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Exhibit 99.2
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AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
between
CATALINA LIGHTING, INC.,
a Florida corporation,
and
SUN CATALINA HOLDINGS, LLC
a Delaware limited liability company
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Dated as of July 23, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS...................................................................................1
SECTION 1.1 Defined Terms.....................................................................1
SECTION 1.2 Accounting Terms and Computations................................................11
SECTION 1.3 Headings; Construction and Interpretation........................................11
ARTICLE II SALE AND PURCHASE............................................................................11
SECTION 2.1. Sale and Issuance of Shares......................................................11
SECTION 2.2. Closing..........................................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE CATALINA ENTITIES......................................12
SECTION 3.1. Organization and Qualification...................................................13
SECTION 3.2. Corporate or Other Power.........................................................13
SECTION 3.3. Authorization; Binding Obligations...............................................13
SECTION 3.4. Subsidiaries.....................................................................13
SECTION 3.5. Conflict with Other Instruments; Existing Defaults; Ranking......................14
SECTION 3.6. Governmental and Other Third Party Consents......................................14
SECTION 3.7. Capitalization...................................................................15
SECTION 3.8. Validity and Issuance of Shares..................................................15
SECTION 3.9. SEC Documents....................................................................15
SECTION 3.10. Financial Statements.............................................................16
SECTION 3.11. Existing Indebtedness; Existing Liens; Investments...............................16
SECTION 3.12. Absence of Certain Changes.......................................................17
SECTION 3.13. Contracts........................................................................18
SECTION 3.14. Accounts Receivable..............................................................20
SECTION 3.15. Employees........................................................................20
SECTION 3.16. Employee Benefit Plans...........................................................20
SECTION 3.17. Tax Matters......................................................................23
SECTION 3.18. Litigation.......................................................................25
SECTION 3.19. Transactions with Affiliates.....................................................26
SECTION 3.20. Investment Company Act...........................................................26
SECTION 3.21. Governmental Regulation..........................................................26
SECTION 3.22. Compliance with Laws.............................................................27
SECTION 3.23. Personal Property................................................................27
SECTION 3.24. Real Property....................................................................27
SECTION 3.25. Environmental Matters............................................................28
SECTION 3.26. Intellectual Property............................................................29
SECTION 3.27. Insurance........................................................................29
SECTION 3.28. Inventory........................................................................30
SECTION 3.29. Customers and Suppliers..........................................................30
SECTION 3.30. Depository and Other Accounts....................................................30
SECTION 3.31. Books and Records................................................................30
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..............................................30
SECTION 4.1. Authorization; Enforceability; No Violations.....................................30
SECTION 4.2. Consents.........................................................................31
SECTION 4.3. Private Placement................................................................31
SECTION 4.4. Legends..........................................................................32
SECTION 4.5. Financing........................................................................32
ARTICLE V COVENANTS OF THE COMPANY.....................................................................32
SECTION 5.1. Business in the Ordinary Course..................................................32
SECTION 5.2. Existing Condition...............................................................32
SECTION 5.3. Maintenance of Properties and Assets.............................................32
SECTION 5.4. Employees and Business Relations.................................................32
SECTION 5.5. Maintenance of Insurance.........................................................33
SECTION 5.6. Compliance with Laws.............................................................33
SECTION 5.7. Conduct of Business..............................................................33
SECTION 5.8. Access to Books and Records......................................................33
SECTION 5.9. Agreement to Take Necessary and Reasonable Actions...............................33
SECTION 5.10. Compliance with Conditions.......................................................33
SECTION 5.11. Consents and Approvals...........................................................34
SECTION 5.12. Voting Agreement.................................................................34
SECTION 5.13. Amendment of Articles of Incorporation...........................................34
ARTICLE VI COVENANTS OF THE PURCHASER...................................................................34
SECTION 6.1. Agreement to Take Necessary and Reasonable Actions...............................34
SECTION 6.2. Consents and Approvals...........................................................34
SECTION 6.3. Restrictions on Transfer.........................................................34
ARTICLE VII CONDITIONS PRECEDENT TO CLOSING..............................................................35
SECTION 7.1. Conditions to the Company's Obligations..........................................35
SECTION 7.2. Conditions to Purchaser's Obligations............................................36
ARTICLE VIII INDEMNIFICATION..............................................................................38
SECTION 8.1. General Indemnification by the Company...........................................38
SECTION 8.2. Indemnification by the Purchaser.................................................38
SECTION 8.3. Third Party Claims...............................................................38
SECTION 8.4. Limitations on Indemnification...................................................40
SECTION 8.5. Survival of Representations and Warranties.......................................40
ARTICLE IX MISCELLANEOUS................................................................................40
SECTION 9.1. Notices..........................................................................40
SECTION 9.2. Governing Law....................................................................42
SECTION 9.3. Termination......................................................................42
SECTION 9.4. Entire Agreement.................................................................43
SECTION 9.5. Modifications and Amendments.....................................................43
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 9.6. Waivers and Extensions...........................................................43
SECTION 9.7. Titles and Headings..............................................................43
SECTION 9.8. Exhibits and Schedules...........................................................43
SECTION 9.9. Break-up Fee.....................................................................43
SECTION 9.10. Expenses.........................................................................44
SECTION 9.11. Press Releases and Public Announcements..........................................44
SECTION 9.12. Assignment; No Third Party Beneficiaries.........................................44
SECTION 9.13. Severability.....................................................................44
SECTION 9.14. Counterparts.....................................................................44
SECTION 9.15. Further Assurances...............................................................44
SECTION 9.16. Remedies Cumulative..............................................................45
SECTION 9.17. Other Activities of Purchaser....................................................45
SECTION 9.18. Waiver of Trial by Jury..........................................................45
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EXHIBITS
Exhibit A - Management Services Agreement
Exhibit B - Registration Rights Agreement
Exhibit C - Voting Agreement
Exhibit D - Form of Opinion of Counsel to the Company
SCHEDULES
Schedule 1.1 Permitted Liens
Schedule 3.5 Conflicts with Other Instruments; Existing Defaults;
Ranking
Schedule 3.5(d) Senior Indebtedness
Schedule 3.6 Governmental and Other Third Party Consents
Schedule 3.7 Capitalization
Schedule 3.11 Indebtedness, Liens and Investments
Schedule 3.12 Absence of Certain Changes
Schedule 3.13 Contracts
Schedule 3.14 Accounts Receivable
Schedule 3.15 Employees
Schedule 3.16 Employee Benefit Plans
Schedule 3.17 Tax Matters
Schedule 3.18 Litigation
Schedule 3.19 Transactions with Affiliates
Schedule 3.24 Properties
Schedule 3.25 Environmental Matters
Schedule 3.26 License Agreements
Schedule 3.27 Insurance
Schedule 3.29 Customers and Suppliers
Schedule 3.30 Depository and Other Accounts
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AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT is made as of July
23, 2001, by and between Catalina Lighting, Inc., a Florida corporation (the
"Company"), and Sun Catalina Holdings, LLC, a Delaware limited liability company
(collectively, the "Purchaser"). This Agreement amends, restates, and
supersedes, in its entirety, the Stock Purchase Agreement by and between the
Company and the Purchaser dated as of April 5, 2001, as amended by First
Amendment to Stock Purchase Agreement dated May 3, 2001, Second Amendment to
Stock Purchase Agreement dated May 15, 2001, Third Amendment to Stock Purchase
Agreement dated May 31, ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to Stock Purchase Agreement dated
June 8, 2001 and Fifth Amendment to Stock Purchase Agreement dated, June 29,
2001.
WHEREAS, the Company desires to issue and sell, and the Purchaser
desires to purchase, shares of the Company's Common Stock, par value $.01 per
share, upon the terms and subject to the conditions contained in this Agreement;
and
WHEREAS, the purchase and sale contemplated herein are to be effected
concurrently with the execution and delivery by the Company to the Purchaser of
the Company's Secured Junior Subordinated Note Due 2006 pursuant to a Note
Purchase Agreement of even date herewith, the issuance and delivery of which is
an inducement to the Purchaser to effect the transactions contemplated by this
Agreement and the consummation of which issuance and delivery is a condition
precedent to any obligation of the Purchaser to consummate the transactions
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" shall mean with respect to any Person any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
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"Agreement" shall mean this Amended and Restated Stock Purchase
Agreement, together with the Exhibits and the Disclosure Schedule, in each case
as amended, restated, supplemented or otherwise modified from time to time.
"Applicable Law" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws, rules, regulations and ordinances of
any Governmental Authority and all common law duties, (ii) Consents of any
Governmental Authority and (iii) orders, decisions, rulings, judgments,
directives or decrees of any Governmental Authority.
"Authorizations" shall have the meaning specified in Section 3.22.
"Bankruptcy Laws" shall mean Title 11 of the United States Code (11
U.S.C. Section 101 et seq.), as amended from time to time, and any other federal
or state law relating to bankruptcy, insolvency or reorganization or for the
relief of debtors.
"Benefit Plan" shall have the meaning specified in Section 3.16.
"Board of Directors" shall mean, with respect to any Person, the board
of directors (or similar governing body) of such Person.
"Business Day" means any day that is not a Saturday, a Sunday, or a day
on which banking institutions in the City of New York, New York, or the City of
Miami, Florida, are authorized or required by law to close.
"Capital Lease" shall mean any lease or other agreement for (or other
arrangement conveying the right to use) property, whether real, personal or
mixed, which has been or is required to be classified or accounted for as a
capital lease on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with GAAP.
"Capital Lease Obligations" shall mean any and all liabilities or other
obligations to pay rent or other amounts under any Capital Lease.
"Capital Stock" shall mean, with respect to any Person, (i) if such
Person is a corporation, any and all shares of capital stock, participations in
profits or other equivalents (however designated) or other equity interests of
such Person, (ii) if such Person is a limited liability company, any and all
membership units or other interests, or (iii) if such Person is a partnership or
other entity, any and all partnership or entity units or other interests.
"Catalina Entities" mean the Company and its Subsidiaries.
"Change in Control" shall mean the occurrence of one or more of the
following events:
(i) any "Person" (other than the Purchaser or any of its
Affiliates, or any Catalina Entity) or "group" (as such terms are used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor
provisions to either of the foregoing), including any group acting for
the purpose of acquiring, holding, voting or disposing of securities
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within the meaning of Rule 13d-5(b)(1) of the Exchange Act becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and 13d-5 of
the Exchange Act (provided that such Person will be deemed to have
"beneficial ownership" of all shares that any such Person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time)), directly or indirectly, of 50% or more of the
total voting power of the Company;
(ii) any sale, transfer, assignment, lease, conveyance or
other disposition, directly or indirectly, of all or substantially all
the assets of the Company to any Person other than the Purchaser or any
of its Affiliates, or any Catalina Entity;
(iii) the Company is acquired by, or merges, consolidates or
amalgamates with or into, any other Person (other than the Purchaser or
any of its Affiliates, or any Catalina Entity), except for a
transaction in which the shareholders of the Company own more than 50%
of the resulting entity immediately after the transaction; or
(iv) the Board of Directors or the shareholders of the Company
shall have approved any plan of liquidation, dissolution or bankruptcy
of the Company.
"Charter" with respect to any corporation means the certificate of
incorporation or articles of incorporation of such corporation.
"Closing" shall have the meaning specified in Section 2.2.
"Closing Date" shall have the meaning specified in Section 2.2.
"Closing Price" shall have the meaning specified in Section 2.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, and the rules and regulations promulgated thereunder, all as
the same may from time to time be in effect.
"Commission" or "SEC" shall mean the Securities and Exchange
Commission, or any successor agency.
"Commonly Controlled Entity" shall have the meaning specified in
Section 3.16.
"Company" shall have the meaning set forth in the Preamble.
"Company Capital Stock" shall mean, collectively, the Company Common
Stock and the Company Preferred Stock.
"Company Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Company.
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"Company Preferred Stock" shall mean the Preferred Stock of the
Company.
"Consent" shall mean any consent, approval, authorization, waiver,
permit, grant, franchise, license, exemption or order of, or any registration,
certificate, qualification, declaration or filing with, or any notice to, any
Person, including, without limitation, any Governmental Authority.
"Contracts" shall have the meaning specified in Section 3.13.
"Convertible Securities" shall mean, with respect to any Person, any
securities or other obligations issued or issuable by such Person or any other
Person that are exercisable or exchangeable for, or convertible into, any
Capital Stock of such Person.
