EXHIBIT 10.2
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CHATTEM, INC.
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(a Tennessee corporation)
2% Convertible Senior Notes due 2013
SECURITIES PURCHASE AGREEMENT
Dated: November 16,
2006
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Chattem, Inc.
-------------
(a Tennessee corporation)
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$125,000,000
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2% Convertible Senior Notes due 2013
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SECURITIES
PURCHASE AGREEMENT
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November 16, 2006
Ladies and Gentlemen:
Chattem, Inc., a
Tennessee corporation (the "Company"), and the several
purchasers named on
the signature pages hereto (each a "Purchaser" and together
the "Purchasers")
agree that each
Purchaser will purchase from the Company and
the Company
will issue and sell to such
Purchaser,
subject to the terms
and
conditions set forth
herein, the aggregate
principal amount of the Company's
Convertible Senior
Notes due 2013 (the "Securities") set forth on such
Purchaser's signature
page attached
hereto. The Securities are to be issued
pursuant to an indenture to be dated as of November 22,
2006 (the
"Indenture")
between the
Company and U.S. Bank, National Association, as trustee (the
"Trustee"). The
Securities will be delivered through book entry facilities of
The Depository Trust Company ("DTC"), to an account specified by each
Purchaser
on its signature page
and will be released by U.S. Bank, National Association
(the "Escrow
Agent") to such
Purchaser at the Closing (as defined in
Section
2(b)).
The
Securities
are convertible, subject to certain conditions as
described in the Final Private Placement Memorandum (as defined
below), prior to
maturity into shares
of common stock,
without par value,
of the Company
(the
"Common Stock")
in accordance with the terms of the Securities and the
Indenture.
The
Securities
are being offered to qualified institutional buyers
("QIBs") within the
meaning of Rule 144A ("Rule 144A") under the Securities Act
of 1933, as amended (the "1933 Act"), pursuant to a private placement
exemption
from registration
under the 1933 Act. On or prior to the Closing Time (as
defined in Section
2(b)), the Company
will enter into a
registration
rights
agreement with the Purchasers (the "Registration Rights
Agreement"), pursuant to
which, subject to the conditions set forth therein, the Company
will be required
to file and use its commercially reasonable efforts to have
declared effective a
registration statement
(the "Registration Statement") under the 1933 Act to
register resales of
the Securities and the shares of Common Stock issuable upon
conversion thereof.
The
Company has (a) prepared and delivered to each Purchaser
copies of a
preliminary private
placement memorandum dated November 13, 2006 and (b)
has
prepared and will deliver to each Purchaser, as promptly as possible
prior to
the Closing Time, copies of a final private placement memorandum dated November
16, 2006 (the "Final Private Placement Memorandum"). "Private Placement
Memorandum" means,
with respect to any date or time referred to in this
Agreement, the most recent private placement memorandum (whether
the Preliminary
Private Placement Memorandum or the Final Private Placement
Memorandum,
or any
amendment or supplement to either such document), including
exhibits thereto, if
any, and any
documents incorporated therein by reference, which has been
prepared and delivered by the Company to the Purchasers.
All references in this Agreement to financial
statements and
schedules
and other information
which is "contained," "included" or "stated" in the
Private Placement
Memorandum
(or other references of like import) shall be
deemed to
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mean and include all such financial statements and schedules and other
information which
are incorporated by reference in the Private Placement
Memorandum; and all references in this Agreement to amendments or
supplements to
the Private Placement
Memorandum shall be deemed to mean and include the filing
of any document under the Securities Exchange Act of 1934, as
amended (the "1934
Act") which is incorporated by reference in the Private Placement
Memorandum.
The
preliminary private placement memorandum dated November 13,
2006, as
amended and supplemented, including any documents filed under the
1934 Act prior
to the date hereof and incorporated by reference therein,
is referred to
herein
as the "Preliminary Private Placement Memorandum."
SECTION 1. Representations and Warranties by the Company.
(a)
Representations and Warranties. The Company represents and
warrants to each Purchaser as of the date hereof and as of Closing
Time referred
to in Section 2(b) hereof, and agrees with each Purchaser, as
follows:
(i) Preliminary
Private Placement Memorandum and Final
Private Placement
Memorandum.
