Real Property Schedule have been provided to
Purchaser. The Company has good and marketable title to all of the real
property shown on the Real Property Schedule as being owned by it ("Owned
Properties") free and clear of any mortgage, liens, pledges, security
interests, charges, claims, restrictions and other encumbrances and material
defects of title of any nature whatsoever, except for Permitted Liens. Each of
the documents disclosed in said Schedule pertaining to properties listed on
such Schedule which are not owned by the Company (collectively, "Leased
Properties") is in full force and effect and there are not any existing
defaults or events of default, real or claimed, or events which with notice or
lapse of time or both would constitute defaults. Each of such documents and
the Company's interest in the Leased Properties is free and clear of any
mortgages or liens, and is not subject to any deeds of trust, assignments,
subleases, or rights of any third parties other than the lessor thereof or any
mortgagee of the lessor. The assignment to the Company by JGT of such
documents does not violate the terms of such documents or all necessary
consents have been obtained with regard thereto.
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(s) Contracts, Agreements Arrangements, etc. The
"Contracts Schedule" attached hereto contains a list of the following material
contracts to which the Company is a party which are not described in any other
Schedule:
(i) contracts for the employment of any
officer, employee, director or consultant;
(ii) contracts for the purchase, sale,
production or supply by the Company, whether on a
continuing basis or otherwise, of goods or services of any
type which have a pay-out of Twenty-Five Thousand and
00/100 Dollars ($25,000) or more per year; and
(iii) agreement, contract or commitment for
any charitable or political contribution;
Except as may be disclosed on the Contracts Schedule, each
of the agreements, contracts, commitments, leases and other instruments,
documents and undertakings listed on the Schedules hereto is valid and
enforceable in accordance with its terms and, as applicable, has been validly
assigned by JGT to the Company, the parties thereto are in compliance with the
provisions thereof, no party is in default in the performance, observance or
fulfillment of any material obligation, covenant or condition contained
therein, the written forms thereof contain the entire agreement of the parties
with regard to the subject matter thereof and no event has occurred which
with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder; furthermore, except as may be disclosed on the
Schedules, no such agreement, contract, commitment, lease or other instrument,
document or undertaking, in the reasonable opinion of the Company, contains any
contractual requirement with which there is a reasonable likelihood the Company
or any other party thereto will be unable to comply.
(t) Intellectual Property; Licenses. The Company
possesses adequate assets, licenses, patents, patent applications, copyrights,
trademarks, trademark applications and tradenames to continue to conduct its
business as heretofore conducted or as currently proposed to be conducted after
giving effect to the Transactions. No event has occurred which permits, or
after notice or lapse of time or both would permit, the revocation or
termination of any of the foregoing which taken in isolation or when considered
with all other such revocations or terminations could have a Material Adverse
Effect. The Company does not have notice or
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knowledge of any facts or any past, present or threatened occurrence that could
preclude or impair the Company's ability to retain or obtain any authorization
necessary for the operation of its respective business.
(u) Solvency. The Company is not insolvent and the
execution and delivery of this Agreement and the other Transaction Documents
pursuant and the consummation of the Transactions will not render the Company
insolvent. The fair value and present fair saleable value of the assets of the
Company exceeds its liabilities. The Company understands that in this context
"insolvent" means that the present fair saleable value of the total assets of
the Company is less than the amount of the total liabilities of the Company.
The Company also understands that the term "liabilities" includes any legal
liability, whether matured or unmatured, liquidated or unliquidated, absolute,
fixed or contingent (with contingent liabilities valued based on the Company's
good faith estimate of the probability of occurrence). The Company will be
able to pay its debts as they become absolute and mature. The consummation of
the Transactions will not leave the Company with property remaining in its
hands constituting unreasonably small capital with which to conduct its
business.
(v) Broker's or Finder's Commissions. No broker's
or finder's or placement fee or commission will be payable to any broker or
agent engaged by the Company or any of its officers, directors or agents with
respect to the issue of the Notes, the Warrants or the transactions
contemplated by this Agreement, including without limitation the Transactions,
except for fees payable to Mellon Private Practice Group and, other than
amounts payable by the Investor for which the Company has no liability. The
Company agrees to indemnify the Purchaser and hold it harmless from and against
any claim, demand or liability for broker's or finder's or placement fees or
similar commissions, whether or not payable by the Company, alleged to have
been incurred in connection with such transactions, other than any broker's or
finder's fees payable to Persons engaged by the Purchaser without the knowledge
of the Company.
(w) Complete Disclosure. All statements and other
factual information furnished by or on behalf of the Company or the Investor to
the Purchaser for purposes of or in connection with this Agreement or the
Transactions were, true and accurate in all material respects on the date as of
which such information was furnished and not incomplete by omitting to state
any fact necessary to make such information not misleading
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at such time in light of the circumstances under which such information was
provided.
4.2 Absolute Reliance. All representations and warranties
contained in this Agreement and any financial statements, instruments,
certificates, schedules or other documents delivered in connection herewith,
will survive the execution and delivery of this Agreement, regardless of any
investigation made by the Purchaser or on the Purchaser's behalf which
representations and warranties shall continue in full force and effect until
such time as the Notes, and all amounts associated or due in connection
therewith have been paid in full and the Purchaser has sold all Warrants,
Underlying Common Stock and Common Stock acquired pursuant to this Agreement.
ARTICLE 5
TRANSFER OF SECURITIES
5.1 Restricted Securities. The Purchaser acknowledges
that (i) the Notes issued hereunder and (ii) the Purchased Securities issued
hereunder (collectively, the "Restricted Securities") are "restricted
securities" as such term is defined in Rule 144 of the SEC. Restricted
Securities are transferable only pursuant to (a) public offerings registered
under the Securities Act, (b) Rule 144 of the SEC (or any similar rule then in
force) if such rule is available and (c) subject to the conditions specified in
Section 5.2 below, any other legally available means of transfer.
5.2 Transfer of Restricted Securities. The Purchaser will
not sell or transfer all or any part of the Restricted Securities unless or
until, as the case may be, (i) it shall have given written notice to the issuer
of such Restricted Securities (in such capacity, the "Issuer") describing such
sale or transfer, (ii) shall have furnished to the Issuer an opinion,
reasonably satisfactory to counsel for the Issuer, of counsel skilled in
securities matters (selected by the Purchaser and reasonably satisfactory to
the Issuer) to the effect that the proposed sale or transfer may be made
without registration under the Securities Act, (iii) it shall (A) cause each
transferee of its rights under the Restricted Securities or any interest
therein to enter into a written agreement pursuant to which such transferee
shall agree to be bound by the restrictions on transferability set forth in
this Section 5.2, and Section 5.3 hereof and, in the case of the Notes, Section
5.4 hereof, and (B) promptly deliver
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a copy of such agreement to the Issuer and provide the Issuer the address of
such transferee; provided, however, that the foregoing clauses (i) through
(iii) shall not apply with respect to any such sale or transfer of the
Restricted Securities in an underwritten public offering of the Restricted
Securities pursuant to an effective registration statement under the Securities
Act, if such sale or transfer is made in accordance with the plan of
distribution set forth therein; and provided, further, that the foregoing
clauses (i) through (iii) shall not apply with respect to any such sale or
transfer of the Restricted Securities by the Purchaser to any of its
Affiliates. In addition, if the holder of the Restricted Securities delivers
to the Issuer satisfactory opinion of such counsel that no subsequent transfer
of such Restricted Securities will require registration under the Securities
Act, the Issuer will promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities
Act legend described in Section 5.3 hereof.
5.3 Legends; Purchaser. The Purchaser, hereby represents
and warrants to the Company that it is an Accredited Investor within the
meaning of Rule 501(a) under the Securities Act and is acquiring the Notes and
the Purchased Securities for investment for its own account, with no present
intention of dividing its participation with others (except for a potential
transfer or transfers of the Notes or the Purchased Securities to an Affiliate
of the Purchaser) or reselling or otherwise distributing the same in violation
of the Securities Act or any applicable state securities laws. The Issuer may
place an appropriate legend on the Restricted Securities owned by the Purchaser
concerning the restrictions set forth in this Article 5. The Issuer may refuse
to transfer the Restricted Securities on its books should the Purchaser attempt
to transfer the Restricted Securities otherwise than in compliance with this
Article 5. Upon the permitted assignment or transfer by the Purchaser or any
of its successors or assignees of all or any part of the Restricted Securities,
the term "Purchaser" as used in this Article 5 shall thereafter mean, to the
extent thereof, the then holder or holders of such Restricted Securities or
portion thereof; provided, however, that the term "Purchaser" shall not be
applicable to any such Person or Persons which shall acquire such securities in
a registered public offering of the Restricted Securities or in any sale
pursuant to Rule 144 of the SEC.
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5.4 Transfer of Notes. Subject to Section 5.2 above, a
holder of a Note may transfer such Note to a new holder, or may exchange such
Note for notes of different denominations (but in no event of denominations of
less than $100,000 in original principal amount), by surrendering such Note to
the Company duly endorsed for transfer or accompanied by a duly executed
instrument of transfer naming the new holder (or the current holder if
submitted for exchange only), together with written instructions for the
issuance of one or more new Notes specifying the respective principal amounts
of each new Note and the name of each new holder and each address therefor.
The Company shall simultaneously deliver to such holder or its designee such
new Notes and shall ▇▇▇▇ the surrendered Notes as canceled. In lieu of the
foregoing procedures, a holder may assign a Note (in full but not in part) to a
new holder by sending written notice to the Company of such assignment
specifying the new holder's name and address; in such case, the Company shall
promptly acknowledge such assignment in writing to both the old and new holder.
The Company shall not be required to recognize any subsequent holder of a Note
unless and until (i) such holder has complied with the requirements of Section
5.2 and (ii) the Company has received reasonable assurance that all applicable
transfer taxes have been paid.
5.5 Replacement of Lost Purchased Securities. Upon
receipt of evidence reasonably satisfactory to the Company of the mutilation,
destruction, loss or theft of any Purchased Securities and the ownership
thereof, the Company shall, upon the written request of the holder of such
Purchased Securities, execute and deliver in replacement thereof new Purchased
Securities in the same form, in the same original amount and dated the same
date as the Purchased Securities so mutilated, destroyed, lost or stolen; and
such Note so mutilated, destroyed, lost or stolen shall then be deemed no
longer outstanding hereunder. If the Purchased Securities being replaced has
been mutilated, it shall be surrendered to the Company; if such replaced
Purchased Securities have been destroyed, lost or stolen, such holder shall
furnish the Company with an indemnity in writing to save it harmless in respect
of such replaced Purchased Securities.
