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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the fiscal year ended: Commission file number:
June 30, 1997 0-14427
LA-MAN CORPORATION
(Name of Small Business Issuer in Its Charter)
NEVADA 38-2286268
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
5029 EDGEWATER DRIVE, ORLANDO, FL 32810 (407) 521-7477
(Address, including zip code, of principal executive offices and telephone
number, including area code of Issuer)
Securities registered under Section 12(b) of the Act: NONE
Securities Registered under Section 12(g) of the Exchange Act: COMMON STOCK,
$.001 PAR VALUE
Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the last 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days. [X]Yes [_]No
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [_]
Issuer's revenues for its most recent fiscal year: $15,945,627
On September 16, 1997 the bid and ask prices of the Common Stock were $2.37
and $2.56, respectively, according to NASDAQ Small Cap Market quotations
furnished by the National Quotation Bureau, Inc. The aggregate market value of
the voting stock of the Issuer held by non-affiliates based on the average of
the bid and ask prices on September 16, 1997 was $6,301,654.
As of September 16, 1997, 3,405,007 shares of Common Stock were outstanding.
Transitional Small Business Disclosure Format (check one): [_]Yes [X]No
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Item 9, Item 10, Item 11 and Item 12 of Part III
of this Report is incorporated by reference from the Issuer's definitive proxy
statement to be filed in accordance with Rule 14a-01, Schedule 14A, in
connection with the Issuer's October 30, 1997 meeting of shareholders which
involves the election of directors.
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PART I
ITEM 1. BUSINESS.
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La-Man Corporation, a Nevada corporation, was originally incorporated in
Michigan on November 2, 1979 and remained substantially inactive until the
autumn of 1980. On February 4, 1983 , La-Man Corporation, a Nevada corporation
("the Company"), was formed and, pursuant to a Certificate of Merger filed on
May 16,1983, the Michigan corporation was merged into the Nevada corporation.
The Company's executive office is located at 5029 Edgewater Drive, Orlando,
Florida 32810. Its telephone number is (407) 521-7477. The Company operates
in two business segments: Signage and Filtration.
The Company's direct wholly-owned subsidiaries include Nevada SEMCO, Inc., a
Nevada corporation ("SEMCO"), Don Bell Industries, Inc., a Florida corporation
("Don Bell"), Don Bell Industries of Nevada, Inc., a Nevada corporation ("Don
Bell Nevada"), Heritage Packaging Services, Inc., an Indiana corporation
("Heritage"), Vision Trust Marketing, Inc., a Florida corporation ("Vision") and
Certified Maintenance Service, Inc., a Florida Corporation ("Certified"). The
Company's indirect wholly-owned subsidiaries include J.M. Stewart Industries,
Inc., a Florida corporation ("Stewart Industries") and J.M. Stewart Corporation,
a Florida corporation ("Stewart Corporation"), each of which is directly owned
by SEMCO, and TracTel Communications, Inc., a Florida corporation ("TracTel"),
which is directly owned by Stewart Corporation.
Since the commencement of its operations, the Company has been engaged in the
manufacture and sale of a line of products which, when installed in compressed
air lines, substantially reduce or totally eliminate water and condensate
problems and most foreign contaminants, such as moisture, oil, dust, rust, and
the like, in the air line. The Company assembles and ships all of its products
from its owned facility in Port Orange, Florida. However, in order to minimize
production costs, the actual components are manufactured by others using tooling
owned by the Company.
Heritage was incorporated on September 27, 1984. On January 5, 1991, the
Company acquired all of the issued and outstanding stock of Heritage in exchange
for shares of the Company's common stock. Heritage marketed and distributed
various packaging materials and supplies, such as cartons, tape, staples,
stretch and shrink film, foam shipping bags, Kraft paper, solid fiber board
grades and various other packing materials and supplies to industrial and
commercial establishments within an approximately 100-mile radius of Ft. Wayne,
Indiana. This business was discontinued in August 1996.
SEMCO was incorporated on August 12, 1993. SEMCO is the holding company for
Stewart Corporation which designs and markets outdoor signs for institutional
businesses such as churches, schools, funeral homes and governmental/military
installations and Stewart Industries, which produces graphic arts and screen
print products. TracTel was incorporated March 21, 1994 and has been inactive
for its entire existence.
On November 14, 1994, the Company acquired Vision and operated the corporation
in Orlando, Florida as a wholly-owned subsidiary offering long distance
telephone services as an authorized agent of MCI Telecommunications, Inc.
("MCI"). Th original contract between Vision and MCI for commercial long-
distance customers was originally executed in 1994 and was restated and extended
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for a new five year term in May 1996. This contract revision had been proposed
by MCI in September 1995 and discussed with Vision over a period of eight
months. In reliance on the new contract, Vision invested heavily in staff,
facilities and equipment in anticipation of significant commission revenue as a
result of the enhancements in the revised contract. In November 1996, the
contracts between Vision and MCI were abruptly terminated by MCI. A lawsuit was
filed by Vision on April 16, 1997 seeking the recovery of damages from MCI.