Neither the
Preliminary
Private
Placement Memorandum,
as of the date of this agreement (exclusive
of any pricing
terms and related information), nor the Final
Private Placement Memorandum, as of its date and as of the
Closing
Time, includes or will
include any untrue statement of a material
fact or omit to state any material fact necessary in order to
make
the statements
therein, in the light
of the circumstances
under
which they were made,
not misleading.
The Company notes that
it
has not filed,
and will not file prior to the closing of the
transactions
contemplated hereby,
historical
and pro forma
financial statements
relating to the proposed acquisition of the
U.S. rights to five brands from Johnson & Johnson and the
consumer
health care business
of Pfizer with the
Securities and
Exchange
Commission, and in
connection with the purchase of the Securities
the
Purchasers will not have access to such financial information.
(ii)
Incorporated
Documents. The
Private Placement
Memorandum as
delivered from time to
time shall incorporate
by
reference the most
recent Annual Report of the Company on Form
10-K filed
with the Securities and Exchange Commission (the
"Commission") and each
Quarterly Report of the Company on Form
10-Q and each Current Report of the Company on Form 8-K filed
with
the Commission
since the end of the
fiscal year to which such
Annual Report relates. The documents incorporated or deemed to be
incorporated by reference in the Private Placement Memorandum at
the time they were or
hereafter are
filed with the Commission
complied and
will comply in all material respects with the
requirements of the
1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations").
(iii)
Independent
Accountants. The
accountants
who
expressed their
opinion with respect to the financial statements
and supporting
schedules
included in the Private Placement
Memorandum are a registered public accounting firm and
independent
public
accountants with
respect
to the Company and its
subsidiaries within
the meaning of the 1933 Act and the rules and
regulations thereunder (the "1933 Act Regulations").
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(iv) Financial
Statements.
The financial statements,
together with the
related schedules
and notes,
included in the
Private Placement
Memorandum,
present fairly in all material
respects the
financial
position
of the Company and its
subsidiaries at
the dates indicated and the statement of
operations, shareholders' equity and cash flows of the Company
and
its subsidiaries for the periods specified, except as noted in
the
notes thereto;
said financial
statements
have been prepared
in
conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved.
The
supporting schedules,
if any, included in the Private
Placement
Memorandum, present fairly in accordance with GAAP the
information
required to
be stated therein. The selected financial data
included in the Private Placement Memorandum present fairly in
all
material respects
the information shown therein and have been
compiled on a basis consistent with that of the audited
financial
statements included in the Private Placement Memorandum.
(v) No Material
Adverse Change in Business. Except as
disclosed in
the Private Placement Memorandum, since the
respective dates as of
which information is
given in the Private
Placement Memorandum,
except as otherwise
stated therein, (A)
there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered
as one enterprise,
whether or not arising
in the ordinary course
of business (a "Material Adverse Effect"), (B) there have been no
transactions entered
into by the
Company or its subsidiaries,
other than those in the ordinary course of business, which are
material with
respect to the Company and its subsidiaries
considered as one
enterprise, and (C)
there has been no dividend
or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(vi) Good Standing of
the Company
and its Subsidiaries.
Each of the Company and its subsidiaries has been duly organized
and is validly existing and in good standing under the laws of
the
jurisdiction of
its organization, has corporate power and
authority to own,
lease and operate its properties and to conduct
its business as described in the Private Placement Memorandum and
is duly qualified as a foreign corporation to transact business
and is in good
standing in each jurisdiction in which such
qualification is
required, whether by
reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in
the
Private Placement
Memorandum,
all of the issued and
outstanding
capital stock of each
subsidiary
has been duly
authorized
and
validly issued, is fully paid and non-assessable and is owned by
the Company, directly
or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance,
claim
or equity; none of the
outstanding shares of capital stock of any
subsidiary was issued
in violation of any
preemptive or
similar
rights of any securityholder of such subsidiary.
(vii) Capitalization
and Other Capital Stock Matters. The
total shareholders'
equity of the Company
is as set forth in the
Private Placement Memorandum in the column entitled "Actual"
under
the caption
"Capitalization" as of the respective dates set forth
therein, and the actual, authorized, issued and outstanding
number
of shares of Common
Stock of the Company
is as set forth in
the
section entitled
"Description
of Capital
Stock" in the
Private
Placement Memorandum
as of the date set forth therein, and there
have been no
changes to such amounts (except for subsequent
issuances, if
any, pursuant to this Agreement, pursuant to
reservations,
agreements, employee
benefit plans referred
to in
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the Private Placement
Memorandum
or pursuant to the
exercise of
convertible securities
or options referred to in the Private
Placement Memorandum).