"Customary Permitted Liens" shall mean:
(i) judgment and attachment Liens in connection with (a)
judgments that do not constitute an event of default under the Note so
long as the judgment creditor has not succeeded in the foreclosure
thereof and reserves have been established to the extent required by
GAAP and (b) litigation and legal proceedings that are being contested
in good faith by appropriate proceedings so long as (i) reserves have
been established to the extent required by GAAP and (ii) such Liens do
not encumber assets by an aggregate amount (together with the amount of
any unstayed judgments against any Catalina Entity) in excess of
$100,000;
(ii) Liens for Taxes, assessments or other governmental
charges or levies on property of the Catalina Entities if the same
shall not at the time be delinquent or thereafter can be paid without
penalty, or are being contested in good faith by appropriate
proceedings;
(iii) pledges or deposits by the Catalina Entities under
worker's compensation laws, unemployment insurance laws or similar
legislation;
(iv) Liens on the property of any Catalina Entity incurred in
the ordinary course of business to secure performance of obligations
with respect to statutory or regulatory requirements, performance or
return-of-money bonds, surety or indemnity bonds or other obligations
of like nature and incurred in a manner consistent with industry
practice, in each case which are not incurred in connection with the
borrowing of money, the obtaining of advances or credit or the payment
of the deferred purchase price of property;
(v) Liens imposed by operation of law, such as carriers',
warehousemen's and mechanics' Liens, on property of any of the Catalina
Entities arising in the ordinary course of business and securing
payment of obligations which are not more than 60 days past due or are
being contested in good faith by appropriate proceedings and, if
required by GAAP, are appropriately reserved for on the books of the
Catalina Entities;
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(vi) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar character;
and
(vii) Liens disclosed in the consolidated balance sheet of the
Company, dated September 30, 2000, or the notes thereto;
provided, however, that each of the Liens described in the foregoing clauses (i)
through (vii) inclusive shall only constitute a Customary Permitted Lien so long
as such Liens do not, individually or taken as a whole, or create a Material
Adverse Effect.
"Disclosure Schedule" shall have the meaning specified in the
introductory paragraph of Section 3.
"Environmental Laws" shall mean all Applicable Laws relating to
Hazardous Materials or the protection of human health or the environment,
including all requirements pertaining to reporting, permitting, investigating or
remediating Releases or threatened Releases of Hazardous Materials into the
environment, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
Without limiting the generality of the foregoing, the term "Environmental Laws"
shall include the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Clean Water Act
(33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.) and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), as such laws
may be amended from time to time, and any other present or future federal,
state, local or foreign statute, ordinance, rule, regulation, order, judgment,
decree, permit, license or request or binding determination of, or agreement
with, any Governmental Authority relating to or imposing liability or
establishing standards of conduct for the protection of human health or safety
or the environment.
"Equity Rights" shall mean, with respect to any Person, any warrants,
options or other rights to subscribe for or purchase, or obligations to issue,
any Capital Stock of such Person, or any Convertible Securities of such Person,
including, without limitation, any options or similar rights issued or issuable
under any employee stock option plan, pension plan or other employee benefit
plan of such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute, including the rules and regulations
promulgated thereunder, in each case as amended from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, any Person
that is, or was at any time within the last six (6) years, a member of a
"controlled group of corporations" with, or is under "common control" with, or
is a member of the same "affiliated service group" with, such Person (as defined
in Sections (b), (c), (m) or (o) of Section 414 of the Code).
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as amended from
time to time.
"Expiration Date" shall have the meaning specified in Section 8.5.
"Financial Statements" shall have the meaning specified in Section
3.10(a).
"Foreign Plans" shall have the meaning specified in Section 3.16(p).
"GAAP" shall mean United States generally accepted accounting
principles and practices set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, all as in effect
on the date hereof, applied on a basis consistent with prior periods.
"Governmental Authority" shall mean any nation or government, and any
state or political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any court, tribunal or arbitrator(s) of competent
jurisdiction, and any self-regulatory organization.
"Guarantee" shall mean any obligation, contingent or otherwise, of any
Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or obligation of any other Person in any manner, whether directly
or indirectly, and shall in any event include the Subsidiary Guaranty and shall
include, without limitation, any obligation of such Person, direct or indirect,
to (i) purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or obligation or the purchase of (or to advance or supply
funds for the purchase of) any security for the payment of such Indebtedness or
obligation, (ii) purchase property, securities or services for the purpose of
assuring the owner of such Indebtedness or obligation of the payment of such
Indebtedness or obligation, or (iii) maintain working capital, equity capital,
available cash or other similar financial requirement of the primary obligor;
provided, however, that the term Guarantee shall not include endorsements for
collection or collections for deposit, in either case in the ordinary course of
business.
"Hazardous Materials" shall mean any substance: (i) the presence of
which requires investigation or remediation under any Applicable Laws; (ii) that
is defined or becomes defined as a "hazardous waste" or "hazardous substance"
under any Applicable Laws (including, without limitation, all Environmental
Laws); (iii) that is toxic, explosive, corrosive, inflammable, infectious,
radioactive, carcinogenic, mutagenic, bio-hazardous or otherwise hazardous and
is or becomes regulated by any Governmental Authority; (iv) the presence of
which on any real property causes or threatens to cause a nuisance upon the real
property or to adjacent properties or poses or threatens to pose a hazard to any
real property or to the health or safety of Persons on or about any real
property; or (v) that contains gasoline or other petroleum hydrocarbons,
polychlorinated biphenyls or asbestos.
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"Indebtedness" shall mean with respect to any Person and without
duplication, (i) any indebtedness, liabilities or other obligations, contingent
or otherwise, for borrowed money; (ii) all obligations evidenced by bonds,
notes, debentures or similar instruments; (iii) all obligations to pay the
deferred purchase or acquisition price of property or services (other than trade
accounts payable arising in the ordinary course of business) and any installment
payment non-compete agreements; (iv) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights or remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property); (v) all Capital Lease Obligations; (vi) all
obligations of others secured by a Lien to which any property or assets owned by
such Person is subject, whether or not the obligations secured thereby have been
assumed by such Person; (vii) all net obligations in respect of rate swaps,
caps, floors and collars, currency swaps, or other similar financial products
designed to provide protection against fluctuations in interest, currency or
exchange rates; (viii) all reimbursement or other obligations of such Person in
respect of any bank Guarantees, surety bonds and similar instruments issued for
the account of such Person or as to which such Person is otherwise liable for
reimbursement of drawings or payments; (ix) all obligations under facilities for
the discount or sale of receivables; (x) the maximum repurchase price of any
redeemable Capital Stock of such Person; (xi) all Guarantees of Indebtedness of
the type described in clauses (i) through (x) above; and (xii) all obligations
which are required to be classified as long-term liabilities on the balance
sheet of such Person under GAAP as liabilities (other than reserves under GAAP),
in each case, only as may be material to such Person or if involving amounts in
excess of $100,000. The Indebtedness of any Person shall also include all
recourse Indebtedness of any partnership or joint venture or limited liability
company in which such Person is a general partner or a joint venturer or a
member.
"Indemnified Party" shall have the meaning specified in Section 8.3.
"Indemnifying Party" shall have the meaning specified in Section 8.3.
"Investments" mean as applied to any Person, (i) any direct or indirect
acquisition or ownership (including, without limitation, beneficial ownership)
by such Person of Capital Stock, other securities or other interests of, or
investments in, any other Person, or all or any substantial part of the business
or assets of any other Person, and (ii) any direct or indirect gift or capital
contribution by such Person to any other Person.
"Knowledge" with respect to the Company shall mean the knowledge of any
of the four executive officers (▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇▇) of the Company, including facts of which such officers, in the
reasonably prudent exercise of their official duties, should have known, with
regard to the Company and the other Catalina Entities.
"Leases" shall have the meaning specified in Section 3.24.
"Lien" shall mean any lien (statutory or other), pledge, mortgage, deed
of trust, assignment, deposit arrangement, priority, security interest, adverse
claim, charge or encumbrance or other preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a lessor under
a Capital Lease having substantially the same
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economic effect), any agreement to give or refrain from giving any lien, pledge,
mortgage, security interest, charge or other encumbrance of any kind, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing or existence of any financing statement or other similar
form of notice under the laws of any jurisdiction or any security agreement
authorizing any Person to file such a financing statement, whether arising by
contract, operation of law, or otherwise.
"Losses" shall have the meaning specified in Section 8.1.
"Management Agreements" mean the agreements between the Company and
each of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
"Management Services Agreement" means the Management Services Agreement
to be entered into by and among the Company and an Affiliate of the Purchaser
concurrently with the Closing, substantially in the form of Exhibit A.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
event, matter, condition or circumstance which (i) has a material adverse effect
on, or material adverse change in, as the case may be, the business, assets,
financial condition, properties (whether real, personal or otherwise), results
of operations of the Catalina Entities taken as a whole, (ii) materially impairs
the ability of any Catalina Entity to perform or observe its obligations under
this Agreement, the Note, any other Transaction Document (other than the Warrant
and the Registration Rights Agreement) to which it is a party or any Senior
Credit Document to which it is a party or (iii) adversely affects the legality,
binding effect, validity or enforceability of this Agreement, any other
Transaction Document (other than the Warrant and the Registration Rights
Agreement) or the perfection or priority of any material Lien granted to the
Purchaser under any Transaction Document.
"Note" shall mean the Note issued pursuant to the terms of the Note
Purchase Agreement.
"Note Purchase Agreement" shall mean the Amended and Restated Note
Purchase Agreement, by and between the Company and Purchaser, dated as of July
23, 2001.
"Notices" shall have the meaning specified in Section 9.1.
"Other Debt Document" shall mean any agreement, instrument or other
document evidencing or governing any Indebtedness of the Catalina Entities other
than the Note and any other Transaction Document, but including, without
limitation, the Senior Credit Documents.
"Pension Plan" shall have the meaning specified in Section 3.16.
"Permitted Liens" shall mean:
(i) Liens in favor of the Purchaser;
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(ii) Liens in favor of the Senior Lenders;
(iii) Liens existing on the date of this Agreement and set
forth on Schedule 1.1, but excluding any Liens incurred in connection
with the extension, renewal or refunding of the Indebtedness secured
thereby;
(iv) Customary Permitted Liens;
(v) Liens to which the Purchaser has consented in writing and
which are expressly subordinate to the Indebtedness to the Purchaser;
and
(vi) Liens existing in connection with any financing referred
to in Section 7.2(c).
"Person" shall mean any individual, trustee, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, limited liability partnership and other
entity or any Governmental Authority.
"Purchase Price" shall have the meaning specified in Section 2.1.
"Purchaser" shall have the meaning set forth in the Preamble.
"Registration Rights Agreement" means the Registration Rights Agreement
to be entered into by and among the Company and the Purchaser concurrently with
the Closing, substantially in the form of Exhibit B.
"Release" shall mean any release (whether threatened or actual),
migration, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, seeping, leaching, dumping or disposing into the
environment or the workplace of any Hazardous Materials, and otherwise as
defined in any Environmental Laws.
"Sale of the Company" shall have the meaning specified in Section 9.9.
"SEC Documents" shall have the meaning specified in Section 3.9.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, all as the same shall be in
effect at the time.
"Senior Credit Agreement" shall mean the Third Amended and Restated
Revolving Credit and Term Loan Agreement dated as of July 23, 2001, as amended,
by and among the Company, as borrower, the guarantors named therein and the
Senior Lenders.
"Senior Credit Documents" shall mean the Senior Credit Agreement and
all notes, Guarantees, security agreements, pledge agreements and other
documents contemplated by the Senior Credit Agreement and executed and delivered
in connection therewith.
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"Senior Indebtedness" shall mean, with respect to any Person, the
principal of, premium, if any, and interest on any Indebtedness of such Person,
whether now outstanding or hereafter created, incurred, assumed or guaranteed,
unless such Indebtedness is contractually pari passu, subordinate or junior in
right of payment and rights upon liquidation to the Indebtedness evidenced by
the Note.
"Senior Lenders" shall mean, collectively, the "Administrative Agent,"
the "Domestic Issuing Bank," the "Domestic Swingline Lender," the "UK Issuing
Bank," the "UK Swingline Bank" and the "Lenders" as each such quoted term is
defined under the Senior Credit Agreement.
"Senior Subordinated Documents" shall mean that certain Note Purchase
Agreement between the Company and SunTrust dated the date hereof, as the same
may hereafter be amended, restated or modified in accordance with the terms
hereof and all other documents contemplated thereby and executed and delivered
in connection therewith including the Subordination Agreement.
"Shares" mean the shares of Company Common Stock to be issued and sold
by the Company to the Purchaser under Section 2.1 hereof.
"Significant Customers" shall have the meaning specified in Section
3.29.
"Significant Suppliers" shall have the meaning specified in Section
3.29.
"Subordination Agreement" shall mean that certain Subordination
Agreement, dated as of the date hereof, by and among SunTrust, the Purchaser and
the Company, as amended, restated, supplemented or otherwise modified from time
to time.
"subsidiary" means, with respect to any Person (a) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a subsidiary of such Person, or by such Person and one or more subsidiaries
of such Person, (b) a partnership in which such Person or a subsidiary of such
Person is, at the date of determination, a general partner of such partnership,
or (c) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (i) at
least a majority ownership interest or (ii) the power to elect or direct the
election of a majority of the directors or other governing body of such Person.
"Subsidiary" means a subsidiary of the Company.
"SunTrust" shall mean SunTrust Banks, Inc., a Georgia corporation.
