Exhibit 10(a)
QUIXOTE CORPORATION
as the Company
and
BUYERS,
as defined herein
SECURITIES PURCHASE AGREEMENT
Dated as of February 9, 2005
7%
Convertible Senior Subordinated Notes due 2025
SECURITIES PURCHASE
AGREEMENT
THIS SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of
February 9, 2005, by and among Quixote Corporation, a Delaware
corporation (the “Company”), and the Buyers listed on
the Schedule of Buyers attached hereto as
Exhibit A (individually, a “Buyer” and,
collectively, the “Buyers”).
THE PARTIES TO THIS
AGREEMENT enter into this Agreement on the basis of the
following facts, intentions and understandings:
A.
In accordance with the terms and conditions of this Agreement, the
Company has agreed to issue and sell, and the Buyers have severally
agreed to purchase in the aggregate, Forty Million United States
Dollars ($40,000,000) principal amount of the Company’s 7%
Convertible Senior Subordinated Notes due 2025 (such Convertible
Senior Notes, substantially in the form attached as Exhibit A
to the Indenture (as defined below), as such form of Note may be
amended, modified or supplemented from time to time in accordance
with the terms thereof, the “Notes”), which shall be
convertible into shares of the common stock, $0.01 2 /
3 par value per share (the “Common Stock”),
of the Company (as converted, the “Conversion Shares”).
The Notes will be issued pursuant to an Indenture, dated as of
February 9, 2005 (the “Indenture”) by and between
the Company and LaSalle Bank National Association, as trustee (the
“Trustee”), substantially in the form attached hereto
as Exhibit B .
B.
Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement substantially in the form attached
hereto as Exhibit D (as the same may be amended,
modified or supplemented from time to time in accordance with the
terms thereof, the “Registration Rights Agreement”)
pursuant to which the Company has agreed to provide the Buyers with
the benefit of certain registration rights under the Securities Act
of 1933, as amended, and the rules and regulations promulgated
thereunder (the “Securities Act”) and applicable state
securities laws, on the terms and subject to the conditions set
forth therein.
NOW THEREFORE , in
consideration of the promises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each
of the Buyers hereby agree as follows:
SECTION 1.
Purchase and Sale of Notes.
(a)
Purchase of Notes . Subject to the satisfaction
(or waiver, to the extent permitted by applicable law) of the
conditions set forth in Sections 6 and 7 of this Agreement, the
Company shall issue and sell to each Buyer, and each Buyer
severally and not jointly agrees to purchase from the Company, the
respective principal amount of Notes set forth opposite such
Buyer’s name on the Schedule of Buyers attached hereto
as Exhibit A (the “Closing”). The
Company shall issue to each Buyer One Thousand United States
Dollars ($1,000) principal amount of the Notes for each One
Thousand United States Dollars ($1,000) tendered by each such
Buyer.
(b)
The Closing . The date and time of the Closing
(the “Closing Date”) shall be 10:00 a.m., Chicago,
Illinois local time, on February 9, 2005, subject to the
satisfaction (or waiver, to the extent permitted by applicable law)
of the conditions set forth in Sections 6 and 7 of this
Agreement. The Closing shall
occur on the Closing Date at the offices of Holland & Knight
LLP, 131 South Dearborn Street, 30 th Floor, Chicago,
Illinois 60603.
(c)
Form of Payment . On the Closing Date, (i) each
Buyer shall pay the Company for the Notes to be issued and sold to
such Buyer on the Closing Date, by wire transfer of immediately
available funds in accordance with the Company’s written wire
instructions attached hereto on Schedule A , or through
book-entry settlement procedures, as applicable, (ii) the Company
shall reimburse each Buyer for its reasonable expenses to the
extent required by Section 4(i) of this Agreement, and (iii)
the Company shall issue to each Buyer properly authenticated Notes
(in the denominations of not less than One Thousand United States
Dollars ($1,000) as such Buyer shall reasonably request)
representing the principal amount of Notes which such Buyer is then
purchasing hereunder, duly executed on behalf of the Company and
registered in the name of such Buyer, provided, that Notes eligible
for services through The Depository Trust Company
(“DTC”) shall be issued, countersigned, registered and
delivered in global certificate form through the facilities at DTC
in such names and denominations as each Buyer shall specify.
SECTION 2 .