5.6 No Other Representations Affected. Nothing contained
in this Article 5 shall limit the full force or effect of any representation,
agreement or warranty made herein or in connection herewith to the Purchaser.
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ARTICLE 6
COVENANTS
6.1 Affirmative Covenants. The Company covenants that, so
long as all or any of the principal amount of the Notes or any interest hereof
shall remain outstanding, and so long as any of the Warrants are outstanding:
(a) Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
(b) Businesses and Properties; Compliance with
Laws. At all times (i) do or cause to be done all things necessary to
preserve, renew and keep in full force and effect in all material respects the
rights, licenses, registrations, permits, franchises, patents, copyrights,
trademarks and trade names, and any other authorizations which may be material
to the conduct of its business, (ii) comply in all material respects with all
laws and regulations applicable to the operation of such business, including
but not limited to, all Environmental Laws, whether now in effect or hereafter
enacted and with all other applicable laws and regulations, (iii) take all
action which may be required to obtain, preserve, renew and extend all
franchises, registrations, certifications, approvals, consents, licenses,
permits and other authorizations which may be material to the operation of such
business, (iv) maintain, preserve and protect all property which may be
material to the conduct of such business, and (v) except for obsolete or worn
out equipment, keep its property in good repair, working order and condition
and from time to time make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements thereto necessary
in order that the business carried on in connection therewith may be properly
conducted in all material respects at all times.
(c) Insurance. Maintain insurance required by the
Purchase Documents, including but not limited to, the Life Insurance, coverage
on its insurable properties, including all inventory, equipment and real
property, against the perils of fire, theft, burglary, public liability,
worker's compensation and business interruption and such other risks as are
customary with companies similarly situated and in the same or similar business
under policies issued by financially sound and reputable insurers in such
amounts as are customary with companies similarly situated and in the same or
similar business. The Company shall pay all insurance
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premiums payable by it and shall deliver the policy or policies of such
insurance (or certificates of insurance with copies of such policies) to the
Lender. All insurance policies of the Company shall contain endorsements, in
form and substance reasonably satisfactory to the Purchaser, providing that the
insurance shall not be cancelable except upon 30 days' prior notice to the
Purchaser. The holders of the Notes shall be shown as an additional named
insured party under all such insurance policies.
(d) Obligations and Taxes. Pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might
give rise to liens or charges upon such properties or any part thereof;
provided, however, that the Company shall not be required to pay and discharge
or to cause to be paid and discharged any such tax, assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good
faith by appropriate proceedings and the Company shall have set aside on its
books adequate reserves with respect thereto.
(e) Financial Statements; Reports. Furnish to each
Purchaser:
(i) Annual Statements. Within ninety (90)
days after the end of each fiscal year, a balance sheet and
statements of operations, stockholders' equity and cash
flows of the Company showing the financial condition of the
Company as of the close of such year and the results of
operations during such year, all the foregoing financial
statements to be audited by a firm of independent certified
public accountants of recognized national standing
acceptable to the Purchaser including, without limitation,
Ernst & Young L.L.P., and accompanied by an opinion of such
accountants without material exceptions or qualifications.
Additionally, such financial statements shall be
accompanied by a certificate of such accountants (which
shall not contain any qualification, exception or scope
limitation not acceptable to Purchaser) stating that in the
course of its regular audit of the Business of the Company,
which audit was conducted in accordance with GAAP, no
Default or Event of Default relating to financial and
accounting matters has come to their attention, or if any
Default or Event of
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Default exists, a statement as to the nature thereof.
(ii) Monthly Statements. Within 30 days
after the end of each month other than the last month of
the fiscal year, a balance sheet and income statement
showing the financial condition and results of operations
of the Company as of the end of each such month and for the
then elapsed portion of the current fiscal year, together
with comparisons to the corresponding periods in the
preceding year and the budget for such periods, accompanied
by a certificate of an officer that such financial
statements have been prepared in accordance with GAAP.
(iii) Certificate of Compliance. Each
financial statement furnished to the Purchaser pursuant to
subsections (i) and (ii) of this Section 6.1(e) shall be
accompanied by a written certificate signed by the
Company's chief financial officer (A) to the effect that no
Default or Event of Default has occurred during the period
covered by such statements or, if any such Default or Event
of Default has occurred during such period, setting forth a
description of such Default or Event of Default and
specifying the action, if any, taken by the Company to
remedy the same, and (B) in the form of Exhibit L showing
the Company's compliance with the covenants set forth in
Sections 6.3.
(iv) Accountant Reports. Promptly upon the
receipt thereof, copies of all reports, if any, submitted
to the Company by independent certified public accountants
in connection with each annual, interim or special audit or
review of the financial statements of the Company or any of
its Subsidiaries made by such accountants, including but
not limited to, any comment letter submitted by such
accountants to management in connection with any annual
review.
(v) Projections. As soon as available, but
in no event later than January 30 of each year, a
projection of the Company's balance sheet and income,
retained earnings and cash flow statements for such year
and the following two years and comparable budgeted figures
for the prior year and within 10 days after any material
update or amendment of any such projection, a copy of such
update or amendment, including a description of and reasons
for such
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update or amendment. Each such projection, update or
amendment shall be accompanied by a written certificate
signed by the Company's chief financial officer to the
effect that it has been prepared on the basis of the
Company's historical financial statements and records,
together with the assumptions set forth in such projection
and that it reflects expectations, after reasonable
analysis, of the Company's management as to the matters set
forth therein.
(vi) Additional Information. Promptly, from
time to time, such other information regarding the
compliance by the Company with the terms of this Agreement
and the other Purchase Documents or the affairs, operations
or condition (financial or otherwise) of the Company as the
Purchaser may reasonably request and which is capable of
being obtained, produced or generated by the Company
without unreasonable cost or burden or of which the Company
has knowledge.
(f) Litigation and Other Notices. Give the
Purchaser prompt written notice of the following:
(i) Orders; Injunctions. The issuance by any
court or governmental agency or authority of any
injunction, order, decision or other restraint prohibiting,
or having the effect of prohibiting, the making of any loan
to the Company or the initiation of any litigation or
similar proceeding seeking any such injunction, order or
other restraint.
(ii) Litigation. The filing or commencement
of any action, suit or proceeding against the Company
whether at law or in equity or by or before any court or
any Federal, state, municipal or other governmental agency
or authority and which, if adversely determined against the
Company, could resulted in uninsured liability in excess of
$250,000 in the aggregate, specific performance or
injunctive relief.
(iii) Environmental Matters. (i) Any
release or threatened release of any Pollutant required to
be reported to any Federal, state or local governmental or
regulatory agency under any applicable Environmental Laws,
(ii) any remedial action taken by the Company or any other
person in response to any Pollutant in, at, on, under, a
part of, or about the Company's
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properties or any other property, (iii) any violation by
the Company of any Environmental Law, and (iv) any notice,
claim or other information that the Company might be
subject to an Environmental Liability, in each case, which
could result in a Material Adverse Effect.
(iv) Default. Any Default or Event of
Default, specifying the nature and extend thereof and the
action (if any) which is proposed to be taken with respect
thereto.
(v) Material Adverse Effect. Any
development in the business or affairs of the Company which
could have a Material Adverse Effect.
(vi) Board Meetings. Written notice of each
regular meeting of the Company's Board of Directors at
least fourteen (14) days in advance of such meeting and
prior written notice of each special meeting of the board
of directors at least seven (7) days in advance of such
meeting, but in any case such notice shall be delivered no
later than the date on which the members of the Board of
Directors are notified of such meeting. In addition, the
Company will send the Purchaser copies of all reports and
materials provided to members of the Board of Directors at
meetings or otherwise.
(vii) Tax and Securities Filings. Within ten (10)
Business Days of filing, copies of all material filings
made by the Company with the Internal Revenue Service or
the SEC.
(g) ERISA. Comply in all material respects with the
applicable provisions of ERISA and the provisions of the Code relating thereto
and furnish to the Purchaser (i) as soon as possible, and in any event within
30 days after the Company knows or has reason to know thereof, notice of (A)
the establishment by the Company of any Plan, (B) the commencement by the
Company of contributions to a Multiemployer Plan, (C) any failure by the
Company or any of its ERISA Affiliates to make contributions required by
Section 302 of ERISA (whether or not such requirement is waived pursuant to
Section 303 of ERISA), or (D) the occurrence of any Reportable Event with
respect to any Plan or Multiemployer Plan, together with a statement of an
officer setting forth details as to such Reportable Event and the action which
the Company proposes to take with respects thereto, together with a copy of the
notice of such Reportable Event given to
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the PBGC, and (ii) promptly after receipt thereof, a copy of any notice the
Company may receive from the PBGC relating to the intention of the PBGC to
terminate any Plan or Multiemployer Plan, or to appoint a trustee to administer
any Plan or Multiemployer Plan and (iii) promptly after receipt thereof, a copy
of any notice of withdrawal liability from any Multiemployer Plan.
(h) Maintaining Records; Access to Premises and
Inspections. Maintain financial records in accordance with GAAP. Upon
reasonable notice, at all reasonable times and as often as any Purchaser may
reasonably request (and at any time after the occurrence and during the
continuation of a Default or Event of Default), permit any authorized
representative designated by the Purchaser to visit and inspect the properties
and financial records of the Company and to make extracts from such financial
records, all at the Company's expense, and permit any authorized representative
designated by the Purchaser to discuss the affairs, finances and conditions of
the Company with the Company's chief financial officer and such other officers
as the Company shall deem appropriate, and the Company's independent public
accountants.