The Common Stock
conforms in all material
respects to the
description
thereof set forth in the Private
Placement Memorandum.
All of the
outstanding
shares of Common
Stock have been duly authorized and validly issued, are fully
paid
and nonassessable and
have been issued in compliance with federal
and state securities
laws. Upon issuance and delivery of the
Securities in accordance with this Agreement and the Indenture,
the Securities
will be convertible at the option of the holder
thereof into shares of Common Stock in accordance with the terms
of the Securities and
the Indenture;
the shares of Common
Stock
issuable upon
conversion
of the Securities have been duly
authorized and
reserved for issuance upon such conversion by all
necessary corporate
action and such shares, when issued upon such
conversion in accordance with the terms of the Securities, will
be
validly issued
and will be fully
paid and non-assessable; no
holder of such shares
will be subject to
personal liability
by
reason of being such a holder; and the issuance of such shares
upon such conversion
will not be
subject to the
preemptive
or
other similar rights of any securityholder of the Company. None
of
the outstanding shares of Common Stock were issued in violation
of
any preemptive
rights, rights of first refusal or other
similar
rights to subscribe
for or purchase
securities
of the Company.
There are no authorized or outstanding options, warrants,
preemptive rights,
rights of first
refusal or other rights to
purchase, or
equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the
Company
or its subsidiaries
other than those
described in the Private
Placement Memorandum
(except for subsequent
issuances,
if any,
pursuant to this Agreement, pursuant to reservations, agreements,
employee benefit
plans referred to in the Private Placement
Memorandum or pursuant to the exercise of convertible securities
or options referred to in the Private Placement Memorandum). The
description of the Company's stock option, stock bonus and other
stock plans or
arrangements,
and the options or other rights
granted thereunder,
set forth or incorporated by reference in the
Private Placement Memorandum, accurately and fairly describes
such
plans, arrangements, options and rights in all material
respects.
(viii) Stock
Exchange Listing. The Common Stock is
registered pursuant to Section 12(b) of the 1934 Act and is
listed
on the Nasdaq Global
Market (the "NASDAQ"),
and the Company
has
taken no action
designed to, or
likely to have the
effect of,
terminating the
registration
of the Common Stock
under the 1934
Act or delisting
the Common
Stock from the NASDAQ,
nor has the
Company received
any notification that the Commission or the
NASDAQ is contemplating terminating such registration or
listing.
(ix) Corporate
Power. The Company has corporate right,
power and authority
to execute and deliver
this Agreement,
the
Securities, the
Indenture,
the Escrow Agreement and the
Registration Rights
Agreement (collectively, the "Transaction
Documents") and
to perform its obligations hereunder and
thereunder; and all
action required
to be taken for the
due and
proper authorization,
execution and delivery of each of the
Transaction Documents
and the consummation
of the transactions
contemplated thereby has been duly and validly taken.
4
<PAGE>
(x) Authorization
of Agreement.
This Agreement has been
duly authorized,
executed and
delivered by, and is a valid and
binding agreement of, the Company, enforceable in accordance with
its terms, except as
the enforcement
thereof may be limited by
bankruptcy, insolvency
(including, without
limitation, all
laws
relating to fraudulent transfers), reorganization, moratorium or
other similar
laws relating to or affecting enforcement of
creditors' rights
generally and by
general principles of
equity
(regardless of whether
enforcement is
considered in a proceeding
in equity or at law).
(xi) Authorization of the Indenture. The Indenture has been
duly authorized by the Company and, when executed and delivered
by
the Company and the Trustee, will constitute a valid and binding
agreement of the
Company, enforceable against the Company in
accordance with its terms, except as the enforcement
thereof may
be limited
by bankruptcy, insolvency (including, without
limitation, all
laws relating to fraudulent transfers),
reorganization,
moratorium or other
similar laws relating
to or
affecting enforcement
of creditors' rights generally and by
general principles of equity (regardless of whether enforcement
is
considered in a proceeding in equity or at law).
