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Exhibit 99.3
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AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
by and among
CATALINA LIGHTING, INC.,
a Florida corporation,
as Company,
and
SUN CATALINA HOLDINGS, LLC,
a Delaware limited liability company
as Purchaser
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$4,500,000 Principal Amount
Secured Junior Subordinated Note Due 2006
Warrants to Purchase shares of
Common Stock of Catalina Lighting, Inc.,
subject to adjustment as provided therein
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Dated as of July 23, 2001
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TABLE OF CONTENTS
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1. DEFINITIONS; ACCOUNTING TERMS...........................................................................1
1.1 Definitions....................................................................................1
1.2 Accounting Terms and Computations.............................................................13
1.3 Covenants.....................................................................................14
1.4 Headings; Construction and Interpretation.....................................................14
2. PURCHASE AND SALE OF THE SECURITIES....................................................................14
2.1 Authorization.................................................................................14
2.2 Purchase of the Securities; Issue Price.......................................................14
2.3 Closing.......................................................................................14
3. REPRESENTATIONS AND WARRANTIES OF ISSUER...............................................................15
3.1 Organization and Qualification................................................................15
3.2 Corporate or Other Power......................................................................15
3.3 Authorization; Binding Obligations............................................................15
3.4 Subsidiaries..................................................................................16
3.5 Conflict with Other Instruments; Existing Defaults; Ranking...................................16
3.6 Governmental and Other Third Party Consents...................................................17
3.7 Capitalization................................................................................17
3.8 Validity and Issuance of Preferred Shares.....................................................17
3.9 SEC Documents.................................................................................18
3.10 Financial Statements..........................................................................18
3.11 Existing Indebtedness; Existing Liens; Investments............................................19
3.12 Absence of Certain Changes....................................................................19
3.13 Contracts.....................................................................................21
3.14 Accounts Receivable...........................................................................22
3.15 Employees.....................................................................................22
3.16 Employee Benefit Plans........................................................................22
3.17 Tax Matters...................................................................................25
3.18 Litigation....................................................................................27
3.19 Transactions with Affiliates..................................................................28
3.20 Investment Company Act........................................................................28
3.21 Governmental Regulation.......................................................................28
3.22 Compliance with Laws..........................................................................29
3.23 Personal Property.............................................................................29
3.24 Real Property.................................................................................29
3.25 Environmental Matters.........................................................................30
3.26 Intellectual Property.........................................................................31
3.27 Insurance.....................................................................................31
3.28 Inventory.....................................................................................32
3.30 Customers and Suppliers.......................................................................32
3.31 Depository and Other Accounts.................................................................32
3.32 Books and Records.............................................................................32
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TABLE OF CONTENTS
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4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER........................................................32
4.1 Authorization; Enforceability; No Violations.................................................32
4.2 Consents.....................................................................................33
4.3 Private Placement............................................................................33
4.4 Legends......................................................................................34
4.5. Financing....................................................................................34
5. COVENANTS OF ISSUER....................................................................................34
5.1 Business in the Ordinary Course..............................................................34
5.2 Existing Condition...........................................................................34
5.3 Maintenance of Properties and Assets.........................................................34
5.4 Employees and Business Relations.............................................................34
5.5 Maintenance of Insurance.....................................................................34
5.6 Compliance with Laws.........................................................................35
5.7 Conduct of Business..........................................................................35
5.8 Access to Books and Records..................................................................35
5.9 Agreement to Take Necessary and Reasonable Actions...........................................35
5.10 Compliance with Conditions...................................................................35
5.11 Consents and Approvals.......................................................................35
6. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.........................................................36
6.1 Representations and Warranties; No Default...................................................36
6.3 Stock Purchase Agreement.....................................................................36
6.3 Purchase Permitted By Applicable Laws........................................................36
6.4 No Material Adverse Change...................................................................36
6.5 No Injunction, Order or Suit.................................................................37
6.6 Liens........................................................................................37
6.7 Certain Principal Documents..................................................................37
6.8 Actions and Documents Relating to the Collateral.............................................37
6.9 Subordination and Intercreditor Relationships................................................38
6.10 Governmental Approvals.......................................................................38
6.11 Opinion of Counsel...........................................................................38
6.12 Delivery of Corporate Documents..............................................................38
