Exhibit 10.47
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this "Agreement"), dated as of July 27, 2001,
is by and between United Acquisition, Inc., an Indiana corporation (the
"Company"), and The Huntington Capital Investment Company, an Ohio corporation
("HCIC"), as Purchaser and initial Holders Representative. Capitalized terms
used in this Agreement not otherwise defined herein are defined in Section 11.1.
To induce Purchaser to purchase the Senior Subordinated Note from the
Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows,
intending to be legally bound.
1. DESCRIPTION OF SENIOR SUBORDINATED NOTE AND COMMITMENT
1.1 Description of Senior Subordinated Note. The Company shall authorize
the issuance and sale of its Senior Subordinated Note, dated the Closing Date,
in the aggregate original principal amount of $3,500,000, and bearing interest
at the fixed rate of 14% per annum; provided, however, that upon the occurrence
of any Event of Default, and during the continuation thereof, the unpaid
principal amount of the Senior Subordinated Note will bear interest at the rate
of 19% per annum. The Senior Subordinated Note will be substantially in the form
attached hereto as Exhibit A. Interest on the Senior Subordinated Note will be
computed on the basis of the actual number of days elapsed over a 360-day year.
1.2 Commitment; Funding. Subject to the terms and conditions hereof and on
the basis of the representations and warranties hereinafter set forth, the
Company shall issue and sell to Purchaser, and Purchaser shall purchase from the
Company, the Senior Subordinated Note in the principal amount of $3,500,000 at a
price of 100% of such principal amount. Delivery of the Senior Subordinated Note
will be made on the Closing Date in the offices of Kroger, Gardis & ▇▇▇▇▇, LLP,I
I I ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ against payment of
the purchase price thereof in immediately available funds, disbursed to such
Person(s) as the Company shall designate in writing. The Senior Subordinated
Note will be delivered to Purchaser in fully registered form, and will be issued
in its name or the name of its nominee(s).
1.3 Underwriting Fee. The Company shall pay to Purchaser an underwriting
fee of $105,000 (three percent (3.0%) of the face amount of the Senior
Subordinated Note), less any portion of such origination fee which may have
previously been paid by or on behalf of the Company to the Purchaser, in
immediately available funds, on the Closing Date, which fee is deemed fully
earned and nonrefundable on the Closing Date. Purchaser may, at its option,
deduct the amount of the underwriting fee from the purchase price of the Senior
Subordinated Note.
1.4 Use of Proceeds. The Company shall use the proceeds from the Senior
Subordinated Note solely to provide a portion of the financing for the purchase
of substantially all of the assets of United Expressline, Inc. and certain
parcels of real estate of J.J.M., Incorporated in connection with the
consummation of the transactions contemplated by the Purchase Documents, and the
payment of fees and expenses in connection therewith.
2. PAYMENT AND PREPAYMENT OF OBLIGATION
2.1 Principal and Interest Payments. Principal and interest on the Senior
Subordinated Note is due and payable as follows:
(a) Principal is due and payable on the Termination Date in an amount
equal to the entire remaining unpaid principal balance outstanding on
the Termination Date.
(b) Interest, which accrues from the Closing Date, is due and payable (i)
quarterly in arrears on the last Business Day of each of March, June,
September, and December, commencing on the last Business Day of
September, 2001, in each case in an amount equal to the aggregate
accrued but unpaid interest, and (ii) on the Termination Date, in an
amount equal to the aggregate accrued but unpaid interest.
2.2 Optional Prepayments. At the Company's option, upon notice given as
provided below, the Company may, at any time and from time to time, prepay all
or any part of the principal of the Senior Subordinated Note, by payment to the
applicable Holder of the principal amount to be prepaid, plus (a) any accrued
and unpaid interest on the principal amount so prepaid, plus (b) any other
Senior Subordinated Obligations for which such Holder is entitled to receive
payment or reimbursement hereunder, plus (c) a premium equal to the product of
the applicable Premium Percentage multiplied by the principal amount of the
Senior Subordinated Note so prepaid. Each prepayment under this Section 2.2 will
be applied: first, to accrued and unpaid interest on the principal amount so
prepaid, second, to any applicable Prepayment Fee, third, to installments of
principal, and fourth, to any other Senior Subordinated Obligations for which
the Holder receiving such prepayment is entitled to receive payment or
reimbursement hereunder. The amount of any such prepayment may not be reborrowed
by the Company. The Company shall give written notice of any optional prepayment
to Purchaser not less than twenty (20) days nor more than sixty (60) days before
the date for prepayment, specifying in each such written notice the date upon
which such prepayment is to be made and the principal amount (together with
accrued and unpaid interest, if any, thereon and any applicable Prepayment Fee)
to be prepaid on such date. Notice of prepayment having been so given, the
applicable prepayment amount will become due and payable on the specified
prepayment date. The Company shall have no right to prepay the Senior
Subordinated Note except as provided in this Section 2.2 or in Section 2.3.
2.3 Mandatory Prepayments. Upon demand by the Purchaser after the
occurrence of a Triggering Event, the Company will prepay the Senior
Subordinated Obligations in full, by payment to the applicable Holder(s) of the
principal amount thereof, plus (a) any accrued and unpaid interest on the
principal amount so prepaid, plus (b) any other Senior Subordinated Obligations
for which such Holder is entitled to receive payment or reimbursement hereunder,
plus (c) a premium equal to the product of the applicable Premium Percentage
multiplied by the principal amount of the Senior Subordinated Note so prepaid.
Each prepayment under this Section 2.3 will be applied: first, to accrued and
unpaid interest on the principal amount so prepaid, second, to any applicable
Prepayment Fee, third, to installments of principal, and fourth, to any other
Senior Subordinated Obligations for which the Holder receiving such prepayment
is entitled to receive payment or reimbursement hereunder.
2.4 Additional Payments. Except as otherwise provided herein or in the
Other Agreements, all Senior Subordinated Obligations payable by the Company to
the Holders will be due within ten (10) days following the date on which demand
therefore is made by the Holders Representative and will bear interest from the
date due until paid at the rate of interest then applicable to the Senior
Subordinated Note under Section 1.1.
2.5 Liquidated Damages. Any Prepayment Fee payable pursuant to Section 22-2
or Section 2.3 will be payable as liquidated damages for loss of the opportunity
to recover loan origination expenses and profits over the balance of the term of
this Agreement and not as a penalty.
2.6 Direct Payment. The Company will pay all sums becoming due hereunder
and on the Senior Subordinated Note to Purchaser at the address specified for
Purchaser on Annex I hereto, by wire transfer in U.S. Dollars of Federal Reserve
Funds or other immediately available funds, to the account specified for
Purchaser on Annex I, or at such other address or in such other form as
Purchaser may have designated by notice to the Company at least five Business
Days prior to the date of any payment, in each case without presentment and
without notations being made thereon. All payments by the Company shall be made
without set-off or counterclaim. The Company shall identify any wire transfer
payment as "Senior Subordinated Note" and shall also identify the payment as
principal, premium, interest and/or reimbursement of costs and expenses,
together with the applicable date or period to which it relates.
2.7 Payments Payable on Business Days. The Company shall make payments of
all amounts due hereunder or under the Senior Subordinated Note on a Business
Day. Any payment due on a day that is not a Business Day will be made on the
next Business Day, together with all interest (if any) accrued in the interim.
2.8 Interest Laws. Notwithstanding any provision to the contrary contained
in this Agreement or any Other Agreement, the Company shall not be required to
pay, and no Holder shall be permitted to contract for, take, reserve, charge or
receive, any compensation which constitutes interest under applicable law in
excess of the maximum amount of interest permitted by law ("Excess Interest").
If any Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Agreement or in any Other
Agreement or otherwise contracted for, taken, reserved, charged or received,
then in such event:
(a) the provisions of this Section 2.8 will govern and control;
(b) the Company will not be obligated to pay any Excess Interest;
(c) any Excess Interest that the Holders may have contracted for, taken,
reserved, charged or received hereunder will be, at the option of the
Holders Representative, (i) applied as a credit against the
outstanding principal balance of the Senior Subordinated Obligations
or accrued and unpaid interest (not to exceed the maximum amount
permitted by law), (ii) refunded to the payor thereof, or (iii) any
combination of the foregoing;
(d) the interest provided for will be automatically reduced to the maximum
lawful rate allowed from time to time under applicable law (the
"Maximum Rate"), and this Agreement and the Other Agreements will be
deemed to have been, and will be, reformed and modified to reflect
such reduction; and
(e) the Company will have no action against the Holders for any damages
arising due to any Excess Interest.
If for any period of time interest on any Senior Subordinated Obligations is
calculated at the Maximum Rate rather than the applicable rate under this
Agreement, and thereafter such applicable rate becomes less than the Maximum
Rate, the rate of interest payable on such Senior Subordinated Obligations will
remain at the Maximum Rate until the Holders will have received the amount of
interest which the Holders would have received during such period on such Senior
Subordinated Obligations had the rate of interest not been limited to the
Maximum Rate during such period. All sums paid or agreed to be paid hereunder or
under the Other Agreements for the use, forbearance or detention of sums due
will, to the extent permitted by applicable law, be amortized, pro-rated,
allocated and spread throughout the full term of the Senior Subordinated
Obligations until payment in full so that the rate or amounts of interest on
account of the Senior Subordinated Obligations does not exceed the Maximum Rate.
The terms of this Section 2.8 are deemed to be incorporated into each Other
Agreement and any other document or instrument between the Company and any
Holder or directed to the Company by any Holder, whether or not specific
reference to this Section 2.8 is made.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company as follows:
3.1 Existence. It is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization.
3.2 Authority. It has the right and power and authority to enter into,
execute, deliver, and perform its obligations under this Agreement, and its
officers or agents executing and delivering this Agreement are duly authorized
to do so. This Agreement has been duly and validly executed and delivered and
constitutes the legal, valid and binding obligation of Purchaser, enforceable in
accordance with its terms.
3.3 Investor Status and Acknowledgment. It is an "accredited investor"
within the meaning of subparagraph (a)(1), (2), (3), or (7) of Rule 501 under
the Securities Act of 1933, as amended (the "Securities Act"). It understands
and acknowledges that the Senior Subordinated Note has not been registered under
the Securities Act or any other applicable securities law, is being offered in
transactions not requiring registration under the Securities Act or any other
securities laws, and may not be offered, sold or otherwise transferred except in
compliance with the registration requirements of the Securities Act and any
other applicable securities law, pursuant to an exemption therefrom or in a
transaction not subject thereto and in each case in compliance with the
conditions for transfer set forth in Section 3.4.
3.4 Investment for own Account; Restrictions on Transfer. Except as
otherwise contemplated by Section 12.5 of this Agreement, it is purchasing the
Senior Subordinated Note for its own account for investment, and not with a view
to, or for offer or sale in connection with, any distribution thereof in
violation of the Securities Act or any other securities laws. Purchaser agrees,
and each Person to whom a Senior Subordinated Note (or interest therein) is
offered, sold, assigned, transferred, pledged, encumbered or otherwise disposed
of (collectively, "transfer"), in whole or in part, will agree, to transfer such
Senior Subordinated Note only (a) to the Company, (b) to an "accredited
investor" within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act that is acquiring such Senior Subordinated Note (or
any interest therein) for its own account and not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act
or any other securities law or (c) pursuant to any other available exemption
from the registration requirements of the Securities Act and the requirements of
any other securities laws.
3.5 Legend on Senior Subordinated Note. It agrees that the Senior
Subordinated Note will bear a legend in substantially the following form:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THE SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION, THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY
ONLY (A) TO THE COMPANY (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO AN "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPHS (A)(1), (2),(3) OR (7) OF
RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR
SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
3.6 No ERISA Plan Assets. The Senior Subordinated Note will not be
purchased with the assets of any pension, profit-sharing, retirement, individual
retirement account, individual retirement annuity, employee benefit plan or
other plan or arrangement subject to Title I of ERISA or Code Section 4975.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce Purchaser to enter into this Agreement, the Company represents and
warrants to Purchaser that the following statements are true, correct, and
complete in all material respects:
4.1 Corporate Existence and Authority. The Company (a) is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Indiana; (b) has all requisite corporate power and authority to own its
assets and carry on its business as now conducted; and (c) is qualified to do
business in all jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would reasonably be
expected to have a Material Adverse Effect. The Company has the corporate power
and authority to execute, deliver, and perform its obligations under this
Agreement, the Purchase Documents, the Senior Loan Documents, and all Other
Agreements to which it is or in connection with the transactions contemplated
hereby, is to become, a party.
4.2 Financial Statements. The Company has delivered to Purchaser (i)
compiled financial statements of United Expressline, Inc. as, at and for the
fiscal years ended 1998, 1999, and 2000, (ii) internal financial statements of
United Expressline, Inc., as, at and for the four months ended June 30, 2001,
and (iii) pro forma financial statements dated April 30, 2001. The financial
statements referred to in clauses (i) and (ii) of this Section 4.2 have been
prepared in accordance with GAAP (except as otherwise noted therein), and fairly
present in all material respects the financial condition of the Company as of
the respective dates indicated therein and the results of the Company's
operations for the respective periods indicated therein. The pro forma balance
sheets are, to the best knowledge of the Company after diligent inquiry and
investigation, complete and accurate and fairly present the Company's assets,
liabilities and financial condition, on the bases described above, as of the
Closing Date, but taking into account the transactions contemplated by this
Agreement, the Purchase Documents, the Obsidian Documents and the Senior Loan
Documents and those contemplated as of the Closing Date under the Other
Agreements. To the best knowledge of the Company after diligent inquiry and
investigation, there are no omissions from the pro forma balance sheets or other
facts and circumstances not reflected in the pro forma balance sheets, which are
or may be material. As of June 30, 2001, the Company did not have any
liabilities or obligations (absolute, accrued, contingent or otherwise) of a
nature required by GAAP to be reflected in such financial statements which were,
individually or in the aggregate, material to the condition, financial or
otherwise, or operations of the Company as of that date which are not reflected
on such financial statements. There has been no material adverse change in the
condition, financial or otherwise, or operations of the Company since June 30,
2001, nor has there otherwise occurred a Material Adverse Effect.
4.3 Default. The Company is not in violation of any material provision
under any loan agreement, indenture, mortgage, lease, franchise, permit, license
or other agreement or obligation to which it is a party or by which any of its
properties is bound which is material. The Company is paying its debts as they
become due.
4.4 Authorization and Compliance with Laws and Material Agreements. The
execution, delivery and performance by the Company of this Agreement, the
Purchase Documents, the Senior Loan Documents, and the Other Agreements to which
it is or may in connection with the transactions contemplated hereby become a
party, have been or prior to the consummation of such transactions contemplated
hereby will be duly all requisite action on the part of the Company and do not
and will not violate their respective organizational documents or any law or any
order of any court, governmental authority or arbitrator, and do not and will
not upon the consummation of the transactions contemplated hereby conflict with,
result in a breach of, or constitute a default under, or result in the
imposition of any Lien (except Permitted Liens) upon any assets of the Company
pursuant to the provisions of any material loan agreement, indenture, mortgage,
security agreement, franchise, permit, license or other instrument or agreement
by which the Company or any of its properties is bound (the "Material
Agreements"). Except as set forth on Schedule 4.4, no authorization, approval or
consent of, and no filing or registration with, any court, governmental
authority or third Person is or will be necessary for the execution, delivery or
performance by the Company of this Agreement, the Purchase Documents, the Senior
Loan Documents, and the Other Agreements to which it is a party or the validity
or enforceability thereof. All such authorizations, approvals, consents,
filings, and registrations described in Schedule 4.4 have been obtained. The
Company is not in violation of its organizational documents or any material
provision of any Material Agreement or any judgment or decree that is material,
and is in full compliance with all material laws, regulations, and rules.
4.5 Environmental Condition of the Property. Except as disclosed on
Schedule 4.5:
(a) The location, construction, occupancy, operation and use of the
Property do not violate any applicable Environmental Law in a manner
which could reasonably be expected to have a Material Adverse Effect;
(b) Without limitation of paragraph (a) above, to the Company's knowledge,
neither the Company nor the Property is subject to any existing,
pending or threatened investigation or inquiry by any governmental
authority or subject to any remedial obligations imposed by a
governmental authority due to violations by the Company of applicable
Environmental Laws, except for any such investigation, inquiry or
obligations which could not reasonably be expected to have a Material
Adverse Effect;
(c) The Company is not subject to any liability or obligation relating to
(i) the environmental conditions on, under or about the Property,
including, without limitation, the soil and ground water conditions at
the Property, or (ii) the use, management, handling, transport,
treatment, generation, storage, disposal, release or discharge of any
Polluting Substance, except, in the case of clauses (i) and (ii), for
any such liability or obligation which could not reasonably be
expected to have a Material Adverse Effect;
(d) There is no Polluting Substance or other substance that may pose any
material risk to safety, health or the environment on, under or about
any Property;
(e) The Company has taken reasonable steps to determine and hereby
represents and warrants that no Polluting Substances have been
disposed of or otherwise released on, onto, into, or from the Property
in violation of applicable Environmental Laws, and the use which the
Company makes and intends to make of the Property does not and will
not result in the disposal or other release of any Polluting
Substances on, onto, into or from the Property in violation of
applicable Environmental Laws; and
(f) The Company has been issued all required federal, state, and local
licenses, certificates or permits relating to, and the Property. The
Company, and the Company's facilities, business, assets, leaseholds
and equipment are all in compliance with, all applicable Environmental
Laws, except for any that could not reasonably be expected to have a
Material Adverse Effect.