"Tax" or "Taxes" mean all federal, state, local, foreign and other net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, add on or alternative minimum,
occupancy, withholding, payroll, employment, social security, excise, severance,
stamp, value added, occupation, premium, property (including, without
limitation, real property and any assessments, special or otherwise), windfall
profits, customs,
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duties or other taxes, fees, assessments or charges of any
kind whatever, together with any interest and any penalties, additions to tax or
additional amounts with respect thereto.
"Tax Returns" mean all returns (including information returns),
declarations, reports, statements and other documents required to be filed with
respect to a Tax.
"Third Party Claim" shall have the meaning specified in Section 8.3.
"Transaction Documents" mean this Agreement, the Registration Rights
Agreement, the Note Purchase Agreement, the Note, the Warrant and the Management
Services Agreement, and all other agreements and instruments referred to therein
to be entered into by the parties to this Agreement in connection with the
consummation of the transactions contemplated hereby and thereby.
"Warrant" shall mean the warrant issued pursuant to the terms of the
Note Purchase Agreement.
"Welfare Plan" shall have the meaning specified in Section 3.16.
SECTION 1.2. Accounting Terms and Computations. For purposes of this
Agreement, (a) all accounting terms used in this Agreement that are not
expressly defined herein have the meanings given to them under GAAP, (b) all
computations made pursuant to this Agreement or any other Transaction Document
shall be made in accordance with GAAP, (c) all financial statements and other
financial information to be delivered by any Catalina Entity hereunder or under
any other Transaction Document shall be prepared in accordance with GAAP, except
that any interim financial statements or other financial information which are
unaudited may be subject to year-end audit adjustments and may omit footnotes
and (d) all computations, financial statements and other financial information
of the Catalina Entities hereunder shall be determined on a consolidated basis
in accordance with GAAP.
SECTION 1.3. Headings; Construction and Interpretation. The headings in
this Agreement are for convenience of reference only, do not constitute a part
of this Agreement and are not to be considered in construing or interpreting
this Agreement. All section, preamble, recital, exhibit, schedule, disclosure
schedule, annex, clause and party references are to this Agreement unless
otherwise stated. No party, nor its counsel, shall be deemed the drafter of this
Agreement for purposes of construing the provisions of this Agreement, and all
provisions of this Agreement shall be construed in accordance with their fair
meaning, and not strictly for or against any party.
ARTICLE II
SALE AND PURCHASE
SECTION 2.1. Sale and Issuance of Shares. On the Closing Date, and upon
the terms and subject to the conditions set forth in this Agreement, the Company
shall issue and sell to the
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Purchaser, and the Purchaser shall purchase and accept from the Company,
8,489,932 shares of Company Common Stock, for the aggregate purchase price of
$3,000,000 ("Purchase Price"), representing a price per share of $0.353 (the
"Closing Price").
SECTION 2.2. Closing.
(a) The closing of the purchase and sale of the Shares (the
"Closing") shall take place at 10:00 a.m., local time, on July 18,
2001, or such other date as promptly thereafter as of which all of the
conditions set forth in Article VII hereof shall have been satisfied or
duly waived or at such other time and date as the parties hereto shall
agree in writing (the "Closing Date"), at the offices of King &
▇▇▇▇▇▇▇▇, ▇▇▇▇ Avenue of the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at
such other place as the parties hereto shall agree in writing.
(b) On the Closing Date (i) the Purchaser shall deposit into a
bank account designated by the Company, by wire transfer of immediately
available funds, an amount equal to the aggregate Purchase Price of the
Shares, and (ii) the Company shall deliver to the Purchaser, against
payment of the Purchase Price therefor, a certificate or certificates
representing 8,489,932 shares of Company Common Stock.
(c) The Shares shall be in definitive form and registered in
the name of the Purchaser or its nominee or designee and in a single
certificate or in such other denominations as the Purchaser shall
request not later than one Business Day prior to the Closing Date.
SECTION 2.3. Use of Proceeds. The proceeds from the purchase of the
Shares shall be applied, first to the extent of any amounts paid by the Company
at the Closing to reduce amounts payable by the Company under the Term A Loan
(as defined in the Senior Credit Agreement), and thereafter, to pay fees and
expenses related to the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In connection with the following representations and warranties,
attached to this Agreement is a disclosure schedule (the "Disclosure Schedule")
arranged in numbered parts corresponding to the Section numbering in this
Agreement of the following representations and warranties. The information
disclosed in any numbered part shall be deemed to relate to and to qualify only
the particular representation or warranty set forth in the corresponding
numbered Section in this Agreement and shall not be deemed to relate to or to
qualify any other representation or warranty unless so stated otherwise
specifying each other representation and warranty to which it relates. To induce
the Purchaser to purchase the Shares under this Agreement, the Company hereby
represents and warrants to the Purchaser that, except as expressly set forth in
the Disclosure Schedule (which shall be deemed to constitute part of these
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representations and warranties) or as set forth in those Company SEC Documents
filed with the SEC on or after September 30, 2000.
SECTION 3.1. Organization and Qualification. Each Catalina Entity is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has all
requisite power and authority necessary to own or lease and operate its
properties and assets and to carry on its business as now conducted and as
proposed to be conducted, and is duly qualified or licensed to do business in
each jurisdiction in which the character of the properties or assets owned,
leased or operated by it or the nature of the activities conducted makes such
qualification or licensing necessary, except where the failure to so qualify
could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.2. Corporate or Other Power. Each Catalina Entity has the
requisite power and authority to execute, deliver, carry out and perform its
obligations under this Agreement and all other Transaction Documents to which it
is a party, including, without limitation, with respect to the Company, the
power and authority to issue, sell and deliver the Shares to be issued and sold
by it to the Purchaser hereunder.
SECTION 3.3. Authorization; Binding Obligations.
(a) The execution, delivery and performance by the Company of
this Agreement and each of the other Transaction Documents to which the Company
is a party, and the consummation by the Company of the transactions contemplated
hereby and thereby, have been duly authorized by all requisite action on the
Company's part. The issuance, sale and delivery by the Company of the Shares as
contemplated hereunder at Closing have been duly authorized, or will be duly
authorized prior to such issuance and delivery. The execution, delivery and
performance of each of the Transaction Documents to which any Catalina Entity
other than the Company is a party, and the consummation by the Catalina Entities
other than the Company of the other transactions contemplated thereby, have been
duly authorized, or will be duly authorized prior to being executed and
delivered, by all requisite action on each such Catalina Entity's part, as
applicable.
(b) This Agreement is, and each other Transaction Document
will at the Closing be, assuming the due authorization, execution and delivery
by the parties (other than the Catalina Entities) thereto, a legal, valid and
binding obligation of each Catalina Entity that is a party thereto, enforceable
against such Catalina Entity in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or conveyance or similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability, and except as
rights of indemnity or contribution may be limited by federal or state
securities laws or the public policy underlying such laws.
SECTION 3.4. Subsidiaries. Exhibit 21 to the Company's annual report on
Form 10-K for the fiscal year ended September 30, 2000 as filed with the SEC on
December 29, 2000, sets forth a true, complete and correct list of all
Subsidiaries of the Company, setting forth, as to each such Subsidiary, its full
name, the address of its principal executive offices or its jurisdiction of
organization.
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SECTION 3.5. Conflict with Other Instruments; Existing Defaults;
Ranking.
(a) The execution, delivery and performance of this Agreement
by the Catalina Entities and each other Transaction Document to which any
Catalina Entity is a party, the issuance, sale and delivery by the Company of
the Shares and the consummation of the other transactions contemplated hereby
and thereby do not and will not violate, or cause a default under, or give rise
to a right of termination under, (i) the Charter or bylaws of that Catalina
Entity, in each case as in effect on the date hereof, (ii) any term of any
lease, credit agreement, indenture, note, mortgage, instrument or other
agreement to which that Catalina Entity is a party or by which any of its
properties or assets are bound (including, without limitation, any Contract or
Other Debt Document) or (iii) any Applicable Laws, except in the case of clause
(ii) or (iii) where the default, breach or violation would not reasonably be
expected to have a Material Adverse Effect.
(b) No Catalina Entity is in default, breach or violation of
(i) its Charter or bylaws as in effect as of the date hereof, (ii) any lease,
credit agreement, indenture, note, mortgage, instrument or other agreement to
which it is a party or by which any of its properties or assets are bound
(including, without limitation, any Contract or Other Debt Document) or (iii)
any Applicable Laws, except in the case of clause (ii) or (iii) where the
default, breach or violation would not reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the foregoing, there does not
exist any "default" or "event of default" (in each case as defined in any Other
Debt Document) or any default under any other credit or financing agreement to
which any Catalina Entity is a party or by which any of its properties or assets
are bound.
(c) Other than the Senior Credit Documents (as to which the
Company has, or before Closing shall have, obtained all required Consents so as
to permit the consummation of all transactions contemplated by the Transaction
Documents), there are no contractual or other restrictions or limitations which
prohibit or restrict (i) the issuance and sale of the Shares as contemplated
hereunder, (ii) any merger, sale of assets or other event which could cause a
Change in Control or (iii) any other financings by any Catalina Entity,
including, without limitation, any public or private debt or equity financings.
(d) Schedule 3.5(d) sets forth a true, correct and complete
list of all Senior Indebtedness of each Catalina Entity. Payment of principal
of, premium, if any, and interest on the Note is subordinate only to the Senior
Indebtedness of the Company, including the note issued in connection with the
financing referred to in Section 7.2(c). No Indebtedness of any Catalina Entity
ranks pari passu with any Indebtedness evidenced by the Note.
SECTION 3.6. Governmental and Other Third Party Consents. Except as
required by applicable filing requirements of the Exchange Act or state
securities laws and those Consents that have already been obtained or made or
those for which the failure to obtain would not have a Material Adverse Effect,
no Catalina Entity is required to obtain any Consent from, or is required to
make any declaration or filing with, any Governmental Authority or any other
Person in connection with the execution, delivery and performance of this
Agreement or any other Transaction Document, including, without limitation, the
issuance, sale and delivery of the
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Shares as contemplated hereunder. To the Company's Knowledge after due inquiry,
each of the Consents that have been obtained or made in connection with the
execution, delivery and performance of this Agreement or any other Transaction
Document is in full force and effect.
SECTION 3.7. Capitalization. Schedule 3.7 sets forth a true, correct
and complete description of the authorized Capital Stock of each Catalina Entity
and the number of shares of each class of Capital Stock that is issued and
outstanding as of the date hereof. All of the issued and outstanding shares of
Capital Stock of each Catalina Entity have been duly authorized and are validly
issued, fully paid and non-assessable. The Company owns all of the issued and
outstanding shares of each other Catalina Entity free and clear of any Liens. As
of the date hereof, there are: (i) no outstanding Equity Rights of any Catalina
Entity (other than Company Capital Stock held by the public) and other than the
warrants issued to the Senior Lenders and SunTrust; (ii) no voting trusts or
other agreements or undertakings with respect to the voting of the Capital Stock
of any Catalina Entity; (iii) no obligations or rights (whether fixed or
contingent) on the part of any Catalina Entity, any of its directors or
officers, or any other Person to purchase, repurchase, redeem or "put" any
outstanding shares of the Capital Stock or Equity Rights of any Catalina Entity;
and (iv) no rights of first offer or first refusal, registration rights or
anti-dilution rights or similar rights with respect to any shares of Company
Capital Stock (other than those granted to the Senior Lenders, the Purchaser and
SunTrust). To the Company's Knowledge after due inquiry, all shares of Company
Capital Stock and Equity Rights of each Catalina Entity have been issued and
offered in compliance with all applicable federal and state securities laws.
SECTION 3.8. Validity and Issuance of Shares. The Shares have been duly
authorized and when issued, delivered and paid for pursuant to the terms of this
Agreement, will be duly and validly issued, fully paid and non-assessable.
SECTION 3.9. SEC Documents.
(a) The Company has filed all required forms, reports and
documents with the Commission since September 30, 1998, including all exhibits
thereto (collectively, the "SEC Documents"), each of which complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act as in effect on the dates so filed. None of the SEC Documents (as
of their respective filing dates or, if amended, as of the date of the last such
amendment filed prior to the date hereof) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(b) No information about the Company contained in the
Company's representations and warranties under this Agreement (including the
Disclosure Schedule) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements made therein not misleading in light of the
circumstances under which they were made.
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(c) To the Company's Knowledge, there are no facts that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and that have not been disclosed in the SEC Documents or this
Agreement (including the Disclosure Schedule).
SECTION 3.10. Financial Statements.
(a) The Company has delivered to the Purchaser copies of:
(i) audited consolidated balance sheets of the
Company and its Subsidiaries as of September 30, 1999 and
2000, and audited consolidated statements of operations,
shareholders' equity and changes in financial position or cash
flows for each of the two years then ended; and
(ii) unaudited financial statements of the Company
and its Subsidiaries consisting of a consolidated balance
sheet as of March 31, 2001, and a statement of operations and
cash flows for the three months ended March 31, 2001 (the
financial statements referred to in clauses (i) and (ii) being
collectively referred to as the "Financial Statements").