6.15 Compliance Certificate.......................................................................39
6.16 Insurance....................................................................................39
6.17 Third-Party Consents.........................................................................39
7. CONDITIONS TO THE OBLIGATIONS OF THE CATALINA ENTITIES.................................................39
7.1 Representations and Warranties...............................................................40
7.2 Purchase Permitted By Applicable Laws........................................................40
7.3 No Injunction or Order.......................................................................40
7.4 Payment for Securities.......................................................................40
7.5 Senior Indebtedness..........................................................................40
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TABLE OF CONTENTS
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8. TERMINATION............................................................................................40
8.1 Termination..................................................................................40
8.2 Waiver.......................................................................................41
9. MISCELLANEOUS..........................................................................................41
9.1 Press Releases and Public Announcements......................................................41
9.2 Consent to Amendments........................................................................41
9.3 Entire Agreement.............................................................................41
9.4 Severability.................................................................................41
9.5 Successors and Assigns; Assignments..........................................................42
9.6 Notices......................................................................................42
9.7 Counterparts.................................................................................43
9.8 Governing Law................................................................................43
9.9 Limitation of Liability......................................................................43
9.10 Waiver of Trial by Jury......................................................................44
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EXHIBITS
Exhibit A - Intellectual Property Security Agreement
Exhibit B - Pledge Agreement
Exhibit C - Registration Rights Agreement
Exhibit D - Security Agreement
Exhibit E - Secured Junior Subordinated Note Due 2006
Exhibit F - Subsidiary Guaranty
Exhibit G - Warrant
Exhibit H - Senior Subordination Agreement
Exhibit I - 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
NOTE PURCHASE AGREEMENT
THIS AMENDED AND RESTATED NOTE PURCHASE AGREEMENT is made as of July
23, 2001, by and between CATALINA LIGHTING, INC., a Florida corporation
("Company"), and SUN CATALINA HOLDINGS, LLC, a Delaware limited liability
company ("Purchaser"). This Agreement amends, restates, and supersedes in its
entirety, the Note Purchase Agreement by and between the Company and the
Purchaser dated as of April 5, 2001, as amended by First Amendment to Note
Purchase Agreement dated May 3, 2001, Second Amendment to Note Purchase
Agreement dated May 15, 2001, Third Amendment to Note Purchase Agreement dated
May 31, ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to Note Purchase Agreement dated June 8, 2001 and
Fifth Amendment to Note Purchase Agreement dated June 29, 2001.
R E C I T A L S
In connection with the financing of the business operations of the
Catalina Entities, the Company has authorized the issuance and sale to the
Purchaser of a Secured Junior Subordinated Note as provided herein in the
principal amount of $4,500,000, and the Purchaser is willing to purchase the
Note on the terms and subject to the conditions set forth herein.
To induce the Purchaser to purchase the Note, the Company is willing to
issue and sell to the Purchaser warrants to purchase shares of Company Common
Stock.
To further induce the Purchaser to purchase the Note, and in
consideration therefor, the Catalina Entities that are party to the Guaranty
Agreement (other than the Company) have agreed, at the Company's request to
guaranty absolutely and unconditionally the Guaranteed Obligations. Each such
Catalina Entity has acknowledged that it derived and expects to derive, directly
or indirectly, a substantial benefit from the purchase by the Purchaser of the
Note, both in its separate capacity and as a member of the integrated
enterprise.
To further induce the Purchaser to purchase the Note, certain of the
Catalina Entities are willing to enter into other Investment Documents.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS; ACCOUNTING TERMS.
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to the
singular and the plural forms thereof):
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"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.
"Agreement" shall mean this Amended and Restated Note 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.
"Assignment" shall mean an assignment or other transfer of any Note
pursuant to the terms of such Note.
"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" shall mean any day that is not a Saturday, a Sunday or a
day on which banking institutions in the City of New York, New York 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
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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" shall 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
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
(vi) 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 2.3.
"Closing Date" shall have the meaning specified in Section 2.3.
"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.
"Collateral" shall mean the "Collateral" under the Collateral
Documents.
"Collateral Documents" shall mean, collectively, the Security
Agreement, the Pledge Agreement, the Intellectual Property Security Agreement,
the landlord waivers and Consents,
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notices of security interest in deposit accounts, UCC financing statements,
fixture filings, patent, trademark and copyright filings, assignments,
acknowledgments, and all other agreements, instruments and documents delivered
from time to time in connection therewith or otherwise to secure the Obligations
or any other obligations of the Catalina Entities or any other Person under this
Agreement, the Note or any other Investment Document, in each case as amended,
restated, supplemental or otherwise modified from time to time.
"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.
"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 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
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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;
(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 and 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 Change.
"Default" shall mean any Event of Default or any event or condition
which, with the giving of notice or the lapse of time or both, becomes an Event
of Default.
"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
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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).
"Event of Default" shall have the meaning specified in the Note.
"Event of Loss" shall mean, with respect to an asset of any Person, any
of the following: (i) any loss, destruction or damage, of such asset; (ii) any
pending or threatened institution of any proceedings for the condemnation or
seizure of such asset or of any right of eminent domain; or (iii) any actual
condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, of such asset, or confiscation of such asset or requisition of the
use of such asset.
"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.
"Financial Statements" shall have the meaning specified in Section
3.10(a).