Buyer’s Representations and Warranties. Each Buyer represents and warrants to the
Company with respect to only itself that as of the date
hereof:
(a)
Investment Purpose . Such Buyer is acquiring the Notes
for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or
exempted from registration under the Securities Act; provided,
however, that by making the representations herein, such Buyer does
not agree to hold any of the Notes or the shares of Common Stock
issued upon conversion of the Notes, including any Additional
Shares (as defined in the Indenture) and shares of Common Stock
issued in payment of the Company Conversion Provisional Payment (as
defined in the Indenture) (collectively, the “Conversion
Shares” and, together with the Notes, the
“Securities”) for any minimum or other specific term
and reserves the right to dispose of the Securities at any time;
provided, further, that such disposition shall be in accordance
with or pursuant to a registration statement or an exemption under
the Securities Act.
(b)
Accredited Investor and Qualified Institutional Buyer Status
. Such Buyer is an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D under the Securities
Act and a “qualified institutional buyer” as that term
is defined in Rule 144A(a) under the Securities Act as of the date
of this Agreement and was not organized for the specific purpose of
acquiring the Securities.
(c)
Reliance on Exemptions . Such Buyer understands that
the Securities are being offered and sold to it in reliance on
specific exemptions from the registration requirements of the
United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and such
Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set
forth herein and in the applicable Note in order to determine the
availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
(d)
Information . Such Buyer believes it (i) has been
furnished with or believes it has had full access to all of the
information that it considers necessary or appropriate for
deciding
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whether to
purchase the Securities, including all materials relating to the
business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been
requested by such Buyer, including a copy of the Confidential
Private Placement Memorandum, (ii) has had an opportunity to ask
questions and receive answers from the Company regarding the terms
and conditions of the Offering, (iii) can bear the economic risk of
a total loss of its investment in the Securities and (iv) has such
knowledge and experience in business and financial matters so as to
enable it to understand the risks of and form an investment
decision with respect to its investment in the Securities. Neither
such inquiries nor any other due diligence investigations conducted
by such Buyer or its advisors, if any, or its representatives shall
limit, modify, amend or affect the Company’s representations
and warranties contained in this Agreement or any other Transaction
Document and the Buyer’s right to rely thereon.
(e)
No Governmental Review . Such Buyer understands
that no United States federal or state agency or any other
government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of
the Securities.
(f)
Transfer or Resale . Such Buyer understands
that, except as provided in the Registration Rights Agreement, the
Securities have not been registered under the Securities Act or any
state securities laws, and may not be offered for sale, sold,
assigned or transferred without registration under the Securities
Act or an exemption therefrom and that, in the absence of an
effective registration statement under the Securities Act, such
Securities may only be sold under certain circumstances as set
forth in the Securities Act. In that connection, such Buyer
is aware of Rule 144 under the Securities Act and the restrictions
imposed thereby.
(g)
Legends .
(1)
Such Buyer understands that, until the expiration of the holding
period applicable to sales thereof under Rule 144(k) (or any
successor provision), any certificate evidencing such Notes (and
all securities issued in exchange therefor or in substitution
thereof, other than Common Stock, if any, issued upon conversion
thereof), which shall bear the legend set forth in
Section 2(g)(2) of this Agreement, if applicable) shall bear a
legend in substantially the following form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION THEREFROM. THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY THE SECURITIES.
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The
Company may place the following legend on any Note, as appropriate,
held by or transferred to an “affiliate” (as defined in
Rule 501(b) of Regulation D under the Securities Act) of the
Company:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON WHO
MAY BE DEEMED TO BE AN AFFILIATE OF THE ISSUER FOR PURPOSES OF RULE
144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND MAY BE SOLD ONLY IN COMPLIANCE
WITH RULE 144, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT.
The
legends set forth above shall be removed and the Company shall
issue a new Note, as appropriate, of like tenor and aggregate
principal amount or number of shares, as appropriate, and which
shall not bear the restrictive legends required by this
Section 2(g)(1), (i) if such Notes are registered for resale
under the Securities Act and are transferred or sold pursuant to
such registration, (ii) if, in connection with a sale transaction,
such holder provides the Company with an opinion of counsel
reasonably acceptable to the Company to the effect that such sale,
assignment or transfer of the Notes may be made without
registration under the Securities Act, or (iii) upon
expiration of the two-year period under Rule 144(k) of the
Securities Act (or any successor rule) if the holder of the
Securities has not been an “affiliate” (as defined in
Rule 501(b) of Regulation D under the Securities Act) during
the preceding three (3) months.