(b) The Financial Statements (including, in each case, the
related schedules and notes) fairly present the consolidated financial position
of the Company and its Subsidiaries, as of the respective dates of such balance
sheets and the consolidated results of operations of the Company and its
Subsidiaries, for the respective periods covered by such statements of
operations, shareholders' equity and changes in financial position or cash
flows, as the case may be, and have been prepared in accordance with GAAP,
except as to the unaudited financial statements, for the omission of notes
thereto and normal year-end adjustments.
(c) The Company has no assets or liabilities that would have
been required to be reflected in consolidated financial statements of the
Company prepared in accordance with GAAP, including the notes thereto and that
are not reflected in the Financial Statements.
SECTION 3.11. Existing Indebtedness; Existing Liens; Investments.
Schedule 3.11 sets forth a true, correct and complete list, and describes, as of
the date or dates indicated therein, as applicable:
(i) all Indebtedness of the Company on a consolidated
and consolidating basis outstanding as of May 31, 2001,
showing, as to each category of Indebtedness, the total amount
outstanding (by principal, interest and other amounts, if
applicable);
(ii) all Liens (other than Permitted Liens) in
respect of any property or assets (other than Liens on
individual assets having a book value less than $100,000 of
the Catalina Entities existing immediately prior to the
Closing Date, showing, as to each Lien, the name of the
grantor and secured party, the Indebtedness secured
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thereby, the name of the debtor (if different from the
grantor) and the assets or other property covered by such
Lien; and
(iii) all Investments of the Catalina Entities as of
May 31, 2001, except for (A) Investments by any Catalina
Entity in another Catalina Entity and (B) individual
Investments with a book value of $100,000 or less.
SECTION 3.12. Absence of Certain Changes. Except as set forth in the
Company's SEC Documents as of the date hereof, and except pursuant to the Senior
Credit Documents, the Senior Subordinated Documents and the Transaction
Documents, since September 30, 2000, there has not been, and there is no
agreement, commitment or obligation to do, any of the following:
(a) Any transaction or series of related transactions
involving any Catalina Entity not in the ordinary course of business, involving
$150,000 individually or $500,000 in the aggregate, including, without
limitation, any sale of any assets or properties (other than inventory in the
ordinary course of business);
(b) Any declaration, setting aside or payment of any dividend
or other distribution or payment (whether in cash, stock or property) with
respect to the Company Capital Stock, or any redemption, purchase or other
acquisition of securities of the Company;
(c) Any damage, destruction or loss, whether or not covered by
insurance, to any material assets or properties of any Catalina Entity, except
such damage, destruction or loss that is less than $100,000 in the aggregate;
(d) Any Material Adverse Effect;
(e) Any loan or advance made by any Catalina Entity to any
Person, except normal travel advances or other reasonable business expense
advances made in the ordinary course of business to its own employees and
extensions of credit made in the ordinary course of business;
(f) Any Indebtedness for borrowed money incurred by any
Catalina Entity or any commitment to incur Indebtedness for borrowed money
entered into by any Catalina Entity (other than as contemplated by this
Agreement) or in the ordinary course of business;
(g) Any capital expenditures or commitments to make capital
expenditures in excess of $150,000, other than in the ordinary course of
business;
(h) Any payment, satisfaction, discharge or cancellation of
any debts or claims of any Catalina Entity other than in the ordinary course of
business consistent with past practices;
(i) Any amendment, modification or termination of any Contract
or agreement to which any Catalina Entity is a party or by which any Catalina
Entity or any of their
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assets or properties may be bound or subject involving $150,000 individually or
$500,000 in the aggregate, or (except as contemplated by Section 7.2(j) hereof)
of any employment or consulting agreement with any officer or director of any
Catalina Entity, and in each case not in the ordinary course of business;
(j) Any mortgage, pledge or Lien (other than Permitted Liens)
encumbering any of the assets or properties of any Catalina Entity, or any
assumption of, or taking any material assets or properties subject to, any
liability not in the ordinary course of business, involving $150,000
individually or $500,000 in the aggregate;
(k) Any increase in, or commitment to increase, the salaries,
wages, bonuses or other compensation payable or to become payable to any officer
or other employee of any Catalina Entity, other than increases in salaries and
wages in the ordinary course of business consistent with past practices, or as
provided in existing employment agreements with employees other than executive
(or, as disclosed to the Purchaser in writing, other) officers; the Company has
provided the Purchaser a schedule of all bonuses payable or to become payable to
officers or employees since September 30, 2000;
(l) Any adoption by any Catalina Entity of any new Benefit
Plan or amendment to any Benefit Plan to provide any new or additional plans,
programs, contracts, benefits or arrangements involving direct or indirect
compensation to any officer, director, employee, former employee, or their
dependents or beneficiaries, of any Catalina Entity;
(m) Any revaluation by any Catalina Entity of any of its
assets, including without limitation, any write-offs, increases in any reserves
except in the ordinary course of business consistent with past practice or any
write-up or write-down of the value of inventory, property, plant, equipment or
any other asset, except in the ordinary course of business consistent with past
practice; or
(n) Any revaluation or repricing of any Equity Rights of any
Catalina Entity.
SECTION 3.13. Contracts.
(a) Schedule 3.13 sets forth an accurate, correct and complete
list of all agreements, contracts, commitments, arrangements and understandings,
written or oral, including all amendments and supplements thereto, of any
Catalina Entity (the "Contracts"), to which any Catalina Entity is a party or is
bound, or by which any of its assets are bound, and which involve any:
(i) agreement, commitment, arrangement or
understanding with any present or former employee or
consultant or for the employment of any Person, including any
consultant, who is not an employee-at-will and as to whom the
aggregate amount payable under the agreement or arrangement
equals or exceeds $100,000;
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(ii) agreement, commitment, arrangement or
understanding for the future purchase of, or payment for,
supplies or products, or for the performance of services or
delivery of goods by or to any Catalina Entity of an amount or
having a value that is or is reasonably likely to be in excess
of $100,000, other than contracts, agreements or commitments
(i) that terminate within 90 days or are cancelable by the
Catalina Entity upon notice of not more than 90 days for a
penalty of less than $100,000 in the aggregate, or (ii) that
relate to the purchase of finished goods or raw materials or
the sale of products that, in each case, have a value of
$5,000,000 or less;
(iii) agreement, commitment, arrangement or
understanding containing a provision to indemnify any Person
or entity or assume any Tax, environmental or other liability
of any Person other than a Catalina Entity and individually
involving an amount in excess of $100,000;
(iv) material agreement, commitment, arrangement or
understanding with federal, state, local, regulatory or other
governmental entities;
(v) agreement, commitment, arrangement or
understanding limiting or restraining any Catalina Entity or
any successor thereto, or to the Knowledge of the Company, any
employee of any Catalina Entity or any successor thereto, from
engaging or competing in any manner or in any business, other
than agreements of such employees in favor of any Catalina
Entity; or
(vi) material license, franchise, distributorship or
other agreement, commitment, arrangement or understanding
which relates in whole or in part to any software (it being
understood that licenses for off-the-shelf software shall not
be deemed to be material), patent, trademark, trade name,
service ▇▇▇▇ or copyright or to any ideas, technical
assistance or other know-how of or used by any Catalina
Entity.
(b) Each of the Contracts listed on Schedule 3.13, or not
required to be listed thereon because of the amount or materiality thereof, is
valid and enforceable in accordance with its terms and is in full force and
effect, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and except as the
availability of equitable remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principle is applied
in a proceeding at law or in equity), provided that the foregoing representation
is to the Company's Knowledge with respect to the other parties to such
Contracts. No Catalina Entity is, and to the Knowledge of the Company, no other
party thereto is, in default in the performance, observance or fulfillment of
any material obligation, covenant or condition contained therein; and no event
has occurred which with or without the giving of notice or lapse of time, or
both, would constitute a default thereunder.
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SECTION 3.14. Accounts Receivable. All accounts receivable of the
Catalina Entities represent valid obligations arising from bona fide business
transactions in the ordinary course of business consistent with past practice.
There is no contest, claim, counterclaim, defense or right of set-off, other
than rebates and returns in the ordinary course of business, under any contract
with any obligor of any account receivable relating to the amount or validity of
such account receivable. All accounts receivable are generally due within 60
days after being accrued on the books of the Catalina Entities and have
generally been collected, or will be collected, in the full aggregate recorded
amounts thereof, subject to the Company's reserves for (i) doubtful accounts,
(ii) sales allowances and (iii) sales returns, in each case of such clause (i),
(ii) and (iii) in the ordinary course of business.
SECTION 3.15. Employees. (i) There have not been in the past five
years, there are not pending, and, to the Knowledge of the Company there are not
threatened, any labor disputes, work stoppages, requests for representation,
pickets or work slow-downs due to labor disagreements; (ii) there is no unfair
labor practice, charge or complaint pending, unresolved or, to the Knowledge of
the Company, threatened before any Governmental Authority; (iii) there is no
employment handbook, personnel policy manual, or similar document that creates
prospective employment rights or obligations; (iv) no employees of any Catalina
Entity are covered by any collective bargaining agreement; (v) each Catalina
Entity has paid or accrued in accordance with GAAP all wages and compensation
due to employees, including all vacations or vacation pay, holidays or holiday
pay, sick days or sick pay, and bonuses, except for failures to pay or accrue
not to exceed $25,000 as to each employee or $100,000 for all employees in the
aggregate; (vi) the consummation of the transactions contemplated by this
Agreement will not create liability under any laws of any Governmental Authority
respecting reductions in force or the impact on employees on plant closing or
sales of businesses, except with regard to the Management Agreements; and (vii)
all Persons classified by any Catalina Entity as independent contractors satisfy
and have satisfied the requirements of law to be so classified, and the Company
has fully and accurately reported their compensation on IRS Form 1099 when
required to do so. To the Company's Knowledge after due inquiry, all employees
of any Catalina Entity who work in the United States are legally able to work in
the United States.