4.6 Solvency. The Company is not entering into the arrangements
contemplated by this Agreement and the Other Agreements with the actual intent
to hinder delay or defraud either present or future creditors. After giving
effect to the transactions contemplated by the Senior Loan Documents, this
Agreement, the Purchase Documents and the Other Agreements, the Company will be
solvent, able to pay its debts as they mature, have capital sufficient to carry
on its business and all businesses in which it is about to engage, and
(a) the assets, inclusive of goodwill, of the Company, at a fair
valuation, exceed its total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities);
(b) current projections which are based on underlying assumptions which
provide a reasonable basis for the projections and which reflect the
Company's judgment based on present circumstances, the most likely set
of conditions and the Company's most likely course of action for the
period projected, demonstrate that the Company will have sufficient
cash flow to enable them to pay their respective debts as they mature;
and
(c) the Company does not have an unreasonably small capital base with
which to engage in its respective anticipated business.
For purposes of paragraph (a) of this Section 4.6, the "fair valuation" of the
assets of the Company is determined on the basis of the amount which may be
realized within a reasonable time, either through collection or sale of such
assets at market value, deeming the latter as the amount which could be obtained
for the property in question within such period by a capable and diligent
businessman from an interested buyer who is willing to purchase under ordinary
selling conditions.
4.7 Litigation and Judgments. Except as disclosed on Schedule 4.7, there is
no action, suit, proceeding or investigation before any court, governmental
authority or arbitrator pending, or to the knowledge of the Company threatened,
against or affecting the Company, this Agreement, the Purchase Documents, the
Senior Loan Documents and/or the Other Agreements. Except as disclosed on
Schedule 4.7, there are no outstanding judgments against the Company. None of
the matters listed on Schedule 4.7 could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
4.8 Rights in Properties; Liens. The Company has good and indefeasible
title to all properties and assets reflected on its balance sheets, and none of
such properties or assets is subject to any Liens, except Permitted Liens. The
Company enjoys peaceful and undisturbed possession under all leases necessary
for the operation of its other properties, assets, and businesses and all such
leases are valid and subsisting and are in full force and effect. There exists
no default under any provision of any lease which would permit the lessor
thereunder to terminate any such lease or to exercise any rights under such
lease which, individually or together with all other such defaults, could have a
Material Adverse Effect. The Company has the exclusive right to use all of the
Intellectual Property necessary or desirable to its business as presently
conducted, and, to the best of the Company's knowledge, the Company's use of the
Intellectual Property does not infringe on the rights of any other Person. To
the best of the Company's knowledge, no other person is infringing the rights of
the Company in any of the Intellectual Property. The Company owns or possesses
all licenses, permits, franchises, authorizations, patents, patent applications,
copyrights, service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are material to the Company without known
conflict with the rights of others; to the best of the Company's knowledge, no
such license or trademark has been declared invalid, been limited by order of
any governmental authority or by agreement, or is the subject of any
infringement, interference or similar proceeding or challenge; to the best
knowledge of the Company, no product of the Company infringes in any material
respect any license, permit, franchise, authorization, patent, copyright,
service ▇▇▇▇, trademark, trade name or other right owned by any other Person;
and to the best knowledge of the Company, there is no material violation by any
Person of any right of the Company with respect to any patent, patent
applications, copyright, service ▇▇▇▇, trademark, trade name or other right
owned or used by the Company. The Company does not owe any royalties, honoraria,
or fees to any Person by reason of its use of the Intellectual Property.
4.9 Enforceability. Each of this Agreement, the Purchase Documents, the
Senior Loan Documents and the Other Agreements to which the Company is a party,
when delivered, constitutes the legal, valid and binding obligations of the
Company enforceable against it in accordance with its respective terms; subject,
in the case of each of the foregoing, to (a) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies general, and (b) general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
4.10 Indebtedness. The Company does not have any Indebtedness, except
Indebtedness permitted under Section 7.1. All Indebtedness owed by the Company
to any Affiliate thereof is set forth on Schedule 4.10.
4.11 Taxes. The Company has filed all tax returns (federal, state, and
local) required to be filed, including, without limitation, information returns,
reports and forms, and has paid all of its tax liabilities, other than taxes
that are being contested by the Company in good faith by appropriate actions or
proceedings diligently pursued, and for which adequate reserves in conformity
with GAAP with respect thereto have been established. The Company knows of no
pending investigation of the Company by any taxing authority or pending but
unassessed material tax liability of the Company. The Company has not made any
presently effective waiver of any applicable statute of limitations or request
for an extension of time to file a tax return, and the Company is not a party to
any tax-sharing agreement.
4.12 Use of Proceeds-, Margin Securities. The Company is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, U or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any extension of credit under
this Agreement will be used to purchase or carry any such margin stock or to
extend credit to others for the purpose of purchasing or carrying margin stock
in violation of Regulations G, U or X of the Board of Governors of the Federal
Reserve System. Neither the Company nor any Person acting on its behalf has
taken any action that might cause the transactions contemplated by this
Agreement, the Purchase Documents, the Senior Loan Documents or any Other
Agreements to violate Regulations G, U or X or to violate the Securities
Exchange Act of 1934, as amended.
4.13 Employee Benefit Matters. Each Plan maintained by the ERISA Controlled
Group at any time has been operated and administered in substantial compliance
with the provisions of ERISA, and the provisions of the Code applicable to it.
Neither the ERISA Controlled Group nor any of their assets are subject to nor
can they reasonably be expected to become subject to a lien as a result of the
existence or operation of any Plan. The ERISA Controlled Group have not had an
"obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer pension plan" (as defined in ERISA Sections 4001(a)(3) and
3(37)(A)) at any time. No facts exist which will result in a material increase
in the premium costs of any Plan for which benefits are insured or a material
increase in benefit costs of any Plan, which provides self-insured benefits. As
of the Closing Date, the ERISA Controlled Group has no material liabilities
under any Plan that is not reflected in the Financial Statements. No facts or
circumstances exist under which Company will incur any liability, nor will the
assets or the real estate of the Company be chargeable with any liability,
relating to any act or omission of the ERISA Controlled Group or their agents or
representatives with respect to Plan at any time maintained by the ERISA
Controlled Group. With respect to the Plans identified in Section 4.13:
(a) all premiums payable under any insured Plan have been fully paid, and
all contributions required to be made to any other Plan have been
made;
(b) all Plans required by law to be funded have been fully funded; and
(c) the assets to be conveyed to Purchaser pursuant to Section 1.5(g) are
not less than the accrued benefits of the participants under the
United Expressline, Inc. Deferred Compensation Plan.
4.14 Delivery of Purchase Documents. Purchaser has received complete copies
of the Purchase Documents and all documents executed in connection with the
transactions contemplated thereby (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if any)
and all amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof, to the extent, in each of the foregoing
cases, that each of the foregoing agreements and other documents have been
prepared or executed and delivered, as the case may be, on or before the date
hereof. None of such documents and agreements has been amended or supplemented,
nor have any of the provisions thereof been waived, except pursuant to a written
agreement or instrument which has heretofore been delivered to Purchaser.
4.15 Delivery of Obsidian Documents. Purchaser has received complete copies
of the Obsidian Documents and all documents executed in connection with the
transactions contemplated thereby (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if any)
and all amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof, to the extent, in each of the foregoing
cases, that each of the foregoing agreements and other documents have been
prepared or executed and delivered, as the case may be, on or before the date
hereof. None of such documents and agreements has been amended or supplemented,
nor have any of the provisions thereof been waived, except pursuant to a written
agreement or instrument which has heretofore been delivered to Purchaser.
4.16 Disclosure. No representation or warranty made by the Company in the
Senior Loan Documents, the Purchase Documents, or any Other Agreement to which
the Company is a party contains any untrue fact or omits to state any material
fact necessary to make the statements herein or therein not misleading. There is
no fact known to the Company that the Company has determined has had a Material
Adverse Effect that has not been disclosed in writing to Purchaser. Except as
disclosed on Schedule 4.15, no officer, director, shareholder or Affiliate of
the Company or any individual related by blood, marriage or adoption to any such
individual, or any entity in which any such Persons or individuals collectively
own any beneficial interest in excess of 10% is a party to any agreement,
contract, commitment or transaction with the Company or has any material
interest in any material property used by the Company (each an "Affiliate
Transaction").
4.17 Subsidiaries and Capitalization. The Company has no Subsidiaries as of
the date of this Agreement. All the issued and outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and
nonassessable. The capitalization of the Company on the Closing Date is set
forth on Schedule 4.16. No violation of any preemptive rights of shareholders of
the Company has occurred by virtue of the transactions contemplated under this
Agreement, the Purchase Documents, the Senior Loan Documents, or any Other
Agreement. There are no outstanding contracts, options, warrants, instruments,
documents or agreements binding upon the Company granting to any Person or group
of Persons any right to purchase or acquire shares of the Company's capital
stock, except pursuant to the Stock Purchase Documents and as set forth in
Schedule 4.16.
4.18 Current Locations. The principal office of the Company is located at
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The Company does not conduct any
material operations or keep any material amounts of property at any other
location, except the following: 68939 M ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. Schedule
4.17 accurately indicates whether each such location is owned or leased, and, if
leased, identifies the owner of such location. No Person other than the Company
has possession of any assets of the Company, except as disclosed on Schedule
4.17.
4.19 Investment Company Act. Neither the Company nor any company
controlling the Company is required to be registered as an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
4.20 Public Utility Holding Company Act. The Company is not a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or a "public utility" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
4.21 No Burdensome Restrictions. The Company is not a party to, or bound by
any agreement, condition, contract, or arrangement which has, or which the
Company reasonably expects in the future will have, a Material Adverse Effect.
4.22 Securities Laws. Assuming the accuracy of the representations of
Purchaser set forth in Article III, and the compliance by each Holder with
Section 12.5 (including, without limitation, the accuracy of the representations
of each Transferee in each Transfer Agreement to which such Transferee is
party), the sale by the Company of the Senior Subordinated Note to the Purchaser
is exempt from the registration requirements of the Securities Act and
applicable state securities or blue sky laws.
4.23 No Labor Disputes. Except as disclosed on Schedule 4.22, the Company
is not involved in any labor dispute. Except as disclosed on Schedule 4.22,
there are no strikes or walkouts or union organization of any of the Company's
employees threatened or in existence and no labor contract is scheduled to
expire during the term of this Agreement. The Company is in compliance with all
laws, rules, regulations, orders, and decrees applicable to it or its
properties, except for instances of noncompliance that, individually or in the
aggregate, will not have a Material Adverse Effect.
4.24 Brokers. Neither the Company nor any shareholders of the Company has
dealt with any broker, finder, commission agent or other Person in connection
with any of the transactions contemplated by the Purchase Agreements or any
transactions referenced in or contemplated by this Agreement, nor is the Company
or any shareholders of the Company under any obligation to pay any broker's fee
or commission in connection with such transactions, except as set forth on
Schedule 4.23.
4.25 Insurance. The amount and types of insurance carried by the Company,
and the terms and conditions thereof, are substantially similar to the coverage
maintained by companies in the same or similar business as the Company and
similarly situated, and include, without limitation, property and casualty
insurance, general liability insurance, business interruption insurance and
other insurance in the amounts and of the types described in Section 6.12
hereof.
4.26 Conduct of Business. On the Closing Date, each of the Company is
engaged only in businesses of the type described in Schedule 4.25.
4.27 Senior Debt. Simultaneously with the issuance of the Senior
Subordinated Note, the Senior Lender will provide United Expressline with the
Senior Debt pursuant to the Senior Loan Documents
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
Purchaser's obligations hereunder are subject to (a) the performance by the
Company of its obligations hereunder that by the terms hereof are to be
performed at or prior to delivery of the Senior Subordinated Note, and (b) the
satisfaction of the following conditions on or before the Closing Date (all such
obligations and conditions being set forth in more detail on Exhibit J attached
hereto):
5.1 Senior Loan Documents. All terms and conditions of the Senior Loan
Documents delivered by the Company to the Purchaser pursuant to Section 5.5(i)
hereof (including, without limitation, the rate of interest, principal
amortization and maturity of the credit facilities established thereunder) are
satisfactory to Purchaser. The Senior Loan Documents are being consummated
simultaneously with the sale of the Senior Subordinated Note.
5.2 ▇▇▇▇▇▇ and Seller Debt. All terms and conditions of the ▇▇▇▇▇▇ Debt and
the Seller Debt (including, without limitation, the rate of interest (which may
not, in the case of the Seller Debt, exceed 9% per annum), principal
amortization and maturity of the credit facilities established thereunder) are
satisfactory to Purchaser.
5.3 Purchase Document Transactions. The Purchase Documents will have been
duly executed and delivered by the parties thereto, all conditions to the
consummation of the transactions contemplated thereby will have been satisfied
or waived with Purchaser's consent, and the terms and provisions of the Purchase
Documents and the structure of the transactions contemplated thereby is
satisfactory to Purchaser.
5.4 Obsidian Document Transactions. The Obsidian Documents will have been
duly executed and delivered by the parties thereto, all conditions to the
consummation of the transactions contemplated thereby will have been satisfied
or waived with Purchaser's consent, and the terms and provisions of the Obsidian
Documents and the structure of the transactions contemplated thereby is
satisfactory to Purchaser.
5.5 No Litigation; Consummation of Transactions. No injunction, preliminary
injunction, or temporary restraining order is threatened or exists which
prohibits or may prohibit the transactions contemplated herein or any other
related transaction, and no litigation or similar proceeding (including, without
limitation, any litigation or other proceeding seeking injunctive or similar
relief) is threatened or exists with respect to the transactions contemplated
herein that, if adversely determined, could in the judgment of Purchaser have a
Material Adverse Effect.