(2)
Such Buyer understands that any stock certificate representing
Conversion Shares shall bear a legend in substantially the
following form (unless (i) such Conversion Shares have been
transferred or sold pursuant to an effective registration
statement, (ii) such Conversion Shares, as appropriate, have been
transferred or sold pursuant to the exemption from registration
provided by Rule 144 under the Securities Act, (iii) such
Conversion Shares, as appropriate, may be transferred pursuant to
Rule 144(k) under the Securities Act, or (iv) unless otherwise
agreed by the Company in writing with written notice to the
transfer agent):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION THEREFROM. THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY THE SECURITIES.
The
Company may instruct the transfer agent to place the following
legend on any certificate evidencing shares of Common Stock held by
or transferred to an “affiliate” (as defined in Rule
501(b) of Regulation D under the Securities Act) of the
Company:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON WHO
MAY BE DEEMED TO BE AN AFFILIATE OF THE ISSUER FOR
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PURPOSES OF RULE 144 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND MAY BE SOLD ONLY IN COMPLIANCE WITH RULE 144,
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO A VALID EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT.
The
legends set forth above shall be removed and the Company shall
issue the relevant Securities without such legends to the holder of
the Securities upon which it is stamped, (i) if such Securities are
registered for resale under the Securities Act and are transferred
or sold pursuant to such registration, (ii) if, in connection with
a sale transaction, such holder provides the Company with an
opinion of counsel reasonably acceptable to the Company to the
effect that such sale, assignment or transfer of the Securities may
be made without registration under the Securities Act, or
(iii) upon expiration of the two-year period under Rule 144(k)
of the Securities Act (or any successor rule) if the holder of the
Securities has not been an “affiliate” (as defined in
Rule 501(b) of Regulation D under the Securities Act) during
the preceding three (3) months.
(3)
Such Buyer understands that, in the event Rule 144(k) as
promulgated under the Securities Act (or any successor rule) is
amended to change the two-year or three-month periods under Rule
144(k) (or the corresponding periods under any successor rule), (i)
each reference in Sections 2(g)(1) and 2(g)(2) of this Agreement to
“two (2) years” or the “two-year period”
and to “three (3) months” shall be deemed for all
purposes of this Agreement to be references to such changed period
or periods, and (ii) all corresponding references in the Notes
shall be deemed for all purposes to be references to the changed
period or periods, provided that such changes shall not become
effective if they are otherwise prohibited by, or would otherwise
cause a violation of, the then-applicable federal securities
laws.
(h)
Authorization; Enforcement; Validity . This
Agreement and the Registration Rights Agreement have been duly and
validly authorized, executed and delivered on behalf of such Buyer
and are valid and binding agreements of such Buyer enforceable
against such Buyer in accordance with their terms, subject as to
enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies.
(i)
Residency . Such Buyer is a resident of that country
or state specified in its address on the Schedule of Buyers
attached hereto as Exhibit A .
(j)
No Conflicts . The execution and performance of this
Agreement and the Registration Rights Agreement do not conflict
with any agreement to which such Buyer is a party or is bound
thereby, any court order or judgment addressed to such Buyer, or
the constituent documents of such Buyer, except for those conflicts
that would not, individually or in the aggregate, have an adverse
effect on the Buyer’s authority or ability to perform its
obligations under this Agreement or the Registration Rights
Agreement.
