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Exhibit 10.4
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NOTE AND EQUITY PURCHASE AGREEMENT
BY AND AMONG
CORRPRO COMPANIES, INC.,
CCFC, INC.,
OCEAN CITY RESEARCH CORP.,
CORRPRO INTERNATIONAL, INC.,
COMMONWEALTH SEAGER HOLDINGS LTD.,
CORRPRO CANADA, INC., AND
BORZA INSPECTIONS LTD.
AS THE LOAN PARTIES
AND
AMERICAN CAPITAL FINANCIAL SERVICES, INC.,
AS AGENT
AND
THE PURCHASERS IDENTIFIED ON
ANNEX A HERETO
MARCH 30, 2004
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TABLE OF CONTENTS
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TABLE OF
CONTENTS.......................................................................
i
RECITALS.......................................................................
1
ARTICLE 1
DEFINITIONS...................................................................
1
1.1.
Certain
Definitions...................................................
1
1.2.
Accounting
Principles.................................................
19
1.3.
Other Definitional Provisions;
Construction........................... 19
ARTICLE 2 ISSUE AND SALE OF
SECURITIES..................................................
19
2.1.
Authorization and Issuance of the
Notes............................... 19
2.2.
Authorization and Issuance of the
Warrants............................ 20
2.3. Sale and
Purchase.....................................................
20
2.4.
The
Closing...........................................................
20
ARTICLE 3 REPAYMENT OF THE
NOTES........................................................
20
3.1.
Interest Rates and Interest
Payments.................................. 20
3.2.
Repayment of the
Notes................................................ 21
3.3.
Optional Prepayment of
Notes.......................................... 21
3.4.
Notice of Optional
Prepayment......................................... 21
3.5.
Mandatory
Prepayment..................................................
22
3.6.
Home
Office Payment...................................................
22
3.7.
Taxes.................................................................
22
3.8.
Maximum Lawful
Rate...................................................
23
3.9.
Capital
Adequacy......................................................
23
3.10.
Certain
Waivers.......................................................
24
3.11.
Administration
Fee....................................................
24
3.12.
Several
Obligations...................................................
24
3.13. Loan
Party Representation; Reliance...................................
25
ARTICLE 4
CONDITIONS....................................................................
25
4.1.
Conditions to Purchase of
Securities.................................. 25
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF
THE LOAN PARTIES............................ 30
5.1.
Representations and Warranties of Loan
Parties........................ 30
5.2.
Absolute Reliance on the Representations and
Warranties............... 38
ARTICLE 6 TRANSFER OF
NOTES.............................................................
38
6.1.
Restricted
Securities.................................................
39
6.2.
Legends; Purchaser's
Representations.................................. 39
6.3.
Transfer of
Notes.....................................................
39
6.4.
Replacement of Lost
Securities........................................ 39
6.5.
No Other Representations
Affected..................................... 39
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ARTICLE 7
COVENANTS.....................................................................
40
7.1.
Affirmative
Covenants.................................................
40
7.2.
Negative
Covenants....................................................
52
7.3. Financial
Covenants...................................................
60
ARTICLE 8 EVENTS OF
DEFAULT.............................................................
62
8.1.
Events of
Default.....................................................
62
8.2.
Consequences of Event of
Default...................................... 64
8.3.
Security..............................................................
65
ARTICLE 9 THE
AGENT.....................................................................
65
9.1.
Authorization and
Action.............................................. 65
9.2.
Delegation of
Duties..................................................
65
9.3.
Exculpatory
Provisions................................................
65
9.4.
Reliance..............................................................
66
9.5.
Non-Reliance on Agent and Other
Purchasers............................ 66
9.6.
Agent in its Individual
Capacity...................................... 66
9.7.
Successor
Agent.......................................................
66
9.8.
Collections and
Disbursements......................................... 67
9.9.
Reporting.............................................................
67
9.10.
Consent of
Purchasers.................................................
68
9.11. This
Article Not Applicable to Loan Parties...........................
68
ARTICLE 10 PUT
OPTION...................................................................
69
10.1.
Grant of
Option.......................................................
69
10.2. Put
Price.............................................................
69
10.3.
Exercise of Put
Option................................................ 69
10.4. Certain
Remedies......................................................
69
10.5. Put
Option Closing....................................................
70
10.6.
Transfer..............................................................
70
10.7.
Subordination.........................................................
70
ARTICLE 11 PREEMPTIVE
RIGHTS............................................................
70
11.1.
Limited Preemptive
Rights............................................. 70
11.2.
Transfer..............................................................
71
ARTICLE 12 REGISTRATION
RIGHTS..........................................................
71
12.1.
Piggyback
Registrations...............................................
71
12.2.
Demand Registration
Rights............................................ 72
12.3.
[Intentionally
Omitted.]..............................................
73
12.4.
Holdback
Agreements...................................................
73
12.5.
Registration
Procedures...............................................
73
12.6.
Registration
Expenses.................................................
75
12.7.
Indemnification.......................................................
76
12.8.
Participation in Underwritten
Registrations........................... 77
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ARTICLE 13
MISCELLANEOUS................................................................
77
13.1.
Successors and
Assigns................................................
77
13.2.
Modifications and
Amendments.......................................... 77
13.3. No
Implied Waivers; Cumulative Remedies; Writing Required.............
77
13.4.
Reimbursement of
Expenses............................................. 77
13.5.
Holidays..............................................................
78
13.6.
Notices...............................................................
78
13.7.
Survival..............................................................
79
13.8.
Governing
Law.........................................................
80
13.9.
Jurisdiction, Consent to Service of
Process........................... 80
13.10. Jury
Trial Waiver.....................................................
81
13.11.
Severability..........................................................
81
13.12.
Headings..............................................................
81
13.13.
Indemnity.............................................................
81
13.14.
Environmental
Indemnity...............................................
81
13.15.
Counterparts..........................................................
82
13.16.
Integration...........................................................
82
13.17.
Subordination.........................................................
82
13.18. Judgment
Currency.....................................................
83
13.19.
Confidentiality and
Publicity......................................... 83
13.20.
Compliance with Canadian
Law.......................................... 85
ARTICLE 14
GUARANTY.....................................................................
85
14.1.
Guaranty..............................................................
85
14.2.
Guaranty
Absolute.....................................................
85
14.3.
Waiver................................................................
86
14.4.
Continuing Guaranty;
Assignments...................................... 86
14.5.
Subrogation...........................................................
87
14.6.
Canadian
Guarantors...................................................
87
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NOTE AND EQUITY PURCHASE AGREEMENT
$14,000,000 AGGREGATE PRINCIPAL AMOUNT OF
NOTES OF THE LOAN PARTIES
DUE MARCH 29, 2011
WARRANTS TO PURCHASE 3,936,967 SHARES
OF COMMON STOCK OF PARENT
THIS NOTE AND EQUITY PURCHASE AGREEMENT
(this "Agreement"), dated as of March
30, 2004, is by and among CORRPRO
COMPANIES, INC., an Ohio corporation
("Parent") and CCFC, INC., a Nevada
corporation, ("CCFC"), OCEAN CITY RESEARCH
CORP., a New Jersey corporation, ("OCRC"),
and CORRPRO INTERNATIONAL, INC.
(f/k/a Corrpro Companies Latin America,
Inc., a Delaware corporation
("Intermediate Holdings", and together with
Parent, CCFC, OCRC, the "US Loan
Parties"), COMMONWEALTH SEAGER HOLDINGS
LTD., a corporation amalgamated under
the laws of the Province of Alberta, Canada
and a Foreign Wholly-Owned
Subsidiary of Intermediate Holdings,
CORRPRO CANADA, INC., a corporation
amalgamated under the laws of the Province
of Alberta, Canada and BORZA
INSPECTIONS LTD., a corporation amalgamated
under the laws of the Province of
Alberta, Canada (collectively, the
"Canadian Loan Parties" and together with the
US Loan Parties, the "Loan Parties"), the
securities purchasers that are now and
hereafter at any time parties hereto and
are listed in Annex A (or any amendment
or supplement thereto) attached hereto
(each a "Purchaser" and collectively,
"Purchasers"), and AMERICAN CAPITAL
FINANCIAL SERVICES, INC., a Delaware
corporation ("ACFS"), as administrative
agent for Purchasers (in such capacity
"Agent"). Capitalized terms used and not
defined elsewhere in this Agreement are
defined in Article 1 hereof.
RECITALS
A. The
US Loan Parties have proposed selling Notes to Purchaser
in the amount of $10,000,000 and the
Canadian Loan Parties have proposed selling
Notes to Purchaser in the amount of
$4,000,000 for the purpose of refinancing
certain existing indebtedness of the Loan
Parties and to pay for certain
transaction expenses related thereto.
B. In
order to induce Purchasers to purchase the Notes to be
issued pursuant to this Agreement, Parent
has agreed to issue and sell to
Purchasers, in connection with the purchase
of such Notes, warrants exercisable
for an aggregate of 3,936,967 shares of
Common Stock of Parent, subject to the
terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the
premises
and their mutual covenants and agreements
herein set forth and intending to be
legally bound hereby, covenant and agree as
follows:
ARTICLE 1
DEFINITIONS
1.1.
Certain Definitions. In addition to other words and terms
defined elsewhere in
1
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this Agreement, the following words and
terms have the meanings set forth below
(and such meanings are equally applicable
to both the singular and plural form
of the terms defined, as the context may
require):
"ACAS" means American Capital Strategies, Ltd., a Delaware
corporation.
"ACFS" means American Capital Financial Services, Inc., a
Delaware
corporation.
"Administration Fee" means a fee in an amount equal to $7,500 per
annum
payable by the Loan Parties to ACFS in
advance commencing on the Closing Date.
"Affiliate" means with respect to any Person, any other Person that
is
directly or indirectly controlling,
controlled by or under common control with
such Person or entity or any of its
Subsidiaries, and the term "control"
(including the terms "controlled by" and
"under common control with") means
having, directly or indirectly, the power
to direct or cause the direction of
the management and policies of a Person,
whether through ownership of voting
securities or by contract or otherwise.
Without limiting the foregoing, the
ownership of ten percent (10%) or more of
the voting securities of a Person
shall be deemed to constitute control and
notwithstanding anything to the
contrary herein, neither Purchasers nor any
of their respective Affiliates shall
be deemed to be Affiliates of the Loan
Parties by virtue of the transactions
contemplated in this Agreement.
"Agent" has the meaning assigned to such term in the preamble
hereto
and any successor agent provided for
hereunder.
"Agreement" means this Note and Equity Purchase Agreement, as the
same
may be amended, restated, supplemented or
otherwise modified from time to time.
"Annual Corporate Charge" means any annual corporate charge that
Wilson
Walton Group Ltd. pays to Parent consistent
with past practices.
"Appraised Value" means the fair market value of a security on
a
control premium basis without discount for
limitations on voting rights,
minority interests, illiquidity or
restrictions on transfer, as determined by an
appraisal performed at the expense of
Parent by any of (x) Houlihan, Lokey,
Howard & Zukin, (y) Duff & Phelps
or (z) Willamette Management Associates, or
any successor to such firms, as Parent
shall elect; provided that such appraiser
shall be directed to determine the value of
such securities as soon as
practicable, but in no event later than
thirty (30) days from the date of its
selection and for such purposes all rights,
options and warrants to subscribe
for or purchase, and other securities
convertible into or exchangeable for
Common Stock of Parent shall be deemed to
be exercised, exchanged or converted,
and the underlying shares of Common Stock
of Parent shall be deemed outstanding.
"Business" means the principal business of the Loan Parties as
set
forth in Section 5.1(b) herein and as such
shall continue to be conducted
following the purchase and sale of the
Securities.
"Business Day" means any day other than a Saturday, Sunday or other
day
on which banking institutions in New York
are authorized or required by law to
close, and in reference to
2
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any Canadian Note or related obligation,
any day other than a Saturday, Sunday
or other day on which commercial banks in
Toronto Ontario, Canada are authorized
or required by law to be closed.
"By-laws" means the by-laws, partnership agreement, operating
agreement
or analogous instrument governing the
operations of each of the Loan Parties, as
applicable, including all amendments and
supplements thereto.
"Canadian Benefit Plans" means any plan, fund, program, or
policy,
whether oral or written, formal or
informal, funded or unfunded, insured or
uninsured, providing material employee
benefits, including medical, hospital
care, dental, sickness, accident,
disability, life insurance, pension,
retirement or savings benefits, under which
the Loan Parties have any liability
with respect to any employee or former
employee, but excluding any Canadian
Pension Plans.
"Canadian Guaranty" means a Guaranty, in form and substance
satisfactory to Agent, executed and
delivered, on a joint and several basis, by
each US Loan Party and any other Domestic
Subsidiary of a Loan Party in favor of
Agent, for the benefit of itself and the
Purchasers.