5.6 Documents. Purchaser will have received the following, each in form and
substance satisfactory to Purchaser:
(a) Senior Subordinated Note. The Senior Subordinated Note issued in the
name of HCIC duly executed by the Company;
(b) Stock Purchase Documents. The ▇▇▇▇▇▇ Stock, duly issued by ▇▇▇▇▇▇ to
HCIC as specified in the Stock Purchase Agreement, along with the
other fully executed Stock Purchase Documents and all other documents
and instruments required pursuant thereto;
(c) This Agreement; Other Agreements. This Agreement and all Other
Agreements, together with completed schedules and exhibits thereto,
duly executed and delivered by the parties thereto;
(d) Insurance. A written report from an insurance broker acceptable to
Purchaser, confirming that the amount of the Company's insurance
coverage and the terms and conditions thereof are substantially
similar to policies maintained by companies similarly situated to the
Company and engaged in the same or a similar business;
(e) Approvals and Consents. Copies, certified by the Company, of all
consents, authorizations, filings, licenses and approvals, if any,
required in connection with the consummation of the transactions
contemplated by the Purchase Documents, the execution, delivery and
performance by the Company, or the validity and enforceability of,
this Agreement, the Senior Loan Documents, the Purchase Documents or
the Other Agreements to which the Company is a party;
(f) Opinion of Counsel to the Company. The written legal opinions of the
Company's legal counsel, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, LLP satisfactory
to HCIC;
(g) General Certificate of the Company's Secretary. A certificate of the
Secretary of the Company together with true, correct and complete
copies of the following:
(1) Charter. The charter documents of the Company, including all
amendments thereto, certified by the Secretary of State of the
state of its incorporation and dated within thirty (30) days
prior to the Closing Date;
(2) By-Laws. The By-Laws of the Company, including all amendments
thereto;
(3) Resolutions. The resolutions of the Board of Directors of the
Company authorizing -the execution, delivery and performance of
this Agreement, the Purchase Documents, the Stock Purchase
Documents, the Senior Loan Documents, and the Other Agreements to
which the Company is a party;
(4) Existence and Good Standing Certificates. Certificates of the
appropriate government officials of the state of incorporation of
the Company as to its existence and good standing, and
certificates of the appropriate government officials in each
state where the Company does business and where failure to
qualify as a foreign corporation would have a Material Adverse
Effect, as to its good standing and due qualification to do
business in such state, each dated within thirty (30) days prior
to the Closing Date; and
(5) Incumbency. The names of the officers of the Company authorized
to sign this Agreement and the Other Agreements to be executed by
the Company, together with a sample of the true signature of each
such officer;
(h) Senior Loan Documents. Copies of the Senior Loan Documents and each
document relating thereto, and a certificate of the Chief Executive
Officer and Chief Financial Officer of the Company certifying that the
attached documents are a true, correct and complete set of the Senior
Loan Documents, that all conditions precedent to funding of the Senior
Debt have been met or waived with Purchaser's written consent, and
that those transactions are being consummated simultaneously with the
sale of the Senior Subordinated Note;
(i) Purchase Documents. Copies of the Purchase Documents and each document
relating thereto, and a certificate of the Chief Executive Officer and
Chief Financial Officer of the Company certifying that the attached
documents are a true, correct and complete set of the Purchase
Documents, that all conditions precedent to funding to the
transactions contemplated by the Purchase Documents have been met or
waived, and that those transactions are being consummated
simultaneously with the sale of the Senior Subordinated Note;
(j) Obsidian Documents. Copies of the Obsidian Documents and each document
relating thereto, and a certificate of the Chief Executive Officer and
Chief Financial Officer of Obsidian certifying that the attached
documents are a true, correct and complete set of the Obsidian
Documents, that all conditions precedent to funding to the
transactions contemplated by the Obsidian Documents have been met or
waived, and that those transactions are being consummated
simultaneously with the sale of the Senior Subordinated Note;
(k) ▇▇▇▇▇▇ and Seller Debt Documents. Copies of the documents evidencing
the ▇▇▇▇▇▇ Debt and the Seller Debt and each document relating
thereto, and a certificate of the Chief Executive Officer and Chief
Financial Officer of the Company certifying that the attached
documents are a true, correct and complete set of such documents, that
all conditions precedent to funding to the transactions contemplated
by the such documents have been met or waived, and that those
transactions are being consummated simultaneously with the sale of the
Senior Subordinated Note;
(1) Communication with Accountants. Purchaser will have received a copy of
a letter from the Company addressed to its accountants, authorizing
such accountants to disclose to the Holders Representative such
financial information concerning the Company as the Holders
Representative may reasonably request to assist the Holders
Representative in determining compliance by the Company with any of
the financial covenants contained in Article VI and Article VII
hereof;
(m) Transaction Certificate. A certificate of the Chief Executive Officer
and the Chief Financial Officer of the Company that, to the best of
their knowledge after due investigation, all conditions precedent to
the effectiveness of this Agreement have been satisfied or waived;
(n) Environmental Reports. Phase I environmental reports addressed to the
Holders Representative and the Senior Lender, prepared in substantial
conformance with standards set forth in ASTM document E 1527-97, by
ESA1 or an other independent environmental consulting firm
satisfactory to the Holders Representative with respect to the
Properties that state that the Holders Representative may rely thereon
and that do not evidence any violation of applicable Environmental
Laws which is unacceptable to Holders Representative.
(o) Employment Agreements. The executed employment and non-compete
agreements between the Company and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ the terms of which
are acceptable to. Purchaser.
(p) Financial Information; Opening Day Balance Sheet. The financial
information described in Section 4.2 of this Agreement, certified as
true, complete and correct by the Company, and an unaudited opening
day balance sheet giving effect to the transactions contemplated by
this Agreement and the Other Agreements, the Senior Loan Documents,
the Obsidian Documents, and the Purchase Documents.
(q) Lien Searches. All-lien searches satisfactory in scope and substance
to the Purchaser.
(r) Recordings and Filings. The Company shall have executed and delivered
all financing statements and other filings as are required to be
filed, registered or recorded in order to create, in favor of the
Purchaser, a second-priority perfected Lien in all of the Company's
assets, together with evidence satisfactory to the Purchaser that all
necessary filing fees and recording and other similar fees, taxes and
expenses related to such filings, registrations and recordings have
been paid in full.
(s) Title Work; Surveys. For each Property that is subject to a Mortgage,
a lender's title insurance policy in ALTA form (or such other form as
is satisfactory to the Purchaser), and a survey, performed by a
surveyor with qualifications acceptable to the Purchaser, certified to
the Purchaser and complying with the minimum detail requirements for
land title surveys as adopted by the American Land Title Association
and Congress on Surveying and Mapping.
(t) Additional Information Other Documents, and Agreements. Such other
information, documents, agreements, commitments, and undertakings as
Purchaser or Purchaser's counsel may reasonably request.
5.7 Equity Contribution. Evidence satisfactory to the Purchaser that
Obsidian has contributed $1,500,000 in equity to the Company.
5.8 Material Adverse Change. For the period from May 31, 2001 to the
Closing Date, there will have been no occurrence or event which, in Purchaser's
opinion, has or could have a Material Adverse Effect.
5.9 Fees and Expenses. An underwriting fee in the amount set forth in
Section 11. 44, will have been paid to Purchaser. All other fees then payable
pursuant to this Agreement which are due on or prior to the Closing Date
(including the fees, expenses and disbursements of the Purchaser's counsel) will
have been paid to Purchaser (or such counsel, as applicable).
5.10 No Event of Default. No Event of Default or Potential Default will
have occurred and be continuing.
5.11 Representations and Warranties. All
representations and warranties contained in this Agreement and the Other
Agreements will be true and correct on the Closing Date.
6. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, from the date hereof and until the Senior
Subordinated Obligations (other than Indemnification Obligations) have been
finally and irrevocably paid in full in accordance with the terms hereof and
thereof:
6.1 Financial Statements. The Company will furnish to Purchaser:
(a) As soon as available, and in any event within ninety (90) days after
the end of each Fiscal Year of the Company, beginning with the Fiscal
Year ending December 31, 2001, (i) a copy of the financial statements
of the Company for such Fiscal Year containing a balance sheet,
statement of income, statement of stockholders' equity, and statement
of cash flow as at the end of such Fiscal Year and for the fiscal year
then ended, in each case setting forth in comparative form the figures
for the preceding Fiscal Year, all in reasonable detail and audited
and certified by Birk, Gross, ▇▇▇▇ & ▇▇▇▇▇▇▇ P.C., or any "Big Six"
firm of independent certified public accountants (or successor firms),
to the effect that such financial statements have been prepared in
accordance with GAAP; (ii) a certificate by such independent certified
public accountants confirming the calculations set forth in the
officers' certificate delivered simultaneously therewith in accordance
with Section 6.2(a); and (iii) a comparison of the actual results
during such Fiscal Year to those originally budgeted by the Company
prior to the beginning of such Fiscal Year, along with management's
discussion and analysis of variances, as well as, variances between
actual results for such Fiscal Year and actual results for the
previous Fiscal Year. The annual audit report required hereby will not
meet the requirements of this Section 6.1 (a) if it is qualified on
the basis that the Company is not a going concern or otherwise
qualified or limited because of restricted or limited examination by
the accountant of any material portion of any of the. records of the
Company.
(b) As soon as available, and in any event within thirty (30) days after
the end of each Fiscal Month, a copy of an unaudited financial report
of the Company and as of the end of such Fiscal Month and for the
portion of the Fiscal Year then ended, containing balance sheets,
statements of income, and statements of cash flow, in each case
setting forth in comparative form the figures for the corresponding
period of the preceding Fiscal Year, along with management's
discussion and analysis all in reasonable detail, including, without
limitation, a comparison of the actual results for such period to
those originally budgeted by the Company prior to the beginning of
such fiscal period and for the Fiscal Year to date.
(c) Simultaneously with the delivery of financial information pursuant to
Section 6.1 (b) in respect of any month which is the last month of any
Fiscal Quarter, management's discussion and analysis of variances
between the results for the portion of the current Fiscal Year ended
on the last day of such Fiscal Quarter and the corresponding period of
the preceding Fiscal Year; all in a format reasonably acceptable to
the Holder's Representative.
(d) As soon as available, and in any event within sixty (60) days after
the Closing Date, a balance sheet of the Company that has been
reviewed by Birk, Gross, ▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., or such other
nationally recognized firm of independent certified public accountants
approved by Purchaser, dated as of the Closing Date, which has been
restated using purchase accounting in accordance with APB 16 and which
gives effect to the issuance of the Senior Subordinated Note and the
Stock Purchase Documents, and the financing transactions contemplated
by the Senior Loan Agreement as if all commitments therein available
to the Company as of the Closing Date were fully utilized, certified
by the Chief Executive Officer and the Chief Financial Officer of the
Company as fairly presenting the Company's financial position.
(e) On or before thirty (30) days prior to the beginning of each Fiscal
Year of the Company, a draft of the annual budget or business plan for
such Fiscal Year, including a projected consolidated and consolidating
balance sheet, income statement, and cash flow statement for such
year, and, promptly during each Fiscal Year, all revisions thereto
approved by the Board of Directors of the Company.
(f) As soon as available, copies of all final reports or letters submitted
to the Company by its independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of the Company made by such accountants, including, without
limitation, any management report (and the Company agrees to obtain
such a report in connection with each of its annual audits by its
independent public accountants).
6.2 Certificates: Other Information. The Company will furnish to Purchaser
all of the following:
(a) Concurrently with the delivery of each of the financial statements
referred to in Section 6.1(a) and Section 6.1(b), a certificate of an
authorized officer of the Company in the form of the officer's
certificate attached hereto as Exhibit I (i) stating that no Potential
Default or Event of Default has occurred and is continuing or, if such
officer has knowledge of a Potential Default or Event of Default, the
nature thereof specifying the steps taken or proposed to remedy such
matter, (ii) showing in reasonable detail the calculations showing
compliance with Sections 6.18, and 7.10, (iii) stating that the
financial statements attached have been prepared in accordance with
GAAP and fairly and accurately present (subject to year-end audit
adjustments, for the annual certificates) in all material respects the
financial condition and results of operations of the Company at the
date and for the period indicated therein, (iv) containing summaries
of accounts payable agings, accounts receivable agings, and inventory;
(v) (A) containing a schedule of the outstanding Indebtedness for
borrowed money of the Company describing in reasonable detail each
such debt issue or loan outstanding, the name, address and
telephone/fax numbers of each of the holders or lenders, as the case
may be, of such debt issue or loan outstanding, the principal amount
and amount of accrued and unpaid interest with respect to each such
debt issue or loan outstanding and (B) making a statement in respect
each thereof similar to statement required in clause (a)(i) above.
(b) As soon as available, (i) a copy of each financial statement, report,
notice or proxy statement sent by the Company to its stockholders in
their capacity as stockholders, (ii) a copy of each regular, periodic
or special report, registration statement, or prospectus filed by the
Company with any securities exchange or the Securities and Exchange
Commission or any successor agency, (iii) any material and adverse
order issued by any court, governmental authority, or arbitrator in
any material proceeding to which the Company is a party, (iv) copies
of all press releases and other statements made available generally by
the Company to the public generally concerning material developments
in the Company's business, and (v) a copy of all correspondence and
Representative).
(c) Promptly, such additional information concerning the Company as the
Holders Representative may reasonably request.
6.3 Books and Records, Accounting System. The Company shall keep, (a)
proper books of record and account in which full, true and correct entries will
be made of all dealings or transactions of or in relation to its business and
affairs; (b) set up on its books accruals with respect to all taxes,
assessments, charges, levies and claims; and (c) on a reasonably current basis
set up on its books from its earnings allowances against doubtful receivables,
advances and investments and all other proper accruals (including, without
limitation, by reason of enumeration, accruals for premiums, if any, due on
required payments and accruals for depreciation, obsolescence, or amortization
of properties), which should be set aside from such earnings in connection with
its business. All determinations pursuant to this subsection will be made in
accordance with, or as required by, GAAP consistently applied. The Company will
maintain a modern system of accounting established and administered in
accordance with sound business practices to permit preparation of consolidated
financial statements in conformity with GAAP.
6.4 Financial Disclosure. The Company hereby irrevocably authorizes and
directs Birk, Gross, ▇▇▇▇ & ▇▇▇▇▇▇▇, P.C. (or its successor as the Company's
principal outside accountant) during the term of this Agreement to exhibit and
deliver to the Holders Representative copies of any of the Company's financial
statements, trial balances or other accounting records of any sort in such
accountant's possession, and to disclose to the Holders Representative any
information it may have concerning the Company's financial status and business
operations, provided, however, that any request hereunder for documents,
analyses or other information made to such accountants will first be made to the
Company.
6.5 Disclosure of Material Matters. The Company will, immediately upon
learning thereof, report to the Holders Representative (a) all matters
materially affecting the value, enforceability or collectibility of any portion
of its assets including, without limitation, changes to significant contracts,
schedules of equipment, changes of significant equipment or real property, the
reclamation or repossession of, or the return to the Company of, a material
amount of goods and material claims or disputes asserted by any customer or
other obligor, which matters could have a Material Adverse Effect, and (b) any
material adverse change in the relationship between the Company any of its
respective suppliers or customers which could have a Material Adverse Effect.
6.6 Maintenance of Properties. The Company will operate and maintain in
good condition and repair (ordinary wear and tear excepted) and replace as
necessary, all of its assets and properties which are necessary or useful in
accordance with sound business practices in the proper conduct of its business
so that the value and operating efficiency of its assets and properties are
maintained and preserved. The Company will at all times maintain the
Intellectual Property in full force and effect, and will defend and protect the
Intellectual Property against all adverse claims, except to the extent that the
failure to so maintain, defend or protect such Intellectual Property would not
have a Material Adverse Effect.
6.7 Payment of Taxes and Claims. The Company will pay or discharge, at or
before maturity or before becoming delinquent (a) all taxes, levies,
assessments, vault, water and sewer rents, rates, charges, levies, permits,
inspection and license fees and other governmental and quasi-governmental
charges and any penalties or interest for nonpayment thereof, heretofore or
hereafter imposed or which may become a Lien upon any property owned by the
Company or arising with respect to the occupancy, use, possession or leasing
thereof (collectively the "Impositions") and (b) all lawful claims for labor,
material, and supplies, which, if unpaid, might become a Lien upon any of its
property; provided, however, the Company will not be required to pay or
discharge any claim for labor, material, or supplies or any Imposition which
meets each of the following requirements: (i) such claim or Imposition is being
contested in good faith by appropriate actions or proceedings diligently
pursued, (ii) adequate reserves in conformity with GAAP with respect thereto
have been established to the reasonable satisfaction of Purchaser, and (iii)
such claim or Imposition (or any Lien arising therefrom) would not otherwise
constitute an Event of Default under this Agreement.
6.8 Compliance with Laws. The Company shall comply with all acts, rules,
regulations, and orders of any legislative, administrative, or judicial body or
official applicable to the operation of the Company's business if noncompliance
with such acts, rules, regulations, or orders could have a Material Adverse
Effect.
6.9 Leasehold Obligations; Material Agreements. The Company shall at all
times pay, when and as due, its rental obligations under all material leases
under which it is a tenant or lessee, and shall otherwise comply, in all
material respects, with all other terms of such leases and keep them in full
force and effect and, at the request of the Holders Representative, will provide
evidence of its having done so. The Company shall comply in all with all
agreements, indentures, mortgages, deeds of trust or other agreements binding on
it or affecting its properties or business where the failure to so comply would
have a Material Adverse Effect.
6.10 Insurance. The Company will maintain, with financially sound,
reputable and solvent companies, insurance policies (a) insuring its assets and
business against loss by fire, explosion, theft, business interruption and other
risks and casualties as are customarily insured against by companies engaged in
the same or a similar business, (b) insuring it against liability for personal
injury and property damages relating to its assets, such policies to be in such
amounts and covering such risks as are usually insured against by companies
engaged in the same or a similar business and use reasonably satisfactory to the
Majority Holders. All general liability policies will be endorsed in favor of
the Holders as an additional insured. The Company shall (i) deliver copies of
all such policies to the Holders Representative within 30 days after the Closing
Date, and from time to time thereafter upon request, (ii) pay, or cause to be
paid, all premiums for such insurance before such premiums become due, (iii)
furnish to the Holders Representative satisfactory proof of the timely making of
such payments, and (iv) cause such policies to require the insurer to give
notice to the Holders Representative of termination or reduction in coverage of
any such policy at least 30 days before such termination or reduction is to be
effective.