(k)
Conversion Limitation . (A) Subject to Buyer’s
election on the signature pages hereto to be governed by this
Section 2(k)(A), each Buyer hereby agrees that in no event
will it convert,
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and the
Company will not honor any conversion request presented to it that
requests the conversion of, any of the Notes in excess of the
number of such Notes, upon the conversion of which (x) the number
of shares of Common Stock beneficially owned by such Buyer (other
than the shares which would otherwise be deemed beneficially owned
except for being subject to a limitation on conversion analogous to
the limitation contained in this Section 2(k)(A)) plus
(y) the number of shares of Common Stock issuable upon the
conversion of such Notes, would be equal to or exceed 9.99% of the
number of shares of Common Stock then issued and outstanding (after
giving effect to such conversion), it being the intent of the
Company and the Buyers that no Buyer electing to be governed by
this Section 2(k)(A) be deemed at any time to have the power
to vote or dispose of greater than 9.99% of the number of shares of
Common Stock issued and outstanding. As used herein,
beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the
“Exchange Act”). To the extent that the
limitation contained in this Section 2(k)(A) applies (and
without limiting any rights the Company may otherwise have), the
Company may rely on the Buyer’s determination of whether the
Notes are convertible pursuant to the terms hereof, the Company
having no obligation whatsoever to verify or confirm the accuracy
of such determination, and the submission of the Conversion Notice
(as that term is defined in the Note) by the Buyer shall be deemed
to be the Buyer’s representation that the Notes specified
therein are convertible or exercisable pursuant to the terms
hereof. Nothing contained herein shall be deemed to restrict
the right of a Buyer to convert the Notes at such time as the
conversion thereof will not violate the provisions of this
Section 2(k)(A). By written notice to the Company, the
Buyer may increase or decrease the maximum percentage stated in
this paragraph to any other percentage not in excess of 19.99%
specified in such notice; provided that (i) any such increase will
not be effective until the sixty-first (61 st ) day
after such notice is delivered to the Company, and (ii) any such
increase or decrease will apply only to the Buyer and not to any
other holder of Notes. Notwithstanding anything to the contrary,
this Section shall not apply to a Buyer unless the Buyer has
elected to be governed by this Section by so indicating on the
signature page.
(B)
Subject to Buyer’s election on the signature pages hereto to
be governed by this Section 2(k)(B), each Buyer hereby agrees
that in no event will it convert, and the Company will not honor
any conversion request presented to it that requests the conversion
of, any of the Notes in excess of the number of such Notes, upon
the conversion of which (x) the number of shares of Common Stock
beneficially owned by such Buyer (other than the shares which would
otherwise be deemed beneficially owned except for being subject to
a limitation on conversion analogous to the limitation contained in
this Section 2(k)(B)) plus (y) the number of shares of
Common Stock issuable upon the conversion of such Notes, would be
equal to or exceed 4.99% of the number of shares of Common Stock
then issued and outstanding (after giving effect to such
conversion), it being the intent of the Company and the Buyers that
no Buyer electing to be governed by this Section 2(k)(B) be
deemed at any time to have the power to vote or dispose of greater
than 4.99% of the number of shares of Common Stock issued and
outstanding. As used herein, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this
Section 2(k)(B) applies (and without limiting any rights the
Company may otherwise have), the Company may rely on the
Buyer’s determination of whether the Notes are convertible
pursuant to the terms hereof, the Company having no obligation
whatsoever to verify or confirm the accuracy of such determination,
and the submission of the Conversion Notice (as that term is
defined in the Note)
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by the Buyer shall be deemed to be the
Buyer’s representation that the Notes specified therein are
convertible or exercisable pursuant to the terms hereof.
Nothing contained herein shall be deemed to restrict the right of a
Buyer to convert the Notes at such time as the conversion thereof
will not violate the provisions of this Section 2(k)(B).
By written notice to the Company, the Buyer may increase or
decrease the maximum percentage stated in this paragraph to any
other percentage not in excess of 9.99% specified in such notice;
provided that (i) any such increase will not be effective until the
sixty-first (61 st ) day after such notice is delivered
to the Company, and (ii) any such increase or decrease will apply
only to the Buyer and not to any other holder of Notes.
Notwithstanding anything to the contrary, this Section shall
not apply to a Buyer unless the Buyer has elected to be governed by
this Section by so indicating on the signature page.
(l)
Additional Acknowledgement . Each Buyer acknowledges
that it has independently evaluated the merits of the transactions
contemplated by this Agreement, the Indenture, the Notes and the
Registration Rights Agreement, that it has independently determined
to enter into the transactions contemplated hereby and thereby,
that it is not relying on any advice from or evaluation by any
other Buyer, and that it is not acting in concert with any other
Buyer in purchasing the Securities offered hereunder. The
Buyers have not taken any actions that would cause such Buyers to
be deemed as members of a “group” for purposes of
Section 13(d) of the Exchange Act, and the Company has no
knowledge of any actions by the Buyers that would be inconsistent
with this representation.