(i) Board of Directors. Regular meetings of the
Board of Directors will be held at least once each calendar quarter at the
principal executive offices of the Company. The Executive shall be a member of
the Board of Directors and shall have the right to designate a majority of the
members of the Board of Directors without the consultation with or approval of
any Person including, without limitation, the Purchaser; provided, however,
Purchaser shall have the right to designate a proportion of the Board of
Directors equal to the Purchaser's proportional ownership of the Common Stock
on a Fully Diluted Basis (with any partial board seats rounded up to the
nearest whole seat). At the option of Purchaser, in lieu of voting board
positions, the Purchaser may designate a Board of Directors observer, without
voting rights. Any Purchaser-designated members or observers shall be entitled
to the same compensation as other non-employee members of the Board of
Directors and, in any case, to receive reimbursement for out-of-pocket expenses
incurred in connection with attendance at Board, committee and stockholder
meetings.
(j) Future Financings. The Company shall give to
ACS a right of first refusal to provide not less than one-third in principal
amount of any future financings of senior or subordinated indebtedness other
than leasing transactions and the Additional Senior
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Indebtedness. ACS shall have thirty (30) days following written notice of the
terms of such financing to provide written notice to the Company of whether it
intends to provide its portion of such financing on such terms. In the event
that ACS declines such opportunity, the Company may take up to ninety (90) days
to consummate such financing on terms no more favorable to the lender than the
terms declined by ACS.
(k) Management Fee. The Company will pay to
ACSCIC or its designee an annual management fee, in arrears, of $37,500.
6.2 Negative Covenants. The Company covenants that, so
long as all or any part of the principal amount of the Notes or any interest
thereon shall remain outstanding:
(a) Indebtedness. The Company shall not create,
incur, assume, guarantee or be or remain liable for, contingently or otherwise,
or suffer to exist any Indebtedness, except:
(i) Indebtedness under this Agreement;
(ii) the Senior Debt and any renewals,
refinancings or extensions thereof plus the other
Indebtedness which constitutes "Senior Debt" under the
Subordination Agreement collectively, without duplication,
"Specified Senior Indebtedness" in aggregate principal
amount of $3,000,000 ("Additional Senior Indebtedness")
(such Additional Senior Indebtedness, such Senior Debt and
such renewals, refinancings and extensions being herein
collectively referred to collectively, without duplication,
as the "Specified Senior Indebtedness"); provided all such
renewals, refinancings or extensions shall be on terms
reasonably acceptable to the Purchaser and (A) no revolving
credit facility shall be in excess of $8,000,000 and (B)
there shall not be a term loan facility or facilities in
excess of the original $21,000,000 principal amount of the
Senior Debt as reduced by the amounts of principal payments
made thereunder after the date hereof plus (C) the
aggregate amount of Specified Senior Indebtedness shall not
exceed $26,000,000 as reduced by the amounts of principal
payments made the Senior Debt term loan facility;
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(iii) Capitalized Lease Obligations, to the
extent permitted by Sections 6.2(d) and 6.2(e);
(iv) Indebtedness secured by Liens permitted
by Section 6.2(b)(iv); provided, that the aggregate
principal amount of such Indebtedness shall not exceed
$250,000; and
(v) Indebtedness incurred in the ordinary
course of business with respect to customer deposits, trade
payables and other unsecured current liabilities not the
result of borrowing and not evidenced by any note or other
evidence of indebtedness; and
(vi) the Aasche Tractor Debt.
Any Indebtedness entered into after the date hereof shall
contain provisions specifically granting the Purchaser notice and cure rights
in the event of any defaults thereunder.
(b) Negative Pledge; Liens. The Company shall not
create, incur, assume or suffer to exist any Lien of any kind on any of its
properties or assets of any kind, except the following (collectively,
"Permitted Liens"):
(i) Liens created in connection with the
Senior Debt and Specified Senior Debt but only to the
extent such Senior Debt and Specified Senior Debt is
permitted under the Subordination Agreement;
(ii) Liens for or priority claims imposed by
law which are incidental to the conduct of business or the
ownership of properties and assets (including mechanic's
warehousemen's, attorneys' and statutory landlords' liens)
and deposits, pledges or liens to secure statutory
obligations, surety or appeal bonds or other liens of like
general nature incurred in the ordinary course of business
and not in connection with the borrowing of money;
provided, however, that in each case, the obligation
secured is not overdue, or, if overdue, is being contested
in good faith and adequate reserves have been set up by the
Company as the case may be; provided, further, that the
lien and security interest provided in the Security
Documents or any portion thereof created or intended to be
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created thereby is not, in the opinion of the Purchaser,
unreasonably jeopardized thereby;
(iii) Liens securing the payments of taxes,
assessments and governmental charges or levies incurred in
the ordinary course of business either (a) not delinquent,
or (b) being contested in good faith by appropriate legal
or administrative proceedings and as to have set aside on
its books adequate reserves, and so long as during the
period of any such contest, the Company shall suffer no
loss of any privilege of doing business or any other right,
power or privilege necessary or material to the operation
of its business; and
(iv) Liens (whether or not assumed) existing
on property at the time of purchase thereof by the Company
or to secure payment of the purchase price thereof,
provided, that:
(a) such Lien is created before or
substantially simultaneously with the purchase of such
property in the ordinary course of business by the
Borrower;
(b) such Lien is confided solely to
the property so purchased, improvements thereto and
proceeds thereof;
(c) the aggregate amount secured by
all such Liens on any particular property at the time
purchased by the Borrower, as the case may be, shall not
exceed the lesser of the purchase price of such property or
the fair market value of such property at the time of
purchase thereof ("purchase price" for this purpose
including the amount secured by each such Lien thereof
whether or not assumed);
(d) the obligation secured by such
Lien is Indebtedness permitted under Section 6.1(a)(iv);
and
(e) to the extent they constitute
Liens, protective filings on property leased under leases
permitted under this Agreement.
(v) Extensions, renewals and replacements of
liens referred to in clauses (i) through (iv) of this
Section 6.2(b), provided, however, that any such extension,
renewal or replacement Lien shall be limited to the
property or assets covered by the Lien extended,
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renewed or replaced and that the obligations secured by any
such extension, renewal or replacement Lien shall be in an
amount not greater than the amount of the obligations
secured by the Lien extended, renewed or replaced.
(c) Contingent Liabilities. The Company shall not
become liable for any Guaranties, except for the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
(d) Leases. The Company shall not become or be
liable for any leases other than: (i) leases, each of which may be either an
operating lease or a Capitalized Lease, equipment used by the lessee in the
ordinary course of business, provided, that such leases are on an Approved
Lease Form and provided, further, that such leases, in the aggregate, will not
and do not result in the payment or accrual (whether on account of Rental
Expense, Interest Expense, principal component of Capitalized Leases or
otherwise) by the Company during any fiscal year of more than an amount equal
to (i) $1,500,000 for 1998, $2,500,000 for 1999, $3,750,000 for 2000,
$4,500,000 for 2001, $5,500,000 for 2002, $6,500,000 for 2003, $6,500,000 for
2004, and $6,500,000 for 2005 minus (ii) the positive difference, if any,
between (x) the aggregate net amount of residual value "guaranteed" by the
Company under all equipment leases which terminate in such fiscal year minus
(y) the aggregate net amount of the fair market value at lease termination of
all equipment covered by such terminating leases and (ii) leases for other than
equipment.
(e) Capital Expenditures. The Company shall not
make capital expenditures in any fiscal year to the extent that during such
fiscal year the aggregate amount of capital expenditures in such fiscal year
would exceed $2,000,000 plus the amount of net proceeds realized by the Company
under clause 6.2(f)(ii) herein.
(f) Mergers, etc. The Company shall not merge into
or consolidate or combine with any other Person, or purchase, lease or
otherwise acquire (in one transaction or a series of related transactions) all
or any material part of the property or assets of any Person other than
purchases or other acquisitions of inventory, materials, leases, property and
equipment in the ordinary course of business. Except as expressly permitted by
the Security Documents, the Company shall not sell, transfer or otherwise
dispose of any of its
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assets, including the Collateral, except for the sale of obsolete or worn out
equipment disposed of in the ordinary course of business and for sales
permitted under the Credit Agreement, provided that no such sale or series of
sales permitted under the Credit Agreement shall, in any one year, involve
Collateral with a value in excess of twenty percent of the value of all
Collateral without the consent of the Purchaser, except for (i) sales,
transfers and other dispositions of equipment which is obsolete or no longer
useful in the business for no consideration other than cash, in the ordinary
course of business, the gross proceeds of which do not exceed $100,000 in any
fiscal year, (ii) sales, transfers and other dispositions of any property if
the full net proceeds of such are used within three months to purchase similar
replacement property, and (iii) sales, transfers and other dispositions under
this clause (iii) of any property which are a "Reduction Event" under the
Credit Agreement, provided that the aggregate amount of such sales, transfers
and dispositions in any fiscal year shall not exceed twenty-five percent of the
value of the Collateral.
(g) Affiliate Transactions. The Company shall not
make any loan or advance to any director, officer or employee of the Company or
any Affiliate, or enter into or be a party to any transaction or arrangement
with any Affiliate of the Company, including, without limitation, the purchase
from, sale to or exchange of property with, any merger or consolidation with or
into, or the rendering of any service by or for, any Affiliate, except as
disclosed on the "Affiliate Transaction Schedule" or pursuant to the reasonable
requirements of the Company's business and upon fair and reasonable terms no
less favorable to the Company than would be obtained in a comparable
arm's-length transaction with a Person other than an Affiliate provided,
however, in any case, the aggregate compensation, loans and advances (other
than reducing travel advances in the ordinary course of business) to any single
employee, officer or director in any fiscal year shall not exceed $175,000.
For so long as no Default or Event of Default has occurred and is continuing
hereunder, the Company shall be entitled to pay an annual management fee to
Investor not to exceed $480,000, such amount to be payable in arrears, pursuant
to a management services agreement, the terms of which are reasonably
acceptable to Purchaser (the "Aasche Management Fee").
(h) Dividends and Stock Purchases. Except as
otherwise permitted by Section 6.2(g), the Company shall not directly or
indirectly: declare or pay any
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Dividends or make any distribution of any kind on its outstanding capital stock
or any other payment of any kind to any of its stockholders or its Affiliates
(including any redemption, purchase or acquisition of, whether in cash or in
property, securities or a combination thereof, any partnership interests or
capital accounts or warrants, options or any of its other securities), or set
aside any sum for any such purpose, except that it may declare or pay any
Dividend payable solely in shares of its Common Stock; provided, however, that
this Section 6.2(h) shall not apply to Stock Purchases pursuant to Article 9
hereof.