"Foreign Plans" shall have the meaning specified in Section 3.16(p).
"Fully Diluted Basis" shall mean with respect to the Company, all
Company Common Stock: (i) issued and outstanding as of the Closing Date; (ii)
issuable upon exercise of the Warrant (as if exercised on the Closing Date);
(iii) issued pursuant to the Stock Purchase Agreement; (iv) issuable upon
exercise of any warrant issued pursuant to the Senior Subordinated Documents (as
if exercised on the Closing Date); (v) issuable upon exercise of any warrant
issued pursuant to the Senior Credit Documents (as if exercised on the Closing
Date); and (vi) issued or issuable pursuant to any and all Equity Rights granted
in satisfaction of the
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obligations of the Company under the Management Agreements (and with respect to
such Equity Rights, if any, as if exercised or converted on the Closing Date).
"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.
"Guarantied Obligations" shall have the meaning specified in the
Subsidiary Guaranty
"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.
"Guarantors" shall mean, collectively, each Catalina Entity other than
the Company that is a party to the Subsidiary Guaranty.
"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.
"Hong Kong" shall mean the Hong Kong Special Administrative Region of
the People's Republic of China.
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"Hong Kong Group" shall mean (i) prior to the Hong Kong Reorganization,
the Consolidated Companies that are organized under the laws of Hong Kong or the
People's Republic of China and are Subsidiaries of either Catalina Industrial or
Trade World, and (ii) after the Hong Kong Reorganization, the Consolidated
Companies that are organized under the laws of Hong Kong or the People's
Republic of China and are Subsidiaries of Go-Gro Industries.
"Hong Kong Reorganization" shall mean the proposed reorganization of
Catalina Industrial, Trade World Industrial, Catalina Asia and Go-Gro Industries
according to the Plan of Reorganization adopted on May 8, 2000, pursuant to
Section 368(a)(1)(D) of the Internal Revenue code of 1986, as amended, which
provides for the purchase/transfer of the assets of Catalina Industrial, Trade
World Industrial and Catalina Asia in exchange for cash/stock of Go-Gro
Industries, after which exchange, Catalina Industrial and Trade World Industrial
will distribute all Go-Gro Industries stock received to Domestic Borrower and
then dissolve. Domestic Borrower will then own 100% of Go-Gro Industries at the
completion of the Plan.
"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.
"Intellectual Property Security Agreement" shall mean an Intellectual
Property Security Agreement made by the Catalina Entities in favor of the
Purchaser substantially in the form of Exhibit A.
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"Intercompany Subordination Agreement" shall mean that certain
Subordination Agreement, dated as of the date hereof, by and among the Catalina
Entities and the Purchaser, as amended, restated, supplemented or otherwise
modified from time to time.
"Investment Documents" shall mean, collectively, this Agreement, the
Note, the Warrant, the Registration Rights Agreement, the Guarantees, the
Collateral Documents, the Senior Subordination Agreement, the Subordination
Agreement and the Intercompany Subordination Agreement and all other agreements
and instruments referred to herein or therein to be entered into by the parties
to this Agreement in connection with the consummation of the transactions
contemplated hereby and thereby.
"Investments" shall 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 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 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.
"Management Agreements" mean the agreements between the Company and
each of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
"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 Investment Document (other than the Warrant
and the Registration Rights Agreement) to which it is a party or (iii) adversely
affects the legality, binding effect, validity or enforceability of this
Agreement, any other Investment Document
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(other than the Warrant and the Registration Rights Agreement) or the Senior
Credit Documents or the perfection or priority of any material Lien granted to
the Purchaser under any Collateral Document.
"Note" shall have the meaning specified in Section 2.1, and shall also
include, where applicable, any additional note or notes issued by the Company in
connection with any Assignments or pursuant to the terms of the Note.
"Obligations" shall mean any and all present and future loans,
advances, Indebtedness, claims, guarantees, liabilities or obligations of the
Catalina Entities, or of any other Person for or on behalf of the Catalina
Entities, owing to the Purchaser, any Affiliate of the Purchaser or any
Indemnified Party, of whatever nature, character or description, arising under
or in connection with this Agreement, the Note, the Subsidiary Guarantee, the
Collateral Documents, any other Investment Document (other than the Warrant and
the Registration Rights Agreement) or otherwise, any and all agreements,
instruments or other documents heretofore or hereafter executed or delivered in
connection with any of the foregoing, in each case whether due or not due,
direct or indirect, joint and/or several, absolute or contingent, voluntary or
involuntary, liquidated or unliquidated, determined or undetermined, now or
hereafter existing, amended, renewed, replaced, extended, exchanged, restated,
refinanced, refunded or restructured, whether or not from time to time decreased
or extinguished and later increased, created or incurred, whether for principal,
interest, premiums, fees, costs, expenses (including, without limitation,
attorneys' fees and expenses) or other amounts incurred for administration,
collection, enforcement or otherwise, whether or not arising after the
commencement of any proceeding under the Bankruptcy Laws (including, without
limitation, post-petition interest) and whether or not allowed or allowable as a
claim in any such proceeding, and whether or not recovery of any such obligation
or liability may be barred by any statute of limitations or such Indebtedness,
claim, liability or obligation may otherwise be unenforceable.