"Canadian Loan Parties" means, collectively, the parties set forth
in
the preamble to this Agreement and all
other Canadian Subsidiaries of the Loan
Parties that become a party to the Purchase
Documents pursuant to a joinder
agreement.
"Canadian Notes" has the meaning assigned to such term in
Section
2.1(b) hereof.
"Canadian Pension Plans" means each pension plan required to be
registered under Canadian federal or
provincial law that is maintained or
contributed to by a Loan Party for its
employees or former employees, but does
not include the Canada Pension Plan or the
Quebec Pension Plan as maintained by
the Government of Canada or the Province of
Quebec, respectively.
"Canadian Security Agreement" has the meaning assigned to such term
in
Section 4.1(c) hereof.
"Capital Expenditures" means, for any period, the sum (without
duplication) of all expenditures (whether
paid in cash or accrued as
liabilities, but excluding any reasonable
expenses incurred to comply with the
Process Covenants) made by the Loan Parties
on a Consolidated basis during such
period that are or are required to be
treated as capital expenditures under
GAAP. For purposes of computing Capital
Expenditures as of any measurement date
on or prior to March 31, 2005, Capital
Expenditures for any period set forth on
Annex B included within the applicable 12
month measurement period shall be
deemed to be equal to the applicable amount
set forth on Annex B.
"Capital Lease" means as to any Person, a lease of any interest in
any
kind of property or asset by that Person as
lessee that is properly recorded as
a "capital lease" in accordance with
GAAP.
3
<PAGE>
"Capitalized Lease Obligations" means all obligations of any
Person
under Capital Leases, in each case, taken
at the amount thereof accounted for as
a liability in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response,
Compensation
and Liability Act (42 U.S.C. Section 9604,
et seq.), as amended, and rules,
regulations, standards guidelines and
publications issued thereunder.
"Change of Control" means the occurrence of any of the
following:
(a) a merger,
amalgamation, consolidation, reorganization,
recapitalization or share or interest
exchange, sale or transfer or any other
transaction or series of transactions in
which the stockholders, managers,
partners, owners or interest holders of
Wingate immediately prior to such
transaction or series of transactions
receive, in exchange for the stock or
interests owned by them, cash, property or
securities of the resulting or
surviving entity or any Affiliate thereof,
and, as a result thereof, Persons
who, individually or in the aggregate, were
holders of fifty percent (50%) or
more of the voting stock or other voting
ownership interests of Wingate,
calculated on a fully diluted basis,
immediately prior to such transaction or
series of transactions hold less than fifty
percent (50%) of the voting stock or
other voting ownership interests of the
resulting or surviving entity or such
Affiliate thereof, calculated on a fully
diluted basis; or;
(b) any
"change in/of control" or similar event as defined in (a)
any certificate or incorporation,
certificate of limited partnership or
certificate of formation or statement of
designations or operating agreement or
partnership agreement of any Loan Party or
(b) any document governing
indebtedness of such Loan Party in excess
of $100,000, individually or $250,000
in the aggregate, which gives the holder of
such indebtedness the right to
accelerate or otherwise require payment of
such indebtedness prior to the
maturity date thereof; or;
(c) a direct
or indirect sale, transfer or other conveyance or
disposition, in any single transaction or a
series of transactions, of 40% or
more of the assets of the Loan Parties, on
a Consolidated basis; or;
(d) Wingate
ceases, indirectly or directly, to have the right to
appoint or elect a majority of the Board of
Directors of Parent; or;
(e) Wingate at
any time ceases to own at least seventy-five
percent (75%) of the issued and outstanding
Preferred Stock owned by it on the
Closing Date (as the same may be adjusted
for any combination, recapitalization
or reclassification into a greater or
smaller number of shares), free and clear
of all Liens; or;
(g) except as
otherwise expressly permitted under the terms and
conditions of the Agreement, US Loan
Parties for any reason at any time cease to
own, directly, 100% of the outstanding
equity interests and securities of their
Consolidated Subsidiaries, free and clear
of all Liens other than Permitted
Liens; or;
(h) the
consummation of a Public Offering, other than an offering
of securities for an employee benefit plan
on SEC Form S-8 or a successor form,
that realizes at least $14,000,000 in net
proceeds to the Parent; or
4
<PAGE>
(i) except as
otherwise expressly permitted under the terms and
conditions of the Agreement, the Canadian
Loan Parties for any reason at any
time ceases to own, directly, 100% of the
outstanding equity interests and
securities of their Consolidated
Subsidiaries, free and clear of all Liens other
than Permitted Liens.
"Charter Documents" means the certificate of incorporation,
partnership, organization, formation,
amalgamation or continuance, or analogous
organic instrument filed with the
appropriate Governmental Authorities of each
of the Loan Parties, as applicable,
including all amendments and supplements
thereto.
"Closing" means the closing of the purchase and sale of the
Securities
pursuant to this Agreement.
"Closing Date" means the date and time for delivery and payment of
the
Notes as finally determined pursuant to
Section 2.4 hereof.
"Closing Processing Fee" means a fee in an amount equal to
$175,000
payable by the Loan Parties to ACFS in
consideration of the structuring of the
financing contemplated hereby.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, collectively and each individually, all
collateral
and/or security granted and/or securities
pledged to Agent, for the benefit of
itself and the Purchasers, by the Loan
Parties and any other Person pursuant to
the Purchase Documents.
"Collateral Assignment" has the meaning assigned to such term
in
Section 4.1(c) hereof.
"Common Stock" means the common stock, no par value, of the
Parent.
"Condition" means any condition that results in or otherwise
relates to
any Environmental Liabilities.
"Consolidated or consolidated" means the consolidation in
accordance
with GAAP of the accounts or other items as
to which such term applies; provided
that for purposes of Section 7.3 and 7.2(e)
hereof, notwithstanding any
provision to the contrary, Subsidiaries of
the Parent who are Foreign
Subsidiaries but not Canadian Loan Parties
shall not be consolidated with the
Loan Parties.
"Consolidated Subsidiary" means a Subsidiary of a Loan Party which
is
consolidated for purposes of the financial
covenants set forth in Section 7.3.
"Contingent Obligations" means, as to any Person, any obligation
of
such Person guaranteeing or intending to
guaranty any Indebtedness, leases,
dividends or other obligations ("primary
obligations") of any other Person (the
"primary obligor") in any manner, whether
directly or indirectly, including,
without limitation, any obligation of such
Person, whether or not contingent,
(a) to purchase any such primary obligation
or any property constituting direct
or indirect security therefor, (b) to
advance or supply funds (i) for the
purchase or payment of any such primary
obligation or (ii) to maintain working
capital or equity capital of the
primary
5
<PAGE>
obligor or otherwise to maintain the net
worth or solvency of the primary
obligor, (c) to purchase property,
securities or services primarily for the
purpose of assuring the owner of any such
primary obligation of the ability of
the primary obligor to make payment of such
primary obligation, (d) otherwise to
assure or to hold harmless the owner of
such primary obligation against loss in
respect thereof, and shall include, without
limitation, Interest Rate
Agreements, or (e) with respect to any
letter of credit issued for the account
of that Person or as to which that Person
is otherwise liable for reimbursement
of drawings; provided, however, that the
term "Contingent Obligation" shall not
include endorsements of instruments for
deposit or collection in the ordinary
course of business. The amount of any
Contingent Obligation shall be deemed to
be an amount equal to the stated or
determinable amount of the primary
obligation in respect of which such
Contingent Obligation is made or, if not
stated or determinable, the maximum
reasonably anticipated liability in respect
thereof (assuming such Person is required
to perform thereunder) as determined
by such Person in good faith.
"Controlled Group" means the "controlled group of corporations" as
that
term is defined in Section 1563 of the
Internal Revenue Code of 1986, as
amended, of which the Loan Parties are a
part from time to time.
"Default" means any event or condition that, but for the giving
of
notice or the lapse of time, or both, would
constitute an Event of Default.
"Domestic Subsidiary" of a Person means a Subsidiary of that
Person
that is incorporated or otherwise organized
under the laws of a State of the
United States of America.
"Domestic Wholly-Owned Subsidiary" of a Person means a
Wholly-Owned
Subsidiary of that Person that is a
Domestic Subsidiary of that Person.
"EBITDA" means, with respect to the Loan Parties on a
Consolidated
basis and for any period, the sum, without
duplication, of the following for
such period: Net Income determined in
accordance with GAAP, plus to the extent
deducted in calculating Net Income (a)
Interest Expense, (b) taxes on income (c)
depreciation expense, (d) amortization
expense (e) all other non-cash and/or
non-recurring charges and expenses approved
by Agent in its Permitted
Discretion, including non-cash charges
related to marking outstanding warrants
to market, non-cash charges related to
accounting for stock options and non-cash
charges related to contractual obligations
with respect the Parent's chief
executive officer positions, but excluding
accruals for cash expenses made in
the ordinary course of business, (f) all
costs related to the transactions
contemplated hereby, by the Investments
Documents, including transaction bonuses
not to exceed $375,000 in the aggregate,
(g) loss from any sale of assets, other
than sales in the ordinary course of
business as permitted hereunder, (h)
management fees paid in cash to Wingate
pursuant to the Management Services
Agreement as permitted hereunder, (i) all
reasonable expenses incurred to comply
with the Process Covenants not to exceed
$750,000 in the aggregate and (j) the
Annual Corporate Charge paid in cash in an
amount not to exceed $600,000 in any
fiscal year, less to the extent added in
calculating Net Income (x) gain from
any sale of assets, other than sales in the
ordinary course of business and (y)
all non-cash and/or non-recurring income
and less cash payments made on account
of any non-cash charges added to Net Income
under clause (e) above, all of the
foregoing determined on a Consolidated
basis and in accordance with GAAP. For
purposes of computing EBITDA as of any
measurement date on or
6
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prior to March 31, 2005, EBITDA for any
period set forth on Annex B included
within the applicable 12 month measurement
period shall be deemed to be equal
the applicable amount set forth on Annex
B.
"Employment Agreements" means, collectively, the employment
agreements
of the following Persons, in form and
substance satisfactory to Agent: Joe Rog,
Michael Baach, George Gehring, David Kroon,
Bob Mayer, Barry Schadeck and John
Moran.
"Environmental Laws" means any Laws which address, are related to
or
are otherwise concerned with environmental,
health or safety issues, including
any Laws relating to any emissions,
releases or discharges of Pollutants into
ambient air, surface water, ground water or
land, or otherwise relating to the
manufacture, processing, distribution, use,
treatment, storage, disposal,
transport, handling, clean-up or control of
Pollutants or any exposure or impact
on worker health and safety.
"Environmental Liabilities" means any obligations or
liabilities
(including any claims, suits or other
assertions of obligations or liabilities)
that are:
(a)
related to
environmental, health or safety issues
(including on-site or off-site contamination by Pollutants of
surface
or subsurface soil or water, and occupational safety and health);
and
(b) based upon
or related to (i) any provision of past,
present or future United States or foreign Environmental Law
(including
CERCLA and RCRA) or common law, or (ii) any judgment, order,
writ,
decree, permit or injunction imposed by any court,
administrative
agency, tribunal or otherwise.
The term "Environmental Liabilities" includes: (i) fines,
penalties,
judgments, awards, settlements, losses,
damages (including foreseeable and
unforeseeable consequential damages),
costs, fees (including attorneys' and
consultants' fees), expenses and
disbursements; (ii) defense and other responses
to any administrative or judicial action
(including claims, notice letters,
complaints, and other assertions of
liability); and (iii) financial
responsibility for (1) cleanup costs and
injunctive relief, including any
Removal, Remedial or other Response
actions, and natural resource damages, and
(2) any other compliance or remedial
measures.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
the same may from time to time be amended,
and the rules and regulations of any
governmental agency or authority, as from
time to time in effect, promulgated
thereunder.
"Event of Default" means any of the events of default described
in
Section 8.1 hereof.
"Existing Warrants" means (i) that certain Common Stock
Purchase
Warrant, dated as of September 23, 2002,
issued to Bank One, N.A. by Parent and
(ii) that certain Common Stock Purchase
Warrant, dated as of September 23, 2002,
issued to The Prudential Insurance Company
of America by Parent.
"Fair Market Value" of a security means (i) if determined in
connection
with a sale of substantially all of the
assets of or securities issued by Parent
to an unrelated third party, the
7
<PAGE>
value to be realized by the holder of the
security as a result thereof, (ii)
otherwise, if available, the Market Price
thereof, and (iii) otherwise, if
Market Price is not available, the
Appraised Value.
"Financing Statements" has the meaning assigned to such term in
Section
4.1(c) hereof.
"Fiscal Year" or "fiscal year" means each twelve month period
ending on
March 31st of each year.