(i) Advances, Investments and Loans. The Company
shall not purchase, or hold beneficially any stock, other securities or
evidences of Indebtedness of, or make or permit to exist any loan, Guaranty or
advance to, or make any investment or acquire any interest whatsoever in, any
other Person (including, but not limited to, the formation or acquisition of
any Subsidiaries), except
(i) securities issued or directly and fully
guaranteed or insured by the United States or America or
any agency or instrumentality thereof having maturities of
not more than six months from the date of acquisition;
(ii) United States dollar denominated time
deposits, certificates of deposit and bankers acceptances
of any Bank or any bank whose short-term debt rating from
Standard & Poor's Ratings Group, a division of The ▇▇▇▇▇▇-
▇▇▇▇ Companies, Inc. ("S&P"), is at least A-1 or the
equivalent or from Moody's Purchasers Service, Inc.
("▇▇▇▇▇'▇") is at least P-1 or the equivalent with
maturities of not more than six months from the date of
acquisition;
(iii) commercial paper with a rating of at
least A-1 or the equivalent by S&P or at least P-1 or the
equivalent by Moody's maturing within six months after the
date of acquisition;
(iv) marketable direct obligations issued by
any state of the United States of America or any political
subdivision of any such state or any public instrumentality
thereof maturing within six months from the date of
acquisition thereof and, at the time of acquisition, having
one of the two highest ratings obtainable from either S&P
or Moody's;
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(v) Investments in money market funds
substantially all the assets of which are comprised of
securities of the types described in clauses (i) through
(iv) above;
(vi) deposit accounts maintained in
accordance with any loan agreement evidencing the Senior
Debt;
(vii) Investments (including debt
obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement
of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of
business;
(viii) receivables owing to the Company
created or acquired in the ordinary course of business and
payable on customary trade terms of the Company;
(ix) deposits made in the ordinary course of
business consistent with past practices to secure the
performance of leases or in connection with bidding on
contracts and performance bonds and deposits in connection
with customer contracts in the ordinary course of business;
and
(x) advances to employees in the ordinary
course of business for business expenses; provided,
however, that the aggregate amount of such advances at any
time outstanding shall not exceed $250,000.
In determining the amount of Investments, acquisitions, loans, advances and
Guaranties, permitted pursuant to this Section 6.2(i), Investments and
acquisitions shall always be taken at the original cost thereof (regardless of
any subsequent appreciation or depreciation therein), loans and advances shall
be taken at the principal amount thereof then remaining unpaid, and Guaranties
shall be taken at the amount of obligations guaranteed thereby.
(j) Use of Proceeds. The Company shall not use any
proceeds from the sale of the Notes hereunder, directly or indirectly, for the
purposes of purchasing or carrying any "margin securities" within the meaning
of Regulations G, T, U or X promulgated by the Board of Governors of the
Federal Reserve Board or for the purpose of arranging for the extension of
credit
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secured, directly or indirectly, in whole or in part by collateral that
includes any "margin securities."
(k) Stock Issuances. The Company shall not issue
any capital stock or other equity interests or any options or warrants to
purchase, or securities convertible into capital or equity interests, except
the issuance of Common Stock upon exercise of the Warrants or otherwise in
connection with the Transactions or the issuance of Common Stock which places
no further obligations of the Company after such issuance.
(l) Amendment of Charter Documents. The Company
shall not amend, terminate, modify or waive or agree to the amendment,
modification or waiver of any material term or provision of its Charter
Documents or Bylaws, or the Stockholders Agreement.
(m) Subsidiaries. The Company shall not establish
or acquire any Subsidiary.
(n) Establishment of New or Changed Business
Locations. The Company shall not move any of its existing business locations,
as identified on the Properties Schedule, or establish new business locations
without providing not less than thirty (30) days advance written notice to the
Purchaser. In connection therewith, the Company shall execute and deliver such
additional Security Documents as the Purchaser may reasonably request and shall
pay all costs associated with the preparation and filing thereof.
(o) Changed or Additional Business Names. The
Company shall not change its corporate name or establish new or additional
trade names without providing thirty (30) days advance written notice to
Purchaser. In connection therewith, the Company shall execute and deliver such
additional Security Documents as the Purchaser may reasonably request and shall
pay all costs associated with the preparation and filing thereof.
(p) Business. The Company shall not engage,
directly, in any business other than the long distance hauling of waste.
(q) Fiscal Year; Accounting. The Company shall not
change its fiscal year or method of accounting (other than immaterial changes
in methods), except as required by GAAP.
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(r) Brokerage Fees. The Company shall not incur
aggregate brokerage and consulting fees in excess of $50,000 in any fiscal
year, other than insurance brokerage, legal and accounting fees in the ordinary
course of business or otherwise in connection with transactions permitted
herein and the Aasche Management Fee and fees paid hereunder and other than the
Contract dated April 7, 1993 between JGT and H.H.H., Inc. (subject to the
provisions of Section 1.1(g) of the Acquisition Agreement).
6.3 Financial Covenants. The Company covenants that, so
long as all or any part of the principal amount of the Notes or any interest
thereon shall remain outstanding:
(a) Total Leverage Ratio. As of the last day of
each fiscal quarter, beginning June 30, 1998, the Total Leverage Ratio for the
applicable Calculation Period shall not exceed: (i) 4.5 for June 30, 1998 and
September 30, 1998, (ii) 4.0 from and including December 31, 1998 to and
including September 30, 1999; (iii) 3.5 from and including December 1999 to and
including December 31, 2002; and (iv) 3.0 thereafter.
(b) Tangible Net Worth. Tangible Net Worth shall
not at any time from and after June 30, 1998 be less than an amount equal to
(i) the greater of (A) $1 and (B) 90% of the Borrower's Tangible Net Worth on
June 30, 1998, minus, in either case, $100,000 plus (ii) 72% of the sum of the
Net Income (not to be reduced by losses) for each fiscal quarter during the
period from July 1, 1998 through and including the date (the "Interim Date")
which is the earlier to occur of the last day of the then most recently
completed fiscal quarter and the last day of the fiscal quarter in which the
Tangible Net Worth of the Borrower first reaches $550,000 plus (iii) (A) if the
Interim Date has occurred and through December 31, 2002, 45% of the sum of the
Net Income (not to be reduced by losses) or (B) after December 31, 2002,
$100,000 plus 50% of the sum of the Net Income (not to be reduced by losses)
for each fiscal quarter during the period from the day after the Interim Date
through and including the last day of the then most recently completed fiscal
quarter.
(c) Fixed Charge Coverage Ratio. As of the last
day of each fiscal quarter, beginning June 30, 1998, the Fixed Charge Coverage
Ratio for the applicable Calculation Period shall not be less than (i) 1.10
through and including December 31, 2002 and (ii) 1.25 thereafter.
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(d) Interest Coverage Ratio. As of the last day of
each fiscal quarter, beginning June 30, 1998, the Interest Coverage Ratio for
the applicable Calculation Period shall not be less than: (i) 2.5 to and
including September 30, 1999; (ii) 3.0 from and including December 31, 1999 to
and including September 30, 2000; (iii) 3.5 from and including December 31,
2000 to and including September 30, 2001; (iv) 4.0 from and including December
31, 2002, and (v) 4.5 thereafter.
ARTICLE 7
DEFAULT
7.1 Events of Default. An Event of Default shall mean the
occurrence of one or more of the following described events:
(a) the Company shall default in the payment of
interest or principal of any of the Notes when due, whether at maturity, upon
any scheduled payment date or by acceleration or otherwise, and, only with
respect to interest, such default shall continue uncured for more than five (5)
Business Days;
(b) the Company shall default (i) in the payment of
principal of or interest on any Indebtedness in an aggregate principal amount
of $250,000 or more beyond any period of grace provided with respect thereto,
or (ii) in the performance of any other covenant, agreement, term or condition
contained in any agreement under which any Indebtedness in an aggregate
principal amount of $250,000 or more is created, beyond any applicable grace or
cure period; provided, however, that with regard to the Senior Debt, any Event
of Default shall occur under this Section 7.1(b) only if the result of such
default shall be an acceleration of the Senior Debt;
(c) any representation or warranty herein made by
the Company, or any certificate or financial statement furnished pursuant to
the provisions hereof, shall prove to have been false or misleading in any
material respect as of the time made or furnished or deemed made or furnished;
(d) the Company shall default in the performance of
any covenant, condition or provision of Section 6.1(h), 6.2 or 6.3 hereof, or
Article 8, 9 or 10 hereof;
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(e) the Company shall default in the performance of
any other covenant, condition or provision of this Agreement, the Security
Documents, or the Notes, or in the performance of any covenant, condition or
provision of the Stockholders Agreement, and such default shall not be remedied
for a period of 30 days after the occurrence of such default regardless of
whether the Purchaser has provided to the Company notice thereof;
(f) a proceeding shall have been instituted in a
court having jurisdiction in the premises seeking a decree or order for relief
in respect of the Company in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or for
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any substantial part
of its property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period of
45 days or such court shall enter a decree or order granting the relief sought
in such proceeding;
(g) the Company shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or for any substantial
part of its property, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or
shall take any corporate action in furtherance of any of the foregoing;
(h) both the following events shall occur; (i) a
Reportable Event, the occurrence of which could cause the imposition of a lien
under Section 4068 of ERISA, shall have occurred with respect to any Plan; and
(ii) the aggregate amount of the then "current liability" (as defined in
Section 412(l)(7) of the Internal Revenue Code of 1986, as amended) of all
accrued benefits under such Plan exceeds the then current value of the assets
allocable to such benefits by more than $100,000 at such time; or
(i) a final judgment which, with other undischarged
final judgments against the Company, exceeds an aggregate of $250,000
(excluding judgments to the extent the Company is fully insured or the
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deductible or retention limit does not exceed $250,000 and with respect to
which the insurer has assumed responsibility in writing), shall have been
entered against the Company if, within 30 days after the entry thereof, such
judgment shall not have been discharged or execution thereof stayed pending
appeal, or if, within 30 days after the expiration of any such stay, such
judgment shall not have been discharged; or
(j) a Change in Control shall occur.
7.2 Consequences of Event of Default. The provisions of
this Section 7.2 are expressly subject to Section 7.3 hereof.