(xii) Authorization of
the Registration
Rights Agreement.
The Registration
Rights Agreement has been duly authorized by the
Company and,
at the Closing Time, will be duly executed and
delivered by, and will
constitute a valid and
binding agreement
of, the Company,
enforceable in accordance with its terms, except
as the enforcement thereof may be limited by bankruptcy,
insolvency (including,
without limitation,
all laws relating
to
fraudulent transfers), reorganization, moratorium or other
similar
laws relating to or affecting enforcement of creditors' rights
generally, by general
principles of equity (regardless of whether
enforcement is
considered
in a proceeding
in equity or at
law)
and, as to rights of
indemnification,
by principles of public
policy.
(xiii) Authorization of the Securities. The Securities have
been duly authorized
and, at Closing
Time, will have been duly
executed by the
Company and, when authenticated, issued and
delivered in
the manner provided for in the Indenture and
delivered against
payment of the purchase price therefor as
provided in this
Agreement,
will constitute valid and binding
obligations of the
Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof
may
be limited
by bankruptcy, insolvency (including, without
limitation, all
laws
relating
to fraudulent transfers)
reorganization,
moratorium or
other similar laws affecting
enforcement of
creditors'
rights
generally
and by general
principles of
equity (regardless of whether enforcement is
considered in a
proceeding in equity
or at law), and will
be in
the form contemplated
by, and entitled to the benefits of, the
Indenture.
(xiv) Description of Transaction Documents. The description
of the Transaction
Documents and the rights, preferences and
privileges of the
capital stock of the
Company, including the
shares of Common Stock issuable upon conversion of the
Securities,
contained in the Final Private Placement Memorandum, are accurate
in all material respects.
5
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(xv) Absence of Defaults and Conflicts. Neither the Company
nor any of its
subsidiaries is in
violation of its charter or
by-laws or in default
in the performance
or observance of any
obligation, agreement,
covenant or
condition contained in any
contract, indenture,
mortgage, deed of trust, loan or credit
agreement, note,
lease or other
agreement or instrument to which
the Company or any of its subsidiaries is a party or by which or
any of them may be
bound, or to
which any of the property or
assets of the
Company or any of its subsidiaries is subject
(collectively,
"Agreements and
Instruments")
except for such
defaults that would not result in a Material Adverse Effect; and
the execution,
delivery
and performance of the Transaction
Documents and any other agreement or instrument entered into or
issued or to be entered into or issued by the Company in
connection with the transactions contemplated hereby or thereby
or
in the Private
Placement Memorandum
and the consummation
of the
transactions
contemplated herein
and in the
Private Placement
Memorandum (including
the issuance and sale of the Securities and
the use of the
proceeds from the sale of the Securities as
described in the Private Placement Memorandum under the caption
"Use of Proceeds") and compliance by the Company with its
obligations hereunder do not and will not, whether with or
without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any
lien,
charge or encumbrance
upon any property or
assets of the Company
or any subsidiary
pursuant to, the
Agreements
and Instruments
except for such
conflicts, breaches
or defaults or Repayment
Events or liens,
charges or encumbrances that, singly or in the
aggregate, would not result in a Material Adverse Effect, nor
will
such action
result in any
violation of the provisions of the
charter or
by-laws of the
Company or its subsidiaries or any
applicable law, statute, rule, regulation, judgment, order, writ
or decree of any government, government instrumentality or
court,
domestic or foreign,
having jurisdiction
over the Company or any
subsidiary or any of their assets, properties or operations. As
used herein, a "Repayment Event" means any event or condition
which gives the holder of any note, debenture or other evidence
of
indebtedness (or any
person acting on such
holder's behalf)
the
right to require the repurchase, redemption or repayment of all
or
a portion of such indebtedness by the Company or any
subsidiary.
(xvi) Absence of Proceedings. Except as otherwise disclosed
in the Private Placement Memorandum, there is no action, suit or
proceeding before or
brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge
of
the Company,
threatened, against or
affecting the Company or its
subsidiaries which
would reasonably be expected to result in a
Material Adverse Effect, or which would reasonably be
expected to
materially and
adversely affect the consummation of the
transactions
contemplated by this Agreement or the performance by
the Company of its obligations hereunder.