"Fixed Charges" means, for the applicable period and without
duplication, the sum of the following for
the Loan Parties, on a Consolidated
basis: (a) Total Debt Service, plus (b)
dividends, repurchases or redemptions of
equity and/or distributions paid in
cash.
"Fixed Charge Coverage Ratio" means, for the Loan Parties on a
Consolidated basis, at any date of
determination, the ratio of (a) EBITDA, minus
non-financed Capital Expenditures and
Capital Expenditures financed under a
revolving line of credit or similar
facility, minus income taxes paid in cash,
to (b) Fixed Charges, in each case for the
twelve (12) months then ending taken
as one accounting period. For purposes of
computing income taxes paid in cash
under clause (a) above as of any
measurement date on or prior to December 31,
2004, the amount of such income taxes paid
in cash for the applicable 12 month
measurement period shall be deemed to be a
pro forma amount of $1,756,000.
"Foreign Subsidiary" means any Subsidiary incorporated or formed in
any
jurisdiction other than any State of the
United States of America.
"GAAP" has the meaning assigned to such term in Section 1.2
hereof.
"Government" means the United States government or any agency
or
Governmental Authority thereof.
"Governmental
Authorities" means any federal, state, municipal,
national, local, provincial or other
governmental court, department, ministry,
council, commission, board, bureau, agency
or instrumentality, governmental or
quasi-governmental, domestic or
foreign.
"Government Contract" or "Government Contracts" means each and all
(i)
written contracts between the Loan Parties
and the Government and (ii) written
subcontracts between (a) the Loan Parties
and a prime contractor (a "Prime
Contractor") who is providing goods or
services to the Government pursuant to a
written contract with the Government (the
"Prime Contract") or (b) the Loan
Parties and a subcontractor who is
providing goods or services to a Prime
Contractor pursuant to a Prime Contract;
provided that in both circumstances the
subcontracts relate only to goods or
services being provided to Government
pursuant to the Prime Contract.
Notwithstanding the foregoing, it is understood
and agreed that for the purposes of
Sections 5.1(w), 5.1(x) and 8.1 of this
Agreement, the terms "Government Contract"
or "Government Contracts" shall also
include any subcontract referenced in (a)
or (b) above, whether or not approved
by Agent.
"Guaranteed Obligations" has the meaning assigned to such term
in
Section 14.1.
8
<PAGE>
"Guaranty" means any guaranty, including, without limitation,
Article
14 of this Agreement, of the payment or
performance of any Indebtedness or other
obligation and any other arrangement
whereby credit is extended to one obligor
on the basis of any promise of another
Person, whether that promise is expressed
in terms of an obligation to pay the
Indebtedness of such obligor, or to
purchase an obligation owed by such
obligor, or to purchase goods and services
from such obligor pursuant to a take-or-pay
contract, or to maintain the
capital, working capital, solvency or
general financial condition of such
obligor, whether or not any such
arrangement is reflected on the balance sheet
of such other Person, firm or corporation,
or referred to in a footnote thereto,
but shall not include endorsements of items
for collection in the ordinary
course of business. For the purpose of all
computations made under this
Agreement, the amount of a Guaranty in
respect of any obligation shall be deemed
to be equal to the maximum aggregate amount
of such obligation or, if the
Guaranty is limited to less than the full
amount of such obligation, the maximum
aggregate potential liability under the
terms of the Guaranty.
"Hazardous Substance" shall mean, without limitation, any
flammable
explosives, radon, radioactive materials,
asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls,
petroleum and petroleum products,
methane, hazardous materials, hazardous
wastes, hazardous or toxic substances or
related materials as defined in or subject
to any applicable Environmental Law.
"Holder" has the meaning assigned to such term in Section 9.1
hereof.
"Indebtedness" of any Person means, without duplication: (a)
all
Indebtedness for Borrowed Money; (b) the
principal balance outstanding under any
synthetic lease, off-balance sheet loan or
similar off balance sheet financing
product; (c) all Contingent Obligations in
respect of indebtedness or
obligations of others of the kinds referred
to in clauses (a) through (b) above,
and (d) all other items not specifically
excluded above which, in accordance
with GAAP, would be included in determining
total liabilities as shown on the
balance sheet of such Person.
"Indebtedness for Borrowed Money" of any Person means, without
duplication, (a) all indebtedness of such
Person for borrowed money, whether or
not evidenced by bonds, debentures, notes
or similar instruments, (b) all
Capitalized Lease Obligations of such
Person, (c) all Indebtedness of such
Person secured by any mortgage, pledge,
security, Lien or conditional sale or
other title retention agreement to which
any property or asset owned or held by
such Person is subject, whether or not the
indebtedness secured thereby shall
have been assumed, (d) all obligations
issued, undertaken or assumed as the
deferred purchase price of Property or
services (excluding trade accounts
payable and accrued obligations (other than
for borrowed money) which are not
aged more than one hundred twenty (120)
calendar days from the billing date or
thirty (30) days from the due date, in each
case incurred in the ordinary course
of business and paid within such time
period, unless the same are being
contested in good faith and by appropriate
and lawful proceedings and such
reserves, if any, with respect thereto as
are required by GAAP and deemed
adequate by such Loan Party's independent
accountants shall have been reserved
to the satisfaction of Agent in its
Permitted Discretion); (e) the face amount
of all letters of credit issued for the
account of such Person and without
duplication, all drafts drawn thereunder
and all reimbursement or payment
obligations with respect to letters of
credit, surety bonds and other similar
instruments issued by such Person; (f) all
indebtedness created or
9
<PAGE>
arising under any conditional sale or other
title retention agreement, or
incurred as financing, in either case with
respect to Property acquired by the
Person (even though the rights and remedies
of the seller or bank under such
agreement in the event of default are
limited to repossession or sale of such
Property), (g) all indebtedness for the
deferred purchase price of property due
more than six months from the incurrence of
such indebtedness and (h) all direct
or indirect guaranties of any or all of the
foregoing.
"Intercompany Balance" means, in the aggregate, any amounts due
from
any Foreign Subsidiaries that are not
Canadian Loan Parties to a Loan Party
(including the amount of any Annual
Corporate Charge), net of any amounts due
from a Loan Party to any Foreign
Subsidiaries that are not Canadian Loan
Parties.
"Interest Expense" means total interest expense generated during
the
period in question (including attributable
to conditional sales contracts,
Capital Leases and other title retention
agreements in accordance with GAAP and
all unused line and commitment fees and
administrative and similar fees) of the
Loan Parties on a Consolidated basis with
respect to all outstanding
Indebtedness including accrued interest and
interest paid in kind and
capitalized interest, but excluding
commissions, discounts and other fees owed
with respect to letters of credit and
bankers' acceptance financing, and net
costs under Interest Rate Agreements.
"Interest Rate Agreement" means any interest rate swap, interest
rate
cap, interest rate collar or other interest
rate hedging agreement or
arrangement.
"Investment" as applied to any Person means the amount paid or
agreed
to be paid or loaned, advanced or
contributed to other Persons, and in any event
shall include (i) any direct or indirect
purchase or other acquisition of any
notes, obligations, instruments, stock,
securities or ownership interest
(including partnership interests and joint
venture interests) and (ii) any
capital contribution to any other
Person.
"Investment Documents" means (a) that certain Securities
Purchase
Agreement dated December 15, 2003, between
CorrPro Investments, LLC and Parent;
and (b) that certain Investor and
Registration Rights Agreement dated March 30,
2004, between CorrPro Investments, LLC and
Parent.
"Landlord Waiver and Consent" means a waiver/consent in form
and
substance satisfactory to Agent in its
Permitted Discretion from the
owner/lessor of any premises not owned by a
Loan Party at which any of the
Collateral is now or hereafter located for
the purpose of providing Agent access
to such Collateral, in each case as such
may be modified, amended or
supplemented from time to time.
"Laws" means all U.S. and foreign federal, state, provincial or
local
statutes, laws, rules, regulations,
ordinances, codes, policies, rules of common
law, and the like, now or hereafter in
effect, including any judicial or
administrative interpretations thereof, and
any judicial or administrative
orders, consents, decrees or judgments.
"Leverage Ratio" means, for the Loan Parties on a Consolidated
basis,
at any date of determination, the ratio of
(i) Total Debt outstanding on such
date, to (ii) EBITDA for the twelve (12)
months then ending taken as one
accounting period.
10
<PAGE>
"Lien" means any security interest, pledge, bailment, mortgage,
hypothecation, deed of trust, conditional
sales and title retention agreement
(including any lease in the nature
thereof), charge, encumbrance or other
similar arrangement or interest in real or
personal property, now owned or
hereafter acquired, whether such interest
is based on common law, statute or
contract.
"LLC Agreement" means that certain Limited Liability Company
Agreement
of CorrPro Investments, LLC entered into
among Wingate, Purchaser and Senior
Lender.
"Loan Parties" means, collectively, the US Loan Parties and the
Canadian Loan Parties.
"Manage" and "Management" means generation, production,
handling,
distribution, processing, use, storage,
treatment, operation, transportation,
recycling, reuse and/or disposal, as those
terms are defined in CERCLA, RCRA and
other Environmental Laws (including as
those terms are further defined,
construed, or otherwise used in rules,
regulations, standards, guidelines and
publications issued pursuant to, or
otherwise in implementation of, such
Environmental Laws).
"Management Fee Subordination Agreement" means, that certain
subordination letter dated as of the
Closing Date among Wingate, Purchasers and
Agent, as such may be modified, amended or
supplemented from time to time, in
form and substance satisfactory to
Agent.
"Management Services Agreement" means that certain Services
Agreement
dated March 30, 2004 between Parent and
Wingate.
"Market Price" of any security means the average of the closing
prices
of such security's sales on all securities
exchanges on which such security may
at the time be listed, or, if there has
been no sales on any such exchange on
any day, the average of the highest bid and
lowest asked prices on all such
exchanges at the end of each day, or, if on
any day such security is not so
listed, the average of the representative
bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York
time, or, if on any day such security is
not quoted in the NASDAQ System, the
average of the highest bid and lowest asked
prices on such day in the domestic
over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or
any similar successor organization,
in each such case averaged over a period of
thirty (30) days consisting of the
day as of which "Market Price" is being
determined and the twenty-nine (29)
consecutive Business Days prior to such
day. If at any time such security is not
listed on any securities exchange or quoted
in the NASDAQ System or the
over-the-counter market, the "Market Price"
shall be the fair value thereof
determined jointly by Parent and the
Holders of Warrants representing a majority
of the shares of Common Stock of Parent
obtainable upon exercise of the
Warrants. If such parties are unable to
reach agreement within ten (10) days,
then the Market Price shall be deemed not
to be available and the "Market Price"
shall be the Appraised Value.
"Material Adverse Effect" means a material adverse effect on
the
business, properties, assets, liabilities
or condition (financial or otherwise)
of the Loan Parties, taken as a whole.
"Material Contracts" means any and all (i) contracts between any
Loan
Party and the Government; and/or (ii)
contracts or agreements to which any Loan
Party is a party and pursuant to which such
Loan Party is or may be (a) entitled
to receive payments, in the aggregate, in
excess of Five Hundred Thousand and
No/100 Dollars ($500,000.00), or (b)
obligated to make
11
<PAGE>
payments or have any other obligation or
liability thereunder (direct or
contingent), in the aggregate, in excess of
Five Hundred Thousand and No/100
Dollars ($500,000.00).
"Measurement Date" has the meaning assigned to such term in Section
7.3
hereof.
"Measurement Period" means the twelve month period ending on a
Measurement Date.
"Mortgage" has the meaning assigned to such term in Section
4.1(e)
hereof.
"Multiemployer Plan" means a multiemployer plan (within the meaning
of
Section 3(37) of ERISA) that is maintained
for the benefit of the employees of
the Loan Parties or any member of the
Controlled Group.
"Negative Pledge Agreements" means each of the Negative Pledge
Agreements dated as of the Closing Date
from the Subsidiaries of the Loan
Parties listed on Schedule 7.1(v), as such
may be modified, amended, restated or
supplemented from time to time.
"Net Income" means, for any Person, the net income (or loss) of
such
Person on a Consolidated basis for such
period taken as a single accounting
period determined in conformity with GAAP;
provided, that there shall be
excluded (i) the income (or loss) of any
Person in which any other Person (other
than such Person) has a joint interest,
except to the extent of the amount of
dividends or other distributions actually
paid to such Person by such Person
during such period, (ii) the income (or
loss) of any Person accrued prior to the
date it becomes a Loan Party or is merged
or amalgamated into or consolidated
with a Loan Party or that Person's assets
are acquired by a Loan Party, (iii)
the income of any Subsidiary of a Loan
Party to the extent that the declaration
or payment of dividends or similar
distributions of that income by that
Subsidiary is not at the time permitted by
operation of the terms of the charter
or any agreement, instrument, judgment,
decree, order, statute, rule or
governmental regulation applicable to that
Subsidiary, and (iv) the income (or
loss) associated with any Interest Rate
Agreement.