(a) Bankruptcy. If an Event of Default specified
in paragraphs (f) or (g) of Section 7.1 shall occur, the unpaid balance of the
Notes and interest accrued thereof and all other liabilities of the Company to
the holders thereof hereunder and thereunder shall be immediately due and
payable, without presentment, demand, protest or (except as expressly required
hereby notice of any kind, all of which are hereby expressly waived).
(b) Other Defaults. If any other Event of Default
shall occur, holder of a majority of the outstanding principal balance of the
Senior Subordinated Notes and the Junior Subordinated Notes may at their
option, by written notice to the Company, declare the entire unpaid balance of
the respective Notes and interest accrued thereon and all other liabilities of
the Company hereunder and thereunder to be forthwith due and payable, and the
same shall thereupon become immediately due and payable, without presentment,
demand, protect or (except as expressly required hereby) notice of any kind,
all of which are hereby expressly waived.
(c) Premium. In the event of any acceleration of
any of the Notes pursuant to this Section 7.2, the Company shall also pay to
holders of the Notes the prepayment premium which would otherwise be payable
upon any prepayment of the Notes.
7.3 Subordination. This Agreement (including, without
limitation, exercise of the rights set forth in Section 7.2 hereof) and the
Notes and the Security Documents are subordinated in the right of a payment to
the prior payment in full of all principal, premium and interest due on the
Senior Debt in accordance with the Subordination Agreement. In the event of
any liquidation, dissolution or winding up of the Company, receivership,
insolvency, bankruptcy or reorganization,
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all principal, premium and interest owing on the Senior Debt shall first be
paid in full before any payment is made upon the indebtedness evidenced by the
Notes.
ARTICLE 8
PREEMPTIVE RIGHTS
8.1 Limited Preemptive Rights. If after the date of this
Agreement, the Company authorizes the issuance and sale of any shares of
capital stock or any securities containing options or rights to acquire any
shares of capital stock (other than in connection with the issuance of such
securities in exchange for the securities or assets of another Person as a part
of an acquisition of a business as a going concern) at any time that any
Purchaser holds any Primary Warrants or any Underlying Common Stock the Company
will offer to sell to each Purchaser a portion of such securities equal to the
percentage determined by dividing (i) the number of shares of Common Stock
which would be owned upon exercise of the Primary Warrants then owned by the
Purchaser plus the Common Stock then held by the Purchaser by (ii) the number
of shares of Common Stock outstanding (on a fully diluted basis but not
including the Conditional Warrants). For purposes of clause (ii) above, a
share of Common Stock acquirable upon exercise or conversion of options or
rights to acquire any shares of Common Stock shall be deemed outstanding only
if the applicable conversion price, exercise price or other acquisition price
is equal to or less than the then current fair market value of a share of
Common Stock. The Purchaser will be entitled to purchase such stock or
securities at the same price and on the same terms as such stock or securities
are to be offered to any other Person. The Purchaser must exercise its
purchase rights within thirty (30) days after receipt of written notice from
the Company describing in reasonable detail the stock or securities being so
offered, the purchase price thereof, the payment terms and the Purchaser's
percentage allotment. Upon the expiration of such period of thirty (30) days,
the Company will be free to sell such stock or securities which the Purchaser
has not elected to purchase during the 90 days following such expiration on
terms and conditions no more favorable to the purchasers thereof than those
offered to the Purchaser. Any stock or securities offered or sold by the
Company after such 90-day period must be reoffered to the Purchaser pursuant to
the terms of this Section 8.1. Any stock or securities purchased by the
Purchaser from the Company pursuant to this Section 8.1 shall, upon such
purchase and thereafter be deemed to be Securities and
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Restricted Securities for all purposes of this Agreement.
8.2 Exceptions. The provisions of Section ____ shall not
apply to issuances of Common Stock upon exercise of the Warrants. The
provisions of Section 8.1 shall terminate upon the consummation of an
underwritten public offering of the Company's Common Stock registered under the
Securities Act with an investment banking firm of national reputation as
managing underwriter.
ARTICLE 9
PUT AND OTHER LIQUIDITY RIGHTS
9.1 Put. At any time and from time to time after the
first to occur of (such date being the "Put Event") (i) the fifth anniversary
of the Closing Date, or (ii) any Change of Control, or (iii) the repayment in
full of the Notes or (iv) the repayment in full of the Senior Debt, any or all
of the holders (individually a "Holder" and collectively, the "Holders") of
Warrants, the Underlying Common Stock or any Common Stock or stock or
securities containing options or rights to acquire any shares of Common Stock
in either case acquired pursuant to Article 8 hereof (collectively, the
"Subject Securities") will have the right (the "Put"), exercisable by delivery
of written notice (the "Put Notice") to the Company and to Investor, (i) to
require the Company to purchase or (ii) to require the Investor to purchase,
for the Put Price (as defined below) payable in accordance with Section 9.3 any
part or all of the Subject Securities then owned by the Holders (the Subject
Securities described in each Put Notice are referred to collectively as the
"Put Shares"). The Company will promptly (and in any event within 10 days)
after receipt of a Put Notice give written notice (the "Company Notice") to
each of the other Holders. Each such Holder will have the right to exercise
its Put in connection with the initial Put Notice within 10 days following the
delivery of the Company Notice. All Put Notices delivered by such other
Holders will be deemed to have been delivered as of the date of the first such
Put Notice, and such date is referred to in this Article 9 as the "Exercise
Date." The right of each Holder to exercise its put will be an individual and
separate right and the exercise of the Put by any Holder will not be
conditioned upon the exercise by any other Holder of its Put.
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9.2 Determination of Put Price. The "Put Price" of each
share of Common Stock or Underlying Common Stock will be an amount equal to the
quotient determined by dividing (i) 100% of the Fair Market Value, by (ii) the
aggregate number of outstanding shares of the Company's Common Stock on a Fully
Diluted Basis as of the Exercise Date; provided that the Put Price to be paid
to a Holder of a Warrant, an option or any other right to acquire Common Stock
shall be reduced by the exercise price of such Warrant, option or right. For
purposes of this Agreement, "Fully Diluted Basis" shall include Common Stock
acquirable upon exercise of conversion of warrants (including assuming the
exercise of the Conditional Warrants at such time), stock options, convertible
securities and similar rights to acquire Common Stock directly or indirectly,
regardless of any legal or contractual restriction of such exercise, but shall
be deemed outstanding only if the applicable conversion price, exercise price
or other acquisition price is equal to or less than the Put Price per share
calculated including such Common Stock as outstanding. "Fair Market Value"
means the aggregate fair market value of all of the common equity interests of
the Company on a control premium basis assuming the sale of the Company as a
going concern to a willing buyer on an orderly basis (and with sufficient time
to market effectively such going concern and for a prospective buyer to inquire
into the business, affairs and condition of the Company and to adequately
arrange for the consummation of such purchase) on the Exercise Date (whether
such sale takes the form of a sale of stock, a sale of assets, a merger or a
consolidation), without any discount for minority interest or lack of
liquidity. Fair Market Value shall also include the value of any additional
consideration received by principal owners of the Company in connection with
any transaction in excess of compensation at the time of such transaction, as a
result of such Person's position as a principal owner, such as consulting or
employment contracts. The Fair Market Value shall be determined by an
appraisal performed at the Company's expense by any of (i) Houlihan, Lokey,
▇▇▇▇▇▇ & ▇▇▇▇▇, (ii) ▇▇▇▇ & ▇▇▇▇▇▇ or (iii) Willamette Management Associates,
or any successor to such firms, as the Company shall elect (the "Appraiser").
The Appraiser will take into account any prior proposals or offers to purchase
all or a portion of the outstanding Common Stock, regardless of whether such
purchase was consummated, including, without limitation, the proposed price,
the form of consideration, the date of the proposal or offer and the financial
capability of the offeror. A representative of the holders of the Put Shares
(as designated by holders of a majority of the Put Shares)
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(the "Representative") will be given reasonable advance notice of and will be
entitled to attend any due diligence meetings between management of the Company
and the Appraiser. The Representative shall have access to all information
given by the Company to the Appraiser and shall have an opportunity to present
its views to the Appraiser.
9.3 Put Closing. Each closing (a "Put Closing") of the
purchase and sale of Put Shares pursuant to a Put will take place on a date
selected by the Company which will be not later than the 45th day following the
Valuation Date. At the option of each Holder, payment of the Put Price for all
Subject Securities tendered at the Put Closing by such Holder will be paid: (i)
by the Company at the Put Closing by cashier's or certified check or by wire
transfer of immediately available funds to accounts designated by the Holder;
or (ii) by the Company at the Put Closing by an increase in the principal
amount of the Senior Subordinated Notes in the amount of the Put Price; or
(iii) by Investor at the Put Closing by delivery to the Holder of fully
registered shares of the publicly-traded common stock of Investor with an
aggregate value (based on the average closing price of such common stock for
the 20 trading days preceding the Put Closing) equal to the Put Price.
9.4 Termination of Put. Except for any rights arising out
of the failure of the Company to perform any of its duties or obligations under
or relating to this Article 9, the rights of the Purchaser pursuant to this
Article 9 will terminate upon the consummation of an underwritten public
offering of the Company's Common Stock registered under the Securities Act with
an investment banking firm of national reputation as managing underwriter.
9.5 Withdrawal of Put Notice. At any time on or prior to
the 15th day following the Valuation Date, any Holder participating in the Put
may by written notice to the Company withdraw its Put Notice, whereupon such
Holder will have no right to receive the Put Price and no obligation to tender
its Subject Securities; provided that notwithstanding the provisions of Section
9.2, such Holder will pay a pro rate share (based upon the proportion that the
number of Put Shares described in such Holder's Put Notice bears to the
aggregate Put Shares as of the Exercise Date) of the appraisal costs incurred
by the Company in accordance with Section ___ except that the Company will, in
any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal
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or accounting duties) in connection with such appraisal. No such withdrawal
will be deemed to be an exercise of a Put as to such withdrawing Holder or
otherwise affect the rights of such Holder to exercise its Put at a later date
or dates so long as its share of such appraisal costs has been paid in full.