"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 Investment 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;
(ii) Liens in favor of the Senior Lenders;
(iii) Liens arising under the Senior Subordinated Documents to the
extent that the Purchaser has a right to have a Lien on the same Collateral;
(iv) 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;
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(v) Customary Permitted Liens; and
(vi) Liens to which the Purchaser has consented in writing and which
are expressly subordinate to the Indebtedness to the Purchaser.
"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.
"Pledge Agreement" shall mean the Pledge Agreement by and among the
Company, as "Pledgor," on the one hand, and the Purchaser, on the other hand
substantially in the form of Exhibit B.
"Purchase Price" shall have the meaning specified in Section 2.2.
"Purchaser" shall have the meaning specified in the preamble.
"Real Property" shall mean any and all real property now or hereafter
owned, leased or operated by any Catalina Entity.
"Registration Rights Agreement" shall mean a Registration Rights
Agreement between the Company and the Purchaser substantially in the form of
Exhibit C.
"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.
"SEC Documents" shall have the meaning specified in Section 3.9.
"Secured Junior Subordinated Note Due 2006" shall mean a Secured Junior
Subordinated Note Due 2006 substantially in the form of Exhibit E.
"Securities" shall have the meaning specified in Section 2.1.
"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.
"Security Agreement" shall mean a Security Agreement made by the
Catalina Entities in favor of the Purchaser substantially in the form of Exhibit
D.
"Senior Agent" shall mean SunTrust Bank, as administrative agent under
the Senior Credit Agreement.
"Senior Credit Agreement" shall mean the Third Amended and Restated
Revolving Credit and Term Loan Agreement dated as of July 23, 2001, by and among
the Company,
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Catalina International PLC, and Ring Limited, as borrowers, the guarantors named
therein and the Senior Lenders, as amended, supplemented, restated or otherwise
modified from time to time.
"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.
"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 Subordination Agreement" shall mean that certain Subordination
Agreement, dated as of the date hereof, by and among the Senior Lenders,
SunTrust, the Purchaser and the Company, as amended, restated, supplemented or
otherwise modified from time to time.
"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, the Subordination Agreement, and with all notes, Guarantees, security
agreements, pledge agreements, and all other documents contemplated thereby and
executed and delivered in connection therewith.
"Shareholders Agreement" shall mean that certain Shareholders
Agreement, dated as of the date hereof, by and between the Purchaser and
SunTrust, as amended, restated, supplemented or otherwise modified from time to
time.
"Significant Customers" shall have the meaning specified in Section
3.29.
"Significant Suppliers" shall have the meaning specified in Section
3.29.
"Stock Purchase Agreement" shall mean the Amended and Restated Stock
Purchase Agreement of even date herewith entered into by and between the Company
and the Purchaser.
"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
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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.
"Subsidiary Guaranty" shall mean a Subsidiary Guaranty made by certain
of the Catalina Entities in favor of the Purchaser substantially in the form of
Exhibit F.
"SunTrust" shall mean SunTrust Banks, Inc., a Georgia corporation.
"SunTrust Warrant Documents" shall mean the Warrant issued by the
Company to SunTrust dated as of the date hereof and the Registration Rights
Agreement between the Company, the Purchaser, SunTrust and the Senior Lenders,
dated as of the date hereof, and all other documents contemplated thereby and
executed and delivered in connection therewith.
"Tax" or "Taxes" shall 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, 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" shall mean all returns (including information returns),
declarations, reports, statements and other documents required to be filed with
respect to a Tax.
"UCC" shall mean the Uniform Commercial Code, as adopted and in force
in the State of New York as from time to time in effect.
"Warrant" shall have the meaning specified in Section 2.1.
"Warrant Shares" shall have the meaning specified in the Warrant.
"Welfare Plan" shall have the meaning specified in Section 3.16.
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 Investment 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
Investment 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
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other financial information of the Catalina Entities hereunder shall be
determined on a consolidated basis in accordance with GAAP.
1.3 Covenants. To the extent that this Agreement contains any covenants
or agreements of any Catalina Entity not a signatory hereto, the Company shall
be responsible for causing such Catalina Entity to comply with such covenants
and agreements. All covenants and agreements under this Agreement shall each be
given independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by another
covenant, by an exception thereto or be otherwise within the limitations
thereof, shall not avoid the occurrence of a Default or an Event of Default if
such action is taken or conditions exists.