"Newly Issued Securities" means any shares of capital stock of
Parent
or any securities containing options or
rights to acquire any shares of capital
stock of Parent; provided, however, that
the term "Newly Issued Securities"
shall not include (i) up to an aggregate of
4,542,654 shares of Common Stock
issued or issuable after the date of this
Agreement upon exercise of options or
rights granted to directors, officers or
employees of Parent pursuant to the
Option Plans, (ii) Common Stock issuable
upon exercise of the Existing Warrants
and the Wingate Warrants, (iii) Common
Stock issuable upon conversion of
securities convertible into or exchangeable
for Common Stock outstanding as of
the date of this Agreement and (iv) shares
of Preferred Stock.
"OFAC" shall mean the Office of Foreign Assets Control of the
United
States of America Department of
Treasury.
"Option Plans" means (i) the 1997 Long-Term Incentive Plan of
Parent,
(ii) the 1997 Non-Employee Directors' Stock
Option Plan of Parent and (iii) any
other stock option plan for the directors,
officers and/or employees of Parent
adopted by the Board of Directors of Parent
and, to the extent required by
applicable law, approved by the
shareholders of Parent.
12
<PAGE>
"Notes" collectively, means the Canadian Notes and the US
Notes.
"Parent" has the meaning assigned to such term in the preamble
hereto.
"PBGC" means the Pension Benefit Guaranty Corporation
established
pursuant to Subtitle A of Title IV of
ERISA, or any other Governmental Authority
succeeding to the functions thereof.
"Permitted Discretion" means a determination or judgment made in
good
faith in the exercise of reasonable (from
the perspective of a secured lender)
credit or business judgment.
"Permitted Dispositions" means:
(i) the sale
by any Loan Party of obsolete, worn out or
replaced equipment or excess equipment no longer needed in the
ordinary
course of business and having a net book value not exceeding
$200,000
in the aggregate in any fiscal year;
(ii)
the sale by any Loan Party of inventory in the
ordinary course of business for fair market value and on an
arm's
length basis;
(iii) the
transfer by any US Loan Party or a Wholly-Owned
Subsidiary of US Loan Party of assets to a US Loan Party or any
Domestic Wholly-Owned Subsidiary of a US Loan Party;
(iv)
the transfer by any Canadian Loan Party or a
Wholly-Owned Subsidiary of Canadian Loan Party of assets to any
Loan
Party or any Wholly-Owned Subsidiary of any Loan Party;
(v) the
transfer by any Loan Party of other assets or
properties not specifically permitted otherwise in clauses (i)
through
(iv) above (other than equity interests in Subsidiaries) only so
long
as (a) such Loan Party complies with the mandatory prepayment
provisions of Section 2.11 of the Senior Credit Agreement in
connection
therewith (to the extent the proceeds thereof are not reinvested
in
accordance with the terms of such Section 2.11 and Section 3.5
hereof),
(b) the net book value of assets so sold does not exceed $100,000
in
the aggregate in any fiscal year, (c) no Default or Event of
Default
exists or otherwise would result therefrom and (d) the sole
consideration thereof, which shall be at least equal to fair
market
value, is cash; and
(vi)
the dispositions set forth on the Permitted
Disposition Schedule attached hereto as Schedule 1.1(a).
"Permitted Distributions" means:
(i) the
declaration and payment of dividends or other
distributions by any Loan Party or a Wholly-Owned Subsidiary of
any
Loan Party to a US Loan Party or any Domestic Wholly-Owned
Subsidiary
of a US Loan Party;
13
<PAGE>
(ii)
the declaration and payment of dividends or other
distributions by any Canadian Loan Party or a Wholly-Owned
Subsidiary
of Canadian Loan Party to any Loan Party or any Wholly-Owned
Subsidiary
of any Loan Party;
(iii) the
declaration and payment of dividends or other
distributions by any Loan Party payable solely in its equity
securities
(to the extent constituting Permitted Securities and the same
(other
than equity securities of Parent) are subject to a first priority
Lien
(subject only to a prior Lien in favor of Senior Lender) in favor
of
Agent, for the benefit of the Purchasers, as security for the
obligations hereunder and under the other Purchase Documents;
(iv)
the issuance by Parent of shares or options to
purchase shares of capital stock under the Warrant, Existing
Warrants,
the Wingate Warrant and the Option Plans; and
(v) so long as
no Default or Event of Default has
occurred and is continuing or would result therefrom, the
distribution
by any Loan Party, upon termination of an employee or in
accordance
with any repurchase provisions set forth in the Option Plan or
in
accordance with any existing option grants, to such employee to
redeem
for cash equity securities or warrants or options to acquire any
equity
securities of such Loan Party owned by such employee not to
exceed
$100,000 annually and $250,000 in the aggregate; provided that
after
giving effect to such distribution, the Loan Parties are in
compliance
on a pro forma basis with the financial covenants set forth in
Section
7.3 (recalculated for the most recent period for which
financial
statements have been delivered).
"Permitted Liens" has the meaning assigned to such term Section
7.2(b)
hereof.
"Permitted Securities" means any shares, units or interests of
equity
securities or ownership interests of Parent
that by their terms (or by the terms
of any security into which it is
convertible or for which it is exchangeable) or
upon the happening of any event or
otherwise (A) are not convertible or
exchangeable for Indebtedness or any
securities that are not Permitted
Securities, (B) (i) do not mature and (ii)
are not putable or redeemable at the
option of the holder thereof, in each case
under clause (i) or (ii) in whole or
in part on or prior to the date six (6)
months after the earlier of the
indefeasible payment in full in cash of the
obligations hereunder, (C) do not
have payments of dividends on or prior to
the date six (6) months after the
indefeasible payment in full of the
obligations hereunder, (D) are unsecured and
by operation of law or by legally binding
agreement are subordinated in right of
repayment, liens, security and remedies to
all of the obligations hereunder and
to all of Agent's and Purchasers' rights,
Liens and remedies, (E) do not have
any veto or supermajority voting rights or
approval rights with respect to any
issues other than to protect their own
rights and preferences, and /or (F) are
not sold, issued or otherwise transferred
in connection with or as a part of a
Public Offering.
"Person" means any individual, partnership, limited
partnership,
corporation, limited liability company,
association, joint stock company, trust,
joint venture, unincorporated organization
or governmental entity or department,
agency or political subdivision
thereof.
14
<PAGE>
"Plan" means any employee benefit plan (within the meaning of
Section
3(3) of ERISA), other than a Multiemployer
Plan, established or maintained by
any of the Loan Parties or any member of
the Controlled Group.
"Pledge Agreements" has the meaning assigned to such term in
Section
4.1(c) hereof.
"Pollutant" shall include any "hazardous substance" and any
"pollutant
or contaminant" as those terms are defined
in CERCLA; any "hazardous waste" as
that term is defined in RCRA; and any
"hazardous material" as that term is
defined in the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et
seq.), as amended (including as those terms
are further defined, construed, or
otherwise used in rules, regulations,
standards, guidelines and publications
issued pursuant to, or otherwise in
implementation of, said Environmental Laws);
and including without limitation any
petroleum product or byproduct, solvent,
flammable or explosive material,
radioactive material, asbestos, polychlorinated
biphenyls (PCBs), dioxins, dibenzofurans,
heavy metals, and radon gas; and
including any other substance or material
that is reasonably determined to
present a threat, hazard or risk to human
health or the environment.
"PPSA" means the Personal Property Security Act (Alberta), as in
effect
from time to time.
"Preferred Stock" means that certain Series B Cumulative
Redeemable
Voting Preferred Stock of Parent, no par
value per share issued and outstanding
as of the Closing Date pursuant to the
Preferred Stock Purchase Agreement.
"Prior Holders" means (i) the holders of "Registrable Securities,"
as
that term is defined in the Existing
Warrants and (ii) the holders of
"Registrable Securities," as that terms is
defined in the Wingate Warrants.
"Process Covenants" has the meaning assigned to such term in
Section
7.1(u).
"Properties and Facilities" has the meaning assigned to such term
in
Section 5.1(q).
"Proprietary Rights" means all patents, trademarks, trade
names,
service marks, copyrights, inventions,
production methods, licenses (other than
any "shrink wrap" licenses), formulas,
know-how and trade secrets, regardless of
whether such are registered with any
Governmental Authorities, including
applications therefor.
"Public Offering" means any offer or sale of securities pursuant to
any
registration statement filed and effective
with the SEC or any other
Governmental Authority after the Closing
Date.
"Purchase Documents" means this Agreement, the Notes, the Warrants
and
the Security Documents and all other
agreements, instruments and documents
delivered in connection therewith as any or
all of the foregoing may be
supplemented or amended from time to
time.
"Purchaser" has the meaning assigned to such term in the
preamble
hereto and in Section 6.2 hereof.
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<PAGE>
"Put Option" has the meaning assigned to such term in Section
10.1
hereof.
"Put Option Closing" has the meaning assigned to such term in
Section
10.5 hereof.
"Put Price" has the meaning assigned to such term in Section
10.2
hereof.
"Put Shares" has the meaning assigned to such term in Section
10.2
hereof.
"RCRA" means the Resource Conservation and Recovery Act (42
U.S.C.
Section 6901 et seq.), as amended, and all
rules, regulations, standards,
guidelines, and publications issued
thereunder.
"Registrable Securities" means any shares of Common Stock of
Parent
purchased upon the exercise of any Warrant
and any shares of Common Stock of
Parent purchased pursuant to Article 11
hereof.
"Removal," "Remedial" and "Response" actions shall include the
types of
activities covered by CERCLA, RCRA, and
other comparable Environmental Laws, and
whether the activities are those which
might be taken by a government entity or
those which a government entity or any
other person might seek to require of
waste generators, handlers, distributors,
processors, users, storers, treaters,
owners, operators, transporters, recyclers,
reusers, disposers, or other persons
under "removal," "remedial," or other
"response" actions.
"Reportable Event" means any of the events which are reportable
under
Section 4043 of ERISA and the regulations
promulgated thereunder, other than an
occurrence for which the thirty (30) day
notice contained in 29 C.F.R. Section
2615.3(a) is waived.
"Required Purchasers" means, at any time, Purchasers holding a pro
rata
percentage of the outstanding principal
amount of the Notes aggregating at least
66-2/3% at such time. Anything to the
contrary contained in this definition
notwithstanding, to the extent the fact
that each Purchaser is considered in
determining Required Purchasers for any
purpose relating to any Canadian Note
would result in material and adverse tax
consequences to any US Loan Party under
Section 956 of the Code, as determined by
Agent and the Required Purchasers in
their Permitted Discretion, then Required
Purchasers, for such purpose, shall be
determined in accordance with the terms of
this definition but solely by
reference to and among the Purchasers of
the Canadian Notes.
"Revolving Financing" means one or more secured revolving lines
of
credit of the Loan Parties in an initial
aggregate amount not to exceed
$19,500,000, subject to adjustment as
provided in the Senior Subordination
Agreement.
"SEC" means the Securities and Exchange Commission and any
governmental
body or agency succeeding to the functions
thereof.
"Securities" has the meaning assigned to such term in Section
2.3
hereof.
"Securities Act" means the Securities Act of 1933, as amended.
16
<PAGE>
"Securities Exchange Act" means the Securities Exchange Act of
1934, as
amended.
"Security Agreement" has the meaning assigned to such term in
Section
4.1(c) hereof.
"Security Documents" means the Security Agreement, the Canadian
Security Agreement, the Mortgages, the IP
Acknowledgements, the Pledge
Agreements, the Negative Pledge Agreements,
the Financing Statements, equivalent
statements, notifications or instruments
under the PPSA, and all other
documents, instruments and other materials
necessary to create or perfect the
security interests created pursuant to the
Security Agreement.
"Senior Credit Agreement" means that certain Revolving Credit,
Term
Loan and Security Agreement by and among
the Loan Parties, CapitalSource
Finance, LLC, as agent, and Senior Lender
dated March 30, 2004, as such may be
amended, modified, renewed, extended or
restated and any substitutions,
replacements or refinancings thereof from
time to time as permitted hereunder.
"Senior Financing" means, collectively, the Revolving Financing and
the
Term Financing.
"Senior Lender" shall collectively mean the banks party to the
Senior
Credit Agreement.
"Senior Subordination Agreement" means that certain
Subordination
Agreement among Agent, Purchasers, Senior
Lender and Parent dated as of the
Closing Date as the same may be modified,
amended, restated, substituted,
replaced and/or supplemented from time to
time.
"Subject Securities" means the Warrants and the Warrant Shares.