9.6 Change of Control. For purposes of this Agreement,
"Change of Control" shall mean the occurrence of any of the following:
(a) (i) any transaction or series of related
transactions resulting in the sale or issuance of securities or any rights to
securities of the Company by the Company representing in the aggregate more
than 30 percent of the issued and outstanding Common Stock and Underlying
Common Stock on a Fully Diluted Basis other than to the Purchaser or Investor,
or (ii) any transaction or series of related transactions resulting in the
sale, transfer, assignment or other conveyance or disposition of any securities
or any rights to securities of the Company by any holder or holders thereof
other than the Purchaser representing in the aggregate more than 30 percent of
the issued and outstanding Common Stock and Underlying Common Stock on a Fully
Diluted Basis and the receipt of any consideration in connection therewith.
(b) a merger, consolidation, reorganization,
recapitalization or share exchange in which the stockholders of the Company
immediately prior to such transaction receive, in exchange for securities of
the Company owned by them, cash, property or securities of the resulting or
surviving entity and as a result thereof Persons who were holders of Common
Stock and Underlying Common Stock hold less than 50 percent of the capital
stock, calculated on a Fully Diluted Basis, of the resulting corporation
entitled to vote in the election of directors;
(c) a sale, transfer or other disposition of assets
representing in the aggregate more than one-third of the assets of the Company;
or
(d) any sale or issuance or series of sales or
issuances of the Common Stock or any other voting security (or security
convertible into, exchangeable for, or exercisable for any other voting
security) of the Company within a 12-month period which results in a transfer
of more than 50 percent of the issued and outstanding shares of capital stock
of the Company or a transfer of more than 50 percent of the voting power of the
Company;
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(e) the consummation of an initial public offering
of securities by the Company other than an offering of securities for an
employee benefit plan on SEC Form S-8 or a successor form; or
(f) other than as a result of his death or
disability, for the period of five years following the date hereof, the ceasing
by the Executive to be employed by the Company as its chief executive officer
or the failure by the Executive to devote his full working time and attention
to the business of the Company.
9.7 Unlocking Rights. In the event that at any time after
the date three years from the date hereof, the Company shall receive a bona
fide third-party offer to purchase all or substantially all of the Common Stock
or the assets of the Company or to merge with the Company in a manner with no
conditions which are unlikely to be satisfied prior to the proposed closing
thereof that would cause the Company's stockholders to receive cash or
publicly-traded securities in exchange for their Common Stock, and the
Company's Board of Directors should not vote to accept such offer or a
stockholder other than the Purchaser shall fail to accept such offer in a way
that makes such offer unavailable to the Purchaser and the Purchaser has
indicated during a contemporaneous time that it would accept such offer, the
Purchaser shall have the right to put all, but not less than all, of its
Warrants and Underlying Common Stock to the Company in accordance with Section
9.1, except that the Fair Market Value per share shall be deemed to be equal to
the amount of such offer; provided however, in the event that the Credit
Agreement restricts the Company from complying with this Section 9.7, the
Company shall use its best efforts to obtain the necessary waiver or
elimination of such restrictions including, without limitation refinancing the
Indebtedness under the Credit Agreement.
ARTICLE 10
CALL
10.1 Call Rights. At any time after the later of the
repayment in full of the Notes (including any prepayment premium and all
amounts then due Purchaser hereunder), the Company will have the right (the
"Call"), exercisable by delivery of thirty (30) days advance written notice
(the "Call Notice") to the Purchaser, to purchase all but not less than all of
the Warrants, and if the Call Notice is given at any time
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through the fifth anniversary of the Closing, any Underlying Common Stock
obtained upon exercise of warrants (collectively, the "Call Shares") purchased
upon exercise of Warrants for the Call Price (as defined below). The date of
delivery of the Call Notice by the Company is referred to in this Article 10 as
the "Call Exercise Date."
10.2 Call Price. The "Call Price" (i) of each share of
Common Stock (including Underlying Common Stock) will be the Put Price as
determined in accordance with Section 9.2 and (ii) of each Warrant to purchase
a share of Common Stock will be the Put Price determined in accordance with
Section 9.2 less the applicable exercise price for such Warrant and for such
purposes, Conditional Warrants shall be deemed to represent the number of
shares of Common Stock as if they were exercised on the Call Exercise Date.
10.3 Look-Back Period. If within the Price Protection
Period (as defined in Section 10.5 below), an Organic Change (as defined in
Section 10.4 below) occurs and the Organic Change Value (as defined in Section
_ _ below) exceeds the Fair Market Value used in the determination of the Call
Price for such exercise of the Call, the Holders will be entitled to receive
from the Company the benefit of such higher valuation for the Call Shares sold
or to be sold to the Company pursuant to such Call. Upon consummation of any
Organic Change, the Company shall promptly deliver a portion of the amount and
type of consideration received in such Organic Change (in proportion to the
amounts of each type of consideration received in the Organic Change) to each
Holder in an amount equal to the excess of (a) the amount which such Holder
would have received upon sale of the Call Shares under the Call if the Fair
Market Value used for purposes of the Call was the Organic Change Value over
(b) the amount which such Holder received from the Company upon sale of the
Call Shares under the Call.
10.4 Organic Change. For purposes of this Article 10,
"Organic Change" shall mean the occurrence of any of the following:
(a) more than 30% of the Common Stock, on a diluted
basis, is sold by the Company or a stockholder or group of stockholders to a
third party or third parties which are not an Affiliate of the Company or any
existing stockholders as part of a single transaction or series of
transactions; or
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(b) the filing by the Company of a registration
statement with the SEC providing for a public offering of the Common Stock.
10.5 Price Protection Period. For purposes of this
Article 10, "Price Protection Period" shall mean the 12-month period following
the Call Closing Date.
10.6 Organic Change Value. For purposes of this Article
10, "Organic Change Value" shall mean the Fair Market Value (determined as
provided in Section 9.2) determined immediately prior to the Organic Change
with respect to which such determination is made after taking into account the
aggregate fair market value of all dividends and distributions declared or paid
by the Company to its shareholders from and after the date of the Exercise Date
to and including the date of the consummation of the Organic Change.
10.7 Call Closing. The closing (the "Call Closing") of
the purchase and sale of Call Shares will take place on a date selected by the
Company and will not be earlier than the 30th day following the Call Notice.
Payment of the Call Price for all Call Shares tendered at the Call Closing will
be paid by the Company at the Call Closing by cashier's or certified check or
by wire transfer of immediate available funds to accounts designated by the
Holders. No Holder will be obligated to tender any Call Shares unless the
Company has adequate funds available to make payment therefor in the manner
provided herein.
10.8 Termination of Call. The rights of the Company
pursuant to this Article 10 will terminate upon the earlier to occur of (i) the
consummation of an underwritten public offering of the Company's Common Stock
registered under the Securities Act with an investment banking firm of national
reputation as managing underwriter, and (ii) the failure of the Company to
promptly pay the Call Price in full in accordance with Section 10.7 following
any delivery of a Call Notice.
ARTICLE 11
REGISTRATION RIGHTS
11.1 Piggyback Registrations.
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(a) Right to Piggyback. Except in connection with
the filing of a Form S-8, whenever the Company proposes to register any of its
equity securities under the Securities Act and the registration form to be used
may be used for the registration of Registrable Securities (a "Piggyback
Registration"), the Company will give prompt written notice (in any event
within five Business Days after its receipt of notice of any exercise of demand
registration rights other than under this Agreement) to all holders of
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 15 days after the receipt of the
Company's notice. Each such holder of Registrable Securities desiring to have
Registrable Securities registered under this Section 11.1 shall advise the
Company in writing within fifteen (15) days after the date of receipt of such
notice from the Company, setting forth the amount of such Registrable
Securities for which registration is requested. The Company shall thereupon
include in such filing the number of Registrable Securities for which
registration is so requested, and shall use its best efforts to effect
registration under the Securities Act of such Registrable Securities.
(b) Piggyback Expenses. The registration expenses
of the holders of Registrable Securities will be paid by the Company in all
Piggyback Registrations to the extent provided in Section 11.6.
(c) Priority on Primary Registrations. If a
Piggyback Registration is an underwritten primary registration on behalf of
the Company, and the managing underwriters advise the Company in writing that
in their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in such
offering within a price range acceptable to the Company, the Company will
include in such registration: (i) first, the securities the Company proposes
to sell, (ii) second, the Registrable Securities requested to be included in
such registration, pro rata among the holders of such Registrable Securities on
the basis of the number of shares owned by each such holder, and (iii) third,
other securities requested to be included in such registration.
(d) Priority on Secondary Registrations. If a
Piggyback Registration is an underwritten secondary registration on behalf of
holders of the Company's securities, and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such
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registration exceeds the number which can be sold in an orderly manner in such
offering within a price range acceptable to the holders initially requesting
such registration, the Company will include in such registration (i) first, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares owned by each such holder, and (ii) second, other securities requested
to be included in such registration.
(e) Selection of Underwriters. If any Piggyback
Registration is an underwritten offering, the selection of investment banker(s)
and manager(s) for the offering must be approved by the holders of a majority
of the Registrable Securities included in such Piggyback Registration. Such
approval will not be unreasonably withheld.
(f) Other Registrations. If the Company has
previously filed a registration statement with respect to Registrable
Securities pursuant to this Section 11.1, and if such previous registration has
not been withdrawn or abandoned, the Company will not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least 180 days has elapsed from the effective date of such
previous registration.
11.2 Demand Registrations Rights.
(a) Demand Rights. If, at any time after the
Company has filed and has had declared effective any registration statement
under the Securities Act or the Securities Exchange Act of 1934, as amended,
except with respect to registration statements filed on Form S-8 or any
successor form, the Company receives a written request by the holders of a
majority of the Registrable Securities to effect the registration under the
Securities Act of such shares, of the Company shall follow the procedures
described in this Section 11.2. Within five (5) days of its receipt of such
request, the Company shall give written notice of such proposed registration (a
"Demand Registration") to all holders of Registrable Securities, and thereupon,
the Company shall, as expeditiously as possible, use its best reasonable
efforts to effect the registration on a form of general use under the
Securities Act of the shares it has been requested to register in such initial
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request and in any response to such notice given to the Company within twenty
(20) days after the Company's giving of such notice. The aforesaid right to
demand registration shall be limited to three demands for all (and not each) of
the Holders of Registrable Securities, provided that if less than seventy-five
percent (75%) of the Registrable Securities proposed to be sold or sold, such
offering shall be considered a Piggyback Registration rather than a Demand
Registration in a particular Demand Registration shall be sold.