(xvii) Absence of Manipulation. Neither the Company nor to
its knowledge
any affiliate, as such term is defined in Rule
501(b) under the 1933 Act ("Affiliate"), of the Company has
taken,
nor will the Company or any Affiliate of the Company take,
directly or
indirectly, any action
which is designed to or which
has constituted or which would reasonably be expected to cause
or
result in stabilization or manipulation of the price of any
security of the
Company to facilitate
the sale or resale of
the
Securities.
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(xviii) Possession
of Intellectual Property. Except as
otherwise disclosed
in the Private Placement Memorandum, the
Company and its
subsidiaries
own or possess
adequate patents,
patent rights,
licenses,
inventions,
copyrights,
know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service
marks, trade names or other intellectual
property
(collectively,
"Intellectual
Property") related to the
business now
operated by them, and neither the Company nor
its
subsidiaries has
received any notice or is otherwise aware of any
infringement of or
conflict with asserted
rights of others
with
respect to
any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property
invalid
or inadequate to protect the interest of the Company or any of
its
subsidiaries therein,
and which infringement
or conflict (if the
subject of
any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would
result
in a Material Adverse Effect.
(xix) Absence of Further Requirements. No filing with, or
authorization,
approval, consent,
license, order,
registration,
qualification or decree of, any court or governmental authority
or
agency is necessary or required for the performance by the
Company
of its obligations
hereunder,
in connection
with the offering,
issuance or sale of the Securities hereunder or the consummation
of the transactions
contemplated by the Transaction Documents or
for the due execution,
delivery or performance of the Transaction
Documents by the
Company, except (A) such as have been
already
obtained or will be made on or prior to the Closing Time, (B) as
may be required
under the securities or blue sky laws of the
various states in which the Securities will be offered or sold
and
the 1933 Act and 1933 Regulations with respect to the
registration
of the resale of the Securities under the 1933 Act pursuant to
the
Registration Rights Agreement and the Trust Indenture Act of
1939,
and (C) the listing
requirements of
NASDAQ, except those
which,
singly or in the
aggregate, if not made
would not result in a
Material Adverse
Effect or would have a
material effect on the
consummation of the
transactions
contemplated by the Transaction
Documents.
(xx) Possession
of Licenses and
Permits. The Company
and
each subsidiary
possess such valid and current certificates,
authorizations or permits issued by the appropriate state,
federal
or foreign regulatory
agencies or bodies necessary to conduct
their respective
businesses,
and neither the Company nor any
subsidiary has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such
certificate,
authorization or
permit which, singly or in the
aggregate, if the
subject of an unfavorable decision, ruling or
finding, would
reasonably be expected
to have a Material Adverse
Effect.
(xxi) Title
to Property. The Company and each of its
subsidiaries has good
and marketable title
to all the properties
and assets reflected as owned in the financial statements
referred
to in Section 1(iv) above (or elsewhere in the Private
Placement
Memorandum), in
each case free and clear of any security
interests, mortgages,
liens, encumbrances,
equities, claims
and
other defects,
except (i) for liens for taxes not yet due or
payable, (ii) as
otherwise disclosed in the Private Placement
Memorandum or
(iii) as would not, individually or in the
7
<PAGE>
aggregate, reasonably
be expected to have a Material Adverse
Effect. The real
property,
improvements,
equipment and personal
property held under
lease by the Company
or any subsidiary
are
held under valid and enforceable leases, with such exceptions as
are not material and do not materially interfere with the use
made
or proposed
to be made of such real property, improvements,
equipment or personal
property by the Company or such subsidiary
to an extent that would reasonably be expected to have a
Material
Adverse
Effect.