The
Buyer’s representations and warranties made in this
Section 2 are made solely for the purpose of permitting the
Company to make a determination that the offer and sale of the
Notes pursuant to this Agreement complies with applicable U.S.
federal and state securities laws and not for any other
purpose. Accordingly, the Company shall not rely on such
representations and warranties for any other purpose.
SECTION 3 .
Representations and Warranties of the Company. The Company represents and warrants to each
of the Placement Agents and each of the Buyers that as of the date
hereof:
(a)
Organization and Qualification . The Company
and its Subsidiaries (as defined below) are corporations,
partnerships or limited liability companies duly organized and
validly existing in good standing under the laws of the
jurisdiction in which they are incorporated or organized, and have
the requisite corporate, limited liability company or partnership
power and authorization to own their properties and to carry on
their business as now being conducted. Copies of the
Company’s Certificate of Incorporation and Bylaws, and all
amendments thereto, have been filed as exhibits to the
Company’s SEC Documents (as defined in Section 3(f) of
this Agreement), are in full effect and have not been
modified. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation, partnership or limited
liability company to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of
the business conducted and proposed to be conducted by it makes
such qualification necessary, except to the extent that the failure
to be so qualified or be in good standing would not have a Material
Adverse Effect. As used in this Agreement, “Material
Adverse Effect” means any material adverse effect on (i) the
business, properties, assets, operations, results of operations or
condition (financial or otherwise) or prospects of the Company and
its Subsidiaries, taken as a whole, (ii) the transactions
contemplated hereby or by the agreements and instruments to be
7
entered into in connection herewith, or
(iii) the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below).
“Subsidiary” means any entity in which the Company,
directly or indirectly, owns or controls a majority of the ordinary
voting power, capital stock or other equity or similar
interests. The Company’s “Subsidiaries” are
set forth on Schedule 3(a) , and the Company’s
“Significant Subsidiaries” are separately identified on
that Schedule.
(b)
Authorization; Enforcement; Validity . The
Company has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement, the
Indenture, the Notes, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in
Section 5 of this Agreement) and each of the other agreements
entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively, the
“Transaction Documents”), and to issue and sell the
Securities in accordance with the terms hereof and thereof.
The execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated
hereby and thereby, including, without limitation, the issuance and
repayment of the Notes, the reservation for issuance and the
issuance of the Conversion Shares issuable upon conversion thereof
and the registration for resale of the Registrable Securities (as
such term is defined in the Registration Rights Agreement), have
been duly authorized by the Company’s Board of Directors and
no further consent or authorization is required of the
Company’s Board of Directors or shareholders. The
Transaction Documents have been duly executed and delivered by the
Company. The Transaction Documents constitute the valid and
binding obligations of the Company enforceable against the Company
in accordance with their terms, except (i) as rights to
indemnification and contribution may be limited by federal or state
securities laws and policies underlying such laws and (ii) as such
enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and
remedies.
(c)
Capitalization . Except for any shares issuable upon
exercise of options issued pursuant to employee benefit plans
disclosed in the Company’s SEC Documents, the capitalization
of the Company is as described in the Company’s SEC
Documents. All of the Company’s outstanding shares have been,
or upon issuance will be, validly issued and are fully paid and
nonassessable and were issued in accordance with applicable federal
and state securities laws. The Company’s Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and
is listed for trading on The NASDAQ National Market (the
“Principal Market”). No shares of the
Company’s capital stock are subject to preemptive rights or
any other similar rights and there are no securities or instruments
to which the Company is a party containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities
as described in this Agreement. Except for rights created pursuant
to the Transaction Documents and as set forth in the SEC Documents,
(i) no shares of the Company’s capital stock are subject to
any liens or encumbrances created by the Company; (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock
of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its Subsidiaries
or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of
8
capital stock
of the Company or any of its Subsidiaries (other than any such
options, warrants, scrip, rights, calls, commitments, securities,
understandings and arrangement outstanding under plans disclosed in
the SEC Documents); (iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing indebtedness of the Company or
any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound other than the senior credit
facility under that certain Credit Agreement dated as of
May 16, 2003 among the Company, and the Northern Trust
Company, LaSalle National Bank, Harris Trust and Savings Bank and
National City Bank of Michigan/Illinois, as lenders (the
“Senior Facility Lenders”), together with the documents
now or hereafter related thereto (including without limitation, any
guarantee agreements and any security documents), in each case as