1.4 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.
2. PURCHASE AND SALE OF THE SECURITIES.
2.1 Authorization. The Company has authorized the issuance and sale to
the Purchaser of the Secured Junior Subordinated Note Due 2006 in the aggregate
principal amount of $4,500,000, substantially in the form of Exhibit E (as the
same may be amended, restated, supplemented, modified, renewed, refinanced or
restructured from time to time, the "Note"). In addition, the Company has
authorized the issuance and sale to Purchaser of a Warrant to purchase the
number of shares of Company Common Stock set forth therein (the "Warrant"),
substantially in the form of Exhibit G. The Note and the Warrant are
collectively referred to herein as the "Securities." The repayment of the
Indebtedness evidenced by the Note and all other Obligations shall be secured by
the Collateral described in the Collateral Documents.
2.2 Purchase of the Securities; Issue Price. Subject to the terms and
conditions contained herein and in the other Investment Documents, and in
reliance upon the representations, warranties, covenants and agreements of the
Catalina Entities contained herein and therein, at the Closing: (i) the Company
shall issue and sell to the Purchaser the Note and the Warrant; and (ii) the
Purchaser shall purchase the Securities from the Company. The aggregate purchase
price to be paid by the Purchaser for the Securities (the "Purchase Price")
shall be $4,500,000, payable as provided in Section 2.3.
2.3 Closing. The closing of the issuance and sale of the Securities
under this Agreement (the "Closing") shall take place at the offices of King &
▇▇▇▇▇▇▇▇, ▇▇▇▇ Avenue of the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m.,
local time, on July 20, 2001 or as soon as practicable thereafter immediately
following the satisfaction or waiver of the conditions precedent set forth in
Section 6 and Section 7 (such date being referred to as the "Closing Date"). At
the Closing, the Company shall deliver to the Purchaser, among other things, the
Securities,
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duly executed by the Company, against delivery by the Purchaser of the Purchase
Price by wire transfer in immediately available funds to such bank as the
Company may request in writing for credit to an account as designated by the
Company in such request.
3. 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 Securities 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 representations and warranties) or as set forth in those Company SEC
Documents filed with the SEC on or after September 30, 2000:
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.
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 Investment 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 Securities to be issued and sold by it
to the Purchaser hereunder.
3.3 Authorization; Binding Obligations.
(a) The execution, delivery and performance by the Company of
this Agreement and each of the other Investment 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 Securities
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 Investment 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
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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 Investment 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.
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.
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 Investment Document to which any
Catalina Entity is a party, the issuance, sale and delivery by the Company of
the Securities 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 Investment
Documents) and the Senior Subordinated
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Documents, there are no contractual or other restrictions or limitations which
prohibit or restrict (i) the issuance and sale of the Securities 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.
There are no contractual or other restrictions or limitations which prohibit or
restrict the issuance and sale of the Notes and Warrants as contemplated
hereunder.
(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) of the Stock Purchase Agreement. No
Indebtedness of any Catalina Entity ranks pari passu with any Indebtedness
evidenced by the Note.
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
Investment Document, including, without limitation, the issuance, sale and
delivery of the Securities 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 Investment Document is in full force and effect.
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 registration rights 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.
3.8 Validity and Issuance of Warrant Shares. As of the date hereof,
830,847 of the Warrant Shares have been duly authorized and reserved for
issuance upon the exercise of the
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Warrant and each, when issued, delivered and paid for pursuant to the terms of
the Warrant, will be duly and validly issued, fully paid and non-assessable.
Following the approval by the shareholders of the Company of the increase in the
Company's authorized capital as provided in Section 5.13 of the Stock Purchase
Agreement, an aggregate of 3,904,838 Warrant Shares will be duly authorized and
reserved for issuance upon the exercise of the Warrant and each, when issued,
delivered and paid for pursuant to the terms of the Warrant, will be duly and
validly issued, fully paid and non-assessable.
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.
(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).
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,
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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.
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 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.
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 Investment 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 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;
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(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 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) of the Stock Purchase Agreement) 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,
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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.
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;
(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.
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(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.
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.
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.
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
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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 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;
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(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);
(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
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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
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.
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.
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(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.
(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.
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(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.
(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.
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 Investment 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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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) of the Stock
Purchase Agreement) 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.
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.
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 Public Utility Holding
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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.
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.
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.
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 Investment Documents or
the consummation of any of the transactions contemplated hereby or thereby.
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.
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.
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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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.
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.
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.
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.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company as follows:
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 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
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Purchaser has the power to execute, deliver and perform the terms and provisions
of the Investment 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 Investment 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 Investment 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 Investment
Documents to which it is a party. This Agreement constitutes, and the other
Investment 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).
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 Investment 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.