SECTION 3.16. Employee Benefit Plans. Schedule 3.16 sets forth a
complete and accurate list of each Benefit Plan covering any present or former
officers, employees or directors of any Catalina Entity. "Benefit Plan" means
each "employee pension benefit plan" (as defined in Section 3(3) of ERISA,
hereinafter a "Pension Plan"), "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA, hereinafter a "Welfare Plan") and each other plan,
program, policy, practice or arrangement (written or oral, formal or informal,
whether done on an individual ad hoc basis or as part of a consistent pattern or
practice of providing benefits to similarly situated individuals) relating to
deferred compensation, bonus, performance compensation, stock purchase, stock
option, stock appreciation, severance, vacation, sick leave, holiday pay, fringe
benefits, personnel policy, reimbursement program, incentive, insurance, welfare
or similar plan, program, policy, practice or arrangement, in each case
maintained or contributed to, or required to be maintained or contributed to, by
any Catalina Entity or its affiliates or any other Person or entity that,
together with any Catalina Entity, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code (each such entity, together with any
Catalina Entity, a "Commonly Controlled Entity") for the benefit of any present
or former
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officer, employee or director. No Catalina Entity has the intent or commitment
to create any additional Benefit Plan or amend any Benefit Plan so as to
increase benefits thereunder. No Catalina Entity has created any Benefit Plan or
declared or paid any bonus compensation in contemplation of the transactions
contemplated by this Agreement. A current, accurate and complete copy of each
Benefit Plan has been made available to the Purchaser:
(a) each Benefit Plan is in substantial compliance with all
reporting, disclosure and other requirements of ERISA, the Code and any other
Applicable Law;
(b) each Pension Plan that is subject to the tax qualification
requirements of Code Section 401(a) and other applicable provisions of the Code
is qualified both as to form and operation under such Code provisions and has
been determined by the Internal Revenue Service to be so qualified as to form
(as evidenced by the issuance of a favorable determination letter) and no
condition exists that would adversely affect such determination;
(c) none of any Benefit Plan, any Catalina Entity, any
Commonly Controlled Entity, any trustee or agent has been or is presently
engaged in any prohibited transactions as defined by Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not applicable which could
subject the Company to the tax or penalty imposed by Section 4975 of the Code or
Section 502 of ERISA;
(d) no Catalina Entity has ever sponsored or contributed to
any plan subject to Title IV of ERISA or any "multiemployer plan" within the
meaning of Section 3(37) of ERISA;
(e) with respect to each Benefit Plan, there are no actions,
suits or claims (other than routine claims for benefits in the ordinary course)
pending or, to the Knowledge of the Company, threatened against any Benefit Plan
or any Catalina Entity with respect to benefits;
(f) with respect to each Benefit Plan to which any Catalina
Entity or any Commonly Controlled Entity is a party which constitutes a group
medical plan subject to Title I, Part 6 of ERISA and Section 4980B of the Code,
each such Benefit Plan substantially complies, and in each case has
substantially complied, with all applicable requirements of Title I, Part 6 of
ERISA and Section 4980B of the Code;
(g) no Benefit Plan is currently under audit or investigation
by the Department of Labor, the Internal Revenue Service or the Pension Benefit
Guaranty Corporation; no Benefit Plan which is a qualified plan has had a
qualification defect corrected, or has an application pending, under any
correction program described in IRS Revenue Procedure 2001-17 (or any successor
thereto); and no Benefit Plan has had a failure to file or report corrected
under the Department of Labor's Delinquent Filer Voluntary Compliance Program
(or any successor thereto);
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(h) using the definition of "employee" employed by the
Internal Revenue Service to determine the applicability of employment taxes
under the Federal Insurance Contributions Act and the Federal Unemployment Tax
Act, no Benefit Plan covers any individual who is not an "employee" (including,
without limitation, any individual that is an independent contractor), and,
conversely, each Benefit Plan covers all "employees" that meet the eligibility
criteria set forth in such Benefit Plan(s);
(i) each of the Benefit Plans is, and its administration is
and has been during the six-year period preceding the date of this Agreement, in
compliance with, and no Catalina Entity has received any claim or notice that
any such Benefit Plan is not in compliance with, all Applicable Laws and orders
and prohibited transaction exemptions, including without limitation, to the
extent applicable, the requirements of ERISA and the Code;
(j) none of any Catalina Entity or any Commonly Controlled
Entity is in default in performing any of its contractual obligations under any
of the Benefit Plans or any related trust agreement or insurance contract;
(k) there are no outstanding liabilities of any Benefit Plan
other than liabilities for benefits to be paid to participants in Benefit Plan
and their beneficiaries in accordance with the terms of Benefit Plan;
(l) each Benefit Plan may be amended or modified by any
Catalina Entity or any Commonly Controlled Entity at any time without liability;
(m) no Benefit Plan other than a Pension Plan, provides
benefits to any individual after termination of employment (other than
continuation of group medical coverage as required under Title I, Part 6 of
ERISA and Section 4980B of the Code for which qualified beneficiaries are
required at all times to pay the maximum premium amount permitted thereunder);
(n) except with respect to the Management Agreements, as the
same may be amended or supplemented, the consummation of the transactions
contemplated by this Agreement will not (in and of itself): (A) entitle any
employee of any Catalina Entity to severance pay, unemployment compensation or
any other payment; (B) accelerate the time of payment or vesting, or increase
the amount of compensation due to any such employee; (C) result in any liability
under Title IV of ERISA; (D) result in any prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code for which an exemption is not
available; or (E) result (either alone or in conjunction with any other event)
in the payment or series of payments by any Catalina Entity or any of its
affiliates to any Person of an "excess parachute payment" within the meaning of
Section 280G of the Code;
(o) with respect to each Benefit Plan that is funded wholly or
partially through an insurance policy, all premiums required to have been paid
to date under the insurance policy have been paid, all premiums required to be
paid under the insurance policy through the Closing Date will have been paid on
or before the Closing Date and, as of the Closing Date, there will be no
liability of any Catalina Entity or any Commonly Controlled Entity under any
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insurance policy or ancillary agreement with respect to such insurance policy in
the nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Closing Date;
(i) each Benefit Plan that constitutes a "welfare
benefit plan," within the meaning of Section 3(1) of ERISA,
and for which contributions are claimed by any Catalina Entity
or any Commonly Controlled Entity as deductions under any
provision of the Code, is in material compliance with all
applicable requirements pertaining to such deduction;
(ii) with respect to any welfare benefit fund (within
the meaning of Section 419 of the Code) related to a welfare
benefit plan, there is no disqualified benefit (within the
meaning of Section 4976(b) of the Code) that would result in
the imposition of a tax under Section 4976(a) of the Code; and
(iii) all welfare benefit funds intended to be exempt
from tax under Section 501(a) of the Code have been determined
by the Internal Revenue Service to be so exempt and no event
or condition exists which would adversely affect any such
determination; and
(p) all benefit plans outside of the United States, if any
(the "Foreign Plans"), are in compliance with all applicable laws and
regulations and have been operated in accordance with the plans' respective
terms. There are no material unfunded liabilities under or in respect of the
Foreign Plans, and all contributions or other payments required to be made to or
in respect of the Foreign Plans prior to the Closing Date have been made or will
be made prior to the Closing Date.
SECTION 3.17. Tax Matters.
(a) All material Tax Returns required to have been filed by or
with respect to each of the Catalina Entities or any affiliated, combined,
consolidated, unitary or similar group of which any Catalina Entity is or was a
member have been duly and timely filed, and each such Tax Return correctly and
completely reflects the liability for Taxes and all other information required
to be reported thereon. All material Taxes owed by any Catalina Entity or any
affiliated, combined, consolidated, unitary or similar group of which any
Catalina Entity is or was a member (whether or not shown on any Tax Return) have
been paid.
(b) The Company has adequately provided for, in their books of
account and related records, liability for all unpaid Taxes of all Catalina
Entities, being current Taxes not yet due and payable.
(c) None of the Catalina Entities is currently the beneficiary
of any extension of time within which to file any Tax Return, nor have any of
the Catalina Entities made (or had made on their behalf) any requests for such
extensions as to Tax returns that have not yet been filed.
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(d) No claim for Taxes (or request for Tax Returns) has ever
been made in a jurisdiction in which any Catalina Entity does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.
(e) Each of the Catalina Entities has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owning to any employee, independent contractor, creditor, stockholder, customer,
supplier or other third party.
(f) There is no dispute or claim concerning liability for
Taxes in an amount in excess of $50,000 with respect to any Catalina Entity for
which notice has been provided to that party, or which is asserted or, to the
Company's Knowledge, threatened, or which is otherwise known to any of the
Catalina Entities. No issues have been raised in any Tax examination with
respect to any Catalina Entity which, by application of similar principles,
could be expected to result in liability for Taxes for any other period not so
examined. None of the Catalina Entities has been the subject of an audit for
Taxes nor to the Company's Knowledge, are there any threatened or proposed
audits for Taxes, in each instance for an amount in excess of $100,000.
(g) No Catalina Entity has waived (or is subject to a waiver
of) any statute of limitations in respect of the payment of Taxes or has agreed
to (or to the Company's Knowledge, is subject to) any extension of time with
respect to any Tax assessment or deficiency. No Catalina Entity has received or
is subject to any ruling related to Taxes or has entered into (or is subject to)
any agreement with a Tax authority.
(h) There are no liens with respect to Taxes upon the stock of
or any assets of any Catalina Entity.
(i) No Catalina Entity is a party to any Tax sharing or
allocation agreement.
(j) No Catalina Entity is, or, to the Company's Knowledge, at
any time has been, a "United States real property holding corporation" within
the meaning of Section 897(c)(2) of the Code. No Catalina Entity is, or, to the
Company's Knowledge, at any time has held, a United States real property
interest within the meaning of Section 897(c)(1) of the Code.
(k) None of the assets or properties of any Catalina Entity
constitutes tax-exempt bond financed property or tax-exempt use property, within
the meaning of Section 168 of the Code. No Catalina Entity is a party to any
"safe harbor lease" that is subject to the provisions of Section 168(f)(8) of
the Code as in effect prior to the Tax Reform Act of 1986, or to any "long-term
contract" within the meaning of Section 460 of the Code.
(l) No Catalina Entity has filed a Consent under Section
341(f) of the Code (or comparable provision of any other Tax law) concerning
collapsible corporations.
(m) No Catalina Entity is a party to any joint venture,
partnership or other arrangement that is treated as a partnership for federal
income tax purposes.
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(n) No Catalina Entity is required by reason of an accounting
method change, or could be required by reason of a proposed or threatened
accounting method change, to make any adjustment under Section 481 of the Code.
(o) Other than the liability of each Catalina Entity pursuant
to Treasury Regulation Section 1.1502-6 or similar provision of Tax law with
respect to any affiliated, combined, consolidated, unitary or similar group of
which such Catalina Entity currently is a member, no Catalina Entity has any
liability for Taxes of any Person other than itself (i) under Treasury
Regulation Section 1.1502-6 or any similar provision of Tax law, (ii) as a
transferee or successor, (iii) by contract or (iv) otherwise.
(p) No Catalina Entity has participated in or cooperated with
an international boycott within the meaning of Section 999 of the Code.
(q) No foreign Catalina Entity has, or, to the Company's
Knowledge, at any time has had, an investment in "United States property" within
the meaning of Section 956(c) of the Code.
(r) No Catalina Entity is, or at any time has been, a passive
foreign investment company within the meaning of Section 1297 of the Code, and
No Catalina Entity is a shareholder, directly or indirectly, in a passive
foreign investment company.
(s) No foreign Catalina Entity is, or at any time has been,
engaged in the conduct of a trade or business within the United States or
treated as or considered to be so engaged.
(t) No Catalina Entity is, or at any time has been, subject to
(i) the dual consolidated loss provisions of Section 1503(d) of the Code, (ii)
the overall foreign loss provisions of Section 904(f) of the Code or (iii) the
recharacterization provisions of Section 952(c)(2) of the Code. No Catalina
Entity has any "non-recaptured net section 1231 losses" within the meaning of
Section 1231(c)(2) of the Code.
SECTION 3.18. Litigation. Except as set forth in the SEC Documents or
otherwise disclosed to the Purchaser, there are no pending or, to the Knowledge
of the Company, threatened claims, actions, suits, labor disputes, grievances,
administrative or arbitration or other proceedings or, to the Knowledge of the
Company, investigations against the Catalina Entities or their respective assets
or properties before or by any Governmental Authority or before any arbitrator.
None of the transactions contemplated by any of the Transaction Documents is
restrained or enjoined (either temporarily, preliminarily or permanently), and
no material adverse conditions have been imposed thereon by any Governmental
Authority or arbitrator. None of the Catalina Entities or any of their
respective assets or properties, is subject to any order, writ, judgment, award,
injunction or decree of any Governmental Authority or arbitrator.
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SECTION 3.19. Transactions with Affiliates.
(a) There is no Indebtedness owing by any Catalina Entity to
any of its Affiliates, other than inter-company transactions between or among
Catalina Entities.
(b) Immediately following the Closing:
(i) no Catalina Entity will be indebted, directly or
indirectly, to any officers or directors of any Catalina
Entity, or to any of the Affiliates of the officers or
directors of any Catalina Entity, except for, in the case of
officers, compensation payable in the ordinary course of
business and reasonable travel reimbursements accrued in the
ordinary course of business consistent with past practices;
(ii) no officer or director of any Catalina Entity,
and no Affiliate of any such officer or director, will (A) be
indebted to any Catalina Entity in any material amount or (B)
(other than the directors of the Company designated by the
Purchaser as contemplated by Section 7.2(n) hereof) be an
Affiliate of any Person which competes, directly or
indirectly, with any Catalina Entity; and
(iii) to the Company's Knowledge there are no voting
or similar agreements between or among the shareholders of the
Company.
(c) To the Company's Knowledge, no officer, director or
employee of any Catalina Entity, and no Affiliate of any such officer, director
or employee, has any direct or indirect interest in any contract (including,
without limitation, any Contract), commitment, license, agreement, obligation or
arrangement to which any Catalina Entity is a party, or has engaged in any
transaction or relationship with any Catalina Entity (other than with respect to
compensation payable to its officers and employees and reasonable travel
reimbursements accrued in the ordinary course of business) involving an amount
in excess of $50,000, other than inter-company transactions between or among
Catalina Entities.
(d) No Catalina Entity is a party to any agreement relating to
the voting or disposition of the Capital Stock of such parties.
(e) No Catalina Entity has loaned or advanced funds in excess
of $50,000 individually or $100,000 in the aggregate to any individual officer,
director or employee of any Catalina Entity, or to any Affiliate of any such
officer, director or, to the Company's Knowledge, any Affiliate of any such
employee.
SECTION 3.20. Investment Company Act. No Catalina Entity is an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
SECTION 3.21. Governmental Regulation. No Catalina Entity is (a) 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
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Public Utility Holding Company Act of 1935, as amended, or (b) subject to
regulations under the Federal Power Act, the Interstate Commerce Act, any state
public utilities code or any other federal or state statute or regulation
limiting its ability to incur Indebtedness.
SECTION 3.22. Compliance with Laws. Each Catalina Entity owns, holds,
possesses or lawfully uses in the operations of its business all franchises,
licenses, permits, titles (including, without limitation, motor vehicle title
and current registration), easements, rights, applications, filings,
registrations and other authorizations ("Authorizations") which are in any
manner necessary for it to conduct its business as now or previously conducted
or for the ownership and use of the assets owned or used by such Catalina Entity
in the conduct of such Catalina Entity's business, free and clear of all Liens
(other than Permitted Liens), charges, restrictions and encumbrances, except
where the failure so to own, hold, possess or lawfully use such Authorization
would not have a Material Adverse Effect, individually or in the aggregate with
all such failures. Each Catalina Entity is not in conflict with, or in default
or violation of any Applicable Law or Authorization, except where such conflict,
violation or default would not have a Material Adverse Effect, individually or
in the aggregate with all such conflicts, violations and defaults.