such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of,
refinancing, replacing, increasing the amount of, or otherwise
restructuring all or any portion of the indebtedness under such
agreement or any successor or replacement agreement and whether by
the same or any other agent, lender or group of lenders (or other
institutions)(the “Senior Facility”); (iv) there are no
amounts outstanding under, and there will be no amounts due upon
termination of, any credit agreement or credit facility other than
the Senior Facility; (v) there are no financing statements securing
obligations in any amounts greater than Fifty Thousand United
States Dollars ($50,000), singly, or Two Hundred Fifty Thousand
United States Dollars ($250,000) in the aggregate, filed in
connection with the Company or any of its Subsidiaries other than
in connection with the Senior Facility; (vi) there are no
agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of its
securities under the Securities Act; (vii) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to
redeem a security of the Company or any of its Subsidiaries; (viii)
the Company does not have any stock appreciation rights or
“phantom” stock plans or agreements or any similar plan
or agreement; (ix) the Company and its Subsidiaries have no
liabilities or obligations required to be disclosed in the SEC
Documents but not so disclosed in the SEC Documents, other than
those incurred in the ordinary course of the Company’s or its
Subsidiaries’ respective businesses and which, individually
or in the aggregate, do not or would not have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole; and
(x) the Company does not have outstanding stockholder purchase
rights or “poison pill” or any similar arrangement in
effect giving any person or entity the right to purchase any equity
interest in the Company upon the occurrence of certain
events.
(d)
Issuance of Securities . The Securities are
duly authorized and, upon issuance in accordance with the terms of
the applicable Transaction Documents, shall be (i) validly
issued, fully paid and non-assessable and (ii) free from all taxes,
liens and charges with respect to the issuance thereof, other than
any liens or encumbrances created by or imposed by the Buyers, and
shall not be subject to preemptive rights or other similar rights
of shareholders of the Company. As of the Closing, at least
1,621,622 shares of Common Stock (subject to adjustment pursuant to
the Company’s covenant set forth in Section 4(e) of this
Agreement) will have been duly authorized and reserved for issuance
upon conversion of the Notes. Upon conversion or issuance in
accordance with the terms of the Notes, the Conversion Shares will
be validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue
9
thereof , other than any liens or
encumbrances created by or imposed by the Buyers, with the holders
being entitled to all rights accorded to a holder of Common
Stock. Subject to the accuracy of the representations and
warranties of each of the Buyers in this Agreement, the issuance by
the Company of the Securities is exempt from registration under the
Securities Act and applicable state securities laws.
(e)
No Conflicts . The execution, delivery and
performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby
and thereby (including, without limitation, the issuance of the
Notes and the reservation for issuance and issuance of the
Conversion Shares) will not (i) result in a violation of the
Company’s Certificate of Incorporation or Bylaws; (ii)
conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, except for such
conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as could not reasonably result,
individually or in the aggregate, have a Material Adverse Effect;
or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market)
applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is
bound or affected. Neither the Company nor any of its
Subsidiaries is in violation of any material term of or in default
under its Certificate of Incorporation, Bylaws or their
organizational charter or bylaws, respectively. Neither the
Company nor any of its Subsidiaries is in violation of any term of
or in default under any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or
any statute, rule or regulation applicable to the Company or its
Subsidiaries, except where such violations and defaults would not
result, either individually or in the aggregate, in a Material
Adverse Effect. The business of the Company and its
Subsidiaries is not being conducted in violation of any law,
ordinance or regulation of any governmental entity, except where
such violations would not result, either individually or in the
aggregate, in a Material Adverse Effect. Except as
specifically contemplated by this Agreement, as required under the
Securities Act or as required by Blue Sky filings (but only to the
extent that such filings may be made after the Closing), the
Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency or
other person or entity in order for it to execute, deliver or
perform any of its obligations under or contemplated by the
Transaction Documents. All consents, authorizations, orders,
filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected
on or prior to the date hereof and copies of such consents,
authorizations, orders, filings and registrations have been
delivered to the Buyers. The Company is not in violation of
the listing requirements of the Principal Market, and has no actual
knowledge of any facts which could reasonably lead to delisting or
suspension of the Common Stock by the Principal Market in the
foreseeable future. The Company and its Subsidiaries are not
in violation of any covenants or other terms of its outstanding
indebtedness for borrowed money, which could reasonably be expected
to have a Material Adverse Effect. The Company and its
Subsidiaries are currently unaware of any facts or circumstances
which might give rise to any of the foregoing events set forth in
this paragraph.