4.3 Private Placement.
(a) The Purchaser understands that (i) the offering and sale
of the Securities 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 Securities.
(b) The Securities 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 Securities and the Purchaser is capable of
bearing the economic risks of such investment, including a complete loss of its
investment in the Securities.
(d) The Purchaser is an "accredited investor" as such term is
defined in Regulation D under the Securities Act.
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4.4 Legends. The Purchaser understands that each instrument evidencing
the Securities 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 COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
4.5 Financing. The Purchaser has or will have available to it at
Closing 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.
5. 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 8.1, except as otherwise expressly contemplated under this Agreement or
in the other Investment Documents, the Company hereby covenants as follows:
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.
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.
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.
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.
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.
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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 could reasonably have
a Material Adverse Effect.
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.
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.
5.9 Agreement to Take Necessary and Reasonable Actions. The Company
shall execute and deliver the Investment 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.
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.
5.11 Consents and Approvals. The Company (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 any Catalina Entity in
connection with its execution, delivery and performance of this Agreement, any
other Investment Document or any of the transactions contemplated hereby
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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.
6. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser to consummate the transactions contemplated hereby, including, without
limitation, to purchase the Securities as provided herein, is subject to the
satisfaction, prior to or at the Closing, of the conditions set forth in this
Section 6; provided, however, that any or all of such conditions may be waived,
in whole or in part, by the Purchaser in its sole and absolute discretion:
6.1. Representations and Warranties; No Default. Each of the
representations and warranties made by the Company in this Agreement shall be
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; the Company 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; and no Default or Event of
Default shall exist or result from the issuance and sale of the Securities or
the other transactions contemplated by this Agreement or the Senior Credit
Agreement. The Company shall have delivered to the Purchaser an officers'
certificate, signed by the President and Chief Executive Officer and the Chief
Financial Officer of the Company, dated as of the Closing Date, to such effect
and to the effect that each of the conditions set forth in this Section 6 has
been satisfied and fulfilled.
6.2 Stock Purchase Agreement. The Company shall have complied in full
with all of its obligations under the Stock Purchase Agreement to the extent set
forth therein.
6.3 Purchase Permitted By Applicable Laws. The consummation of the
transactions contemplated by this Agreement shall not be prohibited by or
violate any Applicable Laws and shall not subject any party to any Tax, penalty
or liability, under or pursuant to any Applicable Laws, and shall not be
enjoined (temporarily or permanently) under, or prohibited by or contrary to,
any injunction, order, decree or ruling. Without limiting the generality of the
foregoing, the consummation of the transactions contemplated hereby shall
otherwise comply with all applicable requirements of federal securities and
state securities or "blue sky" laws.
6.4 No Material Adverse Change. Since September 30, 2000, no change,
occurrence or development 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 could reasonably be expected to
have a Material Adverse Effect.
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6.5 No Injunction, Order or Suit. There shall not have been issued any
injunction, order, decree or ruling that prohibits or limits any of the
transactions contemplated by this Agreement or the other Investment Documents,
and there shall not be any action, suit, proceeding or investigation pending or,
to the Knowledge of the Company, threatened that (a) draws into question the
validity, legality or enforceability of this Agreement or the other Investment
Documents or the consummation of the transactions contemplated hereby or thereby
or (b) might result, in the judgment of the Purchaser, (i) in the imposition of
a penalty if the Securities were delivered as contemplated hereunder or (ii) in
any Material Adverse Change.
6.6 Liens. Purchaser shall receive as of the date of Closing, Liens as
provided in the Security Agreement and Pledge Agreement.
6.7 Certain Principal Documents. The Company shall have delivered to
the Purchaser the following closing documents, each dated as of the Closing
Date:
(a) The Note, duly executed by the Company;
(b) The Warrant, duly executed by Company;
(c) The Registration Rights Agreement, duly executed by the
Company;
(d) The Shareholders Agreement, duly executed by SunTrust; and
(e) The Subsidiary Guaranty, duly executed by the Company and
each Subsidiary that is a party thereto.
6.8. Actions and Documents Relating to the Collateral. Purchaser shall
have received the following in form and substance satisfactory to them:
(a) from the Company or at its direction, the Collateral
Documents and all documents and other instruments required to be delivered by
any Catalina Entity, or required to be caused to be delivered by any Catalina
Entity, under the Collateral Documents;
(b) the Intellectual Property Security Agreement, duly
executed by the Catalina Entities, including the exhibits and schedules thereto,
and together with the Assignment for Security (Patents), Assignment for Security
(Trademarks) and the Special Power of Attorney, in each case duly executed by
the Catalina Entities that are parties thereto;
(c) UCC-1 Financing Statements, to the extent required to
record the obligations provided for under the Collateral Documents, naming each
Catalina Entity as debtor, as applicable, duly executed by the applicable
Catalina Entity, to be filed in each state or other jurisdiction as may be
requested by the Purchaser;
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(d) evidence that the Liens on the Collateral are subject only
to Permitted Liens, such evidence including, without limitation, the results of
any searches conducted by the Company of UCC filing records;
(e) landlord waivers or Consents, as necessary;
(f) a UCC Perfection Certificate, in form and substance
satisfactory to the Purchaser, duly executed by the Company; and
(g) such other documents relating to the Collateral as the
Purchaser may request.