6.11 Inspection Rights. At any time and from time to time during normal
business hours, the Company will permit representatives of the Holders
Representative to examine and make copies of the books and records of, and visit
and inspect the properties of, the Company and to discuss the business,
operations, and financial condition of the Company with its officers and
employees and with its independent certified public accountants. In accordance
with the terms of Section 12.1 hereof, the Company will promptly reimburse the
Holders Representative for all expenses incurred by its representatives in
connection with such inspections.
6.12 Notices. The Company will promptly, but in any event within five (5)
Business Days after first becoming aware thereof, notify the Holders
Representative in writing of:
(a) the commencement of any action, suit, or proceeding against the
Company that, in its reasonable judgment, if determined adversely to
the Company, could reasonably be expected to have a Material Adverse
Effect;
(b) the occurrence of an event of default or an event which with the
passage of time or giving of notice or both constitutes an event of
default under any of the Senior Loan Documents or under any instrument
or agreement evidencing any other Indebtedness of the Company, which
notice must specify the nature of such event, condition or default and
what action the Company has taken or is taking or proposes to take
with respect thereto; or
(c) any other matter that has had or, in the reasonable judgment of the
Company, is likely to have, a Material Adverse Effect; and
(d) The occurrence of a Potential Default or an Event of Default, which
notice must specify the nature of such event, condition or default and
what action the Company has taken or is taking or proposes to take
with respect thereto.
The Company shall accompany any notification required by this Section 6.12 with
a certificate of the Chief Executive Officer or Chief Financial Officer setting
forth the details of the specified events and the action which the Company
proposes to take with respect thereto.
6.13 Additional Notices. Promptly after receipt, the Company shall provide
the Holders Representative with copies of all notices (including notices of
default), statements and financial information, including notices of default,
received from the Senior Lender under the Senior Loan Agreement and any other
creditor or lessor with respect to the acceleration of the maturity of any item
of Indebtedness for borrowed money which, if not paid, could give rise to an
Event of Default under Section 8.1(b) or the repossession of material property
from the Company.
6.14 Senior Loan Document Amendments. The Company shall promptly provide
the Holders Representative with copies of all proposed amendments to the Senior
Loan Documents and of all other loan agreements to which the Company is a party.
6.15 Further Assurances. The Company shall execute and deliver, from time
to time, upon the reasonable request of the Holders Representative, such
supplemental agreements, statements, assignments and transfers, or instructions
on documents as may be necessary in order that the full intent of the parties to
this Agreement and the Other Agreements may be carried into effect.
6.16 Compliance with ERISA and the Code. The Company will comply, and will
cause each other member of any ERISA Controlled Group to comply, with all
minimum funding requirements, and all other material requirements, of ERISA and
the Code, if applicable, to any Employee Benefit Plan it or they sponsor or
maintain, so as not to give rise to a Material Adverse Effect. The Company will
pay, and will cause each other member of any ERISA Controlled Group to pay, when
due any amount payable by it to the Pension Benefit Guaranty Corporation.
Promptly after the filing thereof and upon the request of the Holders
Representative therefore, the Company shall furnish to the Holders
Representative with regard to each Employee Benefit Plan, copies of each annual
report required to be filed pursuant to Section 104 of ERISA in connection with
each such plan for each plan year.
6.17 Compliance with Regulations G, U and X. Neither the Company nor any
Person acting on its behalf will take any action which might cause this
Agreement, the Senior Subordinated Note, the Stock Purchase Documents, the
Senior Loan Documents or any Other Agreements to violate, and the Company will
take all actions necessary to cause compliance with, Regulations G, U and X of
the Board of Governors of the Federal Reserve System and the Securities Exchange
Act of 1934, in each case as now in effect or as the same may hereafter be in
effect.
6.18 Financial Covenants. The Company shall maintain and keep in full force
and effect each of the financial covenants set forth below. The calculation and
determination of each such financial covenant, and all accounting terms
contained therein, must be so calculated and construed in accordance with GAAP
and is subject to adjustment for consistency following the Company furnishing to
the Holders Representative the balance sheets described in Section 66-1 of this
Agreement:
(a) Minimum EBITDA. The Company shall not permit EBITDA of the Company as
of any of the Fiscal Quarter ends set forth below (in each case, for
the EBITDA Testing Period applicable to such Fiscal Quarter end) to be
less than the amount corresponding to such Fiscal Quarter end as set
forth below:
Fiscal Quarter End Minimum EBITDA
12/31/01 $ 496,000
03/31/02 $1,319,000
06/30/02 $2,239,000
09/30/02 $2,942,000
12/31/02 $3,062,000
03/31/03 $3,180,000
06/30/03 $3,311,000
09/30/03 $3,411,000
12/31/03 $3,499,000
03/31/04 $3,624,000
06/30/04 $3,763,000
09/30/04 $3,869,000
6.16 Compliance with ERISA and the Code. The Company will comply, and will
cause each other member of any ERISA Controlled Group to comply, with all
minimum funding requirements, and all other material requirements, of ERISA and
the Code, if applicable, to any Employee Benefit Plan it or they sponsor or
maintain, so as not to give rise to a Material Adverse Effect. The Company will
pay, and will cause each other member of any ERISA Controlled Group to pay, when
due any amount payable by it to the Pension Benefit Guaranty Corporation.
Promptly after the filing thereof and upon the request of the Holders
Representative therefore, the Company shall furnish to the Holders
Representative with regard to each Employee Benefit Plan, copies of each annual
report required to be filed pursuant to Section 104 of ERISA in connection with
each such plan for each plan year.
6.17 Compliance with Regulations G, U and X. Neither the Company nor any
Person acting on its behalf will take any action which might cause this
Agreement, the Senior Subordinated Note, the Stock Purchase Documents, the
Senior Loan Documents or any Other Agreements to violate, and the Company will
take all actions necessary to cause compliance with, Regulations G, U and X of
the Board of Governors of the Federal Reserve System and the Securities Exchange
Act of 1934, in each case as now in effect or as the same may hereafter be in
effect.
6.18 Financial Covenants. The Company shall maintain and keep in full force
and effect each of the financial covenants set forth below. The calculation and
determination of each such financial covenant, and all accounting terms
contained therein, must be so calculated and construed in accordance with GAAP
and is subject to adjustment for consistency following the Company furnishing to
the Holders Representative the balance sheets described in Section 66-1 of this
Agreement:
(a) Minimum EBITDA. The Company shall not permit EBITDA of the Company as
of any of the Fiscal Quarter ends set forth below (in each case, for
the EBITDA Testing Period applicable to such Fiscal Quarter end) to be
less than the amount corresponding to such Fiscal Quarter end as set
forth below:
Fiscal Quarter End Minimum EBITDA
12/31/01 $ 496,000
03/31/02 $1,319,000
06/30/02 $2,239,000
09/30/02 $2,942,000
12/31/02 $3,062,000
03/31/03 $3,180,000
06/30/03 $3,311,000
09/30/03 $3,411,000
12/31/03 $3,499,000
03/31/04 $3,624,000
06/30/04 $3,763,000
09/30/04 $3,869,000
Fiscal Quarter End Minimum EBITDA
12/31/04 $3,963,000
03/31/05 $4,095,000
06/30/05 $4,243,000
09/30/05 $4,356,000
12/31/05 $4,455,000
03/31/06 $4,555,000
06/30/06 $4,555,000
(b) Minimum Fixed Charge Coverage Ratio. For each Cumulative Twelve Month
Fiscal Period commencing with the Fiscal Month ending July 31, 2001,
the Company shall maintian a Fixed Charge Coverage Ratio of not less
than 1.1 to 1.0.
(c) Funded Debt to EBITDA Ratio. The Company shall not permit the Funded
Debt to EBITDA Ratio of the Company as of any of the Fiscal Quarter
ends set forth below (in each case, for the EBITDA Testing Period
applicable to such Fiscal Quarter end) to exceed the ratio
corresponding to such Fiscal Quarter end as set forth below:
Fiscal Quarter End Maximum Funded Debt to
EBITDA Ratio
12/31/01 25.00 to 1
03/31/02 9.00 to 1
06/30/02 5.25 to 1
09/30/02 4.00 to 1
12/31/02 4.00 to 1
03/31/03 3.50 to 1
06/30/03 3.50 to 1
09/30/03 3.50 to 1
12/31/03 3.50 to 1
03/31/04 3.00 to 1
06/30/04 3.00 to 1
09/30/04 3.00 to 1
12/31/04 3.00 to 1
03/31/05 2.50 to 1
06/30/05 2.50 to 1
09/30/05 2.50 to 1
12/31/05 2.50 to 1
03/31/06 2.00 to 1
06/30/06 2.00 to 1
(d) Minimum Capital Base. The Company shall maintain a minimum Capital
Base at a level not less than $6,750,000.00 at all times until
September 30, 2001, with the minimum Capital Base required hereunder
increasing on September 30, 2001, and on the last day of each Fiscal
Quarter thereafter, by seventy-five .,percent (75%) of the Company's
net income for the Cumulative Twelve Month Fiscal Period then ended,
exclusive of losses.
(e) Maximum Capital Expenditures. The Company shall not make or incur any
Capital Expenditures in the aggregate during any fiscal year in excess
of Two Hundred Fifty Thousand Dollars ($250,000) without the
Purchaser's prior written consent.
6.19 Board Observation and Membership.
(a) The Company shall permit any representative designated by the Holders
to (i) visit and inspect any of the properties of the Company; (ii)
examine the corporate and financial records of Company and make copies
thereof or extracts therefrom; and (iii) discuss the affairs,
finances, and accounts of the Company with the directors, officers,
key employees, and independent accountants of the Company.
(b) The Company shall permit Purchaser, so long as any of the Senior
Subordinated Note is outstanding or so long as Purchaser is a holder
of any Common Stock, or owns any stock, warrants or other equity
interest in the Company issued to it or received by it upon exercise,
conversion or exchange thereof or as a dividend or other distribution
with respect thereto, to designate, by written notice, two Persons to
attend and observe all meetings of the Company's board of directors
and all committees or sub-committees thereof. The Company shall (A)
provide such designees notice of all such meetings not less than ten
(10) business days in advance, except that (i) if longer advance
notice is given to the members of the board of directors, the same
advance notice will be given to such designees, and (ii) if
exceptional circumstances arise which make it prudent for a special
meeting of the board of directors to be called on less than ten (10)
business days' notice, then such meeting may be called with such
notice as may be reasonable at the time and the same advance notice
given to the members of the board of directors will be given to such
designees, and (B) provide to such designees, a copy of all materials
distributed at such meetings. The Company shall hold such meetings in
person at least quarterly. The designated observer may call such
meetings on two occasions per calendar year on ten (10) business days'
actual notice to the Company. The Purchaser may change its designees
by written notice to the Company. The Company shall reimburse such
observers for all reasonable expenses incurred relating to such
meetings. Neither the Purchaser's observers nor any director who is
also an officer of the Company will be paid any compensation for
serving as an observer of the board or as a director, as the case may
be.
(c) The Company will (A) permit Purchaser, so long as any of the Senior
Subordinated Note is held by Purchaser, to appoint in lieu of one
representative observer, one person as a member of the Company's board
of directors ("Purchaser Representative"). The Company will (A)
provide such designees notice of all such meetings not less than ten
(10) business days in advance, except that (i) if longer advance
notice is given to the members of the board of directors, the same
advance notice will be given to such designees, and (ii) if
exceptional circumstances arise which make it prudent for a special
meeting of the board of directors to be called on less than ten (10)
business days' notice, then such meeting may be called with -such
notice as may be reasonable at the time and the same advance notice
given to the members of the board of directors will be given to such
designees, and (B) provide to such designees, a copy of all materials
distributed at such meetings. The Company will reimburse the Purchaser
Representatives of the Company's board of directors for all reasonable
expenses incurred traveling to and from such meetings. The Company
shall not pay any of the management directors additional compensation
for attending the board meetings. The Company shall not pay the
Purchaser's Representative or any director who is also an officer of
the Company any compensation for serving as a director of the Company.
6.20 Environmental Costs.
(a) The Company hereby indemnifies and holds each Holder harmless from and
against any liability, loss, damage, suit, action or proceeding
pertaining to violation by the Company of any Environmental Laws,
including, but not limited to, claims of any federal, state or
municipal government or quasi-governmental agency or any third person,
whether arising under any federal, state or municipal law or
regulation, or tort, contract or common law that relates to the
Company.
(b) To the extent the laws of the United States or any state in which the
Company leases or owns property provide that a lien upon the property
of the Company may be obtained for the removal of Polluting Substances
which have been released, no later than sixty (60) days after notice
is given by Purchaser to the Company, the Company shall deliver to
Purchaser a report issued by a qualified, third party environmental
consultant selected by the Company and approved by Purchaser
certifying as to the existence of any Polluting Substances located
upon or beneath the specified property, leased or owned. To the extent
any such Polluting Substance is located therein or thereunder that
either (i) subjects the property to Lien or (ii) requires removal to
safeguard the health of any Person, the Company shall remove, or cause
to be removed, such Lien and such Polluting Substance at the Company's
expense.
7. NEGATIVE COVENANTS
The Company covenants and agrees that from the date hereof until the Senior
Subordinated Obligations have been finally and irrevocably paid in full in
accordance with the terms hereof and thereof:
7.1 Indebtedness. The Company shall not create, incur, issue, assume,
guarantee or otherwise become liable for any Indebtedness except: (a) Permitted
Indebtedness; (b) any extension, renewal or refinancing of any Permitted
Indebtedness (other than the Senior Debt) on such terms and conditions as are,
on the whole, no more onerous to the Company than the terms and conditions of
such Permitted Indebtedness on the date of such extension, renewal or
refinancing; (c) ordinary course trade payables or customer deposits; and (d)
any replacement or refinancing of the Senior Debt; provided that (1) the
interest rate or default rate is not greater than 2% above the rate then in
effect pursuant to the Senior Loan Agreement, (ii) the amortization of principal
on such refinancing is not for a shorter period or for greater annual amounts,
than the amortization provided for in the Senior Loan Agreement, (iii) the
maximum principal amount outstanding under the Senior Debt as so replaced or
refinanced does not exceed the maximum principal amount of the Senior Debt
permitted pursuant to the Senior Lender Intercreditor Agreement, unless the
Company on the date of such replacement or refinancing will have made a
prepayment on the Senior Subordinated Note to the Holders in an amount equal to
such increased amount, together with any applicable Prepayment Fee and other
amounts required under Section 2.3, and (iv) the final maturity date of any term
loans are not extended. Any Permitted Indebtedness that is subordinated to the
Senior Subordinated Obligations will continue to be subordinated to the Senior
Subordinated Obligations on terms and conditions reasonably satisfactory to the
Holders.
7.2 Limitation on Liens. The Company shall not incur, create, assume, or
permit to exist any Lien upon any of its property, assets, or revenues, except
Permitted Liens.
7.3 Merger, Acquisition, Dissolution and Sale of Assets. Other than in
connection with transactions contemplated by the Purchase Agreement on the
Closing Date, the Company shall not become a party to a merger or consolidation,
purchase, or otherwise acquire all or a substantial part of the assets of any
Person or any shares or other evidence of beneficial ownership of any Person,
dissolve or liquidate. The Company shall not form, acquire, or permit the
existence of any Subsidiary. The Company shall not, without the prior written
consent of the Purchaser and the Holders, sell, sell-leaseback, lease as lessor,
license, assign or transfer (whether in one transaction or a series of
transactions) any of its assets or properties, except: (a) inventory in the
6rdinary course of business; and (b) equipment that is obsolete, worn out or no
longer useful or necessary in the Company's business in the ordinary course of
business, so long as the Net Proceeds of any such sales of Equipment will be
applied first to the Senior Debt and then to the Senior Subordinated Obligations
in accordance with the Senior Subordination Agreement.
7.4 Negative Pledge. Until payment and performance in full of all of the
Senior Subordinated Obligations and termination of this Agreement, the Company
shall not, without Purchaser's prior written consent, pledge or suffer to exist
any Lien (except for Permitted Liens) on any part of its assets. Except with
respect to specific property encumbered to secure payment of Permitted
Indebtedness as of the date hereof, or with respect to any amendment, renewal,
extension, substitution, refinancing, restructuring or replacement of the Senior
Debt in accordance with the terms of this Agreement, the Company shall not enter
into any agreement prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
7.5 Restricted Payments. The Company shall not (i) make prepayments or
advances in respect of Indebtedness to others (except to the Senior Lender in
accordance with the Senior Loan Documents and to the Purchaser in accordance
with this Agreement), except the Company.may endorse checks, drafts, and similar
instruments for deposit or collection in the ordinary course of business and, so
long as no Event of Default has occurred that has not been waived (and subject
to the terms of any applicable subordination agreement), may pay scheduled
principal and interest payments with respect to the Permitted Indebtedness, (ii)
loan any money to or guaranty or assume any obligation of any other Person other
than loans to employees in the ordinary course of business, the aggregate
outstanding principal amount of all of which loans do not at any time exceeds
One Hundred Thousand Dollars ($100,000) or (iii) declare or pay any dividends or
make any other payments on the capital stock of, redeem, repurchase or retire
any of the capital stock of, or make any other distribution to, their respective
equity owners.