"Subordinated Debt" means any Indebtedness, contingent equity,
earnout
or other obligations that is unsecured and
subordinated by written contract in
right of repayment, liens, security and
remedies to all of the obligations
hereunder and to all of Agent's and
Purchasers' rights, Liens and remedies and
in form and substance satisfactory to Agent
in its Permitted Discretion.
"Subordination Agreement" means, individually and collectively, (i)
the
Management Fee Subordination Agreement; and
(ii) any other agreements between
Agent and holders of Subordinated Debt
relating to Subordinated Debt, in each
case as the same may be modified, amended,
restated and/or supplemented from
time to time, in each case in form and
substance satisfactory to Agent.
"Subsidiary" of any corporation means any other corporation or
limited
liability company of which the outstanding
capital stock possessing a majority
of voting power in the election of
directors (otherwise than as the result of a
default) is owned or controlled by such
corporation directly or indirectly
through Subsidiaries.
"Term Financing" means one or more secured term credit facilities
with
an aggregate principal amount not to exceed
$20,500,000, subject to adjustment
as provided in the Senior Subordination
Agreement.
17
<PAGE>
"Total Debt" shall mean, at any date of determination, the sum of
(i)
the total outstanding principal balance of
all Indebtedness for Borrowed Money
of Loan Parties on a Consolidated basis,
including, without limitation, all
Indebtedness under the Purchase Documents,
the Senior Financing, all undrawn
amounts under standby letters of credit
pursuant to the Senior Credit Agreement,
and all Capital Leases Obligations and (ii)
all accrued interest on the
foregoing including, without limitations,
all interest paid in kind. For all
purposes of this Agreement, the term "Total
Debt" shall be calculated to include
(i.e., not net of) discounts, deductions or
allocations relating or applicable
to or arising from any equity or equity
participation or fees, whether under
GAAP or otherwise, but shall not include
any Preferred Stock regardless of its
accounting treatment pursuant to GAAP or
payments of principal paid by the Loan
Parties on Indebtedness satisfied with the
proceeds of this Agreement.
"Total Debt Service" means, for any period, the sum of (i)
scheduled or
other required payments of principal on any
and all Total Debt, (ii) any other
cash amounts due or payable with respect
to, in connection with or on Total
Debt, and (iii) cash Interest Expense. For
purposes of computing Total Debt
Service as of any measurement date on or
prior to March 31, 2005, Total Debt
Service for any period set forth on Annex B
included within the applicable 12
month measurement period shall be deemed to
be equal the applicable amount set
forth on Annex B.
"Transaction Documents" has the meaning assigned to such term
in
Section 5.1(f) hereof.
"Transactions" means the incurrence of debt and the issuance of
securities in connection therewith, as
contemplated by this Agreement, the
Notes, the Transaction Documents and all
other agreements contemplated hereby
and thereby.
"UCC" means the Uniform Commercial Code as in effect in the State
of
New York from time to time; provided, that
to the extent the UCC is used to
define any term herein or in any other
Purchase Document and such term is
defined differently in different Articles
or Divisions o the UCC the definition
of such term contained in Article or
Division 9 shall govern.
"Underlying Common Stock" means (i) the Warrant Shares and (ii)
any
equity securities issued or issuable with
respect to the securities referred to
in clause (i) above by way of stock
dividend or stock split or in connection
with a combination of shares,
recapitalization, merger, consolidation or other
reorganization.
"US Loan Parties" means, collectively, the parties set forth in
the
preamble to this Agreement and all other
Domestic Subsidiaries of the Loan
Parties that become a party to the Purchase
Documents pursuant to a joinder
agreement.
"US Notes" has the meaning set forth in Section 2.1(a) hereof.
"UST" means an underground storage tank, including as that term
is
defined, construed and otherwise used in
RCRA and in rules, regulations,
standards, guidelines and publications
issued pursuant to RCRA and comparable
state and local laws.
"Warrants" has the meaning assigned to such term in Section 2.2
hereof.
18
<PAGE>
"Warrant Shares" means the shares of Common Stock issued or
issuable
upon exercise of the Warrants.
"Wholly-Owned Subsidiary" of a Person means any Subsidiary of
that
Person in which (other than directors'
qualifying shares required by law) 100%
of the equity, at the time as of which any
determination is being made, is
owned, beneficially and of record, by that
Person, or by one or more of the
other Wholly-Owned Subsidiaries of that
Person, or both.
"Wingate" means Wingate Partners III, L.P., a Delaware limited
partnership, and its Affiliates, successors
and assigns.
"Wingate Warrants" means the detachable warrants to be issued and
sold
by Parent pursuant to the terms of the
Investment Documents, including any
warrants issued upon any transfer, division
or combination, or in substitution,
thereof.
1.2.
Accounting Principles. The character or amount of any asset,
liability, capital account or reserve and
of any item of income or expense to be
determined, and any consolidation or other
accounting computation to be made,
and the construction of any definition
containing a financial term, pursuant to
this Agreement shall be determined or made
in accordance with generally accepted
accounting principles in the United States
of America consistently applied
("GAAP") as in effect from time to time;
provided that, if any change in GAAP
results in a change in the calculation of
the financial covenants or
interpretation of the related provisions of
this Agreement or any other Purchase
Document, then the Loan Parties and Agent
agree to amend such provisions of this
Agreement so as to equitably reflect such
changes in GAAP with the desired
result that the criteria for evaluating the
Loan Parties' financial condition
shall be the same after such change in GAAP
as if such change had not been made.
1.3.
Other Definitional Provisions; Construction. Whenever the
context so requires, neuter gender includes
the masculine and feminine, the
singular number includes the plural and
vice versa. The words "hereof" "herein"
and "hereunder" and words of similar import
when used in this Agreement shall
refer to this Agreement as a whole and not
in any particular provision of this
agreement, and references to section,
article, annex, schedule, exhibit and like
references are references to this Agreement
unless otherwise specified. A
Default or Event of Default shall
"continue" or be "continuing" until such
Default or Event of Default has been cured
or waived by Agent and Purchasers.
References in this Agreement to any Persons
shall include such Persons'
successors and permitted assigns. Other
terms contained in this Agreement (which
are not otherwise specifically defined
herein) shall have meanings provided in
Article 9 of the UCC on the date hereof to
the extent the same are used or
defined therein.
ARTICLE 2
ISSUE AND SALE OF SECURITIES
2.1.
Authorization and Issuance of the Notes. (a) The US Loan
Parties have duly authorized the issuance
and sale to Purchasers of $10,000,000
in aggregate principal amount of the US
Loan Parties' Senior Secured
Subordinated Notes Due March 29, 2011 to be
substantially in the form of the
Note attached hereto as Exhibit A-1
(including any Notes issued in substitution
therefor pursuant to Sections 6.3 and 6.4
hereof and any Notes issued in
exchange for Put Shares
19
<PAGE>
pursuant to Section 10.4 or Section 10.5,
the "US Notes").
(b) The
Canadian Loan Parties have duly authorized the
issuance and sale to Purchasers of $4,000,000 in aggregate
principal
amount of the Canadian Loan Parties' Senior Secured Subordinated
Notes
Due March 29, 2011 to be substantially in the form of the Note
attached
hereto as Exhibit A-2 (including any Notes issued in
substitution
therefor pursuant to Sections 6.3 and 6.4 hereof and any Notes
issued
in exchange for Put Shares pursuant to Section 10.4 or Section
10.5,
the "Canadian Notes").
2.2.
Authorization and Issuance of the Warrants. Parent has duly
authorized the issuance and sale to
Purchasers of stock purchase warrants
substantially in the form of the warrant
attached hereto as Exhibit B
(collectively, the "Warrants") evidencing
Purchasers' right to acquire an
aggregate 3,936,967 shares of Common Stock
of Parent.
2.3.
Sale and Purchase. Subject to the terms and conditions and in
reliance upon the representations,
warranties and agreements set forth herein,
(a) the US Loan Parties shall sell to
Purchasers, and Purchasers shall purchase
from the US Loan Parties, in an amount
equal to the pro rata portion of the US
Notes as set forth on Annex A, the US Notes
in the aggregate principal amount
set forth in Section 2.1(a) hereof for
$10,000,000 in the aggregate, (b) the
Canadian Loan Parties shall sell to
Purchasers, and Purchasers shall purchase
from the Canadian Loan Parties, in an
amount equal to the pro rata portion of
the Canadian Notes as set forth on Annex A,
the Canadian Notes in the aggregate
principal amount set forth in Section
2.1(b) hereof for $4,000,000 in the
aggregate and (c) Parent shall sell to
Purchasers, and Purchasers shall purchase
from Parent, in an amount equal to the pro
rata portion of the Warrants as set
forth on Annex A, the Warrants for an
exercise price of $.001 per share not to
exceed $100 in the aggregate. (The Warrants
and the Notes are sometimes referred
to herein collectively as the
"Securities.")
2.4.
The Closing. Delivery of and payment for the Securities (the
"Closing") shall be made at such place and
on such other date as may be mutually
agreeable to the Loan Parties and
Purchasers. The date and time of the Closing
as finally determined pursuant to this
Section 2.4 are referred to herein as the
"Closing Date." Delivery of the Securities
shall be made to Purchasers against
payment of the purchase price therefor,
less the Closing Processing Fee and any
other amounts payable pursuant to Section
4.1(k) hereof, by wire transfer of
immediately available funds in the manner
agreed to by the Loan Parties and
Purchasers. The Notes shall be issued in
such name or names and in such
permitted denomination or denominations as
set forth in Annex A or as Purchasers
may request in writing not less than two
(2) Business Days before the Closing
Date.
ARTICLE 3
REPAYMENT OF THE NOTES
3.1.
Interest Rates and Interest Payments. On the first Business
Day of each month commencing on May 1,
2004, (a) the US Loan Parties, jointly
and severally, covenant and agree to make
payments in arrears to Agent for the
ratable benefit of Purchasers of accrued
interest on the US Notes and (b) the
Canadian Loan Parties, jointly and
severally, covenant and agree to make
payments in arrears to Agent for the
ratable benefit of the Purchasers of
accrued interest on the Canadian Notes. The
Notes will bear interest on the
outstanding principal amount thereof at
20
<PAGE>
a rate equal to twelve and one-half percent
(12.5%). Interest on the Notes will
be computed on the basis of a year of 360
days, composed of twelve 30-day
months, and the actual number of days
elapsed.
3.2.
Repayment of the Notes. (a) The US Loan Parties, jointly and
severally, covenant and agree to repay to
Agent, for the ratable benefit of
Purchasers, the unpaid principal balance of
the US Notes in full, together with
all accrued and unpaid interest, fees and
other amounts due hereunder in one (1)
payment of $10,000,000 or such other
principal amount as is then outstanding,
together with all accrued and unpaid
interest, fees and other amounts due
hereunder on March 29, 2011, and (b) the
Canadian Loan Parties, jointly and
severally, covenant and agree to repay to
Agent, for the ratable benefit of
Purchasers, the unpaid principal balance of
the Canadian Notes in full, together
with all accrued and unpaid interest, fees
and other amounts due hereunder in
one (1) payment of $4,000,000 or such other
principal amount as is then
outstanding, together with all accrued and
unpaid interest, fees and other
amounts due hereunder on March 29,
2011.
3.3.
Optional Prepayment of Notes. Subject to the terms of this
Section 3.3, the Loan Parties may prepay to
Agent, for the ratable benefit of
Purchasers, the outstanding principal
amount of the Notes in whole or in part in
multiples of $500,000, or such lesser
amount as is then outstanding, at any time
at a price equal to (a) the accrued
interest, if any, to the date set for
prepayment, plus (b) a prepayment fee
representing the amortization of certain
of Purchasers' costs incurred in connection
with the purchase of the Notes equal
to the principal amount prepaid multiplied
by the following percentage:
<TABLE>
<CAPTION>
If Prepaid During the 12-Month Period
Ending on March 30th of
the Following Years:
Percentage
-------------------------------------
----------
<S>
<C>
2005
5%
2006
4%
2007
3%
2008
2%
2009 and thereafter
0%
</TABLE>
All such prepayments shall be applied by Agent to the
outstanding
principal of the Notes after application of
such prepayment to any accrued
interest and prepayment premium payable in
connection therewith. Anything herein
contained to the contrary notwithstanding,
the Agent, in its sole and absolute
discretion, may require all or any portion
of voluntary prepayments made by the
Loan Parties to be applied to the principal
balance of US Note and any related
obligations prior to the application
thereof to the Canadian Note and related
Canadian obligations.
3.4.