SECTION 3.23. Personal Property. Each Catalina Entity has good, valid
and marketable title to all of its material personal property, free and clear of
all Liens, (other than Permitted Liens) and Liens which could not reasonably be
expected to have a Material Adverse Effect.
(a) All leases, licenses, permits and authorizations in any
manner related to the personal property or business of the Catalina Entities and
all other instruments, documents and agreements pursuant to which the Catalina
Entities have obtained the right to use any personal property are in good
standing, valid and effective in accordance with their respective terms, and
there is no existing default or event which with notice or lapse of time, or
both, would constitute a default under any of such leases, licenses, permits,
authorizations, instruments, documents or agreements, other than defaults or
events that could not reasonably be expected to have a Material Adverse Effect.
(b) All facilities, vehicles, machinery, equipment and other
material items of tangible personal property owned or used by the Catalina
Entities are in good operating condition and repair, subject to normal wear and
maintenance, are useable in the regular and ordinary course of business of the
Catalina Entities and conform to all applicable laws, ordinances, codes, rules
and regulation relating to their construction, use, operation and maintenance,
other than nonconformance that could not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.24. Real Property.
(a) Schedule 3.24(a) sets forth a true and complete list of
all material offices, manufacturing plants and warehouse facilities of the
Catalina Entities, and whether such office, plant or facility is leased or
owned. Each Catalina Entity has good and marketable title in fee simple to all
real properties owned by it and valid and enforceable leasehold interests in all
real estate leased by it, except as encumbered by Permitted Liens.
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(b) None of the real properties owned by or the leasehold
estates of any Catalina Entity are subject to (i) any Liens other than Permitted
Liens or (ii) any easements, rights of way, licenses, grants, building or use
restrictions, exceptions, reservations, limitations or other impediments that,
in either case (i) or (ii), adversely affect the value thereof for their present
use, or that interfere with or impair the present and continued use thereof, in
the usual and normal conduct of the business of any such Person.
(c) All improvements on such real properties and the
operations therein conducted conform to all applicable health, fire,
environmental, safety, zoning and building laws, ordinances and administrative
regulations (whether through grandfathering provisions, permitted use
exceptions, variances or otherwise), except for possible nonconforming uses or
violations that do not and will not interfere with the present use, operation or
maintenance thereof as now used, operated or maintained or access thereto, and
that do not and will not have a Material Adverse Effect. No Catalina Entity has
received notice of any violation of or noncompliance with any such laws,
ordinances or administrative regulations from any applicable governmental or
regulatory authority.
(d) No Catalina Entity is in breach of or default (and no
event has occurred which, with due notice or lapse of time or both, may
constitute a breach or default) under any of the leases referenced in subsection
(a) herein (the "Leases") and (ii) no party to any Lease has given any Catalina
Entity written notice of or made a claim with respect to any breach or default.
(e) None of the Leases require a Consent to be obtained for
the execution, delivery and performance of any of the Transaction Documents or
the consummation of any of the transactions contemplated hereby or thereby.
SECTION 3.25. Environmental Matters.
(a) Each Catalina Entity and its operations has obtained and
maintained in effect all licenses, permits and other Authorizations required
under all Environmental Laws and is in material compliance with all
Environmental Laws and with all such licenses, permits and Authorizations.
(b) no Catalina Entity has (A) performed or suffered any act
which could give rise to, or has otherwise incurred or expressly assumed by
contract or operation of law, liability to any Person (governmental or not)
under any Environmental Law, or (B) received notice of any such liability or any
claim therefor or submitted notice to any Governmental Authority with respect to
any of their respective assets;
(c) no hazardous substance, hazardous waste, contaminant,
pollutant or toxic substance (as such terms are defined in any applicable
Environmental Law) and no asbestos containing material has been released, placed
or dumped by any Catalina Entity or to the Company's Knowledge, otherwise come
to be located on, at, beneath or near any of the assets or properties owned,
leased or otherwise operated by any Catalina Entity or into any surface waters
or groundwater thereon or thereunder; and
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(d) no Catalina Entity owns or operates an underground storage
tank containing a regulated substance, as such term is defined in Subchapter IX
of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6991 et seq.
except as in accordance with Applicable Law.
SECTION 3.26. Intellectual Property.
(a) The Catalina Entities own, license or have the legally
enforceable right to use, free and clear of all Liens (other than Permitted
Liens), (i) all letters patent, patent applications, inventions on which patent
applications have not been filed, trademarks, service marks, trade names
(whether registered or unregistered) and the registrations or applications for
registration therefor, logos, symbols, brands, copyrights (whether registered or
unregistered) and registrations therefor, both United States and foreign, and
all renewals, renewal rights, reissues, modifications or extensions thereof, and
know-how, trade secrets, formulae, research and development data, new product
research data and manufacturing processes that are material to their respective
businesses as currently conducted (collectively, the "Intellectual Property"),
and (ii) all computer software that is necessary to the operation of their
respective businesses and that could not be replaced without significant cost to
the Catalina Entities.
(b) To the Company's Knowledge, no claim has been asserted by
any Person challenging or questioning the validity or the right of any Catalina
Entity to use the Intellectual Property, nor is there any valid basis for any
such claim. To the Company's Knowledge, the use of any item of Intellectual
Property by any Catalina Entity does not infringe and will not infringe on any
right, title or interest held by any other entity or Person in any intellectual
property. To the Company's Knowledge, the use of any intellectual property by
any other Person or entity does not infringe on the Intellectual Property or on
the rights of any Catalina Entity in any of the Intellectual Property.
(c) No Catalina Entity is a party to any license agreement or
any other agreement to use, sell, assign or encumber any of the Intellectual
Property that is material to its business as currently conducted. Such
agreements set forth on Schedule 3.26 are in full force and effect, and each
Catalina Entity has, and to the Knowledge of the Company, each other party to
such agreements has, complied with the requirements of such agreements. No
notice of termination has been given pursuant to any of such agreements.
SECTION 3.27. Insurance. Schedule 3.27 sets forth a true and complete
list of all liability and other insurance coverage (including, without
limitation, product liability and product recall insurance) insuring the
Catalina Entities against losses arising out of or related to their respective
businesses (which list accurately describes the coverage carried and the
expiration dates of such policies). The Catalina Entities are covered by
insurance in scope and amount customary and reasonable for the business in which
it is engaged and will be so covered after consummation of the transactions
contemplated hereby. The insurance policies listed on Schedule 3.27 constitute
insurance protection against all liability, claims and risks occurring in the
ordinary course of business customarily included within comprehensive liability
coverage and at amounts and levels customarily maintained for a business of this
type. All such policies are in full force and effect.
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SECTION 3.28. Inventory. All inventory of the Catalina Entities was
manufactured, purchased, acquired or ordered in the ordinary course of business
and consistent with past practice, consists of items of a quality or quantity
useable or saleable generally in the ordinary course of business consistent with
past practice, and is valued in accordance with GAAP.
SECTION 3.29. Customers and Suppliers. Schedule 3.29 sets forth a
complete and accurate list of all Significant Customers and Significant
Suppliers. For purposes of this Agreement, "Significant Customers" are the 10
customers that have effected the most purchases of products or services, in
dollar terms, from the Catalina Entities during the most recent four fiscal
quarters, and "Significant Suppliers" are the 10 suppliers who supplied the
largest amount, by dollar volume, of products or services to the Catalina
Entities during the most recent four fiscal quarters. None of the Significant
Customers or Significant Suppliers has terminated or threatened to terminate its
relationship with the Catalina Entities with which it deals. Schedule 3.29 sets
forth the monthly ▇▇▇▇▇▇▇▇ to and revenue from each Significant Customer for
each of the 12 months in the 12-month period ending May 31, 2001. To the
Company's Knowledge, no Catalina Entity has received any material customer
complaints concerning its products or services, nor has it had any of its
products returned by a purchaser thereof or any requests for warranty services,
except for normal warranty returns and service that are consistent with past
history and would not, individually or in the aggregate, result in a reversal of
material revenue.
SECTION 3.30. Depository and Other Accounts. Schedule 3.30 sets forth a
true and complete list of all banks and other financial institutions and
depositories at which any Catalina Entity maintains (or has caused to be
maintained) deposit accounts, spread accounts, yield supplement reserve
accounts, operating accounts, trust accounts, trust receivable accounts or other
accounts of any kind or nature into which funds of any Catalina Entity is
deposited from time to time. Such Schedule 3.30 correctly identifies the name
and address of each depository, the name in which each account is held, the
purpose of the account, the account number, the contact Person at such
depository and his or her telephone number.
SECTION 3.31. Books and Records. The books, records and accounts of the
Company accurately and fairly reflect, in reasonable detail, the transactions
and the assets and liabilities of the Company on a consolidated basis.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
SECTION 4.1. Authorization; Enforceability; No Violations.
(a) The Purchaser is duly organized and validly existing, in
good standing as a limited liability company under the laws of its jurisdiction
of organization and has the requisite power and authority to own its properties
and assets and to carry on its business as it is now being conducted. The
Purchaser is duly qualified to do business as a foreign limited liability
company in each jurisdiction in which the character of the properties owned or
leased by
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it or the nature of its business makes such qualification necessary, except
where the failure to so qualify could not reasonably be expected to have a
material adverse effect on the Purchaser. The Purchaser has the power to
execute, deliver and perform the terms and provisions of the Transaction
Documents to which it is a party and has taken all necessary limited liability
company action to authorize the execution, delivery and performance by it of
such Transaction Documents and to consummate the transactions contemplated
hereby and thereby.
(b) The execution, delivery and performance by the Purchaser
of the terms and provisions of the Transaction Documents to which it is a party
and the consummation of the transactions contemplated hereby and thereby do not
and will not violate, any provision of the governing documents of the Purchaser,
or of any other agreement or instrument to which the Purchaser is a party or by
which it is bound, or to which any of its properties or assets is subject, or of
any Applicable Law. The Purchaser has duly executed and delivered this Agreement
and, at the Closing, will have duly executed and delivered the other Transaction
Documents to which it is a party. This Agreement constitutes, and the other
Transaction Documents when executed and delivered by the Purchaser will
constitute the legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
SECTION 4.2. Consents. No Consent, authorization or order of, or filing
or registration with, any Governmental Authority or other Person is required to
be obtained or made by the Purchaser for the execution, delivery and performance
by the Purchaser of this Agreement or the other Transaction Documents to which
it is a party or the consummation of any of the transactions contemplated hereby
or thereby other than those that will have been made or obtained on or prior to
the Closing Date.
SECTION 4.3. Private Placement.
(a) The Purchaser understands that (i) the offering and sale
of the Shares by the Company to the Purchaser are intended to be exempt from
registration under the Securities Act pursuant to Section 4(2) thereof, and (ii)
there is no existing public or other market for the Shares.
(b) The Shares to be acquired by the Purchaser pursuant to
this Agreement are being acquired for its own account and without a view to
making a distribution thereof in violation of the Securities Act.
(c) The Purchaser has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Shares and the Purchaser is capable of bearing
the economic risks of such investment, including a complete loss of its
investment in the Shares.
(d) The Purchaser is an "accredited investor" as such term is
defined in Regulation D under the Securities Act.
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SECTION 4.4. Legends. The Purchaser understands that each certificate
evidencing the Shares may bear any legend required by applicable state
securities laws, and the following legend, at the discretion of the Company:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO
THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
SECTION 4.5. Financing. The Purchaser has or has available to it all
funds necessary in order for the Purchaser to consummate the purchase of all of
the Shares and to effect payment of the Purchase Price therefor.
ARTICLE V
COVENANTS OF THE COMPANY
From the date of execution of this Agreement, until the earlier of (i)
the Closing Date or (ii) the termination of this Agreement as provided in
Section 9.3, except as otherwise expressly contemplated under this Agreement or
in the other Investment Documents, the Company hereby covenants as follows:
SECTION 5.1. Business in the Ordinary Course. The Company shall, and
the Company shall cause each Subsidiary to, conduct its business in the ordinary
course and consistent with past practice.
SECTION 5.2. Existing Condition. The Company shall not, and the Company
shall not suffer any Subsidiary to, cause or permit to occur any of the events
or occurrences described in Section 3.12 hereof.
SECTION 5.3. Maintenance of Properties and Assets. The Company shall,
and the Company shall cause each Subsidiary to, maintain and service its
properties and assets in the ordinary course of business and consistent with
past practice, in order to preserve their value and usefulness in the conduct of
its respective business.
SECTION 5.4. Employees and Business Relations. The Company shall, and
the Company shall cause each Subsidiary to, use commercially reasonable efforts
to keep available the services of its current employees and agents and to
maintain its relations and goodwill with its suppliers, customers, distributors
and any others with whom or with which it has business relations.