7.6 Investments. Except as otherwise permitted by Section 7.1, the Company
shall not (i) create any Subsidiary after the Closing Date, (ii) make or hold
any investment in any common stocks, bonds or securities of any kind or any
further capital contribution to any Person other than notes or securities issued
by a customer of the Company in connection with a proceeding in respect of the
Financial Impairment of such customer, (iii) be or become a party to any joint
venture or other partnership, (iv) make or keep outstanding any advance or loan,
or (v) be or become a guarantor of any kind.
7.7 Transactions with Affiliates. The Company shall not enter into any
transaction with any director, officer, employee, shareholder, or Affiliate of
the Company, or any Affiliate or relative of the foregoing except transactions
set forth on Schedule 7.7 or where the terms of such transaction are
substantially similar to those negotiated in good faith by unrelated parties and
disclosed to the Holder prior to execution of the transactions.
7.8 Nature of Business. The Company shall not engage in any business other
than the businesses set forth on Schedule 4.25, or any business reasonably
related thereto.
7.9 Modification of Senior Loan Agreement. Except to the extent permitted
in the Senior Lender Intercreditor Agreement, the Company shall not without the
prior written consent of the Holders agree or consent to any modification,
amendment or waiver of any of the terms or provisions of the Senior Loan
Documents; provided, however, that nothing contained in this Section 7.9
prohibits or limits the Company's right to refinance the Senior Debt upon the
terms set forth in Section 7.1 provided that the terms of such refinancing,
taken as a whole, are not materially more onerous to the Holders than the terms
of the Senior Loan Agreement as in effect on the Closing Date.
7.10 Remuneration. The Company shall not (i) pay any management,
consulting, or similar fees to any shareholder or Affiliate of the Company or to
any director, officer, employee or immediate family member of any such Affiliate
or shareholder, or (ii) pay compensation to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ in excess of
$250,000 annual base salary and bonus plus benefits substantially similar to
those offered by United Expressline.
7.11 R&D Expenditures. The Company will not make or incur any expenditures
for research and development in the aggregate during any Fiscal Year in excess
of Two Hundred Thousand Dollars ($200,000).
7.12 Fiscal Year. The Company will not change its Fiscal Year or accounting
methods without the Holders' prior written consent.
8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1 Events of Default. The occurrence of any one or more of the following
events constitutes an "Event of Default:
(a) Payment. Failure by the Company to make payment of principal or
interest on the Senior Subordinated Note when due or failure by the
Company to pay any other Senior Subordinated Obligations when required
to be paid hereunder to the extent such failure is not remedied within
three (3) Business Days after such required date of payment hereunder
or thereunder; or
(b) Representations and Warranties. Any warranty or representation made or
deemed made by the Company in respect of the Company or any guarantor
or obligor in this Agreement, in any of the Other Agreements, any
certificate, document or financial or other written statement
furnished at any time in compliance with this Agreement are proved to
have been false or inaccurate in any material respect when made or
deemed made; or
(c) Violation of Covenants. Failure by the Company (in respect of the
Company, any guarantor or obligor) to perform, keep, or observe any
term, provision, condition or covenant contained in this Agreement
which is required to be performed, kept, or observed by the Company
(in respect of the Company, any Subsidiary of the Company, or any such
guarantor) (other than those provisions, terms or conditions
referenced in Sections 8.1 (a) and 8.1 (b) of this Agreement); or
(d) Senior Loan Documents; Purchase Documents, Other Agreements. (a)
Failure by the Company or any guarantor or obligor to perform, keep,
or observe any other term, provision, condition or covenant contained
in the Senior Loan Documents, the Purchase Documents or the Other
Agreements that is required to be performed, kept, or observed by any
of them, or (b) the occurrence of an Event of Default under (and as
defined in) this Agreement or any off the Other Agreements; or
(e) Cross-Default. (a) Default by the Company in respect of: (i) any
Indebtedness of the Company in excess of One Hundred Thousand Dollars
($100,000), in the aggregate, (ii) the Senior Loan Agreement or any of
the Senior Loan Documents, or (iii) any of the Other Agreements;
where, in the case of any of clauses (i)-(iii) above, such default
could permit the holder of such other Indebtedness to accelerate such
Indebtedness or any portion thereof to the extent such default has not
been waived, or (b) default by the Company in respect of any Material
Agreement where such default (i) would permit the other party or
parties to such agreement to terminate such agreement, (ii) has
resulted or could reasonably be expected to result in a Material
Adverse Effect; or
(f) False or Misleading Reports. The making or delivering to the Purchaser
by the Company, or any of its officers, employees, or agents, of any
written statement, report, financial statement, or certificate which
is not true and correct in any material respect when made; or
(g) Material Adverse Effect. The occurrence of any Material Adverse
Effect; or
(h) Termination of Existence. The dissolution or termination of existence
of the Company or any guarantor of the Senior Subordinated
Obligations; or
(i) Control. The occurrence of any Change of Control;
(j) Failure of Enforceability of this Agreement, Credit Document;
Security. If. (a) any covenant, material agreement or any Senior
Subordinated Obligation of the Company of the Company or any of the
Other Documents ceases to be enforceable, or is determined to be
unenforceable, in accordance with its terms, or (b) the Company denies
or disaffirms its obligations under this Agreement or any of the Other
Documents or any of the Liens granted in connection therewith, or (c)
any Liens in favor of the Purchaser granted in this Agreement or any
of the Other Documents are determined to be void, voidable or invalid,
or are subordinated or not otherwise given the priority contemplated
by this Agreement, or (d) any perfected Liens granted in favor of the
Purchaser are determined to be unperfected except in the normal course
of the business of the Company as expressly contemplated and permitted
by this Agreement and the Other Documents, or (e) ▇▇▇▇▇▇ revokes, or
permits a payment default to occur under, the Capital Contribution
Agreement; or
(k) ERISA. If: (a) the Company, or any of its ERISA Affiliates or any
other Person institutes any steps to terminate an Employee Benefit
Plan of the Company, or such ERJSA Affiliates, which Employee Benefit
Plan is subject to Title IV of ERISA and, as a result of such
termination, the Company or ERISA Affiliate is or could reasonably be
expected to be required to make a contribution to such Employee
Benefit Plan the payment of which, when taken together with all like
termination payments suffered by the Company or such ERISA Affiliates,
either has resulted or could reasonably be expected to result in a
Material Adverse Effect, or (b) the Company or such ERISA Affiliate
fails to make a contribution to any Employee Benefit Plan which
failure would be sufficient to give rise to a Lien under Section
302(f) of ERISA; or
(l) Judgments. Any money judgment, writ or warrant of attachment or
similar process involving (a) an amount in any individual case in
excess of One Hundred Thousand Dollars ($100,000) or (b) an amount in
the aggregate at any time in excess of One Hundred Thousand Dollars
($100,000), (to the extent not insured by an insurance carrier which
has acknowledged coverage in the amount of the claim without any
reservation of rights of which has been ordered by a court of
competent jurisdiction to pay such claim) is entered or filed against
the Company or against any of its assets and is not released,
discharged, vacated, fully bonded or stayed within thirty (30) days
after such judgment, writ or warrant of attachment or similar
proceeding is entered; or
(m) Forfeiture Proceedings. An adjudication against the Borrower in any
criminal proceedings requiring the Company's forfeiture of any asset
or assets having, either individually or in the aggregate, a value in
excess of One Hundred Thousand Dollars ($100,000); or
(n) Financial Impairment. The Financial Impairment of ▇▇▇▇▇▇, the Company,
or any guarantor of the Senior Subordinated Obligations.
8.2 Remedies.
(a) Defaults. Upon the occurrence of an Event of Default, the Purchaser
has the right to declare all of the Senior Subordinated Obligations
due or to become due from the Company to the Purchaser, whether under
this Agreement, the Other Agreements, the Senior Subordinated Note or
otherwise, at the option of the Purchaser, immediately due and
payable, anything in the Senior Subordinated Note or other evidence of
the Senior Subordinated Obligations or in any of the Other Agreements
to the contrary notwithstanding.
(b) General Rights and Remedies of Purchaser.. The Purchaser has all other
legal and equitable rights to which the Purchaser may be entitled, all
of which rights and remedies are cumulative, and none of which are
exclusive, to the extent permitted by law, in addition to any other
rights or remedies contained in this Agreement or in any of the Other
Agreements.
(c) Termination; Effect on Borrower Obligations. Any termination by the
Purchaser pursuant to this Section 8.2 of its performance does not
absolve, release, or otherwise affect the liability of the Company in
respect of transactions prior to such termination or affect any of the
Liens, rights, powers, and remedies of the Purchaser. Such Liens,
rights, powers, and remedies continue, in all events, until all Senior
Subordinated Obligations of the Company to the Purchaser are
satisfied.
(d) Remedies Cumulative. The above-stated remedies are not intended to be
exhaustive and the full or partial exercise of any of such remedies
does not preclude the full or partial exercise of any other remedy by
the Purchaser under this Agreement, under any of the Other Agreements,
or at equity or under law.
9. SUBORDINATION
Notwithstanding any provision in this Agreement to the contrary, the
Indebtedness evidenced by the Senior Subordinated Note is subordinate in right
of payment to all regularly scheduled payments of principal and interest with
respect to Senior Debt, and the rights and remedies hereunder of the Purchaser,
each Holder and the Holders Representative are subordinate to the rights and
remedies of the Senior Lender, in accordance with the terms of the Senior Lender
Intercreditor Agreement. Nothing contained in this Article IX or elsewhere in
this Agreement, in the Senior Subordinated Note or the Senior Lender
Intercreditor Agreement is intended to or actually impairs, as between the
Company, on the one hand, and Purchaser, each Holder and the Holders
Representative, on the other hand, the obligations of the Company, which are
absolute and unconditional, to pay to each Holder the principal of, Prepayment
Fee (if any), Mandatory Prepayments (if any), and interest on the Senior
Subordinated Note held by such Holder and all other Senior Subordinated
Obligations owing to such Holder as and when the same become due and payable in
accordance with their terms, or is intended to or actually affects the relative
rights of Purchaser, each Holder and the Holders Representative and other
creditors of the Company other than the holders of the Senior Debt, nor does
anything herein or therein prevent Purchaser, each Holder and the Holders
Representative from exercising all remedies otherwise permitted by applicable
law upon an Event of Default under this Agreement.
10. FORM OF SUBORDINATED NOTES, REGISTRATION, TRANSFER AND REPLACEMENT
10.1 Form of Senior Subordinated Note. The Senior Subordinated Note
initially delivered under this Agreement will be a fully registered note in the
form attached hereto as Exhibit A. The Senior Subordinated Note is issuable only
in fully registered form in principal denominations of at least $1,000,000 (or
the then remaining outstanding balance thereof, if less than $1,000,000).
10.2 Subordinated Note Register. The Company shall cause to be kept at the
principal office a register for the registration and transfer of the Senior
Subordinated Note. The Company shall record the names and addresses of each
Holder of the Senior Subordinated Note, each date of transfer, together with a
reasonably detailed description thereof, and the name and address of each
transferee of the Senior Subordinated Note in such register.
10.3 Issuance of New Senior Subordinated Note upon Exchange or Transfer.
Upon surrender for exchange or registration of transfer of any Senior
Subordinated Note to the Company at its address set forth in Section 12.3 (which
Senior Subordinated Note will have been conspicuously marked "REPLACED") and, if
such surrender is made in connection with any transfer, the submission to the
Company of evidence satisfactory to it that the requirements of Section 12.5
have been satisfied, the Company shall execute and deliver, at the expense of
the submitting Holder or any Transferee, one or more new Senior Subordinated
Note having any denomination permitted by Sections 10.1 and 12.5. The newly
issued Senior Subordinated Note must be: (a) in an aggregate principal amount
equal to the aggregate principal amount of the surrendered Senior Subordinated
Note, (b) registered in the name of the surrendering Holder or, if such
surrender is made in connection with any transfer, in the name of the applicable
Transferee and (c) in the case of an exchange, dated the date of the surrendered
Senior Subordinated Note or, in the case of a transfer, dated the date of such
transfer. Every Senior Subordinated Note surrendered for registration of
transfer must be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the Holder of such Senior Subordinated Note or by
his/her attorney duly authorized in writing.
10.4 Replacement of Senior Subordinated Note. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Senior Subordinated Note and, in the case of any such loss, theft or
destruction, upon delivery of a bond of indemnity in such form and amount as is
reasonably satisfactory to the Company or, in the event of such mutilation upon
surrender and cancellation of the Senior Subordinated Note, the Company, without
charge to the Holder thereof, will make and deliver a new Senior Subordinated
Note of like tenor and the same series in lieu of such lost, . stolen, destroyed
or mutilated Senior Subordinated Note. If any such lost, stolen or destroyed
Senior Subordinated Note is owned by HCIC or any other Holder whose credit is
satisfactory to the Company, then the affidavit of an authorized officer of such
owner setting forth the fact of. loss, theft or destruction and of its ownership
of the Senior Subordinated Note at the time of such loss, theft or destruction
is accepted as satisfactory evidence thereof, and no further indemnity is
required as a condition to the execution and delivery of a new Senior
Subordinated Note, other than a written agreement of such owner (in form
reasonably satisfactory to the Company) to indemnify the Company.
11. INTERPRETATION OF AGREEMENT
11.1 Certain Terms Defined. When used in this Agreement, the terms set
forth below are defined as follows:
"Affiliate" means any Person directly or indirectly controlling, controlled by,
or under common control with, the Person in question. A Person is deemed to
control a corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract, or
otherwise.
"Affiliate Transaction" is defined in Section 4.15.
"Agreement" means this Note Purchase Agreement, including all schedules and
exhibits hereto, as the same may be modified, supplemented, extended, and/or
amended from time to time.
"Assignments of Leases" means each of the Michigan Assignment of Leases and the
Encroachment Parcel Assignment of Leases. "Bank" means First Indiana Bank, with
its principal office in Indianapolis, Indiana "Business Day" means a day of the
year on which banks are not required or authorized to close in Columbus, Ohio.
"Capital Base" means the shareholders' equity of the Company plus the principal
amount of the Company's indebtedness to HCIC, its indebtedness to Seller and
▇▇▇▇▇▇ to the extent subordinated to HCIC, and any other indebtedness of the
Company that is subordinated to the Company's indebtedness to the Senior Lender
and HCIC on terms acceptable to such parties.
"Capital Contribution Agreement" means that certain Capital Contribution
Agreement in the form attached hereto as Exhibit E, by and among the Company,
the Purchaser, the Senior Lender and ▇▇▇▇▇▇, dated as of the Closing Date and
providing, upon the terms and conditions set forth therein, for an equity
contribution by ▇▇▇▇▇▇ to the Company in an amount of up to $1,000,000, as the
same may from time to time be amended, restated, supplemented or otherwise
modified.
"Capital Expenditures" means any and all amounts invested, expended or incurred
(including Indebtedness under Capital Leases) by a Person in respect of the
purchase, acquisition, improvement, renovation or expansion of any land and
depreciable or amortizable property of such Person (including, without
limitation, expenditures required to be capitalized in accordance with GAAP),
each as determined on a consolidated basis in accordance with GAAP.
"Capital Leases" means, in respect of any Person, any lease of property imposing
obligations on such Person, as lessee of such property, which are required in
accordance with GAAP to be capitalized on a balance sheet of such Person.
"Change of Control" means either (i) the ceasing of ▇▇▇▇▇▇ to have beneficial
ownership or control of one hundred percent (100%) (on a fully-diluted basis,
disregarding any director qualifying share ownership) of the combined voting
power or economic benefit of the then outstanding equity interests of the
Company entitled to vote generally in the election of directors or (ii) the
ceasing of individuals who constitute the board of directors of ▇▇▇▇▇▇ on the
Closing Date (the "Incumbent Board") to constitute for any reason at least a
majority of the board of directors of ▇▇▇▇▇▇ at any time; provided, however,
that any Person becoming a member of the board of directors of ▇▇▇▇▇▇ subsequent
to the date hereof whose election (or nomination for election) was approved by a
vote of at least 60% of the directors comprising the Incumbent Board will be
considered for purposes hereof as though such Person was a member of the
Incumbent Board (and the former member of the Incumbent Board who has been
replaced thereby shall thereupon no longer be considered to be a member of the
Incumbent Board).