6.9 Subordination and Intercreditor Relationships. The Company shall
have delivered to the Purchaser the Senior Subordination Agreement, the
Subordination Agreement and the Intercompany Subordination Agreement, each in
form and substance satisfactory to Purchaser.
6.10 Governmental Approvals. The Company and the Catalina Entities
shall have obtained all Governmental Approvals necessary or required to complete
the transactions contemplated hereby, and that such Governmental Approvals shall
continue in full force and effect.
6.11 Senior Subordinated Documents. The Company and SunTrust shall have
executed and delivered the Senior Subordinated Documents and the Company shall
have received $4,300,000 in cash from SunTrust for the purchase of the
subordinated notes issued thereunder and the related warrants.
6.12 SunTrust Warrant Documents. The Company and SunTrust shall have
executed and delivered the SunTrust Warrant Documents.
6.13 Execution of Senior Credit Documents. Each of the Company and the
Senior Lenders shall have entered into amendments to the Senior Credit Documents
and the Senior Lenders shall have consented to the transactions contemplated
hereby.
6.14 Opinion of Counsel. The Purchaser shall have received the written
opinions of, counsel to the Catalina Entities, dated as of the Closing Date and
addressed to the Purchaser, substantially in the form of Exhibit I.
6.15 Delivery of Corporate Documents. The Catalina Entities shall have
delivered to the Purchaser the following:
(a) a copy of the Company's articles or certificate of
incorporation or constitutive documents, as amended through the Closing Date,
certified as of a recent practicable date by the Secretary of State or other
appropriate official of the state or jurisdiction of its incorporation or
organization;
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(b) a certificate as to the good standing (and a certificate
as to the tax good standing, if available) from the Secretary of State or other
official from the state of each Catalina Entity's incorporation (and the taxing
authority), in each case dated as of a recent practicable date;
(c) a certificate as to the good standing (and a certificate
as to the tax good standing, if available) from the Secretary of State or other
official from each state in which each Catalina Entity is qualified to do
business, in each case dated as of the most recent practicable date;
(d) a certificate of the Company's Secretary, dated as of the
Closing Date and in form and substance satisfactory to the Purchaser, certifying
as to (i) its Bylaws; (ii) the resolutions adopted by such Person's Board of
Directors authorizing the execution, delivery and performance of this Agreement,
the Note, the Warrant, the Guarantees, the Collateral Documents and the other
Investment Documents to which it is a party (including, without limitation, the
reservation for issuance of Company Common Stock upon exercise of the Warrant);
and (iii) the incumbency of such Person's officers executing this Agreement, the
Note and the other Investment Documents;
(e) evidence that the Company has redeemed the shareholder
rights plan; and
(f) such other documents as the Purchaser may reasonably
request.
6.16 Compliance Certificate. The Purchaser shall have received a
compliance certificate signed by the President and Chief Executive Officer and
the Chief Financial Officer of the Company, certifying that each of them has
reviewed this Agreement and the other Investment Documents and that, after
giving effect to the incurrence of Indebtedness hereunder and the consummation
of the other transactions contemplated hereby and thereby, the Company, on a
consolidated basis, will be in compliance with the Financial Covenants of the
Note.
6.17 Insurance. The Company shall have delivered to the Purchaser
certificates of liability insurance with respect to the insurance policies
required to be maintained by the Catalina Entities as of the Closing Date
pursuant to Section 7(i) of the Note, together with additional insured and
lender's loss payable endorsements in favor of the Purchaser, all in form and
substance satisfactory to the Purchaser.
6.18. Third-Party Consents. 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.
7. CONDITIONS TO THE OBLIGATIONS OF THE CATALINA ENTITIES. The obligations of
the Catalina Entities to consummate the transactions contemplated hereby are
subject to the satisfaction, prior to the Closing, of the conditions set forth
in this Section 7;
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provided, however, that any or all of such conditions may be waived, in whole or
in part, by the Company (on behalf of itself and the other Catalina Entities) in
its sole and absolute discretion:
7.1 Representations and Warranties. The representations and warranties
of the Purchaser contained in this Agreement 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) at and as of the Closing Date after
giving effect to the transactions contemplated by this Agreement, as if made on
and as of such date, and the Purchaser shall have performed or satisfied all of
its covenants and agreements under the Investment Documents to be performed or
satisfied on or prior to the Closing Date.