Notice of Optional Prepayment. If the Loan Parties shall elect
to prepay any Notes pursuant to Section 3.3
hereof, the Loan Parties shall give
notice of such prepayment to Agent and each
holder of the Notes to be prepaid
not less than twenty (20) days or more than
ninety (90) days prior to the date
fixed for prepayment, specifying (a) the
date on which such prepayment is to be
made, (b) the principal amount of such
Notes to be prepaid on such date, and
21
<PAGE>
(c) the premium, if any, and accrued
interest applicable to the prepayment. Such
notice shall be accompanied by a
certificate of the chairman of the Board of
Directors, the president, the vice
president, and/or the treasurer of Parent
that such prepayment is being made in
compliance with Section 3.3.
3.5.
Mandatory
Prepayment. The Notes shall be prepaid in full,
together with all interest, fees and
expenses plus a prepayment premium computed
in accordance with Section 3.3, as if such
prepayment were a voluntary
prepayment, in the event of a Change of
Control or the consummation of a Public
Offering, other than an offering of
securities for an employee benefit plan on
SEC Form S-8 or a successor form, that
realizes at least $14,000,000 in net
proceeds to the Parent.
3.6.
Home Office Payment. The Loan Parties will pay all sums
becoming due on such Notes for principal,
premium, if any, and interest to Agent
by the method and at the address specified
for such purpose in Annex A, or by
such other method or at such other address
as Purchasers shall have from time to
time specified to the Loan Parties in
writing for such purpose, without the
presentation or surrender of such Note or
the making of any notation thereon,
except that upon written request of the
Loan Parties made concurrently with or
reasonably promptly after payment or
prepayment in full of any Note, each holder
of a Note shall surrender such Note for
cancellation, promptly after such
request, to the Loan Parties at their
principal executive office.
3.7.
Taxes. Any and all payments by the Loan Parties hereunder or
under the Notes or other Purchase Documents
that are made to or for the benefit
of Purchasers shall be made free and clear
of and without deduction for any and
all present or future taxes, levies,
imposts, deductions, charges or
withholdings and penalties, interests and
all other liabilities with respect
thereto (collectively, "Taxes"), excluding
taxes imposed on Agent's or
Purchasers' net income or capital and
franchise taxes imposed on any of them by
the jurisdiction under the laws of which
any of them is organized or any
political subdivision thereof (all such
nonexcluded Taxes being hereinafter
referred to as "Covered Taxes"). If any of
the Loan Parties shall be required by
law to deduct any Covered Taxes from or in
respect of any sum payable hereunder
or under any Notes or other Purchase
Documents to Agent for the benefit of
Purchasers, or to Purchasers, the sum
payable shall be increased as may be
necessary so that after making all required
deductions of Covered Taxes
(including deductions of Covered Taxes
applicable to additional sums payable
under this paragraph), each Purchaser
receives an amount equal to the sum it
would have received had no such deductions
been made. The Loan Parties shall
make such deductions and the Loan Parties
shall pay the full amount so deducted
to the relevant taxation authority or other
authority in accordance with
applicable law. In addition, the Loan
Parties agree to pay any present or future
stamp, documentary, excise, privilege,
intangible or similar levies that arise
at any time or from time to time from any
payment made under any and all
Purchase Documents or from the execution or
delivery by the Loan Parties or from
the filing or recording or maintenance of,
or otherwise with respect to the
exercise by Agent or Purchasers of their
respective rights under any and all
Purchase Documents (collectively, "Other
Taxes"). The Loan Parties will
indemnify Agent and Purchasers for the full
amount of Covered Taxes imposed on
or with respect to amounts payable
hereunder and Other Taxes, and any liability
(including penalties, interest and
expenses) arising therefrom or with respect
thereto. Payment of this indemnification
shall be made within thirty (30) days
from the date Agent or Purchasers provide
the Loan Parties
22
<PAGE>
with a certificate certifying and setting
forth in reasonable detail the
calculation thereof as to the amount and
type of such Taxes. Any such
certificates submitted by Agent or
Purchasers in good faith to the Loan Parties
shall, absent manifest error, be final,
conclusive and binding on all parties.
The obligation of the Loan Parties under
this Section 3.7 shall survive the
payment of the Notes and the termination of
this Agreement. Within thirty (30)
days after the Loan Parties having received
a receipt for payment of Covered
Taxes and/or Other Taxes, the Loan Parties
shall furnish to Agent, the original
or certified copy of a receipt evidencing
payment thereof.
3.8.
Maximum Lawful Rate
(a) This
Agreement, the Notes and the other Purchase
Documents are hereby limited by this Section 3.8. In no event,
whether
by reason of acceleration of the maturity of the amounts due
hereunder
or otherwise, shall interest and fees contracted for, charged,
received, paid or agreed to be paid to Purchasers exceed the
maximum
amount permissible under such applicable law. If, from any
circumstance
whatsoever, interest and fees would otherwise be payable to Agent
or
Purchasers in excess of the maximum amount permissible under
such
applicable law, the interest and fees shall be reduced to the
maximum
amount permitted under applicable law. If from any circumstance,
Agent
or Purchasers shall have received anything of value deemed interest
by
applicable law in excess of the maximum lawful amount, an amount
equal
to any excess of interest shall be applied to the reduction of
the
principal amount of the Notes, in such manner as may be determined
by
Purchasers, and not to the payment of fees or interest, or if
such
excessive interest exceeds the unpaid balance of the principal
amount
of the Notes, such excess shall be refunded to the Loan
Parties.
(b) For the
purposes of disclosure under the Interest Act
(Canada), whenever any interest or any fee to be paid by a Loan
Party
hereunder or in connection herewith is to be calculated on the
basis of
any period of time ("First Period") that is less than a calendar
year
(the "First Rate"), it is hereby agreed that the yearly rate of
interest to which the rate used in such calculation is equivalent
is
the rate so used multiplied by the actual number of days in the
year
divided by such period in which the same is to be ascertained
and
divided by the number of days in the First Period. The rates of
interest to be
paid under this Agreement are nominal rates, and not
effective rates or yields. The principle of deemed reinvestment
of
interest does not apply to any calculation of interest under
this
Agreement.
(c)
Without
limiting the generality of Section 3.8(a)
above, with respect to the Canadian Notes and related obligations,
in
no event shall the aggregate "interest" (as that term is defined
in
Section 347 of the Criminal Code (Canada)) exceed the effective
annual
rate of interest on the "credit advanced" (as defined therein)
lawfully
permitted under Section 347 of the Criminal Code (Canada). The
effective annual rate of interest shall be determined in
accordance
with generally accepted actuarial practices and principles over
the
term of the applicable Loan, and in the event of a dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries
appointed by Agent will be conclusive for the purposes of such
determination.
3.9.
Capital Adequacy. If, after the date hereof, either the
introduction of or any
23
<PAGE>
change of the interpretation of any law or
the compliance by Purchasers with any
guideline or request from any governmental
authority (whether or not having the
force of law) has or would have the effect
of reducing the rate of return on the
capital or assets of Purchasers as a
consequence of, as determined by Agent or
Purchasers in their sole discretion, the
existence of any Purchaser's
obligations under this Agreement or any
other Purchase Documents, then, upon
demand by Purchasers, the Loan Parties
immediately shall pay to Purchasers, from
the time as specified by Purchasers,
additional amounts sufficient to compensate
Purchaser in light of such circumstances.
The obligations of the Loan Parties
under this Section 3.9 shall survive the
payments of the Notes and the
termination of this Agreement.
3.10.
Certain Waivers. The Loan Parties unconditionally waive (a)
any rights to presentment, demand, protest
or (except as expressly required
hereby) notice of any kind, and (b) any
rights of rescission, setoff,
counterclaim or defense to payment under
the Notes or otherwise that the Loan
Parties may have or claim against any
Purchaser, the Agent or any prior
Purchaser or Agent.
3.11.
Administration Fee. The Loan Parties shall pay the annual
Administration Fee on the Closing Date and
each anniversary thereafter until the
Notes are indefeasibly paid in full.
3.12.
Several Obligations.
(a) Each US
Loan Party acknowledges that it is jointly
and severally liable for all of the US Obligations under the
Purchase
Documents. Each US Loan Party expressly understands, agrees and
acknowledges that (i) US Loan Parties are all Affiliates, (ii) each
US
Loan Party desires to have the availability of one common
credit
facility instead of separate credit facilities, (iii) each US
Loan
Party has requested that the Agent and the Purchasers extend such
a
common credit facility on the terms herein provided, (iv) the
Purchasers will be lending against, and relying on a Lien upon, all
of
US Loan Parties' assets even though the proceeds of any particular
loan
made hereunder may not be advanced directly to a particular US
Loan
Party, (v) each US Loan Party will nonetheless benefit by the
issuance
of the US Notes in a size greater than each could independently
warrant, (vi) all of the representations, warranties,
covenants,
obligations, conditions, agreements and other terms contained in
the
Purchase Documents to which any US Loan Party is a party shall
be
applicable to and shall be binding upon each US Loan Party, and
(vii)
the US Loan Parties have each executed the Notes as co-makers of
the
Notes and that it would not be able to obtain the credit provided
by
the Purchasers hereunder without the financial support provided by
the
other US Loan Parties.
(b) Each
Canadian Loan Party acknowledges that it is
jointly and severally liable for all of the obligations related to
the
Canadian Notes under the Purchase Documents. Each Canadian Loan
Party
expressly understands, agrees and acknowledges that (i) Canadian
Loan
Parties are all Affiliates, (ii) each Canadian Loan Party desires
to
have the availability of one common credit facility instead of
separate
credit facilities, (iii) each Canadian Loan Party has requested
that
the Agent and the Purchasers extend such a common credit facility
on
the terms herein provided, (iv) the Purchasers will be lending
against,
and relying on a Lien upon, all of Canadian Loan Parties' assets
even
though the proceeds of any particular loan made hereunder may not
be
advanced directly
24
<PAGE>
to a particular Canadian Loan Party, (v) each Canadian Loan Party
will
nonetheless benefit by the issuance of Canadian Notes in a size
greater
than each could
independently warrant, (vi) all of the representations,
warranties, covenants, obligations, conditions, agreements and
other
terms contained in the Purchase Documents to which any Canadian
Loan
Party is a party shall be applicable to and shall be binding upon
each
Canadian Loan Party, and (vii) the Canadian Loan Parties have
each
executed the Notes as co-makers of the Notes and that it would not
be
able to obtain the credit provided by the Purchasers hereunder
without
the financial support provided by the other Canadian Loan
Parties.
(c) Anything
to the contrary contained in this Agreement
or any other Purchase Document notwithstanding, to the extent
any
representation, warranty, covenant or other provision contained
herein
or in such Purchase Document that, by its terms, is made by
Loan
Parties on a joint and several basis would result in material
and
adverse tax consequences to any US Loan Party under Section 956 of
the
Code due to such joint and several nature, as determined by Agent
and
the Required Purchasers in their Permitted Discretion, such
representation, warranty, covenant or other provision shall be
deemed
to be made, without further action or notice by or on behalf of
Agent,
any Purchaser or any other Person, by each Loan Party on a several,
and
not a joint basis or a joint and several basis, to and for the
benefit
of Agent and each Purchaser.
3.13. Loan
Party Representation; Reliance. Each Loan Party
irrevocably appoints Parent as its agent
for all purposes relevant to this
Agreement and all other Purchase Documents,
including the giving and receipt of
notices and execution and delivery of all
documents, instruments, and
certificates contemplated herein and
therein and all modifications hereto and
thereto. Any acknowledgment, consent,
direction, certification, or other action
which might otherwise be valid or effective
only if given or taken by all or any
Loan Party acting singly, shall be valid
and effective if given or taken only by
Parent, whether or not any of the other
Loan Parties joins therein, and the
Agent and the Purchasers shall have no duty
or obligation to make further
inquiry with respect to the authority of
Parent under this Section 3.13,
provided that nothing in this Section 3.13
shall limit the effectiveness of, or
the right of the Agent and the Purchasers
to require and rely upon, any notice,
document, instrument, certificate,
acknowledgment, consent, direction,
certification, or other action to be
delivered by each Loan Party pursuant to
this Agreement or the other Purchase
Documents. With respect to any action
hereunder, Agent and Purchasers may
conclusively rely upon, and shall incur no
liability to any Loan Party in acting upon,
any request or other communication
that Agent or any Purchaser reasonably
believes to have been given or made by a
Person authorized on such or any Loan
Party's behalf, whether or not such Person
is listed on the incumbency certificate
delivered pursuant to this Agreement. In
each such case, each Loan Party hereby
waives the right to dispute Agent's and
Purchasers' actions based upon such request
or other communication absent
manifest error.
ARTICLE 4
CONDITIONS
4.1.
Conditions to Purchase of Securities. The obligation of
Purchasers to purchase and pay for the
Securities is subject to the
satisfaction, prior to or at the Closing,
of the following
25
<PAGE>
conditions:
(a)
Representations and Warranties True. The
representations and warranties contained in Article 5 hereof shall
be
true and correct in all material respects at and as of the Closing
Date
as though then made, except to the extent of changes caused by
the
transactions expressly contemplated herein.