"Closing Date" means July 27, 2001, or such later date on which all of the
conditions stated in Article V of this Agreement have been met to Purchaser's
satisfaction and the purchase price for the Senior Subordinated Note has been
paid. "Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, and the regulations promulgated thereunder. "Company" means
United Acquisition, Inc., an Indiana corporation and, unless the context
requires otherwise, includes its Subsidiaries, if any. "Controlled Group" means
any group of organizations within the meaning of Section 414(b), (c), (m) or (o)
of the Code of which the Company is a member.
"Cumulative Twelve Month Fiscal Period" means a period consisting of twelve
consecutive Fiscal Months, whether or not in the same Fiscal year of the
Company. "▇▇▇▇▇▇ Debt" means the Indebtedness owing by the Company to ▇▇▇▇▇▇
pursuant to a certain Subordinated Promissory Noted, dated as of the Closing
Date, in the original principal amount of $500,000.
"▇▇▇▇▇▇ Stock" means the Series C Convertible Preferred Stock, par value $0.001
per share, of ▇▇▇▇▇▇ to be issued to Purchaser.
"▇▇▇▇▇▇ Subordination Agreement" means that certain Subordination Agreement,
dated as of the Closing Date, executed by ▇▇▇▇▇▇, the Senior Lender, and the
Purchaser, in the form attached hereto as Exhibit G, pursuant to which the
relative priorities of the Senior Lender and Purchaser with respect to the
repayment of Senior Debt and the Senior Subordinated Obligations, on the one
hand, and the ▇▇▇▇▇▇ Debt, on the other, are established, as the same may be
amended, supplemented or otherwise modified from time to time.
"EBITDA" means, for any period, earnings before interest, taxes, depreciation,
and amortization, all determined in accordance with GAAP. "EBITDA Testing
Period" means (a) with respect to the Fiscal Quarter end occurring on December
31, 2001, the Fiscal Quarter ending on such date, (b) with respect to the Fiscal
Quarter end occurring on March 31, 2002, the period commencing on October 1,
2001 and continuing through March 31, 2002, (c) with respect to the Fiscal
Quarter end occurring on June 30, 2002, the period commencing on October 2001
and continuing through June 30, 2002, and (d) with respect to each Fiscal
Quarter end occurring after June 30, 2002, the Cumulative Twelve Month Fiscal
Period ending on such Fiscal Quarter end.
"Excess Cash Flow" means the remainder of. (A) EBITDA, minus (B) the sum of: (1)
interest expense, (2) capital expenditures not made with borrowed funds, (3)
cash taxes and/or member distributions permitted hereunder for the payment of
taxes, plus (4) scheduled principal payments on term indebtedness including
principal payments on Seller Debt permitted under the Subordination Agreements,
plus or minus (C) changes in working capital.
"Employee Benefit Plan" means any employee benefit plan, as defined in Section
3(3) of ERISA, which is maintained by any member of an ERISA Controlled Group.
"Encroachment Parcel Assignment of Leases" means an Assignment of Rents and
Leases in the form attached hereto as Exhibit D-2 on the Property that is the
subject of the Leasehold Mortgage, as the same may from time to time be amended,
restated, supplemented or otherwise modified.
"Environmental Laws" means all federal, state, or local laws, ordinances, rules,
regulations, and orders of courts or governmental administrative agencies or
authorities relating to pollution or protection of the environment (including,
without limitation, ambient air, surface water, ground water, land surface, and
subsurface strata), and other laws relating to (a) Polluting Substances or (b)
the manufacture, processing, distribution, use, treatment, handling, storage,
disposal, or transportation of Polluting Substances. "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended and in effect from time to
time, and the regulations promulgated thereunder.
"ERISA Controlled Group" means an entity that is a member of a group that
includes the Company and which is treated as a single employer under Section
414(b) or (c) of the Code. In addition, for any purpose of this Agreement
relating to Code Section 412, the term ERISA Affiliate means any entity
aggregated with the Company under Code Sections 414(b), (c), (m), or (o). "Event
of Default" is defined in Section 8.1.
"Excess Interest" is defined in Section 2.8.
"Financial Impairment" means, in respect of a Person, the distressed economic
condition of such Person manifested by any one or more of the following events:
(a) the discontinuation of the business of the Person;
(b) the adjudication of the Person as a debtor or having an order for
relief under Title 11 of the United States Code entered against the
Person;
(c) the Person ceases or in unable or admits in writing its inability, to
make timely payment upon the Person's debts, obligations, or
liabilities as they mature or come due;
(d) assignment by the Person for the benefit of creditors;
(e) voluntary institution by the Person or consent granted by the Person
to the involuntary institution (whether by petition, compliant,
application, default, answer (including, without limitation, an answer
or any other permissible or required responsive pleading admitting:
(i) the jurisdiction of the forum or (ii) any material allegations of
the petition, complaint, application, or other writing to which such
answer serves as a responsive pleading thereto), or otherwise) of any
bankruptcy, insolvency, reorganization, arrangement, or similar
proceeding pursuant to or purporting to be pursuant to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation, receivership, trusteeship, or similar law of
any jurisdiction;
(f) voluntary application by the Person for or consent granted by the
Person to be involuntary appointment of any receiver, trustee, or
similar officer (i) for the Person or (ii) of or for all or any
substantial part of the Person's property; or
(g) the commencement or filing against a Person, without such Person's
application, approval or consent, of an involuntary proceeding or an
involuntary petition seeking: (a) liquidation, reorganization or other
relief in respect of such Person, its debts or all or a substantial
part of its assets under any Federal, state or foreign bankruptcy,
insolvency, receivership, or similar law now or hereafter in effect or
(b) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for such Person or for a substantial
part of its assets, and, in any such case, either (i) such proceeding
or petition continues undismissed for sixty (60) days or (ii) an order
or decree approving or ordering any of the foregoing is entered.
"Fiscal Month" means any of the twelve consecutive monthly fiscal accounting
periods collectively forming a Fiscal Year of the Company.
"Fiscal Quarter" means any of the four consecutive three-month fiscal accounting
periods collectively forming a Fiscal Year of the Company.
"Fiscal Year" means the Company's regular annual accounting period for federal
income tax purposes ending December 31.
"Fixed Charge Coverage Ratio" means the ratio of. (A) the Company's EBITDA plus
capital contributions made to the Senior Lender under the Capital Contribution
Agreement, over (B) the sum of the principal paid plus interest expense plus
Capital Expenditures not paid from borrowed funds.
"Funded Debt" means, with respect to the Company at any time, the aggregate
principal amount of all Indebtedness then outstanding that has an original
maturity date or remains unpaid more than twelve (12) months after the date
originally incurred. "Funded Debt to EBITDA Ratio" means, as of any date of
determination, the ratio of the Company's Funded Debt as of such date to the
Company's EBITDA for the EBITDA Testing Period applicable to such date.
"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board, the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board or in
such other statements by such other entity as may be in general use by
significant segments of the accounting profession and which have been applied in
the preparation of the financial statements referred to in Section 4.2 of this
Agreement and otherwise consistently applied.
"Holders" means the Person or Persons who, at the time of determination, is the
lawful owner of all or a portion of the Senior Subordinated Note, except that
neither the Company nor any Affiliate of the Company (other than HCIC and its
affiliates) will at any time be a Holder. Unless otherwise provided in this
Agreement, in each instance that the consent or request of the Holders to an
action is required, the Holders will be deemed to have consented to or requested
such action, as the case may be, if the majority of the Holders so consent or
request, as the case may be.
"Holders Representative" means at any date of determination (i) Purchaser, at
all times during which Purchaser is a Holder of Senior Subordinated Note having
an aggregate principal amount equal to greater than 50% of the then outstanding
principal amount of all Senior Subordinated Note and (ii) at all other times,
the Person appointed in writing by the majority of the Holders to act as their
representative from time to time for purposes herein; provided that (A) the
Holders Representative is (x) a Holder and (y) reasonably acceptable to the
Company; and (B) the Company is given 5 Business Days' prior written notice of
the appointment of any Holders Representative.
"Impositions" is defined in Section 6.7.
"Indebtedness" means, with respect to any Person, without duplication, (a)
indebtedness for borrowed money, (b) obligations of such Person evidenced by
bonds, indentures, notes or other similar instruments, (c) obligations of such
Person for the deferred purchase price of property or services, (d) obligations
of such Person as lessee under Capitalized Leases, (e) all obligations of such
Person as an account party in respect of letters of credit or banker's
acceptances, (f) liabilities of such Person in respect of unfunded vested
benefits under plans covered by Title IV of ERISA, (g) obligations of a third
party secured by any Lien on the properties or assets of such Person, (h)
obligations of such Person in respect of currency or interest rate swap or
interest rate cap or comparable transactions, (i) obligations secured by any
Lien on the properties or assets of such Person and (j) obligations under any
direct or indirect guaranty in respect of indebtedness or obligations of a third
party of the kinds referred to in clauses (a) through (i) above.
"Indemnification Obligations" means Senior Subordinated Obligations for
indemnification or contribution hereunder or under the Other Agreements.
"Indiana Mortgage" means the Mortgage, Security Agreement, Assignment of Rents
and Fixture Filing, executed by the Company in favor of the Purchaser in the
form attached hereto as Exhibit C-1 on the Property owned by the Company in
Elkhart County, Indiana, and commonly known as ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, as the same may from time to time be amended, restated, supplemented or
otherwise modified.
"Intellectual Property" means all patents, patent rights, patent applications,
licenses, inventions, trade secrets, know-how, proprietary techniques (including
processes and substances), trademarks, service marks, trade names, and
copyrights. "Intercreditor Agreements" means each of (a) the Senior Lender
Intercreditor Agreement, (b) the Seller Subordination Agreement, and (c) the
▇▇▇▇▇▇ Subordination Agreement.
"Leasehold Mortgage" means the Leasehold Mortgage executed by the Company in
favor of the Purchaser in the form attached hereto as Exhibit C-3 on the
leasehold interest of the Company created by that certain Real Estate Lease
entered into by and among the Company, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ Trust dated September 11, 1992, ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, dated as of the Closing Date, with respect to certain real estate located
in White Pigeon, St. ▇▇▇▇▇▇ County, Michigan, as the same may from time to time
be amended, restated, supplemented or otherwise modified.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, lease, financing statement, or conditional sale or title retention
agreement, or any other interest in property designed to secure the repayment of
Indebtedness or any other obligation, whether arising by agreement, operation of
law, or otherwise.
"Material Adverse Effect" means (a) a material adverse effect upon the business,
operations, properties, assets or condition (financial or otherwise) of the
Company or (b) the impairment of the ability of any party to perform its
obligations under this Agreement or any of the Other Agreements to which it is a
party or of Purchaser to enforce or collect any of the Senior Subordinated
Obligations. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect, a Material Adverse Effect is deemed to have occurred if the
cumulative effect of such event and all other then existing events would result
in a Material Adverse Effect.
"Maximum Rate" is defined in Section 2.8.
"Michigan Assignment of Leases" means an Assignment of Rents and Leases in the
form attached hereto as Exhibit D-1 on the Property that is the subject of the
Michigan Mortgage, as the same may from time to time be amended, restated,
supplemented or otherwise modified.
"Michigan Mortgage" means the Mortgage executed by the Company in favor of the
Purchaser in the form attached hereto as Exhibit C-2 on the Property owned by
the Company in St. ▇▇▇▇▇▇ County, Michigan, owned by the Company and commonly
known as ▇▇▇▇▇ ▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the same may from time to
time be amended, restated, supplemented or otherwise modified. "Mortgages" means
each of the Indiana Mortgage, the Michigan Mortgage and the Leasehold Mortgage.
"Obsidian" means Obsidian Capital Partners, L.P., a Delaware limited
partnership.
"Obsidian Documents" means (a) the Share Exchange Agreement by and between
Obsidian and ▇▇▇▇▇▇ dated as of July , 2001, together with all other documents,
certificates, instruments and agreements contemplated thereby or executed and/or
delivered in connection therewith, all as the same may from time to time be
amended, restated, supplemented or otherwise modified, and all other documents,
certificates, instruments and agreements contemplated thereby or executed and/or
delivered in connection therewith, all as the same may from time to time be
amended, restated, supplemented or otherwise modified.
"Other Agreements" means the Senior Subordinated Note, the Stock Purchase
Documents, the Security Documents, the Intercreditor Agreements and all other
agreements, instruments and documents (including, without limitation, notes,
guarantees, powers of attorney, consents, assignments, contracts, notices,
subordination agreements and all other written matter), and all renewals,
modifications and extensions thereof, whether heretofore, now or hereafter
executed by or for the benefit or on behalf of the Company and delivered to and
for the benefit of Purchaser or any Person participating with Purchaser in the
Senior Subordinated Note with respect to this Agreement or any of the
transactions contemplated by this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any other governmental
authority succeeding to any of its functions. "Pension Plan" means a defined
benefit plan, as defined in Code Section 4.140) or ERISA Section 3(35) that is
or will be established or maintained by any member of an ERISA Controlled Group.
"Permitted Indebtedness" means (a) any Indebtedness in favor of the Senior
Lender under the Senior Loan Agreement and created pursuant thereto, (b) any
Indebtedness in favor of Purchaser under this Agreement and/or the Other
Agreements and created pursuant thereto, (c) presently existing or hereafter
arising purchase money Indebtedness incurred by the Company to finance the
acquisition of capital assets by the Company, subject to the limitations placed
on capital expenditures in Section 7.10, (d) subject to the Seller Subordination
Agreement, the Seller Debt, (e) subject to the ▇▇▇▇▇▇ Subordination Agreement,
the ▇▇▇▇▇▇ Debt, and (0 the other Indebtedness set forth on Schedule 11.1(aA.
"Permitted Liens" means (a) Liens in favor of the Senior Lender under the Senior
Loan Agreement in effect on the date hereof or created pursuant thereto, (b)
Liens in favor of Purchaser under this Agreement and/or the Other Agreements;
(c) Liens securing purchase money Indebtedness incurred to finance the
acquisition of capital assets by the Company (including any Lien in respect of a
Capitalized Lease of personal property), subject to the limitations placed on
Capital Expenditures in Section 6.18(e) hereof, but only so long as, and (i)
such Lien attaches only to the asset so financed, and (ii) the Indebtedness
secured by such Lien does not exceed 100% of the purchase price, including
installation and freight, of the asset so financed; (d) Liens for taxes,
assessments or government charges not yet due and payable; (e) materialmen's,
mechanic's, carrier's, landlord's or other like Liens arising against the
Company in the ordinary course of business for amounts that are not yet due and
payable or which are being diligently contested in good faith, so long as the
Purchaser has been notified thereof and adequate reserves are maintained for
their payment; (f) pledges or deposits to secure only the payment of worker's
compensation, unemployment insurance or other social security benefits (other
than liens arising under ERISA) in the ordinary course of business; (g) zoning
or deed restrictions, public utility easements, rights of way, minor title
irregularities and similar matters relating to real property of the Company, in
all such cases having no Material Adverse Effect; (h) Liens (i) which arise in
connection with judgments or attachments the occurrence of which does not
constitute an Event of Default, (ii) the execution or other enforcement of any
such Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings and (iii) which
are junior in priority to the Liens of the Purchaser; (i) deposits or cash
pledges securing performance of contracts, bids, tenders, leases (other than
Capital Leases) statutory obligations, surety and appeal bonds (other than
contracts for the payment of Indebtedness for borrowed money) arising in the
ordinary course of business; 0) liens created or assumed in purchasing,
constructing or improving any real property or to which any real property is
subject when purchased, subject to the limitations placed on Capital
Expenditures in Section 6.18(e) hereof, provided, however, that: (i) the
mortgage, security interest or other lien is confined to the property in
question and (ii) the Indebtedness secured thereby does not exceed 100% of the
price of such purchase, construction or improvements; (k) any operating lease
entered into by the Company as lessee; provided, however, that the scheduled
rental payments in respect to all such leases of the Company do not at any time
exceed Twenty Thousand Dollars ($20,000) per month in the aggregate or Two
Hundred Forty Thousand Dollars ($240,000) in the aggregate during any Fiscal
Year of the Company; (1) any transfer of a check or other medium of payment for
deposit or collection, or any similar transaction in the ordinary course of
business; (m) security deposits received from customers, in each case in the
ordinary course of business; and (n) Liens disclosed on Schedule 7.2 and
approved by Purchaser.
"Person" means any individual, sole proprietorship, corporation, business trust,
unincorporated organization, association, company, partnership, limited
liability company, joint venture, governmental authority (whether a national,
federal, state, county, municipality or otherwise, and includes without
limitation any instrumentality, division, agency, body or department thereof),
or other entity.