10
(f)
SEC Documents; Financial Statements . Since
July 1, 2001, the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it
with the Securities and Exchange Commission (the
“Commission”) pursuant to the reporting requirements of
the Exchange Act (all of the foregoing filed prior to or on the
date hereof and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the “SEC
Documents”). As of the date of filing of such SEC
Documents, each such SEC Document, as it may have been subsequently
amended by filings made by the Company with the Commission prior to
the date hereof, complied in all material respects with the
requirements of the Exchange Act applicable to such SEC Document
and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they
are or were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with
applicable accounting requirements and published rules and
regulations of the Commission with respect thereto. Such
financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied in
the United States (“GAAP”), during the periods involved
(except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may
be condensed or summary statements), correspond to the books and
records of the Company and fairly present in all material respects
the financial position of the Company and its Subsidiaries as of
the dates thereof and the results of operations and cash flows for
the periods then ended. Grant Thornton LLP are independent
public accountants as required by the Exchange Act. The
Company is not aware of any issues raised by the Commission with
respect to any of the SEC Documents that have not been resolved in
the ordinary course of review. No other written information
provided by or on behalf of the Company to the Buyers which is not
included in the SEC Documents, including, without limitation,
information referred to in Section 2(d) of this Agreement,
contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they are or
were made, not misleading. The Company satisfies the
requirements for use of Form S-3 for registration of the resale of
the Registrable Securities and does not have any knowledge or
reason to believe that it does not satisfy such requirements or
have any knowledge of any fact which would reasonably result in its
not satisfying such requirements. The Company is not required
to file and will not be required to file, any agreement, note,
lease, mortgage, deed or other instrument entered into prior to the
date hereof and to which the Company is a party or by which the
Company is bound which has not been previously filed as an exhibit
to its reports filed with the Commission under the Exchange Act,
except for those Transaction Documents required to be filed upon
execution and delivery, and the Fourth Amendment to the Senior
Facility. Except for the issuance of the Notes contemplated
by this Agreement, no event, liability, development or circumstance
has occurred or exists, or is currently contemplated to occur, with
respect to the Company or its Subsidiaries or their respective
business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Company under
applicable securities laws and which has not been publicly
disclosed. The Company has no reason to believe that its
independent auditors will withhold their consent to the inclusion
of their audit opinion concerning the Company’s financial
statements which shall be included in the Registration Statement
(as such term is defined in the Registration Rights Agreement).
11
(g)
Absence of Litigation . Except as disclosed in
the section titled “Legal Proceedings” in the
Company’s Annual Report on Form 10-K for the fiscal year
ended June 30, 2004, there is no action, suit, proceeding,
inquiry or investigation (“Material Litigation”) before
or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened in writing against the Company
or any of its Subsidiaries or any of the Company’s or the
Subsidiaries’ officers or directors in their capacities as
such that would have a Material Adverse Effect. The Company
believes it has set aside on its books provisions reasonably
adequate for the payment of all judgments, damages, costs, and
expenses arising out of its pending Material Litigation and has
appropriately accounted for such reserves under GAAP.
(h)
No Integrated Offering . Neither the Company,
nor any of its affiliates, nor any person acting on its or their
behalf, has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of
the Securities Act or any applicable shareholder approval
provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated, nor
will the Company or any of its Subsidiaries take any action or
steps that would cause the offering of the Securities to be
integrated with other offerings.
(i)
Intellectual Property Rights . The Company and
its Subsidiaries own, possess, license or can acquire or make use
of on reasonable terms, adequate rights or licenses to use all
trademarks, trade names, trade dress, service marks, service mark
registrations, service names, patents, patent rights, copyrights,
inventions, technology licenses, approvals, governmental
authorizations, trade secrets, and other intellectual property
rights (collectively, “Intellectual Property”)
necessary to conduct their respective businesses as now conducted
and as currently contemplated to be conducted by them as described
in the SEC Documents, except where the failure to currently own or
possess Intellectual Property would not have a Material Adverse
Effect. The Company and its Subsidiaries do not have any
knowledge of any infringement by the Company or its Subsidiaries of
Intellectual Property rights of others, or of any development of
similar or identical trade secrets or technical information by
others that would have a material adverse effect. There is no
claim, action or proceeding being made by the Company or its
Subsidiaries regarding the Intellectual Property rights of the
Company or its Subsidiaries or to the Company’s knowledge,
brought or currently threatened against the Company or its
Subsidiaries regarding the Intellectual Property rights of or the
use of any Intellectual Property by the Company or its Subsidiaries
of any third party that, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect.