(b) Material
Adverse Change. There will have been no
material adverse change in the business or financial condition of
the
Loan Parties or the capital markets since September 30, 2003.
(c) Security
Agreement; Collateral Assignment. The Loan
Parties and Agent, for the benefit of the Purchasers, shall
have
entered into (i) a security agreement or security agreements,
granting
to Agent a security interest in the assets of the US Loan
Parties
subordinated in lien priority only to the Liens in favor of the
Senior
Lender and subject to no other Liens other than Permitted Liens,
in
form and substance as set forth in Exhibit C attached hereto (as
the
same may be amended, modified or supplemented from time to time
in
accordance with the terms thereof, the "Security Agreement"), (ii)
a
security agreement or security agreements, granting to Agent a
security
interest in the assets of the Canadian Loan Parties subordinated
in
lien priority only to the Liens in favor of the Senior Lender
as
contemplated therein and subject to no other Liens other than any
other
Permitted Liens, in form and substance acceptable to Agent
attached
hereto (as the same may be amended, modified or supplemented from
time
to time in accordance with the terms thereof, the "Canadian
Security
Agreement"), (iii) pledge agreements granting to Agent for the
benefit
of Purchasers a pledge of the equity securities held by (A) the US
Loan
Parties and (B) the Canadian Loan Parties with respect to the
Canadian
Notes and related obligations, in form and substance acceptable
to
Agent as the same may be amended, modified or supplemented from
time to
time in accordance with the terms hereof (the "Pledge Agreements")
and
(iv) a collateral patent, trademark, copyright and license
acknowledgement in form and substance as set forth in Exhibit D
attached hereto (as the same may be amended, modified or
supplemented
from time to time in accordance with the terms thereof, the "IP
Acknowledgement"). The Loan Parties shall have executed and
delivered
to Agent, for the benefit of the Purchasers, such financing
statements
and other instruments (collectively, "Financing Statements") as
Agent
shall require in order to perfect and maintain the continued
perfection
of the security interest created by the Security Agreement. Agent
shall
have received reports of filings with appropriate government
agencies
showing that there are no Liens on the Collateral other than
Permitted
Liens.
(d) Mortgage
and Title Insurance. Agent shall have
received (i) an ALTA mortgagee's policy of title insurance
(ALTA
Revised 1987 Form or such other form acceptable to Agent) in favor
of
Agent with respect to each parcel of owned real estate located in
the
United States, issued by a title company and in an amount
satisfactory
to Agent in its Permitted Discretion, showing that the applicable
Loan
Party is the owner of such parcel and has good and marketable
title
thereto and insuring that the mortgage (in form and substance as
set
forth in Exhibit E attached hereto) covering such parcel
constitutes a
valid Lien on such parcel, subject only to Permitted Liens and
other
matters
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<PAGE>
approved by Agent in its Permitted Discretion, each such policy to
be
in such form and containing such endorsements as may be required
by
Agent in its Permitted Discretion, (ii) evidence that all premiums
with
respect to such title insurance policies shall have been paid in
full
by the Loan Parties, and (iii) a survey of each parcel of Real
Estate
and the real estate subject to any leasehold estate identified
on
Schedule 4.1(d) in sufficient detail to permit the elimination of
any
survey exceptions to the title policy insuring the Lien of such
Mortgage and otherwise satisfactory to Agent in its Permitted
Discretion;
(e)
Environmental Reports. Agent shall have received
reports covering the Loan Parties' properties in form and
substance
satisfactory to Agent regarding the Loan Parties' compliance
with
Environmental Laws.
(f) Landlord
Waivers and Consents. The Loan Parties shall
have delivered to Agent a Landlord Waiver and Consent for each
property
leased for the properties located in Conyers, Georgia, Belle
Chase,
Louisiana, Houston, Texas, Sand Springs, Oklahoma and San
Leandro,
California and for each other property lease, if any, for which
the
consent of the landlord is needed in connection with any change
of
control of
the tenant, each in form and substance satisfactory to
Purchaser.
(g) LLC
Agreement. CorrPro Investments, LLC and each of
its members shall have entered into the LLC Agreement.
(h) Management
Fee Subordination Agreement. Agent,
Purchasers and Wingate shall have executed the Management Fee
Subordination Agreement.
(i) Investment
Documents. Parent and CorrPro Investments
LLC shall have executed the Investment Documents on terms
reasonably
satisfactory to Agent and Purchasers.
(j) Closing
Documents. The Loan Parties will have
delivered or caused to be delivered to Agent all of the
following
documents in form and substance satisfactory to Agent:
(i) the US
Notes (as designated by Agent and
Purchasers pursuant to Section 2.1(a) and Annex A hereof) in
aggregate original principal amounts as set forth herein, duly
completed and executed by the US Loan Parties;
(ii)
the Canadian Notes (as designated by Agent
and Purchasers pursuant to Section 2.1(b) and Annex A hereof)
in aggregate original principal amounts as set forth herein,
duly completed and executed by the Canadian Loan Parties;
(iii) the
Warrants (as designated by Agent and
Purchasers pursuant to Section 2.2 and Annex A hereof)
evidencing the right to acquire the number of shares of Common
Stock of Parent set forth in Section 2.2 and Annex B hereof,
subject to adjustment from time to time in accordance with the
terms thereof;
(iv)
certificates of good standing dated not more
than 10 Business Days
27
<PAGE>
prior to the Closing Date for each of the Loan Parties issued
by their respective jurisdictions of organization and each
jurisdiction where they are qualified to operate as a foreign
corporation, or its equivalent except for such jurisdiction
where the failure to so qualify would not reasonably be likely
to have or result in a Material Adverse Effect;
(v) a copy of
the Charter Documents of each of
the Loan Parties, certified by the appropriate governmental
official of the jurisdiction of its organization as of a date
not more than 10 Business Days prior to the Closing Date;
(vi)
a copy of the By-laws of each of the Loan
Parties, certified as of the Closing Date by the secretary,
assistant secretary, manager or general partner, as
applicable, of each respective Loan Party;
(vii) a
certificate of the secretary, assistant
secretary, managing director, manager or general partner of
each of the Loan Parties, certifying as to the names and true
signatures of the officers or other authorized person of the
respective Loan Party authorized to sign this Agreement and
the other documents to be delivered by the respective Loan
Party hereunder;
(viii) copies of
the resolutions duly adopted by
the each of the Loan Party's board of directors, general
partners, board of managers or other governing body,
authorizing the execution, delivery and performance by the
respective Loan Party of this Agreement and each of the other
agreements, instruments and documents contemplated hereby to
which the respective
Loan Party is a party, and the
consummation of all of the other Transactions, certified as of
the Closing Date by the secretary, assistant secretary,
manager or general partner of the respective Loan Party;
(ix)
a certificate dated as of the Closing Date
from an officer, general partner or manager of each of the
Loan Parties stating that the conditions specified in this
Section 4.1 have been fully satisfied or waived by Agent;
(x)
certificates of insurance evidencing the
existence of all insurance required to be maintained by the
Loan Parties pursuant to Section 7.1(c), and Agent shall be
satisfied with the type and extent of such coverage;
(xi)
opinions of Hahn Loeser & Parks LLP, counsel
to the Loan Parties, and special counsel for the Loan Parties,
including, without limitation, appropriate Canadian counsel
licensed in such provinces of Canada as requested by Agent, in
each case in form and substance satisfactory to Agent;
(xii)
copies of all material leases to which any
of the Loan Parties is a party; and
(xiii) such
other documents relating to the
Transactions contemplated by this Agreement as Agent or its
special counsel may reasonably request.
28
<PAGE>
(k)
Purchaser's Fees and Expenses.
(i) Closing
Processing Fee: On the Closing Date,
the Loan Parties shall pay the Closing Processing Fee to ACFS
(and the Loan Parties hereby authorize Agent to deduct the
Closing Processing Fee from the aggregate proceeds from the
sales of the Securities by the Loan Parties);
(ii)
Initial Administrative Fee. On the Closing
Date, the Loan Parties shall have paid the initial yearly
Administrative Fee to ACFS (and the Loan Parties hereby
authorize Agent to deduct the initial Administrative Fee from
the aggregate proceeds of the sale of the Securities by the
Loan Parties); and
(iii)
Other Fees and Expenses. On the Closing
Date, the Loan Parties shall have paid the fees and expenses
of Agent and Purchasers, payable by the Loan Parties pursuant
to Section 14.4 hereof (and the Loan Parties hereby authorize
Agent to deduct from the aggregate proceeds of the sale of the
Securities by the Loan Parties, all such amounts).
(l) Legal
Investment. On the Closing Date, Purchasers'
purchases of the Securities shall not be prohibited by any
applicable
law, rule or regulation of any Governmental Authority
(including,
without limitation, Regulations T, U or X of the Board of Governors
of
the Federal Reserve System) as a result of the promulgation or
enactment thereof or any changes therein, or change in the
interpretation thereof by any Governmental Authority, subsequent to
the
date of this Agreement.
(m)
Proceedings. All proceedings taken or required to be
taken in connection with the transactions contemplated hereby to
be
consummated at or prior to the Closing and all documents
incident
thereto will be satisfactory in form and substance to Agent and
its
special counsel and to Purchaser and its special counsel.
(n) Employment
Agreements and Key Employees. The Loan
Parties shall have entered into the Employment Agreements to which
they
are a party. No key executive employee and no group of employees
or
independent contractors of the Loan Parties has given notice that
they
intend to terminate his, her or their employment or relationship
with
the Loan Parties.
(o) Financial
Condition. Parent shall have, on a
Consolidated basis, as of the Closing Date, after giving effect to
the
payment of (i) prior Indebtedness, (ii) all fees payable to
Purchasers
under the terms of this Agreement, and (iii) all costs and
expenses
arising as a result of the Transactions contemplated by this
Agreement,
the Senior Credit Agreement and any other Transaction Document to
which
the Loan Parties are
party: (x) adjusted EBITDA (as set forth on Annex
C attached hereto) for the twelve month period ending on February
28,
2004 of at least $12,250,000, (y) Debt to EBITDA Ratio of not more
than
3.30 to 1.00, and (z) available cash and immediately accessible
availability in an amount greater than $5,000,000 on the Closing
Date.
(p) Equity.
Parent shall have received no less than
$13,000,000 consideration for Preferred Stock in form and
substance
acceptable to Purchasers in their sole
29
<PAGE>
discretion.
(q) Senior
Credit Agreement. The Loan Parties shall have
entered into the Senior Credit Agreement in form and substance
acceptable to Purchasers in their sole discretion.
(r) Senior
Subordination Agreement. Agent, Purchasers and
the Senior Lender shall have executed the Senior Subordination
Agreement.
(s) Existing
Indebtedness. All in form and substance
satisfactory to Agent in its Permitted Discretion, Agent shall
have
received evidence (i) of repayment in full and termination of
all
liabilities and obligations of the Loan Parties to Bank One, N.A.,
the
Royal Bank of Canada, and The Prudential Insurance Company of
America
and all related documents, agreements and instruments and of all
Liens
and UCC or PPSA financing statements and similar statements
relating
thereto, including, without limitation, any Liens and/or UCC or
PPSA
financing statements covering or relating to any assets or
properties
of any equity holders of any Loan Party, (ii) of release and
termination of, or Agent's authority to release and terminate, any
and
all Liens and/or UCC or PPSA financing statements and similar
statements in, on, against or with respect to any assets or
property of
the Loan Parties (other than Permitted Liens), and (iii) that any
and
all existing lockbox arrangements are terminated.
(t) Middle
East Operations. Agent shall have received
evidence satisfactory to Agent that Parent has received proceeds
in
connection with the pending divestiture of Parent's Middle East
operations such that the Net Proceeds are at least $2,500,000.
(u) Waiver.
Any condition specified in this Section 4.1
may be waived by Agent; provided that no such waiver will be
effective
against Agent unless it is set forth in a writing executed by
Agent.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
5.1.
Representations and Warranties of Loan Parties. As a material
inducement to Agent and Purchasers to enter
into this Agreement and purchase the
Notes and the Warrants, the Loan Parties,
jointly and severally, hereby
represent and warrant to Agent and
Purchasers as follows:
(a)
Organization and Power. Each of the Loan Parties is
duly organized, validly existing and in good standing under the
laws of
its state of organization. Each of the Loan Parties has all
requisite
corporate or other organizational power and authority and all
material
licenses, permits, approvals and authorizations necessary to own
and
operate its properties, to carry on its businesses as now conducted
and
presently proposed to be conducted and to carry out the
Transactions,
and is qualified to do business in the jurisdictions listed on
the
"Organizational Schedule" attached hereto as Schedule 5.1(a),
which
includes every jurisdiction where the failure to so qualify
might
reasonably be expected to have a Material Adverse Effect. Each of
the
Loan Parties has its principal place of business as set forth on
the
"Organizational Schedule." The copies of the
30
<PAGE>
Charter Documents and By-Laws of the Loan Parties that have
been
furnished to Agent reflect all amendments made thereto at any
time
prior to the date of this Agreement and are correct and
complete.