(xxii) Environmental
Laws. Except as described in the
Private Placement Memorandum and except such matters as would
not,
singly or in the aggregate, result in a Material Adverse Effect,
(A) neither the Company nor its subsidiaries is in violation of
any federal,
state,
local or foreign statute, law, rule,
regulation, ordinance,
code, policy or rule
of common law or any
judicial or administrative interpretation thereof,
including any
judicial or
administrative order,
consent, decree or judgment,
relating to
pollution or protection of human health, the
environment (including, without limitation, ambient air, surface
water,
groundwater,
land surface
or subsurface strata) or
wildlife, including,
without limitation, laws and regulations
relating to the
release or threatened release of chemicals,
pollutants,
contaminants, wastes,
toxic substances, hazardous
substances, petroleum
or petroleum products,
asbestos-containing
materials or mold (collectively, "Hazardous Materials") or to
the
manufacture,
processing,
distribution, use,
treatment, storage,
disposal,
transport or
handling
of Hazardous Materials
(collectively,
"Environmental Laws"),
(B) the Company and its
subsidiaries have
all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in
compliance with
their
requirements,
(C) there are no
administrative,
regulatory or judicial actions, suits, demands,
demand letters,
claims,
liens, notices of noncompliance or
violation, or
proceedings
relating to any Environmental Law
pending or, to the
Company's knowledge,
threatened
against the
Company or its
subsidiaries
and (D) there are no events or
circumstances that
would reasonably be expected to form the basis
of an order for
clean-up or
remediation, or an
action, suit or
proceeding by any
private party or
governmental body or
agency,
against or affecting the Company or its subsidiaries relating to
Hazardous Materials or Environmental Laws.
(xxiii) Accounting
Controls and Disclosure Controls. The
Company and each of its subsidiaries maintain a system of
internal
accounting controls
sufficient to provide
reasonable
assurances
that (A) transactions are executed in accordance with
management's
general or specific
authorization; (B)
transactions are recorded
as necessary to permit
preparation of
financial statements in
conformity with GAAP
and to maintain
accountability for
assets;
(C) access
to assets is permitted only in accordance with
management's general
or specific authorization; and (D) the
recorded
accountability
for assets is compared
with the existing
assets at reasonable
intervals and
appropriate
action is taken
with respect
to any differences. Except as described in the
Private Placement Memorandum, since the end of the Company's
most
recent audited
fiscal year, there has been (1) no material
weakness in
the Company's internal control over financial
reporting (as defined
in Rules 13a-15 and
15d-15 under the
1934
Act Regulations)
(whether or not remediated) and (2) no change in
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<PAGE>
the Company's internal
control over financial
reporting that has
materially affected, or is reasonably likely to materially
affect,
the Company's
internal control over financial reporting. The
Company and each of its subsidiaries employ disclosure controls
and procedures (as defined in Rules 13a-15 and 15d-15 under the
1934 Act Regulations) that are designed to ensure that
information
required to be
disclosed by the
Company in the reports
that it
files or submits under the 1934 Act is recorded, processed,
summarized and reported, within the time periods specified
in the
Commission's rules and
forms, and is accumulated and communicated
to the Company's
management, including
its principal
executive
officer or officers and principal financial officer or officers,
as appropriate, to allow timely decisions regarding disclosure.
(xxiv) Compliance with the Sarbanes-Oxley Act. The Company
and its officers and
directors are in
compliance in all material
respects with applicable provisions of the Sarbanes-Oxley Act of
2002 and the rules
and regulations promulgated in connection
therewith (the
"Sarbanes-Oxley
Act") that,
with respect to
the
Company, are effective as of the date hereof.
(xxv) Payment of
Taxes. The Company and
its consolidated
subsidiaries have filed all necessary federal, state and foreign
income and franchise tax returns and have paid all taxes
required
to be paid by any of them and, if due and payable, any related or
similar assessment,
fine or penalty
levied against any of
them,
except such taxes that are being contested in good faith and as
to
which adequate
reserves have been provided as set forth in the
following sentence and except where the failure to file or
failure
to pay would not, individually or in the aggregate, have a
Material Adverse
Effect. The Company
has made adequate
charges,
accruals and
reserves in the applicable financial statements
referred to in Section
1(iv) above in respect of all federal,
state and foreign income and franchise taxes for all periods as
to
which the tax liability of the Company or any of its consolidated
subsidiaries has not been finally determined.
(xxvi) Insurance. The Company and its subsidiaries carry or
are entitled to the
benefits of
insurance in such amounts and
covering such risks as is generally deemed adequate and customary
for the businesses
in which they are
currently engaged and all
such insurance is in full force and effect, except in each case
as
would not reasonably be expected to have a Material Adverse
Effect. The
Company has no reason to believe that it or its
subsidiaries will not be able (A) to renew its existing
insurance
coverage as and
when such policies expire or (B) to obtain
comparable coverage from similar institutions as may be
necessary
or appropriate
to conduct its
business as now conducted and at a
cost that would not result in a Material Adverse Change.
(