7.2 Purchase Permitted By Applicable Laws. The consummation of the
transactions contemplated by this Agreement shall not be prohibited by or
violate any Applicable Laws and shall not subject any party to any Tax, penalty
or liability, under or pursuant to any Applicable Laws, and shall not be
enjoined (temporarily or permanently) under, or prohibited by or contrary to,
any injunction, order, decree or ruling. Without limiting the generality of the
foregoing, the consummation of the transactions contemplated hereby shall
otherwise comply with all applicable requirements of federal and state
securities laws.
7.3 No Injunction or Order. There shall not have been issued any
injunction, order, decree or ruling that prohibits or limits any of the
transactions contemplated by this Agreement or the other Investment Documents.
7.4 Payment for Securities. The Purchaser shall have delivered to the
Company the Purchase Price required to be paid by Section 2.2.
7.5 Senior Indebtedness. 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.
8. TERMINATION.
8.1 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 Securities as provided herein, by the Company if the
Closing shall not have occurred on the Closing Date;
(c) by the Purchaser 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
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(d) if the Closing shall not have occurred on or prior to July
20, 2001, by either the Company or the Purchaser, at any time after July 20,
2001.
8.2 Waiver. The Purchaser may (a) extend the time for the performance
of any of the obligations or other acts of the Catalina Entities, (b) waive any
inaccuracies in the representations or warranties of the Catalina Entities or
(c) waive compliance with any of the conditions, covenants or agreements of the
Catalina Entities contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument signed by the Purchaser. Any waiver of the
breach of any term or condition shall not be construed as a waiver of any other
breach or as a subsequent waiver of the same term or condition, or as a waiver
of any other term or condition of this Agreement, the Note or the Warrant. The
failure by the Purchaser to assert, or any delay by Purchaser in asserting, any
of its rights under this Agreement, the Note or the Warrant shall not constitute
a waiver of any such rights and no single or partial exercise of any such right
shall preclude any other or further exercise thereof or the exercise of any
other right.
9. MISCELLANEOUS.
9.1 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.
9.2 Consent to Amendments. No amendment, supplement or other
modification to this Agreement or any other Investment Document shall be
effective unless in writing and signed by the Purchaser and the Company, and the
Catalina Entities may not take any action herein prohibited, or omit to perform
any act herein required to be performed by them, unless the Company and the
Guarantors shall have obtained the prior written consent of the Purchaser to
such action or omission. No course of dealing between the Catalina Entities, on
the one hand, and the Purchaser (or any successor or assignee thereof), on the
other hand, nor any delay in exercising any rights hereunder or under the Note
or any other Investment Document shall operate as a waiver of any rights of the
Purchaser (or any other holder of the Notes).
9.3 Entire Agreement. This Agreement, together with the Exhibits, and
the Disclosure Schedule which are all incorporated herein by this reference and
are an integral part of this Agreement, the Note, the Warrant, the Collateral
Documents and the other Investment Documents, and the Confidentiality Agreement
between the Company and an Affiliate of the Purchaser executed prior to the date
hereof, constitute the full and entire agreement and understanding between the
Purchaser, on the one hand, and the Catalina Entities, on the other hand,
relating to the subject matter hereof and thereof, and supersede all prior oral
and written, and all contemporaneous oral, agreements and understandings
relating to the subject matter hereof.
9.4 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such
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prohibition or unenforceability without invalidating the remaining provisions
hereof or affecting the validity or enforceability of such provisions in any
other jurisdiction.
9.5 Successors and Assigns; Assignments. This Agreement shall inure to
the benefit of, and be binding upon, the parties and their respective successors
and permitted assigns. 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 this Section 9.5.
9.6 Notices. All notices, demands, requests, Consents, approvals or
other communications (collectively, "Notices") required or permitted to be given
hereunder or which 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 Company: Catalina Lighting, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esquire or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, PA
▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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To the Purchaser:
Sun Catalina Holdings, LLC
c/o Sun Capital Partners, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and C. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
One Oxford Centre, Thirty-Second Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
9.7 Counterparts. This Agreement may be executed in two or more
counterparts and by facsimile, each of which shall be deemed an original, but
all of which together shall constitute one instrument.
9.8 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.
9.9 Limitation of Liability. No claim shall be made by any Catalina
Entity or any of its or their Affiliates against the Purchaser, or any
Affiliates, partners, directors, officers,
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employees, agents, representatives, attorneys, accountants or advisors of the
Purchaser, for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or under any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement or any other Investment Document, or any act, omission or event
occurring in connection therewith. Each Catalina Entity hereby waives, releases
and agrees not to ▇▇▇ upon any claim for such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
9.10 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 Investment Document, any Collateral 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
Note 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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