(b) Principal
Business. The Loan Parties are primarily
engaged in the business of providing corrosion control related
services, systems, equipment and materials to the
infrastructure,
environmental and energy markets, including (i) corrosion
control
engineering services, systems and equipment, (ii) coating services
and
(iii) pipeline integrity and risk assessment services (the
"Business").
(c) Financial
Statements and Financial Projections.
(i) Financial
Statements. The Loan Parties have
delivered to Agent copies of their audited consolidated
year-end financial statements for and as of the end of the
three fiscal years ended March 31, 2003 and unaudited interim
statements for the fiscal quarters ended June 30, 2003,
September 30, 2003 and December 31, 2003 (the "Financial
Statements"). The Financial Statements were compiled from the
books and records maintained by the Loan Parties' management,
are correct and complete and fairly represent the consolidated
financial condition of the Loan Parties as of their dates and
the results of operations for the fiscal periods then ended
and have been prepared in accordance with GAAP except as set
forth on the "Financial Statements Exception Schedule"
attached hereto as Schedule 5.1(c).
(ii)
Financial Projections. The Loan Parties have
delivered to Agent financial projections of the Loan Parties
for the period April 1, 2003 through March 31, 2008 derived
from various assumptions of the Loan Parties' management (the
"Financial Projections"). The Financial Projections represent
a reasonable estimate of possible results in light of the
history of the Business and the Loan Parties, present and
foreseeable conditions and the intentions of the Loan Parties'
management. The
Financial Projections accurately reflect the
liabilities of the Loan Parties upon consummation of the
transactions contemplated hereby as of the Closing Date.
(iii)
Accuracy of Financial Statements. The Loan
Parties do not have any liabilities, contingent or otherwise,
or forward or long-term commitments that are not disclosed in
the Financial Statements or in the notes thereto, except as
set forth on Schedule 5.1(c) and except as disclosed therein
there are no unrealized or anticipated losses from any
commitments of the Loan Parties which may reasonably be
expected to be or result in a Material Adverse Effect.
(d)
Capitalization and Related Matters. As of the Closing
Date and immediately thereafter, the authorized capital stock of
Parent
and the shares of stock that are issued , outstanding and reserved
for
issuance upon exercise of the Warrants are as set forth on the
Organizational Schedule. As of the Closing Date, except as set
forth on
the Organizational Schedule, the authorized capital stock of each
of
the other Loan Parties and the number and ownership of all
outstanding
capital stock of each of the other Loan
31
<PAGE>
Parties is as set forth on the Organizational Schedule. As of
the
Closing Date, none of the Loan Parties will have outstanding
any
capital stock or securities convertible or exchangeable for any
shares
of its capital stock except as set forth on the Organizational
Schedule
and none will have outstanding any rights or options to subscribe
for
or to purchase its capital stock or any stock or securities
convertible
into or exchangeable for its capital stock except as set forth on
the
Organizational Schedule. As of the Closing Date, none of the
Loan
Parties will be subject to any obligation (contingent or otherwise)
to
repurchase or otherwise acquire or retire any shares of its
capital
stock, except as set forth herein, in the Charter Documents and as
set
forth on the Organizational Schedule, respectively, as in effect on
the
date hereof. As of the Closing, all of the outstanding shares of
each
Loan Party's capital stock will be validly issued, fully paid
and
nonassessable. There are no statutory or, except as set forth on
the
Organizational Schedule, contractual stockholders' preemptive
rights
with respect to the issuance of the Warrants hereunder. Assuming
the
truthfulness of the representations made by Purchaser herein, none
of
the Loan Parties has violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of
any
of its capital stock, and the offer, sale and issuance of the
Securities hereunder do not require registration under the
Securities
Act or any applicable state securities laws. To the best knowledge
of
Parent, there are no agreements among Parent's stockholders
with
respect to the voting or transfer of Parent's capital stock other
than
as contemplated in the Purchase Documents and the Investment
Documents.
(e)
Subsidiaries. The Loan Parties do not own, or hold
any rights to acquire, any shares of stock or any other security
or
interest in any other Person, and the Loan Parties have no
Subsidiaries, except in each case as set forth on the
Organizational
Schedule.
(f)
Authorization; No Breach. The execution, delivery and
performance of this Agreement, the other Purchase Documents, the
Senior
Credit Agreement, the Investment Documents and all other
agreements
contemplated hereby and thereby to which each of the Loan Parties
is a
party (collectively, the "Transaction Documents"), and the
consummation
of the Transactions have been duly authorized by each of the
Loan
Parties. The execution and delivery by each of the Loan Parties of
the
Purchase Documents do not and will not (i) conflict with or result
in a
breach of the terms, conditions or provisions of, (ii) constitute
a
default under, (iii) except as created pursuant to the Security
Documents, result in the creation of any Lien upon any of the
Loan
Parties' capital stock or assets pursuant to, (iv) give any third
party
the right to accelerate any obligation under, (v) result in a
violation
of, or (vi) require any authorization, consent, approval, exemption
or
other action by or notice to any Governmental Authority pursuant
to,
the Charter Documents of any of the Loan Parties, or any law,
statute,
rule or regulation to which any of the Loan Parties is subject, or
any
agreement, instrument, order, judgment or decree to which any of
the
Loan Parties is a party or to which they or their assets are
subject.
(g)
Governmental Approvals. Except as specifically
provided by the Purchase Documents, no registration with or consent
or
approval of, or other action by, any Governmental Authority is or
will
be required in connection with the consummation of
32
<PAGE>
the Transactions by the Loan Parties.
(h)
Enforceability. This Agreement constitutes, and each
of the other Purchase Documents when duly executed and delivered
by
each of the Loan Parties who are parties thereto will
constitute,
legal, valid and binding obligations of each of the Loan
Parties
enforceable in accordance with their respective terms subject to
the
effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability
of
creditors' rights generally and to the effect of general principles
of
equity which may limit the availability of equitable remedies
(whether
in a proceeding at law or in equity).
(i) No
Material Adverse Change. Since September 30, 2003,
there has been no event or occurrence that is likely to have a
Material
Adverse Effect.
(j)
Litigation. Except as described in the "Litigation
Schedule" attached hereto as Schedule 5.1(j) there is no action,
suit,
proceeding or investigation pending or, to its knowledge,
threatened
against any Loan Party that (a) questions or could reasonably
be
expected to prevent or affect the validity of any of the Purchases
or
the right of such Loan Party to enter into any Purchase or to
consummate the transactions contemplated thereby or (b) could
reasonably be expected to be, have or result in, either
individually or
in the aggregate, any Material Adverse Change or Material
Adverse
Effect. No Loan Party is aware that there is any basis for the
foregoing. No Loan Party is a party or subject to any order,
writ,
injunction, judgment or decree of any Governmental Authority. As of
the
Closing Date, there is no action, suit, proceeding or
investigation
initiated by any Loan Party currently pending. Except as disclosed
in
the financial statements most recently delivered to Agent
hereunder, no
Loan Party has any existing accrued and/or unpaid Indebtedness to
any
Governmental Authority or any other governmental payor.
(k) Compliance
with Laws. Each Loan Party (a) except as
set forth on the Compliance Schedule attached hereto as
Schedule
5.1(k), is in compliance with all laws, statutes, rules,
regulations,
ordinances and tariffs of any Governmental Authority applicable to
such
Loan Party, the Business and/or such Loan Party's assets or
operations,
including, without limitation, ERISA and any laws or
regulations
pertaining to the Business, and (b) is not in violation of any
order of
any Governmental Authority or other board or tribunal, except, in
the
case of both (a) and (b), where noncompliance or violation could
not
reasonably be expected to be, have or result in a Material
Adverse
Effect. To the Loan Parties' knowledge, there is no event,
fact,
condition or circumstance which, with notice or passage of time,
or
both, would constitute or result in any noncompliance with, or
any
violation of,
any of the foregoing, in each case except where
noncompliance or violation could not reasonably be expected to be,
have
or result in a Material Adverse Effect. No Loan Party has received
any
notice that any Loan Party is not in material compliance in any
respect
with any of the requirements of any of the foregoing. No Loan Party
has
(i) engaged in any Prohibited Transactions as defined in Section
406 of
ERISA and Section 4975 of the Code, (ii) failed to meet any
applicable
minimum funding requirements under Section 302 of ERISA in respect
of
its plans and no funding requirements have been postponed or
delayed,
(iii) knowledge of any event or occurrence which would cause
the
Pension Benefit Guaranty Corporation to institute
33
<PAGE>
proceedings under Title IV of ERISA to terminate any of the
employee
benefit plans, (iv) any fiduciary responsibility under ERISA
for
investments with respect to any plan existing for the benefit
of
Persons other than its employees or former employees, or (v)
withdrawn,
completely or partially, from any multi-employer pension plans so
as to
incur liability under the MultiEmployer Pension Plan Amendments
of
1980. With respect to each Loan Party, there exists no event
described
in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) day notice period
contained in 12 C.F.R. Section 2615.3 has not been waived. With
respect
to each scheme or arrangement mandated by a government other than
the
United States providing for post-employment benefits (each, a
"Foreign
Government Scheme or Arrangement") and with respect to each
employee
benefit plan maintained or contributed to by any Loan Party that is
not
subject to United States law providing for post-employment
benefits
(each, a "Foreign Plan"): (i) all employer and employee
contributions
required by law or by the terms of any Foreign Government Scheme
or
Arrangement or any Foreign Plan have been made, or, if
applicable,
accrued, in accordance with normal accounting practices; (ii)
the
liability of each Loan Party with respect to a Foreign Plan is
reflected in accordance with normal accounting practices on the
financial statements of such Loan Party, as the case may be; (iii)
each
Foreign Plan is funded in accordance with applicable law; and (iv)
each
Foreign Plan required to be registered has been registered and has
been
maintained in good standing with applicable regulatory
authorities.
Each Loan Party has maintained in all material respects all
records
required to be maintained by any applicable Governmental Authority.
No
Loan Party has engaged, or does engage, directly or indirectly, in
any
business
other than the Business.
(l)
Environmental Protection. Except as specified in
"Environmental Schedule" attached hereto as Schedule 5.1(l), each
Loan
Party is in compliance in all material respects with all
applicable
Environmental Laws. Except as set forth on Schedule 5.1(l), no
Loan
Party has been notified of any action, suit, proceeding or
investigation (a) relating in any way to compliance by or liability
of
such Loan Party under any Environmental Laws, (b) which otherwise
deals
with any Hazardous Substance or any Environmental Law, or (c)
which
seeks to suspend, revoke or terminate any license, permit or
approval
necessary for the generation, handling, storage, treatment or
disposal
of any Hazardous Substance.
(m) Legal
Investments; Use of Proceeds. The Loan Parties
will use the proceeds from the sale of the Notes to refinance
certain
existing indebtedness and pay certain transaction expenses
related
thereto. The Loan Parties are not engaged in the business of
extending
credit for the purpose of purchasing or carrying any "margin stock"
or
"margin security" (within the meaning of Regulations T, U or X
issued
by the Board of Governors of the Federal Reserve System), and
no
proceeds of the sale of the Notes will be used to purchase or carry
any
margin stock or margin security or to extend credit to others for
the
purpose of purchasing or carrying any margin stock or margin
security.
(n) Taxes.
Each of the Loan Parties has filed or caused
to be filed all federal, state and local tax returns that are
required
to be filed by it, and has paid or caused to be paid all taxes
shown to
be due and payable on such returns or on any assessments received
by
it, including payroll taxes, except only for taxes that such Loan
Party
is
34
<PAGE>
currently contesting in good faith and for which adequate reserves
have
been established.
(o)
Intentionally Omitted.
(p) Investment
Company Act; Public Utility Holding
Company Act. None of the Loan Parties is (a) an "investment
company" or
"controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended, or (b) a "holding
company"
or a "subsidiary company" of a "holding company" or an "affiliate"
of a
"holding company" or of a "subsidiary company" of a "holding
company,"
within the meaning of the Public Utility Holding Company Act of
1935,
as
amended.
(q)
Properties; Security Interests. Except as set forth
on the "Properties Schedule" attached hereto as Schedule 5.1 (q),
each
Loan Party is the sole owner and has good, valid and marketable
title
to, or a valid leasehold interest in, license of, or right to use,
all
of its properties and assets, whether personal or real, free and
clear
of all Liens other than Permitted Liens. Schedule 5.4 lists as of
the
Closing Date (i) the locatio