(j)
Insurance . The Company and each of its Subsidiaries
are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are
commensurate with similarly situated companies engaged in similar
businesses as the Company and its Subsidiaries.
(k)
Regulatory Permits . The Company and its Subsidiaries
possess all material certificates, authorizations and permits
issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as currently conducted
12
(the
“Permits”), except where the failure to possess such
Permits would not have a Material Adverse Effect, and neither the
Company nor any of its Subsidiaries has received any written notice
of proceedings relating to the revocation or material modification
of any such Permit.
(l)
Tax Status . The Company and each of its
Subsidiaries (i) has made or filed all federal and state income and
all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and all such tax returns are
accurate and complete in all material respects, (ii) has paid all
taxes and other governmental assessments and charges due with
respect to the periods covered by such returns, reports and
declarations, except those being contested in good faith and for
which the Company has made appropriate reserves on its books in
accordance with GAAP, and (iii) has paid or set aside on its books
provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations (referred to in clause (i) above) apply. Except
as disclosed in the SEC Documents, there are no unpaid taxes or
assessments for tax deficiencies that are individually or in the
aggregate material in amount claimed to be due by the taxing
authority of any jurisdiction, and the Company knows of no basis
for any such claim, and there are no audits in progress with
respect to any tax returns, no extension of time is in force with
respect to any date on which any tax return was or is to be filed
(except for extensions of federal and state tax returns due
June 30, 2004 made in the ordinary course of business), and no
waiver or agreement is in force for the extension of time for the
assessment or payment of any tax. Except as disclosed in the
SEC Documents, all provisions for tax liabilities of the Company
and each of its Subsidiaries have been disclosed in the
Company’s financial statements and made in accordance with
GAAP consistently applied, and all liabilities for taxes of the
Company and each of its Subsidiaries attributable to periods prior
to or ending on the Closing Date have been adequately disclosed in
the Company’s financial statements.
(m)
Application of Takeover Protections . The
Company and its Board of Directors have taken all necessary action,
if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation, the
laws of the state of its incorporation or the laws of any other
state which is applicable to the Buyers as a result of the
transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and the
Buyers’ ownership, voting or disposition of the
Securities.
(n)
Foreign Corrupt Practices . Neither the Company nor
any of its Subsidiaries, nor, to the Company’s knowledge, any
director, officer, agent, employee or other person acting on behalf
of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company or any Subsidiary used any
corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or
is in violation of any provision of the United States Foreign
Corrupt Practices Act of 1977, as amended, or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or
employee.
(o)
Confidential Private Placement Memorandum . The information
supplied by the Company for inclusion or incorporation by reference
in the Confidential Private Placement Memorandum dated as of
February 9, 2005 (the “Confidential Private
Placement
13
Memorandum”) in connection with the
Offering does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. If,
at any time prior to the Closing Date, any event with respect to
the Company shall occur which is required to be described in the
Confidential Private Placement Memorandum, such event shall be so
described, and an appropriate amendment or supplement shall be
prepared by the Company.
(p)
Transactions With Affiliates . Other than the
grant of stock options granted pursuant to the Company’s
employee benefit plans, none of the officers, directors or
employees of the Company is presently a party to any transaction
with the Company or any of its Subsidiaries (other than in
connection with the provision of services as employees, officers
and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any such officer, director
or employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer,
director, trustee or partner, such that the transaction would be
required to be disclosed pursuant to Item 404 of Regulation S-K
promulgated under the Securities Act.
(q)
Brokers and Finders . Except for fees payable to the
Placement Agents as placement agents, no brokers, finders or
financial advisory fees or commissions will be payable by the
Company with respect to the transactions contemplated by this
Agreement.
(r)
Absence of Certain Changes . Except as
disclosed in the SEC Documents available on the EDGAR system, since
June 30, 2004, there has been no change or development that
has had or could reasonab
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