(b) Other Stock. The Company may include in any
registration under this Section 11.2 any other shares of Common Stock
(including issued and outstanding shares of stock as to which the holders
thereof have contracted with the Corporation for "piggyback" registration
rights) so long as the inclusion in such registration of such shares will not,
in the opinion of the managing underwriter of the shares of the Stockholder or
Stockholders first demanding registration (if the offering is underwritten),
interfere with the successful marketing in accordance with the intended method
of sale or other disposition of all the stock sought to be registered by such
demanding Stockholder or Stockholders pursuant to this Section 11.2.
11.3 S-3 Demand Registration Rights. In addition to the
registration rights provided in Sections 11.1 and 11.2 above, if at any time
the Company is eligible to use Form S-3 (or any successor form) for
registration of secondary sales of Registrable Securities, any Holder of
Registrable Securities may request in writing that the Company register shares
of Registrable Securities on such form. Upon receipt of such request, the
Company will promptly notify all holders of Registrable Securities in writing
of the receipt of such request and each such Holder may elect (by written
notice sent to the Company within thirty (30) days of receipt of the Company's
notice) to have its Registrable Securities included in such registration
pursuant to this Section 11.3. Thereupon, the Company will, as soon as
practicable, use its best efforts to effect the registration on Form S-3 of all
Registrable Securities that the Company has so been requested to register by
such Holder for sale. The Company will use its best efforts to qualify and
maintain its qualification for eligibility to use Form S-3 for such purposes.
11.4 Holdback Agreements.
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(a) Each holder of Registrable Securities agrees
not to effect any public sale or distribution (including sales pursuant to Rule
144) of equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the 90-day period (or such longer period, not to exceed 90 additional days,
as the managing underwriter shall require) beginning on the effective date of
any underwritten Piggyback Registration in which Registrable Securities are
included or Demand Registration (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree.
(b) The Company agrees (i) not to effect any public
sale or distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, during the seven days
prior to and during the 90-day period beginning on the effective date of or any
underwritten Piggyback Registration or Demand Registration (except as part of
such underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public
offering otherwise agree, and (ii) to use best efforts to cause each holder of
at least 10% (on a fully-diluted basis) of its Common Stock, or any securities
convertible into or exchangeable or exercisable for Common Stock, purchased
from the Company at any time after the date of this Agreement (other than in a
registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
11.5 Registration Procedures. Whenever the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use reasonable efforts
to effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof (including the
registration of Warrants held by a holder of Registrable Securities requesting
registration as to which the Company has received reasonable assurances that
only Registrable Securities will be distributed to the public), and pursuant
thereto the Company will as expeditiously as possible:
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(a) prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use reasonable
efforts to cause such registration statement to become effective (provided that
before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered by such
registration statement copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel);
(b) furnish to each seller of Registrable
Securities such number of copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
(c) use reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of
such jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdictions, (iii) consent to general service of
process in each such jurisdiction or (iv) undertake such actions in any
jurisdiction other than the states of the United States of America and the
District of Columbia);
(d) notify each seller of such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in such registration statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
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(e) cause all such Registrable Securities to be
listed on each securities exchange on which similar securities issued by the
Company are then listed and, if not so listed, to be listed on the NASD
automated quotation system and, if listed on the NASD automated quotation
system, use its best efforts to secure designation of all such Registrable
Securities covered by such registration statements as a NASDAQ "national market
system security" within the meaning of Rule 11Aa2-1 of the Securities and
Exchange Commission or, failing that, to secure NASDAQ authorization for such
Registrable Securities and, without limiting the generality of the foregoing,
to arrange for at least two market makers to register as such with respect to
such Registrable Securities with the NASD;
(f) provide a transfer agent and registrar for all
such Registrable Securities not later than the effective date of such
registration statement;
(g) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);
(h) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;
(i) otherwise use its best efforts to comply with
all applicable rules and regulations of the Securities and Exchange Commission,
and make available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months beginning
with the first day of the Company's first full calendar quarter after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
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(j) permit any holder of Registrable Securities
which holder, in its reasonable judgment, might be deemed to be an underwriter
or a controlling person of the Company, to participate in the preparation of
such registration or comparable statement and to require the insertion therein
of material, furnished to the Company in writing, which in the reasonable
judgment of such holder and its counsel should be included; and
(k) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any common stock included in such registration statement for
sale in any jurisdiction, the Company will use its reasonable best efforts
promptly to obtain the withdrawal of such order. If any such registration or
comparable statement refers to any holder by name or otherwise as the holder of
any securities of the Company and if its sole and exclusive judgment such
holder is or might be deemed to be a controlling person of the Company, such
holder shall have the right to require (i) the insertion therein of language,
in form and substance satisfactory to such holder and presented to the Company
in writing, to the effect that the holding by such holder of such securities is
not to be construed as a recommendation by such holder of the investment
quality of the Company's securities covered thereby and that such holding does
not imply that such holder will assist in meeting any future financial
requirements of the Company, (ii) in the event that such reference to such
holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force, the deletion of the reference to such
holder; provided that with respect to this clause (ii) such holder shall
furnish to the Company an opinion of counsel to such effect, which opinion and
counsel shall be reasonably satisfactory to the Company.
11.6 Registration Expenses.
All expenses incident to the Company's performance
of or compliance with this Article 11, including without limitation all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws, printing expenses, messenger and delivery expenses, and fees
and disbursements of counsel for the Company and all independent certified
public accountants, underwriters (excluding discounts and commissions) and
other Persons retained by the Company (all such expenses, excluding
underwriting discounts and commissions, being herein
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called "Registration Expenses"), will be borne by the Company. The Company
will bear the reasonable fees and expenses of one counsel for the Holders of
Registrable Securities participating in any Piggyback Registration or Demand
Registration. All underwriting discounts and commissions will be borne by the
seller of the securities sold pursuant to the registration.
11.7 Indemnification.
(a) The Company agrees to indemnify, to the extent
permitted by law, each holder of Registrable Securities, its officers and
directors and each Person who controls such holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the company by such holder
expressly for use therein or by such holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such holder with a sufficient number of copies
of the same. In connection with an underwritten offering, the Company will
indemnify such underwriters, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the
holders of Registrable Securities.
(b) In connection with any registration statement
in which a holder of Registrable Securities is participating, each such holder
will furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify the
Company, its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of material fact contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading
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but only to the extent that such untrue statement or omission is contained in
any information or affidavit so furnished in writing by such holder;
(c) Any Person entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without the indemnifying party's consent (but
such consent will not be unreasonably withheld). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in
the reasonable judgment of any indemnified party a conflict of interest exists
between such indemnified party and any other of such indemnified parties with
respect to such claim.
(d) The indemnification provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and will survive the transfer of
securities. The Company also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the event
the Company's indemnification is unavailable for any reason.
11.8 Participation in Underwritten Registrations. No
Person may participate in any registration hereunder which is underwritten
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Person or Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up agreements, and other documents required under the terms of such
underwriting arrangements; provided that no holder of Registrable Securities
included in any underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters other than
representations and warranties
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regarding such holder and such holder's intended method of distribution.
ARTICLE 12
MISCELLANEOUS
12.1 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that (i) the Company may not assign
or transfer its rights hereunder or any interest herein or delegate its duties
hereunder without the prior written consent of the Purchaser, (ii) the
Purchaser shall have the right to assign its rights hereunder and under the
Restricted Securities and the Subject Securities owned by it and its interests
herein and therein, (A) in the case of the Notes, only to a holder of at least
$100,000 in original principal amount, and (B) in all cases, in accordance with
Article 5 hereof, and thereupon, any purchaser of such Restricted Securities or
Subject Securities shall be considered the Purchaser hereunder.
12.2 Modifications, Amendments or Waivers. The provisions
of this Agreement may be modified, amended or waived, but only by a written
instrument signed by each of the Company and the Purchaser and to the extent
such modification, amendment or waiver relates to any Notes, by prior written
consent of holders of a majority of the then outstanding principal amount of
such Notes; provided, that no such action will change (i) the rate at which or
the manner in which interest accrues on any Notes or the times at which such
interest becomes payable or (ii) any provision relating to the scheduled
payments or prepayments of principal on the Notes without the written consent
of all the holders of the principal amount of any Notes.
12.3 No Implied Waivers; Cumulative Remedies; Writing
Required. No delay or failure in exercising any right, power or remedy
hereunder shall affect or operate as a waiver thereof; nor shall any single or
partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or remedy preclude any further exercise thereof or
of any other right, power or remedy. The rights and remedies hereunder are
cumulative and not exclusive of any rights or remedies which it or they would
otherwise have. Any waiver, permit, consent or approval of any kind or
character of any breach or default under this Agreement or any such waiver of
any provision or condition of this Agreement must be in writing and
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shall be effective only to the extent in such writing specifically set forth.
12.4 Reimbursement of Expenses. The Company upon demand
shall pay or reimburse the Purchaser for all reasonable fees and expenses
incurred or payable by the Purchaser (including, without limitation, fees and
expenses of special counsel for the Purchaser), from time to time (i) arising
in connection with the negotiation, preparation and execution of this
Agreement, the Notes and all other instruments and documents to be delivered
hereunder or thereunder or arising in connection with the transactions
contemplated hereunder or thereunder, (ii) relating to any amendments, waivers
or consents pursuant to the provisions hereof or thereof, and (iii) arising in
connection with the enforcement of this Agreement or collection of the Notes.
12.5 Holidays. Whenever any payment or action to be made
or taken hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, such payment or action shall be made or taken on the
next following Business Day, and such extension of time shall be included in
computing interest or fees, if any, in connection with such payment or action.