"Polluting Substances" means all pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes and includes, without
limitation, any flammable explosives, radioactive materials, oil, hazardous
materials, hazardous or solid wastes, hazardous or toxic substances or related
materials defined as such in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act of 1976,
the Hazardous and Solid Waste Amendments of 1984, and the Hazardous Materials
Transportation Act, and comparable Environmental Laws of any state in which the
Company owns or leases property as any of the same are hereafter amended, and in
the regulations promulgated thereunder; provided, in the event any of the
foregoing Environmental Laws is amended so as to broaden the meaning of any term
defined thereby, such broader meaning applies subsequent to the effective date
of such amendment and, provided, further, to the extent that the applicable laws
of any state establish a meaning for "hazardous substance," "hazardous waste,"
"hazardous material," "solid waste," or "toxic substance" which is broader than
that specified in any of the foregoing Environmental Laws, such broader meaning
applies.
"Potential Default" means the occurrence of any condition or event that, with
the passage of time or giving of notice or both, would constitute an Event of
Default.
"Premium Percentage" means, with respect to any payment or prepayment made or
required of the Company under Section 2.2, Section 2.3, or Section 8.2, the
premium percentage set forth below which corresponds to the earliest date set
forth below upon which such payment or prepayment, as the case may be, is made
or required pursuant to such section of the Agreement:
Premium Payment Date or Premimum
Prepayment Date Percentage
Closing Date through July 26, 2002 5%
July 27, 2002 through July 26, 2003 4%
July 27, 2003 through July 26, 2004 3%
July 27, 2004 through July 26, 2005 2%
July 27, 2005 through July 26, 2006 1%
July 26, 2006 and thereafter 0%
"Prepayment Fee" means and includes (a) the premium payable by the Company to
Purchaser under subclause (c) of the first sentence of Section 2.2 in the event
of a prepayment under Section 2.2, (b) the premium payable by the Company to
Purchaser under Section 2.3, as a result of the occurrence of an event described
in Section 2.3, and (c) the premium payable by the Company to Purchaser under
Section 8.2 under any of the circumstances which require the payment of a
premium by the Company to Purchaser under Section 8.2.
"Property" means all real property owned, leased, or operated by the Company.
"Purchase Documents" means (a) the Purchase Agreement by and among United
Acquisition, Inc., United Expressline, Inc., J.J.M., Incorporated, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dated as of
July ___, 2001, together with all other documents, certificates, instruments and
agreements contemplated thereby or executed and/or delivered in connection
therewith, all as the same may from time to time be amended, restated,
supplemented or otherwise modified, and all other documents, certificates,
instruments and agreements contemplated thereby or executed and/or delivered in
connection therewith, all as the same may from time to time be amended,
restated, supplemented or otherwise modified.
"Purchaser" means HCIC, together with all of their respective transferees,
successors and assigns of all or any portion of the Senior Subordinated Note or
the Senior Subordinated Obligations and any nominees on whose behalf any of the
foregoing purchase or otherwise acquire any of such Indebtedness of the Company,
and includes, but is not limited to, each and every "Holder" as defined herein.
With respect to any right or action to be taken by Purchaser under this
Agreement, the term Purchaser means (a) so long as HCIC is a Holder, HCIC, and
(b) if HCIC is no longer a Holder, Holders representing a majority in interest
of the Senior Subordinated Obligations.
"Reportable Event" means (i) any of the events set forth in Sections 4043(c)
(other than a merger, consolidation or transfer of assets in which no Pension
Plan involved has any unfunded benefit liabilities and other than those events
as to which the notice requirements or penalties for failure to provide notice
have been waived by regulation or administrative action of the PBGC), 4068(a) or
4063(a) of ERISA, (ii) any event requiring any member of the Controlled Group to
provide security under Section 401(a)(29) of the Code, or (iii) any failure to
make payments required by Section 412(m) of the Code.
"Securities Act" is defined in Section 3.3 of this Agreement.
"Security Agreement" means the Security Agreement, dated as of the Closing Date,
executed by the Company in favor of the Purchaser in the form attached hereto as
Exhibit B, as the same may from time to time be amended, restated, supplemented
or otherwise modified. "Security Documents" means, collectively, any assignment,
pledge agreement, security agreement, mortgage, deed of trust, deed to secure
debt, financing statement and any similar instrument, document or agreement
under or pursuant to which a Lien is now or hereafter granted to, or for the
benefit of, the Purchaser, the Holders Representative and/or any of the Holders
on any real or personal property of any Person to secure all or any portion of
the Senior Subordinated Obligations, all as the same may from time to time be
amended, restated, supplemented or otherwise modified,, including, without
limitation, the Security Agreement, the Mortgages, the Assignments of Leases and
the Capital Contribution Agreement.
"Seller" means United Expressline, Inc, an Indiana corporation.
"Seller Debt" means the Indebtedness owing by the Company to Seller pursuant to
a certain Subordinated Promissory Note, dated as of the Closing Date, in the
original principal amount of $1,500,000. "Seller Subordination Agreement" means
that certain Subordination Agreement, dated as of the Closing Date, executed by
the Company, the Senior Lender, the Purchaser and Seller, in the form attached
hereto as Exhibit H, pursuant to which the relative priorities of the Senior
Lender and Purchaser with respect to the repayment of Senior Debt and the Senior
Subordinated Obligations, on the one hand, and the ▇▇▇▇▇▇ Debt, on the other,
are established, as the same may be amended, supplemented or otherwise modified
from time to time.
"Senior Debt" means, at any given time, the Indebtedness (whether now
outstanding or hereafter incurred) of the Company in respect of the Senior Loan
Agreement, in a principal amount not to exceed the limitations set forth with
respect thereto in the Senior Lender Intercreditor Agreement, together with
interest, fees, premiums, expenses, indemnities and all other amounts payable
under the Senior Loan Documents or any notes, security documents, guaranties or
other loan documents referred to therein or pursuant thereto, and any permitted
replacements, renewals, extensions, restructurings and refinancings thereof or
substitutions therefor (and as any of the foregoing may be limited by the terms
of this Agreement or the Senior Lender Intercreditor Agreement).
"Senior Lender" means First Indiana Bank, with its principal office in
Indianapolis, Indiana, together with its successors and assigns, and any Person
who replaces or refinances all or part of the Senior Debt under the terms set
forth in Section 7.1(c).
"Senior Lender Intercreditor Agreement" means that certain Intercreditor
Agreement, dated as of the Closing Date, executed by the Company, the Senior
Lender, and Purchaser in the form attached hereto as Exhibit F, pursuant to
which the relative priorities of the Senior Lender and Purchaser with respect to
the repayment of Senior Debt and the Senior Subordinated Obligations are
established, as the same may be amended, supplemented or otherwise modified from
time to time.
"Senior Loan Agreement" means the Credit Agreement between the Company and the
Senior Lender, dated as of the Closing Date, as the same may be amended,
supplemented or otherwise modified from time to time.
"Senior Loan Documents" means the Senior Loan Agreement and the agreements,
documents and instruments executed in connection therewith or contemplated
thereby, and all amendments thereto, as the same may be amended, supplemented or
otherwise modified from time to time, and renewed, extended, substituted,
refinanced or replaced, including successive refinancings thereof. "Registration
Rights Agreement" means the Registration Rights Agreement dated as of the
Closing Date executed by HCIC and ▇▇▇▇▇▇, as the same may be amended, modified
or restated from time to time.
"Subsidiary" means any Person of which or in which the Company owns directly or
indirectly more than 50% of (i) the combined voting power of all classes having
general voting power under ordinary circumstances to elect a majority of the
board of directors or equivalent body of such Persons, if it is a corporation,
(ii) the capital interest or profits interest in the profits of such Person, if
it is a partnership, joint venture or similar entity, or (iii) the beneficial
interest of such Person if it is a trust, association or other unincorporated
organization.
"Senior Subordinated Note" means a term promissory note in the form of Exhibit A
issued to one or more Holders pursuant to this Agreement, together with all
renewals, modifications, extensions, substitutions and replacements thereof.
"Senior Subordinated Obligations" means and includes any and all Indebtedness
and/or liabilities of the Company to Purchaser of every kind, nature and
description, direct or indirect, secured or unsecured, joint, several, joint and
several, absolute or contingent, due or to become due, now existing or hereafter
arising, under this Agreement or any Other Agreement (regardless of how such
Indebtedness or liabilities arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument) and all
obligations of the Company to Purchaser to perform acts or refrain from taking
any action under any of the aforementioned documents, together with all
renewals, modifications, extensions, increases, substitutions or replacements of
any of such Indebtedness.
"Stock Purchase Agreement" means the Stock Purchase Agreement, dated as of the
Closing Date executed by and between the Purchaser and ▇▇▇▇▇▇, with respect to
the issuance to the Purchaser of the ▇▇▇▇▇▇ Stock, as the same may be amended,
modified or restated from time to time.
"Stock Purchase Documents" means the Stock Purchase Agreement and the Joinder
Agreement, together with all other documents, certificates, instruments and
agreements contemplated thereby or executed and/or delivered in connection
therewith, all as the same may from time to time be amended, restated,
supplemented or otherwise modified, and all other documents, certificates,
instruments and agreements contemplated thereby or executed and/or delivered in
connection therewith, all as the same may from time to time be amended,
restated, supplemented or otherwise modified.
"Termination Date" means the earliest to occur of (a) July 27, 2006, (b) the
date on which the Senior Subordinated Note is accelerated pursuant to Article
VIII, or (c) the date on which the Senior Subordinated Obligations are paid in
full.
"Termination Event" means (a) a Reportable Event, (b) the termination of a
Pension Plan which has a material unfunded benefit liabilities (including an
involuntary termination under Section 4042 of ERISA), (c) the filing of a Notice
of Intent to Terminate a Pension Plan, (d) the initiation of proceedings to
terminate a Pension Plan under Section 4042 of ERISA or (e) the appointment of a
trustee to administer a Pension Plan under Section 4042 of ERISA.
"Transfer" is defined in Section 12.5 hereof.
"Transfer Agreement" is defined in Section 12.5 hereof.
"Transferee" means any Person to whom a Transfer is made in accordance with
Section 12.5; provided that (A) such Person is an "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act.
"Triggering Event" means (a) a Change of Control, (b) any combination,
consolidation or merger between the Company and any partnership, limited
liability company or corporation, unless (i) the Company is the surviving entity
and (ii) the holders of euity securities of the Company immediately prior to
such transaction hold, immediately after such transaction, at least a majority
of the equity securities of the Company, (c) sale of all or substantially all of
the assets of the Company in one or a series of related transactions, (d) the
consummation of any public offering of equity securities by the Company or a
successor thereof, or (e) the occurrence of any Event of Default.
Terms that are defined in other Sections of this Agreement have the meanings
specified therein. All other terms contained in this Agreement have, when the
context so indicates, the meanings provided for by the Uniform Commercial Code
as adopted and in force in the State of Ohio, as from time to time in effect.
11.2 Accounting Terms and Definitions. Unless otherwise defined or
specified herein all accounting terms used in this Agreement will be construed
in accordance with GAAP, applied on a basis consistent in all material respects
with the financial statements delivered by Company to HCIC on or before the
Closing Date. All accounting determinations for purposes of determining
compliance with the financial covenants contained in Section 6.18 will be made
in accordance with GAAP as in effect on the Closing Date and applied on a basis
consistent in all material respects with the audited financial statements
delivered to HCIC by Company on or before the Closing Date. The financial
statements required to be delivered hereunder from and after the Closing Date,
and all financial records, will be maintained in accordance with GAAP as in
effect at the time of deliverance of such financial statements. If GAAP changes
from the basis used in preparing the audited financial statements delivered to
HCIC by Company on or before the Closing Date, the certificates required to be
delivered pursuant to Section 6.2 demonstrating compliance with the covenants
contained herein must include, at the election of Company or upon the request of
HCIC, calculations setting forth the adjustments necessary to demonstrate how
Company is in compliance with the financial covenants based upon GAAP as in
effect on the Closing Date.
12. MISCELLANEOUS
12.1 Expenses. The Company agrees to pay (a) all out-of-pocket expenses of
Purchaser (including reasonable fees, expenses and disbursements of Purchaser's
counsel) in connection with the preparation, negotiation, enforcement, operation
and administration of this Agreement, the Senior Subordinated Note, the Other
Agreements, or any documents executed in connection therewith, or any waiver,
modification or amendment of any provision hereof or thereof; and (b) if an
Event of Default occurs, all court costs and costs of collection, including,
without limitation, reasonable fees, expenses and disbursements of counsel
employed in connection with any and all collection efforts. The attorneys' fees
arising from such services, including those of any appellate proceedings, and
all expenses, costs, charges and other fees incurred by such counsel or
Purchaser in any way or respect arising in connection with or relating to any of
the events or actions described in this Article XII are payable by the Company
to Purchaser, on demand, and are additional Senior Subordinated Obligations.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees may include: recording costs, appraisal costs, paralegal fees, costs
and expenses; accountants' fees, costs and expenses; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges, telegram charges;
facsimile charges; secretarial overtime charges; and expenses for travel,
lodging and food paid or incurred in connection with the performance of such
legal services; provided that all such fees are reasonable. The Company agrees
to indemnify Purchaser from and hold it harmless against any documentary taxes,
assessments, or charges made by any governmental authority by reason of the
execution and delivery by the Company or any other Person of this Agreement, the
Other Agreements, and any documents executed in connection therewith.
12.2 Indemnification. In addition to any other rights or remedies to which
HCIC and the HCIC Investors may be entitled, the Company agrees to and will
indemnify and hold harmless Purchaser, the other Holders, and their Affiliates
and their respective successors, assigns, officers, directors, employees,
attorneys, and agents (individually and collectively, an "Indemnified Party")
from and against any and all losses, claims, obligations, liabilities,
deficiencies, penalties, causes of action, damages, reasonable costs, and,
reasonable expenses (including, without limitation, costs of investigation and
defense, attorneys' fees and expenses) (collectively "Loss") including, without
limitation, those arising out of the sole or contributory negligence of any
Indemnified Party, that the Indemnified Party may suffer, incur, or be
responsible for, arising or resulting from any misrepresentation, breach of
warranty, or nonfulfillment of any covenant or agreement on the part of the
Company under this Agreement, or under any other agreement to which the Company
is a party in connection with the transactions contemplated hereby, or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by the Company to Purchaser or the other Holders
under this Agreement; provided, that the Company will not indemnify any
Indemnified Party for any Loss resulting from such Indemnified Party's gross
negligence or willful misconduct. The foregoing indemnification includes any
such claims, actions, damages, costs and expenses incurred by reason of the sole
or contributory negligence of the Person to be indemnified, but excludes any of
the same incurred by reason of such Person's gross negligence or willful
misconduct.
12.3 Notices. All notices, requests, demands and other communications
provided for hereunder must be in writing and will be given solely: (a) by hand
delivery or by overnight courier delivery service, with all charges paid, (b) by
facsimile transmission, if confirmed same day in writing by first class mail
mailed, or (c) by registered or certified mail, postage prepaid and addressed to
the parties. For the purposes of this Agreement, such notices are deemed to be
given and received: (i) if by hand or by overnight courier service, upon actual
receipt, (ii) if by facsimile transmission, upon receipt of machine-generated
confirmation of such transmission (and provided the above-stated written
confirmation is sent) or (iii) if by registered or certified mail, upon the
first to occur of actual receipt or the expiration of 48 hours after deposit
with the U.S. Postal Service. Notices or other communications hereunder must be
addressed, (a) if to Purchaser, addressed to Purchaser at the address specified
on Annex I hereto or to such other address as Purchaser may in writing
designate, (b) if to any other Holder, addressed to such Holder at such address
as such Holder may in writing designate, and (c) if to the Company, addressed to
the Company at the address set forth next to its name on the signature pages
hereto or to such other address as the Company may in writing designate.
12.4 Reproduction of Documents. This Agreement and all documents relating
hereto, including, without limitation (a) consents, waivers and modifications
which may hereafter be executed, (b) documents received by Purchaser at the
closing of the purchase of the Senior Subordinated Note, and (c) financial
statements, certificates and other information previously or hereafter furnished
to Purchaser, may be reproduced by Purchaser by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and
Purchaser may destroy any original document so reproduced. The Company agrees
and stipulates that any such reproduction which is legible is admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction is likewise
be admissible in evidence; provided that nothing herein contained precludes the
Company from objecting to the admission of any reproduction on the basis that
such reproduction is not accurate, has been altered, is otherwise incomplete or
is otherwise inadmissible.