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SECTION 5.5. Maintenance of Insurance. The Company shall, and the
Company shall cause each Subsidiary to, notify the Purchaser of any material
changes in the terms of the insurance policies and binders referred to on
Schedule 3.27 hereto.
SECTION 5.6. Compliance with Laws. The Company shall, and the Company
shall cause each Subsidiary to, comply with all Applicable Laws, ordinances,
rules, regulations and orders applicable to any Catalina Entity or its business,
operations, properties or assets, noncompliance with which might have a Material
Adverse Effect.
SECTION 5.7. Conduct of Business. The Company shall, and the Company
shall cause each Subsidiary to, use its commercially reasonable efforts to
conduct its business in such a manner that on the Closing Date the
representations and warranties of the Company contained in this Agreement shall
be true, as though such representations and warranties were made on and as of
each such date, and the Company shall, and the Company shall cause each
Subsidiary to, use its commercially reasonable efforts to cause all of the
conditions to the obligations of the Purchaser under this Agreement to be
satisfied on or prior to the Closing Date.
SECTION 5.8. Access to Books and Records. The Company shall afford, and
shall cause each Subsidiary to afford, to each of the Purchaser and the
Purchaser's accountants, counsel and other representatives reasonable access
during normal business hours throughout the period prior to the Closing Date to
all the Company's and the Subsidiaries' properties, books, contracts,
commitments and records (including, but not limited to, Tax Returns) and, during
such period, shall furnish promptly to the Purchaser (a) a copy of each report,
schedule and other document filed or received by the Company or any of the
Subsidiaries pursuant to the requirements of federal or state securities laws,
and (b) all other information concerning the Company's and the Subsidiaries'
business, properties and personnel as the Purchaser may reasonably request;
provided that no investigation or receipt of information pursuant to this
Section 5.8 shall affect any representation or warranty of the Company or the
conditions to the obligations of the Purchaser.
SECTION 5.9. Agreement to Take Necessary and Reasonable Actions. The
Company shall execute and deliver the Transaction Documents and such other
documents, certificates, agreements and other writings and take such other
actions as may be necessary or reasonably requested by the Purchaser in order to
consummate or implement expeditiously the transactions contemplated hereby.
SECTION 5.10. Compliance with Conditions. The Company shall use its commercially
reasonable efforts to cause all of the obligations imposed upon it in this
Agreement to be duly complied with and to cause all conditions precedent to the
obligations of the Company and the Purchaser to be satisfied. Upon the terms and
subject to the conditions of this Agreement, the Company shall use its
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable consistent
with Applicable Law to consummate and make effective in the most expeditious
manner practicable the transactions contemplated hereby.
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SECTION 5.11. Consents and Approvals. The Company (a) shall obtain all
necessary Consents of all Governmental Authorities and all material Consents of
all other Persons, firms or corporations required to be obtained by any Catalina
Entity in connection with its execution, delivery and performance of this
Agreement, any other Transaction Document or any of the transactions
contemplated hereby or thereby, and (b) shall diligently assist and cooperate
with the Purchaser in preparing and filing all documents required to be
submitted by the Purchaser to any Governmental Authority in connection with such
transactions and in obtaining any governmental Consents, waivers, authorizations
or approvals which may be required to be obtained by the Purchaser in connection
with such transactions.
SECTION 5.12. Voting Agreement. The Company shall use its best efforts
to cause ▇▇. ▇▇▇ to enter into a Voting Agreement substantially in the form of
Exhibit C.
SECTION 5.13. Amendment of Articles of Incorporation. Promptly
following the Closing, the Company shall solicit the written consent of its
shareholders or call a special meeting of shareholders to increase the number of
authorized shares of Common Stock to 50,000,000 shares. The covenant contained
in this Section 5.13 shall survive the Closing.
ARTICLE VI
COVENANTS OF THE PURCHASER
SECTION 6.1. Agreement to Take Necessary and Reasonable Actions. The
Purchaser agrees to execute and deliver each of the Transaction Documents to
which it shall be a party and such other documents, certificates, agreements and
other writings and to take such other actions as may be necessary or reasonably
requested by the Company in order to consummate or implement expeditiously the
transactions contemplated hereby.
SECTION 6.2. Consents and Approvals. The Purchaser (a) shall obtain all
necessary Consents, waivers, authorizations and approvals of all Governmental
Authorities and all material Consents, waivers, authorizations and approvals of
all other Persons, firms or corporations required to be obtained by the
Purchaser in connection with its execution, delivery and performance of this
Agreement, any other Transaction Document or any of the transactions
contemplated hereby or thereby, and (b) shall diligently assist and cooperate
with the Company in preparing and filing all documents required to be submitted
by the Company to any Governmental Authority in connection with such
transactions and in obtaining any governmental Consents, waivers, authorizations
or approvals which may be required to be obtained by the Company in connection
with such transactions.
SECTION 6.3. Restrictions on Transfer. The Purchaser shall not sell,
assign, transfer, pledge, hypothecate, mortgage, encumber or dispose of Shares
representing 30% or more of the shares of the Company's Common Stock then
outstanding in a private transaction or series of private transactions to any
Person or group or their respective Affiliates, other than (i) in connection
with the sale of all or substantially all of the outstanding shares of the
Company's capital stock, (ii) pursuant to a tender offer (whether or not the
Board of Directors has
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recommended that the Company's shareholders accept such tender offer), or (iii)
upon approval by the majority of the disinterested members of the Company's
Board of Directors. In no event shall the foregoing restriction be deemed to
limit or restrict in any way the Purchaser's ability to sell shares pursuant to
an effective registration statement under the Securities Act in connection with
a bona fide public distribution.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
SECTION 7.1. Conditions to the Company's Obligations. The obligations
of the Company hereunder required to be performed on the Closing Date shall be
subject, at its election, to the satisfaction or waiver (which waiver, if so
requested by the Purchaser, shall be made in writing), at or prior to the
Closing, of the following conditions:
(a) The representations and warranties of the Purchaser
contained in this Agreement shall have been true and correct when made and shall
be true and correct in all material respects (except those representations and
warranties that are specifically qualified as to materiality in accordance with
their terms, which shall be true and correct in all respects) on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
(b) The Purchaser shall have performed all obligations and
agreements, and complied with all covenants, contained in the Transaction
Documents, to be performed and complied with by the Purchaser at or prior to the
Closing Date.
(c) The Purchaser shall have delivered to the Company a
certificate, executed by it or on its behalf by a duly authorized
representative, dated as of the Closing Date, certifying that each of the
conditions specified in this Section 7.1 has been satisfied with respect to the
Purchaser.
(d) The Purchaser shall have performed all obligations and
agreements, and complied with all covenants, contained in this Agreement, to be
performed and complied with by it at or prior to the Closing Date.
(e) All governmental and regulatory approvals and clearances
and all third-party Consents necessary for the consummation by the Purchaser of
the transactions contemplated by the Transaction Documents shall have been
obtained and shall be in full force and effect.
(f) The Company shall have received payment of the Purchase
Price as provided pursuant to Section 2.2(b)(i) herein.
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(g) Any modification to the terms of the Company's Senior
Credit Documents, which modification adversely affects the Company, shall have
been approved by the Company.
(h) Any modification to the terms of any of the Management
Agreements, which modification increases the economic benefit of such agreement
to the executive officer party thereto, shall have been approved by a majority
of the disinterested members of the Company's Board of Directors.
(i) There shall be no action continuing, and no statute, rule,
regulation, judgment, administrative interpretation, order or injunction shall
have been enacted, promulgated, entered or enforced, and there shall be no
action deemed applicable to the sale of the Shares to the Purchaser, which would
(i) make illegal or otherwise restrict or prohibit the consummation of the sale
of the Shares to the Purchaser, or (ii) restrict the ability of the Purchaser,
or render the Purchaser unable, to effect the purchase of the Shares from the
Company.
(j) The Company shall have received such other certificates,
instruments and documents in furtherance of the transactions contemplated hereby
as it may reasonably request.
SECTION 7.2. Conditions to Purchaser's Obligations. The obligations of
the Purchaser hereunder required to be performed at the Closing shall be
subject, at its election, to the satisfaction or waiver (which waiver, if so
requested by the Company, shall be made in writing), at or prior to the Closing,
of the following conditions:
(a) The representations and warranties of the Company
contained in this Agreement shall have been true and correct when made and shall
be true and correct in all material respects (except those representations and
warranties that are specifically qualified as to materiality in accordance with
their terms, which shall be true and correct in all respects) on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date. Any waiver by the Purchaser of this condition to the Purchaser's
obligations shall be solely for the purposes of effecting the Closing and,
unless otherwise provided in writing, shall not constitute a waiver of the
Purchaser's or any other Indemnified Party's right to indemnification for the
Company's failure to satisfy this condition.
(b) The Company shall have performed all obligations and
agreements, and complied with all covenants, contained in the Transaction
Documents, to be performed and complied with by it at or prior to the Closing
Date.
(c) The Company shall have restructured its senior debt
financing in form and substance satisfactory to the Purchaser. The Company shall
have obtained $4.3 million in subordinated financing (from a lender other than
the Purchaser or its Affiliates) on terms substantially similar to those set
forth in the Note Purchase Agreement and Note, and all amounts shall have been
funded to the Company pursuant thereto.
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(d) The Company shall have executed and delivered the
Management Services Agreement.
(e) The Company shall have executed and delivered the
Registration Rights Agreement.
(f) Following the date hereof the Company shall not have
entered into agreements (other than modifications or amendments of the
Management Agreements satisfactory to the Purchaser, and other than the
subordinated financing referred to in subsection (c) above) with any other
investors in equity of the Company other than the Purchaser and the subordinated
lender.
(g) Since September 30, 2000, no change, occurrence or
development with respect to the Catalina Entities or their businesses that was
not disclosed in the SEC Documents filed prior to the date of this Agreement or
in the Disclosure Schedule shall have occurred or become known to the Purchaser
that has had or could reasonably be expected to have a Material Adverse Effect.
(h) There shall be no action continuing, and no statute, rule,
regulation, judgment, administrative interpretation, order or injunction shall
have been enacted, promulgated, entered or enforced, and there shall be no
action deemed applicable to the sale of the Shares to the Purchaser, which would
(i) make illegal or otherwise restrict or prohibit the consummation of the sale
of the Shares to the Purchaser, or (ii) restrict the ability of the Purchaser,
or render the Purchaser unable, to effect the purchase of the Shares from the
Company.
(i) The Company shall have redeemed the shareholder rights
plan.
(j) The Management Agreements shall have been modified or
amended, on terms satisfactory to the Purchaser.
(k) The Company shall have obtained and delivered to the
Purchaser all Consents required to be obtained from all Governmental Authorities
and other Persons in connection with the transactions contemplated by this
Agreement pursuant to Section 5.11 hereof, and the Purchaser shall have approved
the terms and conditions thereof, and all applicable waiting periods shall have
expired.
(l) Counsel to the Company, shall have delivered to the
Purchaser an opinion, dated the Closing Date, addressed to the Purchaser,
substantially in the form of Exhibit D.
(m) The Purchaser shall have received delivery of the Shares
as set forth hereunder.
(n) The Board of Directors shall have been expanded or the
Company shall have received the resignations of a sufficient number of directors
to satisfy the provisions
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of this Section 7.2(n), and the Company shall deliver at Closing resolutions
duly adopted by the Board appointing directors designated in writing by the
Purchaser to fill the vacancies created by such expansion and/or resignations,
all to the effect that, effective immediately after the completion of Closing,
not less than two-thirds of the members of the Board of Directors will be
directors designated by the Purchaser.
(o) The Purchaser shall have received an executed and
delivered Voting Agreement, substantially in the form of Exhibit C. The
Purchaser shall have received such other certificates, instruments and documents
in furtherance of the transactions contemplated by this Agreement as it may
reasonably request.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. General Indemnification by the Company. Subject to the
limitations contained in Section 8.4 hereof, the Company covenants and agrees
that it will indemnify, defend, protect and hold harmless the Purchaser and its
officers, stockholders, directors, divisions, subdivisions, affiliates,
subsidiaries, parents, agents, employees, successors and assigns at all times
from and after the date of this Agreement until the Expiration Date (as defined
in Section 8.5) from and against all claims, damages, losses (including, without
limitation, diminution in the value of the Shares), liabilities, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses, which shall
include, without limitation, expenses of investigation) (collectively, "Losses")
incurred by the Purchaser as a result of or arising from (a) any breach of the
representations and warranties made by the Company set forth herein or on the
schedules or certificates delivered in connection herewith, or (b) any
nonfulfillment of any covenant or agreement on the part of the Company under
this Agreement; provided, that Losses shall be limited to and shall not exceed
(i) actual out-of-pocket expenses incurred by Purchaser, and (ii) the amount by
which the per share price of the Shares has declined below the Purchase Price
per share as set forth in this Agreement.