12.6 Notices. All notices and other communications given
to or made upon any party hereto in connection with this Agreement shall,
except as otherwise expressly herein provided, be in writing and mailed via
certified mail, sent by Federal Express or other similar express delivery
service for next day delivery, telefaxed (with a confirming copy sent by such
an express delivery service for next day delivery) or hand delivered to the
respective parties, as follows:
to the Company:
Specialty Transportation Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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to ACS:
American Capital Strategies Ltd.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telefax: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telefax: (▇▇▇)▇▇▇-▇▇▇▇
or in accordance with any subsequent written direction delivered in accordance
with this section from the recipient party to the sending party. All such
notices and other communications shall, except as otherwise expressly herein
provided, be effective upon delivery if delivered by hand; in the case of
certified mail, three Business Days after the date sent; in the case of
telefax, when received; or in the case of express delivery service, the day
after delivery of the notice to such service with charges prepaid.
12.7 Survival. All representations, warranties, covenants
and agreements of the Company contained herein or made in writing in connection
herewith shall survive the execution and delivery of this Agreement and the
purchase of the Notes and the Purchased Securities and shall continue in full
force and effect so long as any Note or any other Restricted Securities are
outstanding and until payment in full of all of the Company's obligations
hereunder or thereunder.
12.8 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE DEEMED TO BE
CONTRACTS UNDER THE LAWS OF THE STATE OF MARYLAND AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF SAID
STATE, EXCEPT FOR ITS RULES RELATING TO THE CONFLICT OF LAWS.
12.9 JURISDICTION. THE PURCHASER MAY ENFORCE ANY CLAIM
ARISING OUT OF THIS AGREEMENT OR THE RELATED DOCUMENTS IN ANY STATE OR FEDERAL
COURT HAVING SUBJECT MATTER JURISDICTION AND LOCATED IN THE STATE OF MARYLAND,
FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INSTITUTED WITH RESPECT TO ANY SUCH
CLAIM, EACH OF THE
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PARTIES HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS. EACH OF
THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF SAID COURTS BY MAILING A COPY THEREOF, BY CERTIFIED MAIL, POSTAGE PREPAID,
TO SUCH PARTY AT ITS ADDRESS SET FORTH IN SECTION 12.6 HEREOF AND AGREES THAT
SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW, (I) SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT, ACTION OR
PROCEEDING AND (II) SHALL BE TAKEN AND HELD TO BE VALID PERSONAL SERVICE UPON
AND PERSONAL DELIVERY TO IT. NOTHING HEREIN CONTAINED SHALL AFFECT THE RIGHT
OF ANY PURCHASER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
PRECLUDE ANY PURCHASER FROM BRINGING AN ACTION IN RESPECT HEREOF IN ANY OTHER
STATE OR PLACE HAVING JURISDICTION OVER SUCH ACTION. EACH OF THE PARTIES
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT LOCATED IN THE STATE
OF MARYLAND AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
12.10 JURY TRIAL WAIVER. THE COMPANY HEREBY IRREVOCABLY
WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR
DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR (II) ARISING
FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT
AND AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.
12.11 Herein, etc. Words such as "herein," "hereunder,"
"hereof" and the like shall be deemed to refer to this Agreement as a whole and
not to any particular document or Article, Section or other portion of a
document.
12.12 Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law in any jurisdiction, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating any other provision of this Agreement.
12.13 Headings. Article, section and subsection headings
in this Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
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12.14 Indemnity. The Company hereby agrees to indemnify,
defend and hold harmless the Purchaser and its officers, directors, employees,
agents and representatives, and their respective successors and assigns in
connection with any losses, claims, damages, liabilities and expenses,
including reasonable attorneys' fees, to which the Purchaser may become subject
(other than as a result of the gross negligence or willful misconduct of any
such Person), insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or by reason of any investigation,
litigation or other proceedings related to or resulting from any act of, or
omission by, the Company or its Affiliates or any officer, director, employee,
agent or representative of the Company or its Affiliates with respect to the
Transactions, the Notes, Charter Documents, the Bylaws or any agreements
entered into in connection with any such agreements, instruments or documents
and to reimburse the Purchaser and each such Person and Affiliate, upon demand,
for any legal or other expenses incurred in connection with investigating or
defending any such loss, claim, damage, liability, expense or action. To the
extent that the foregoing undertakings may be unenforceable for any reason, the
Company agrees to make the maximum contribution to the payment and satisfaction
of indemnified liabilities set forth in this Section which is permissible under
applicable law.
12.15 Environmental Indemnity. The Company, and its
successors and assigns, hereby agree to defend, indemnify and hold harmless,
Purchaser and its Affiliates (including their partners, subsidiaries,
customers, guests, and invitees, and the successors and assigns of all of the
foregoing, and their respective officers, employees and agents) from and
against any and all Environmental Liabilities, whenever and by whomever
asserted, to the extent that such Environmental Liabilities are based upon, or
otherwise relate to: (i) any condition at any time in, at, on, under, a part
of, involving or otherwise related to the Properties and Facilities (including
any of the properties, materials, articles, products, or other things included
in or otherwise a part of the Properties and Facilities); (ii) any action or
failure to act of any Person, including any prior owner or operator of the
Properties and Facilities (including any of the properties, materials,
articles, products, or other things included in or otherwise a part of the
Properties and Facilities), involving or otherwise related to the Properties
and Facilities or operations of the Company; (iii) the Management of any
Pollutant, material, article or product (including Management of any material,
article or product containing a
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Pollutant) in any physical state and at any time, involving or otherwise
related to the Properties and Facilities or any property covered by clause (iv)
(including Management either from the Properties and Facilities or from any
property covered by clause (iv), and Management to, at, involving or otherwise
related to the Properties and Facilities or any property covered by clause
(iv)); (iv) conditions, and actions or failures to act, in, at, on, under, a
part of, involving or otherwise related to any property other than the
Properties and Facilities, which property was, at or prior to the Closing Date,
(I) acquired, held, sold, owned, operated, leased, managed, or divested by, or
otherwise associated with, (A) JGT, (B) any of JGT's Affiliates, or (C) any
predecessor or successor organization of those identified in (A) or (B); or
(II) engaged in any tolling, contract manufacturing or processing, or other
similar activities for, with, or on behalf of JGT; (v) any violation of or
noncompliance with or the assertion of any lien under the Environmental Laws,
(vi) the presence of any toxic or hazardous substances, wastes or contaminants
on, at or from the past and present Properties and Facilities, including,
without limitation, human exposure thereto; (vii) any spill, release, discharge
or emission affecting the past and present Properties and Facilities, whether
or not the same originates or emanates from such Properties and Facilities or
any contiguous real estate, including, without limitation, any loss of value of
such Properties and Facilities as a result thereof; or (viii) a
misrepresentation in any representation or warranty or breach of or failure to
perform any covenant made by the Company in this Agreement. This indemnity and
agreement to defend and hold harmless shall survive any termination or
satisfaction of the Notes or the sale, assignment or foreclosure thereof or the
sale, transfer or conveyance of all or part of the past and present Properties
and Facilities or the sale, transfer or conveyance of all or part of the
Underlying Common Stock or any other circumstances which might otherwise
constitute a legal or equitable release or discharge, in whole or in part, of
the Company under the Notes or the Underlying Common Stock. Notwithstanding
the above, this Environmental Indemnity provision does not apply to the extent
that any such Environmental Liability is a result of the willful misconduct or
gross negligence of Purchaser or its successors and permitted assigns.
12.16 Counterparts. This Agreement may be executed in any
number of counterparts and by either party hereto on separate counterparts,
each of which, when so executed and delivered, shall be an original,
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but all such counterparts shall together constitute one and the same
instrument.
12.17 Integration. This Agreement, the Security
Documents, the Notes, the Purchase Documents the Purchased Securities, the
Stockholders' Agreement, the Charter Documents and the Bylaws set forth the
entire understanding of the parties hereto with respect to all matters
contemplated hereby and supersede all previous agreements and understandings
among them concerning such matters including without limitation, the letter
agreement dated as of December 30, 1997. No statements or agreements, oral or
written, made prior to or at the signing hereof, shall vary, waive or modify
the written terms hereof.
12.18 Special Release of Liens. In the event that at any
time the Company's sole remaining obligations hereunder shall be (i) the
obligations under Article 9 with respect to the Purchased Shares and (ii)
contingent indemnification obligations with respect to which no claims of
reimbursements have been made, then upon the request and at the expense of the
Company, the Purchaser shall promptly take such actions as are reasonably
requested by the Company to release all of the Purchaser's Liens on the
Collateral and to cause the Purchaser's rights under the Voting Trust to be
terminated, and for all such purposes all obligations under this Agreement
which are secured by the Security Documents shall be deemed to be satisfied.
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SIGNATURE PAGE TO
SUBORDINATED NOTE AND EQUITY PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
SPECIALTY TRANSPORTATION
SERVICES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
Title: President
----------------------
AMERICAN CAPITAL STRATEGIES LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
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Joinder by AASCHE Transportation Services, Inc.
The undersigned, AASCHE Transportation Services, Inc., hereby joins in
the attached Subordinated Note and Equity Purchase Agreement signifying its
agreement to Article 9 thereof.
AASCHE Transportation
Services, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
Title: CFO
----------------------
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EXHIBITS
---------
EXHIBIT A-1 Form of Senior Subordinated
Note Due 2008
EXHIBIT A-2 Form of Junior Subordinated
Note Due 2008
EXHIBIT B-1 Form of Primary Warrant
EXHIBIT B-2 Form of Conditional Warrant
EXHIBIT C Form of Security Agreement
EXHIBIT D Form of Mortgages
EXHIBIT E Form of Stockholders
Agreement
EXHIBIT F Certificate of Incorporation
EXHIBIT G Form of Guaranty of Accuracy
EXHIBIT H Voting Trust Agreement
EXHIBIT I Stock Pledge Agreement
EXHIBIT J Form of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Ltd. Opinion
EXHIBIT K Compliance Certificate
Schedules
---------
"Qualification Schedule" (Section 4.1(a))
"Obligations Schedule" (Section 4.1(g))
"Litigation Schedule" (Section 4.1(i))
"Permits Schedule" (Section 4.1(j))
"Environmental Schedule (Section 4.1(k))
"Collective Bargaining
Schedule" (Section 4.1(n))
"Plan Schedule" (Section 4.1(o))
"Equipment Schedule" (Section 4.1(q))
"Real Property Schedule" (Section 4.1(r))
"Contracts Schedule" (Section 4.1(s))
"Properties Schedule" (Section 4.1(p))
"Other Transactions
Schedule" (Section 6.2(g))
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