12.5 Assignment, Sale of Interest. The Company may not sell, assign or
transfer this Agreement, the Senior Subordinated Note or the Other Agreements or
any portion thereof, including, without limitation, the Company's rights, title,
interests, remedies, powers and/or duties hereunder or thereunder. The Company
hereby consents to Purchaser's participation, sale, assignment, transfer or
other disposition (collectively, a "Transfer"), at any time or times hereafter,
of this Agreement, or the Other Agreements to which the Company is a party, or
of any portion hereof or thereof, including, without limitation, Purchaser's
rights, title, interests, remedies, powers and/or duties hereunder or
thereunder. Any such Transfer must be: (a) only to a Transferee; (b) in a
principal amount for any Senior Subordinated Note of not less than $500,000; (c)
arranged by the transferor thereof or the applicable Transferee (including,
without limitation, costs and expenses relating to the preparation, execution
and delivery of any Transfer Agreement (as defined herein) and any new Senior
Subordinated Note and due diligence); and (d) made pursuant to a transfer
agreement (each a "Transfer Agreement") executed by the transferor, the
applicable Transferee, the Holders Representative and the Company, and which
sets forth:
(1) the following representations and undertaking of the Transferee:
(A) such Transferee (I) is an "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities
Act; (II) understands and acknowledges that the Senior Subordinated
Note have not been registered under the Securities Act or any other
applicable securities law, are being offered in transactions not
requiring registration under the Securities Act or any other
securities laws, and may not be offered, sold or otherwise
transferred, except in compliance with the registration requirements
of the Securities Act and any other applicable securities law,
pursuant to an exemption therefrom or in a transaction not subject
thereto and in each case in compliance with the conditions for
transfer set forth in clause (B) below; (III) is aware that it may be
required to bear the economic risk of an investment in the
Subordinated Notes for an indefinite period of time and it is able to
bear such risk for an indefinite period; and (IV) is purchasing the
Senior Subordinated Note for its own account for investment, and not
with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act or any other
securities laws;
(B) such Transferee agrees to offer, sell, assign, transfer, pledge,
encumber or otherwise disposed of such Senior Subordinated Note, in
whole or in part, only (a) to the Company, (b) to an "accredited
investor" within the meaning of subparagraphs (a)(1), (2), (3) or (7)
of Rule 501 under the Securities Act that is acquiring such Senior
Subordinated Note (or any interest therein) for its own account and
not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act or any other
securities law or (c) pursuant to any other available exemption from
the registration requirements of the Securities Act and the
requirements of any other securities laws;
(C) such Transferee acknowledges that it is subject to, and its interest
in the Senior Subordinated Note are governed by, this Agreement
(including without limitation Section 12.13 hereof, such Transfer
Agreement to set forth a reproduction of such section in its entirety)
and the Senior Subordination Agreement; and
(D) such Transferee represents and warrants that it is not purchasing its
interest in the Senior Subordinated Note (and the corresponding
interest in the Senior Subordinated Obligations) with the assets of
any pension, profit-sharing, retirement, individual retirement
account, individual retirement annuity, employee benefit plan or other
plan or arrangement subject to Title,I of ERISA or Code Section 4975;
and
(2) the address and telephone and facsimile numbers of such Transferee for
purposes of Section 12.3; and
(3) the aggregate principal amount of each Senior Subordinated Note so
transferred; the aggregate accrued but unpaid interest so transferred; the
aggregate amount of any other Subordination Obligation so transferred; and,
for each of the foregoing amounts, the aggregate amount retained by the
transferor; provided than any Transfer by a Holder must be made together
with a pro rata portion of (x) accrued by unpaid interest owing to such
Holder in respect of the principal amount of the Senior Subordinated Note
transferred and (y) all other Senior Subordinated Obligations owing to such
Holder in respect to the principal amount of the Senior Subordinated Note
transferred.
12.6 Successors and Assigns. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns.
12.7 Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
12.8 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which is deemed to be an original, and it is not
necessary in making proof of this Agreement to produce or account for more than
one such counterpart or reproduction thereof permitted by Section 12.3.
12.9 Reliance on and Survival Provisions. All covenants, representations
and warranties made by the Company herein and in any certificates delivered
pursuant hereto, whether or not in connection with a closing, (a) are deemed to
be material and to have been relied upon by Purchaser, notwithstanding any
investigation heretofore or hereafter made by Purchaser or on Purchaser's
behalf, and (b) survive the delivery of this Agreement and the Senior
Subordinated Note until all obligations of the Company under this Agreement
(other than Indemnity Obligations) have been satisfied.
12.10 Integration and Severability. This Agreement embodies the entire
agreement and understanding between Purchaser and the Company, and supersedes
all prior agreements and understandings relating to the subject matter hereof.
In case any one or more of the provisions contained in this Agreement or in any
Senior Subordinated Note, or any application thereof, are determined to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein, and any
other application thereof, are not in any way be affected or impaired thereby.
12.11 Holders Representative. Each Holder hereby appoints and authorizes
the Holders Representative to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement and the Other
Agreements as are delegated to the Holders Representative by the terms hereof
and thereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for hereunder and
under the Other Agreements, the Holders Representative is not required to take
any action or exercise any discretion, but shall act or refrain from acting upon
the instructions of the Majority Holders.
12.12 Law Governing. THIS AGREEMENT HAS BEEN SUBSTANTIALLY NEGOTIATED AND
IS BEING EXECUTED, DELIVERED, AND ACCEPTED, AND IS INTENDED TO BE PERFORMED, IN
PART IN THE STATE OF OHIO OBLIGATIONS, RIGHTS AND REMEDIES HEREUNDER, ARE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF OHIO. THE SUBORDINATED NOTE IS GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE SPECIFIED THEREIN.
PURCHASER RETAINS ALL RIGHTS UNDER THE LAWS OF THE UNITED STATES OF AMERICA,
INCLUDING THOSE RELATING TO THE CHARGING OF INTEREST.
12.13 Waivers; Modification. NO PROVISION OF THIS AGREEMENT MAY BE WAIVED,
CHANGED, AMENDED OR MODIFIED, OR THE DISCHARGE THEREOF ACKNOWLEDGED, ORALLY, BUT
ONLY BY AN AGREEMENT IN WRITING SIGNED BY THE COMPANY AND THE MAJORITY HOLDERS,
AND SUCH WAIVER, CHANGE, AMENDMENT OR MODIFICATION IS EFFECTIVE ONLY IN THE
SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH IT IS GIVEN; PROVIDED,
HOWEVER, THAT ANY CHANGE, AMENDMENT OR MODIFICATION OF, OR WAIVER OF COMPLIANCE
WITH ANY OF THE PROVISIONS OF THIS SECTION 12.13, THE DEFINITION OF MAJORITY
HOLDERS OR ANY TERMS AFFECTING THE MATURITY OF OR ANY OTHER DATES FOR PAYMENT
REQUIRES THE WRITTEN AGREEMENT OF EACH HOLDER.
12.14 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY, PURCHASER, THE HOLDERS REPRESENTATIVE AND EACH HOLDER HEREBY
IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SUBORDINATED NOTES OR ANY
DOCUMENTS ENTERED INTO IN CONNECTION HEREWITH OR THEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF THE COMPANY, PURCHASER, THE
HOLDERS REPRESENTATIVE AND EACH HOLDER IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
12.15 Submission to Jurisdiction. THE COMPANY HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF
FRANKLIN, STATE OF OHIO AND IRREVOCABLY AGREES THAT, SUBJECT TO THE PURCHASER'S
ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER FINANCING DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
THE COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS,..
AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE
NOTES, OR ANY OTHER DOCUMENT OR AGREEMENT EXECUTED AT ANY TIME IN CONNECTION
THEREWITH. THE COMPANY DESIGNATES AND APPOINTS ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ AND SUCH OTHER
PERSONS AS MAY HEREAFTER BE SELECTED BY THE COMPANY WHICH IRREVOCABLY AGREE IN
WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS
IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY THE COMPANY TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY THE PURCHASER
BY REGISTERED MAIL TO THE COMPANY AT ITS ADDRESS AS PROVIDED HEREIN AND SHALL BE
DEEMED TO HAVE BEEN RECEIVED BY THE COMPANY FIVE (5) DAYS AFTER BEING SO MAILED.
IF ANY AGENT APPOINTED BY THE COMPANY REFUSES TO ACCEPT SERVICE, THE COMPANY
HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS 1N ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF PURCHASER TO BRING PROCEEDINGS
AGAINST THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.
12.16 Other Business. It is understood and accepted that Purchaser, the
Holders, and their Affiliates have interests in other business ventures that may
be in conflict with the activities of the Company and that nothing in this
Agreement will limit the current or future activities of the Company and that
nothing in this Agreement will limit the current or future business activities
of such parties whether or not such activities are competitive with those of the
Company.
12.17 Confidentiality. The Purchaser, the Holders Representative and each
Holder hereby: (a) acknowledge that the Company has trade secrets and financial,
environmental and other data and information the confidentiality of which is
important to their businesses and (b) agree to use all reasonable efforts to
keep confidential any such trade secret, data or information conveyed to them,
except that this Section 12.15 does not preclude Purchaser, the Holders
Representative or any Holder from furnishing any such confidential information:
(i) subject to the Company's receipt of prior notice from the Purchaser, the
Holders Representative or any Holder if permitted under applicable law and such
legal proceedings, to the extent which may be required by subpoena or similar
order of any court of competent jurisdiction;, (ii) to the extent such
information is required to be disclosed to any regulatory or administrative
governmental agency or commission having any regulatory authority over the
Purchaser, the Holders Representative or any Holder or their respective
securities, (iii) to any other party to this Agreement, (iv) to any Affiliate of
the Purchaser, the Holders Representative or any Holder so long as such
Affiliate agrees to be bound in writing by provisions of this Section 12.15
prior to the time of such disclosure, (v) to any actual or prospective
transferee, participant or subparticipant of all or part of the Purchaser's or
any Holder's rights arising out of or in connection with this Agreement so long
as such prospective transferee, participant or subparticipant to whom disclosure
is made agrees in writing to be bound by the provisions of this Section 12.15
prior to the time of such disclosure, (vi) to anyone if it has been already
publicly disclosed (other than by Purchaser, the Holders Representative or any
Holder, or any other Person, in contravention of this Section 12.15), (vii) to
the extent reasonably required in connection with the exercise of any right or
remedy under this Agreement, (viii) to the Purchaser's legal counsel, auditors,
professional advisors and consultants, and accountants and (ix) to the extent
reasonably required in connection with any legal proceedings instituted by or
against the Purchaser, the Holders Representative or any Holder under this
Agreement; provided, however that for any disclosure pursuant to clauses (i),
(ii), (vii) or (ix) hereof, the Purchaser, the Holders Representative or such
Holder, shall use reasonable efforts to disclose only that portion of the
confidential information as it is legally required, in the sole opinion of its
counsel, to disclose.
12.18 Sharing of Information. Notwithstanding the provisions of Section
12.15, Purchaser may furnish to its Affiliates, its accountants, its employees,
its officers, its directors, its legal counsel, potential participants,
potential investors and to any governmental agency having jurisdiction over
Purchaser investors and potential investors, information concerning the
business, financial condition, value of the ▇▇▇▇▇▇ Stock and property of the
Purchaser, and the terms, conditions and other provisions applicable to the
respective parts thereof, any such disclosure to occur in the Purchaser's
ordinary course of business consistent with past practice.
12.19 No Fiduciary Relationship; Limitation on Liability. No provision in
this Agreement, the Notes or in any relate document, and no course of dealing
between the parties, shall be deemed to create any fiduciary duty by the
Purchaser to the Company. Neither the Purchaser, nor any of its affiliates,
officers, directors, employees, attorneys, partners or agents, shall have any
liability with respect to, and the Company hereby waives, releases and agrees
not to ▇▇▇ any of them uponany claim for any special, indirect, incidental or
consequential damages suffered or incurred by the Company in connection with,
arising out of, or in any way related to, this Agreement or any of the Financing
Documents, or any of the transactions contemplated thereby. The Company hereby
waives, releases and agrees not to ▇▇▇ the Purchaser or any of the Purchaser's
affiliates, officers, directors, employees, attorneys, partners or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Financing Documents,
or any of the transactions contemplated thereby. All attorneys, accountants,
appraisers and other professional Persons and consultants retained by the
Purchaser shall have the right to act exclusively in the interest of the
Purchaser and shall have no duty of disclosure, duty of loyalty, duty of care or
other duty or obligation of any type or nature whatsoever to the Company or to
any of its shareholders or any other Person; provided, however, that such
limitation shall not apply to any such Person serving as a director or officer
of the Company.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company and Purchaser have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized.
COMPANY:
UNITED ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chairman
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Company's Address for Notices:
United Acquisition, Inc.
Bank One Center/Tower - Suite 3680
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
One American Square
18th Floor
P.O. Box 82035
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
HCIC:
THE HUNTINGTON CAPITAL INVESTMENT COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇, Assistant Vice President
HCIC's address for Notices:
The Huntington Capital Investment Company
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Annex I
to
Note Purchase Agreement
Information Concerning- Purchaser
HCIC:
Principal Amount of
Senior Subordinated Note: $3,500,000
Denomination of Common Stock: Shares representing 6.59% of the common stock
▇▇▇▇▇▇ on a fully diluted basis
Address for notices:
The Huntington Capital Investment Company
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Payments to be made by wire transfer to:
Senior Subordinated Note
THE RIGHTS OF THE HOLDER OF THIS NOTE TO RECEIVE PAYMENT ARE SUBJECT AND
SUBORDINATE TO THE PAYMENT OF ALL OBLIGATIONS OF THE MAKER OR OBLIGOR TO FIRST
INDIANA BANK AND ITS SUCCESSORS AND PERMITTED ASSIGNS PURSUANT TO THE TERMS OF A
SUBORDINATION AGREEMENT DATED AS OF JULY 27, 2001 BY AND AMONG UNITED
ACQUISITION, INC., FIRST INDIANA BANK, AND THE HUNTINGTON CAPITAL COMPANY.
$3,500,000.00 July 27, 2001
FOR VALUE RECEIVED, the undersigned corporation, United Acquisition, Inc., an
Indiana corporation, hereby promises to pay to the order of The Huntington
Capital Investment Company (the "Purchaser"), at its offices at ▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (or at such other place as the holder may from time
to time designate) the principal sum of THREE AND ONE HALF MILLION AND NO/100
DOLLARS ($3,500,000.00).
This note is the Senior Subordinated Note referred to in the Note Purchase
Agreement dated as of July 27, 2001, by and between the undersigned and
Purchaser (as amended, supplemented or otherwise modified from time to time; the
"Purchase Agreement"). Capitalized terms used in this note are defined in the
Purchase Agreement, unless otherwise expressly stated herein. This note is
entitled to the benefits of the Purchase Agreement and is subject to all of the
agreements, terms and conditions contained therein, all of which are
incorporated herein by this reference. Payment of this note is subject to the
agreements, terms and conditions contained in the Senior Lender Intercreditor
Agreement. This note may not be prepaid, in whole or in part, except in
accordance with the terms and conditions set forth in the Purchase Agreement.
The outstanding principal balance of this note shall be due and payable as
provided in Section 2.1 (a) of the Purchase Agreement. Interest on the principal
amount of this note from time to time outstanding shall be due and payable as
provided in Section 2.1 (b) of the Purchase Agreement, at the annual rate of
interest set forth in Section 1.1, of the Purchase Agreement (computed on the
basis of the actual number of days elapsed over a 360-day year). In no event,
however, shall interest exceed the maximum rate permitted by law.
As provided in Section 8.2 of the Purchase Agreement, (a) upon the
occurrence of an Event of Default under Section 8.1 (n) of the Purchase
Agreement, this note, and all amounts payable hereunder in accordance with the
terms of the Purchase Agreement, shall immediately become. due and payable,
without notice of any kind, and (b) upon the occurrence of any other Event of
Default under the Purchase Agreement, this note, and all amounts payable
hereunder in accordance with the terms of the Purchase Agreement, shall, at the
option of the holder, immediately become due and payable, without notice of any
kind.
THIS NOTE SRALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF OHIO APPLICABLE TO AN AGREEMENT EXECUTED, DELIVERED AND
PERFORMED THEREIN WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW RULES THEREOF OR
ANY OTHER PRINCIPLES THAT COULD REQUIRE THE APPLICATION OF THE SUBSTANTIVE LAW,
OF ANY OTHER JURISDICTION.
The undersigned expressly waives any presentment, demand, protest, notice
of default, notice of intention to accelerate, notice of acceleration or notice
of any other kind except as expressly provided in the Purchase Agreement.
IN WITNESS WHEREOF, the Company has caused this note to be duly executed as
of the 27th of July, 2001.
UNITED ACQUISITION, INC.
By:
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Name:
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Title:
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