SECTION 8.2. Indemnification by the Purchaser. Subject to the
limitations contained in Section 8.4 hereof, the Purchaser covenants and agrees
that it will indemnify, defend, protect and hold harmless the Company and its
officers, stockholders, directors, divisions, subdivisions, affiliates,
subsidiaries, parents, agents, employees, successors and assigns at all times
from and after the date of this Agreement from and against all Losses incurred
by the Company as a result of or arising from (a) any breach of the
representations and warranties made by the Purchaser set forth herein or on the
schedules or certificates attached hereto, or (b) any nonfulfillment of any
agreement on the part of the Purchaser under this Agreement.
SECTION 8.3. Third Party Claims. (a)In order for a party hereto eligible to be
indemnified hereunder (an "Indemnified Party") to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim or demand made by any Person or entity against the
Indemnified Party (a "Third Party Claim"), such Indemnified
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Party must notify the parties obligated to provide indemnification pursuant to
Section 8.1 or 8.2 hereof (each, an "Indemnifying Party") in writing, and in
reasonable detail, of the Third Party Claim within 30 Business Days after
receipt by such Indemnified Party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure. Such notice
shall state the nature and the basis of such claim and a reasonable estimate of
the amount thereof. Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party, within ten Business Days after the Indemnified Party's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the Third Party Claim.
(b) The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel (provided that such counsel is
not reasonably objected to by the Indemnified Party), any Third Party Claim;
provided that, and for so long as, the Indemnifying Party pursues the same in
good faith and diligently and provided that the Third Party Claim does not
relate to an actual or potential Loss to which Section 8.3(e) applies in which
the Indemnified Party is the Purchaser. If the Indemnifying Party undertakes to
defend or settle, it shall promptly notify the Indemnified Party of its
intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records or information reasonably
requested by the Indemnifying Party that are in the Indemnified Party's
possession or control. Notwithstanding the foregoing, the Indemnified Party
shall have the right to participate in any matter through counsel of its own
choosing at its own expense (unless there is a conflict of interest that
prevents counsel for the Indemnifying Party from representing the Indemnified
Party, in which case the Indemnifying Party will reimburse the Indemnified Party
for the expenses of its counsel). After the Indemnifying Party has notified the
Indemnified Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently pursues
such defense, the Indemnifying Party shall not be liable for any additional
legal expenses incurred by the Indemnified Party in connection with any defense
or settlement of such asserted liability, except to the extent such
participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for reasonable
additional legal expenses and out-of-pocket expenses, and except in the case of
a Third Party Claim relating to an actual or potential Loss to which Section
8.3(e) applies in which the Indemnified Party is the Purchaser.
(c) No Indemnifying Party shall, in the defense of any Third
Party Claim, Consent to entry of any judgment (other than a judgment of
dismissal on the merits without costs) or enter into any settlement, except with
the written Consent of the Indemnified Party, which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all liability in respect of such claim or
matter.
(d) If the Indemnifying Party does not assume the defense of
any Third Party Claim, then the Indemnified Party may defend against such Third
Party Claim in such manner as it deems appropriate at the expense of the
Indemnifying Party.
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(e) Notwithstanding anything to the contrary in this Article
VIII, if at any time, in the reasonable opinion of the Purchaser as the
Indemnified Party (notice of which opinion shall be given in writing to the
Indemnifying Party), any Third Party Claim seeks material prospective relief
which could have an adverse effect on any such Indemnified Party or any
subsidiary, then such Indemnified Party shall have the right to control or
assume (as the case may be) the defense of any such Third Party Claim and the
amount of any judgment or settlement and the reasonable costs and expenses of
defense (including, but not limited to, fees and disbursements of counsel and
experts) shall be included as part of the indemnification obligations of the
Indemnifying Party hereunder. If the Indemnified Party elects to exercise such
right, then the Indemnifying Party shall have the right to participate in, but
not control, the defense of such Third Party Claim at the sole cost and expense
of the Indemnifying Party.
SECTION 8.4. Limitations on Indemnification. Notwithstanding any other
term of this Agreement, in no event shall the Company or the Purchaser be liable
under this Article VIII for an amount which exceeds the Purchase Price. All
indemnification obligations of the Company, other than Third Party Claims, shall
be satisfied by the payment of cash or, at the sole option of the Purchaser in
each instance, the issuance of additional shares of Company Common Stock, valued
at a price per share equal to the average of the closing prices per share (or,
if no closing price is available, the average of the last bid and ask prices per
share) of the Common Stock for the 10 trading days immediately preceding and
excluding the date of payment.
SECTION 8.5. Survival of Representations and Warranties. The parties
agree that the representations and warranties made by the parties in this
Agreement, or in any certificate or other instrument delivered pursuant to this
Agreement, shall survive for a period of two years from the Closing Date (which
date is hereinafter called the "Expiration Date"), except that:
(a) the representations and warranties contained in Section
3.17 hereof shall survive until six months after the termination of the
applicable statute of limitations relating thereto, which shall be deemed the
Expiration Date for purposes of this clause (a) and claims arising from a breach
of the representations and warranties contained in such Section 3.17;
(b) the representations and warranties contained in Section
3.25 hereof shall survive until six months after the termination of the
applicable statute of limitations relating thereto, which shall be deemed the
Expiration Date for purposes of this clause (b) and claims arising from a breach
of the representations and warranties contained in such Section 3.25; and
(c) the representations and warranties contained in Sections
3.3 and 3.7 hereof shall survive the Closing Date without time limitation.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices. All notices, demands, requests, Consents,
approvals or other communications (collectively, "Notices") required or
permitted to be given hereunder or which
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are given with respect to this Agreement shall be in writing and shall be
personally served, delivered by reputable air courier service with charges
prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given on the next Business Day following delivery of such notice to a reputable
air courier service.
To the Company:
Catalina Lighting, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, PA
▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Purchaser:
Sun Catalina Holdings, LLC
c/o Sun Capital Partners, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and C. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
One Oxford Centre, Thirty-Second Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 9.2. Governing Law. This Agreement shall be governed by,
interpreted under, and construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed within the
State of New York, without giving effect to any choice-of-law provisions thereof
that would compel the application of the substantive laws of any other
jurisdiction. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the United States District Court sitting in the Southern
District of New York, and of the Supreme Court of the State of New York sitting
in New York county and any appellate court from any thereof, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.
SECTION 9.3. Termination. This Agreement may be terminated:
(a) at any time prior to the Closing Date by mutual agreement
of the parties;
(b) in the event the Purchaser fails to perform its
obligations to purchase the Shares as provided herein, by the Company if the
Closing shall not have occurred on the Closing Date;
(c) by the Purchaser (i) if a default shall be made by the
Company in the observance or due and timely performance of any of the covenants,
agreements or conditions contained herein, and the curing of such default shall
not have been made on or before the Closing Date, or (ii) pursuant to Section
9.9 hereof;
(d) if the Closing shall not have occurred on or prior to July
18, 2001, by either the Company or the Purchaser, at any time after July 18,
2001.
Termination pursuant to the foregoing clauses (a), (b), (c) or (d)
notwithstanding, Article VIII, Section 9.10 and, in the event of a termination
pursuant to Section 9.3(c)(ii), Section 9.9(a) hereof shall remain in effect.
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SECTION 9.4. Entire Agreement. This Agreement, the Confidentiality
Agreement between the Company and an Affiliate of the Purchaser executed prior
to the date hereof, the other Transaction Documents (including all agreements
entered into pursuant hereto and all certificates and instruments delivered
pursuant hereto and thereto) constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements, representations, understandings, negotiations and discussions
between the parties, whether oral or written.
SECTION 9.5. Modifications and Amendments. No amendment, modification
or termination of this Agreement shall be binding upon any other party unless
executed in writing by the parties hereto intending to be bound thereby.
SECTION 9.6. Waivers and Extensions. Any party to this Agreement may
waive any right, breach or default which such party has the right to waive,
provided that such waiver will not be effective against the waiving party unless
it is in writing, is signed by such party, and specifically refers to this
Agreement. Waivers may be made in advance or after the right waived has arisen
or the breach or default waived has occurred. Any waiver may be conditional. No
waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof nor of any other
agreement or provision herein contained. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts.
SECTION 9.7. Titles and Headings. Titles and headings of sections of
this Agreement are for convenience only and shall not affect the construction of
any provision of this Agreement.
SECTION 9.8. Exhibits and Schedules. Each of the exhibits and schedules
referred to herein and attached hereto is an integral part of this Agreement and
is incorporated herein by reference.
SECTION 9.9. Break-up Fee.
(a) The Company will not directly or indirectly solicit or
encourage inquiries or proposals, engage in any negotiations concerning, or
provide any confidential information to any Person relating to, a capital
infusion via equity or junior debt financing of the Company (other than a
potential Sale of the Company, and other than as provided in Section 7.2(c)). In
the event the Company breaches this Section 9.9, and the Purchaser provides
written notice to the Company that it is terminating this Agreement as a result
of the breach of this Section 9.9, the Company will pay the Purchaser a break-up
fee of $500,000 within 10 Business Days of receipt of such notice; provided,
however, it shall not be a breach of this Section 9.9 for the Company to pursue
a proposal or offer for a merger, consolidation, business combination, or sale
of all or substantially all of the assets or outstanding shares of Capital Stock
of Catalina (any of the foregoing, a "Sale of the Company").
(b) If the Company agrees to a Sale of the Company prior to
the Closing, the Company will immediately pay the Purchaser $1,250,000 plus the
amount of the Purchaser's expenses, pursuant to Section 9.10.
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SECTION 9.10. Expenses. The Company shall pay or cause to be paid at
Closing all reasonable out-of-pocket fees and expenses incurred by the Purchaser
and its Affiliates, in connection with the transactions contemplated by this
Agreement, the Transaction Documents and all matters related thereto (including,
without limitation, reasonable fees and disbursements of counsel and
consultants). The Company, and not the Purchaser, shall pay any and all fees and
expenses of Sun Trust Equity Partners as a result of the execution and delivery
of this Agreement or any other Transaction Document and/or the consummation of
the transactions contemplated hereby and/or thereby. In addition, at the
Closing, the Company shall pay the Purchaser a non-refundable, non-accountable
Closing fee of $400,000.
SECTION 9.11. Press Releases and Public Announcements. All public
announcements or disclosures relating to the transactions contemplated hereby
shall be made only if mutually agreed upon by the Company and the Purchaser,
except to the extent that such disclosure is, in the opinion of counsel,
required by law or by stock exchange regulation; provided that any such required
disclosure shall only be made, to the extent consistent with law, after
consultation with the Purchaser.
SECTION 9.12. Assignment; No Third Party Beneficiaries. This Agreement
and the rights, duties and obligations of the Company hereunder may not be
assigned or delegated by the Company without the prior written consent of the
Purchaser. This Agreement and the rights, duties and obligations of the
Purchaser hereunder may not be assigned or delegated by the Purchaser, other
than to an Affiliate of the Purchaser, without the prior written consent of the
Company. Except as provided in the preceding sentences, any assignment or
delegation of rights, duties or obligations hereunder made without the prior
written consent of the other party hereto shall be void and of no effect. This
Agreement and the provisions hereof shall be binding upon and shall inure to the
benefit of each of the parties and their respective successors and permitted
assigns. This Agreement is not intended to confer any rights or benefits on any
Persons that are not party hereto other than as expressly set forth in Article
VIII and this Section 9.12.
SECTION 9.13. Severability. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
SECTION 9.14. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
SECTION 9.15. Further Assurances. Each party hereto, upon the request
of any other party hereto, shall do all such further acts and execute,
acknowledge and deliver all such further instruments and documents as may be
necessary or desirable to carry out the transactions contemplated by this
Agreement, including, in the case of the Company, such acts, instruments
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and documents as may be necessary or desirable to convey and transfer to the
Purchaser the Shares to be purchased by it hereunder.
SECTION 9.16. Remedies Cumulative. The remedies provided herein shall
be cumulative and shall not preclude the assertion by any party hereto of any
other rights or the seeking of any remedies against the other party hereto.
SECTION 9.17. Other Activities of Purchaser. Nothing contained in the
Transaction Documents or any other agreement of the Company shall be deemed to
prohibit the Purchaser or any of its Affiliates from forming or investing in
other entities engaged in activities similar to those of the Company.
SECTION 9.18. Waiver of Trial by Jury. Each Catalina Entity and the
Purchaser hereby irrevocably and unconditionally waives the right to a trial by
jury in any action, suit, counterclaim or other proceeding (whether based on
contract, tort or otherwise) arising out of, connected with or relating to this
Agreement, any other Transaction Document, the transactions contemplated hereby
or thereby, or the actions of Purchaser in the negotiation, administration,
performance or enforcement.
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IN WITNESS WHEREOF, the parties have caused this Amended and Restated
Stock Purchase Agreement to be executed and delivered by their duly authorized
representatives as of the date first written above.
COMPANY CATALINA LIGHTING, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President and Chief
Executive Officer
PURCHASER SUN CATALINA HOLDINGS, LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
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