Because the cancellation of the contract by MCI resulted in Vision no longer
being contracted to market MCI long-distance services, its sole line of
business, the Company discontinued the operations of Vision in December 1996.
On September 7, 1995, the Company acquired Don Bell, located in Port Orange,
Florida and Don Bell Nevada, an inactive company. Don Bell, which is a
commercial sign manufacturer, was incorporated on January 1, 1982 as a
successor to a family-owned business. Don Bell specializes in the design,
manufacture, installation and service of custom designed electronic signs. All
manufacturing is done at its owned plant in Port Orange, Florida. Don Bell
Nevada has remained inactive since the acquisition.
Only July 1, 1997, the Company acquired Certified, which was incorporated on
September 27, 1991. Certified is a service company specializing in the
servicing of electronic signs and indoor and outdoor commercial lighting.
Unless the context otherwise requires , the term "Company" hereinafter refers
to La-Man Corporation, Heritage, Certified, SEMCO and its subsidiaries Stewart
Corporation and Stewart Industries, Don Bell, Don Bell Nevada, Vision , and
TracTel. The Company's Consolidated Financial Statements include the accounts
of all subsidiaries. See the footnotes to the Company's Consolidated Financial
Statements for information relating to the Company's industry segments.
LOAN AGREEMENT, LINE OF CREDIT, LETTER OF CREDIT AND NOTES PAYABLE
On August 28, 1997 (subsequent to the June 30, 1997 year-end), the Company
obtained a $2,570,000 irrevocable letter of credit from SouthTrust Bank,
National Association ("SouthTrust") and issued an aggregate of $2,500,000 of its
Variable/Fixed Rate Credit Enhanced Notes ("Notes") secured by such letter of
credit. The notes bear interest at a variable rate (which, including the effect
of amortization of finance costs, was an effective rate of 7.00% as of September
16, 1997). Interest payments are due on the notes on a monthly basis with
certain annual principal payments due each August. The notes mature in stages
through August, 2012. Approximately $2.1 million of the proceeds from the notes
was used to pay off all existing Company debt, including debt obtained in the
Certified acquisition, except for the Company's 8%, $750,000 convertible note
payable to Worrell Enterprises, Inc. ("Convertible Note"). The remaining
proceeds were, or will be, used to pay the closing costs of the notes and for
capital expansions of the Company's sign production facilities.
The Company can elect under certain circumstances to cause the interest rate
on the Notes to be converted from a variable to a fixed rate, in which case
interest would be payable generally every six months after the effective date of
conversion. Both the variable rate and the fixed rate are determined from time
to time by SouthTrust Securities, Inc., as Remarketing Agent, as being the
lowest interest rate that would, in the opinion of the Remarketing Agent, result
in the market value of the Notes being 100% of the principal amount thereof on
the date of such determination, taking into account relative market conditions
and credit rating factors as they exist on the interest
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rate adjustment date, except that the variable rate may never exceed 18% per
annum. The Company has the right to redeem the Notes at par during any variable
rate period, and during any fixed rate period at a premium of 102% beginning on
the 4th anniversary date of conversion declining to 100% on the 6th anniversary.
$2,260,000 principal of the Notes are subject to mandatory redemption, by lot,
in stages from 1998 through 2011. Holders may tender the Notes to the
Remarketing Agent during any business day during a variable rate period and are
required to tender upon conversion of the Notes to a fixed rate, upon the
expiration of the letter of credit securing the Notes if the Company has not
previously obtained a substitute letter of credit meeting the requirements of
the Trust Indenture under which the Notes were issued, and upon certain other
events. The Remarketing Agent is required to use its best efforts to remarket
Notes tendered at the option of holders and, in certain cases, upon mandatory
tender of the Notes.
Simultaneous with the issuance of the notes, the Company obtained a $1.3
million revolving line of credit from SouthTrust. The line of credit bears
interest at one percent over the bank's prime rate and matures August 1999 with
renewal provisions. As of September 16, 1997, no borrowings were outstanding
against the line of credit.
The letter of credit, notes and line of credit are cross-collateralized by
substantially all assets of the Company and its subsidiaries, and joint and
several guarantees of each of the Company's operating subsidiaries. The loan
documents contain various covenants, including the following financial
covenants:
(a) The Company's ratio of Debt to Tangible Net Worth cannot exceed 3.1-to-1
during fiscal 1998, 2.7-to-1 during fiscal 1999 and 2.4-to-1 during fiscal
2000 and thereafter;
(b) The Company is required to maintain working capital of $750,000 during
fiscal 1998, $1,000,000 during fiscal 1999 and $1,250,000 during fiscal
2000 and thereafter;
(C) The Company is required to maintain a current ratio of 1.25-to-1 at all
times.
(d) The Company must maintain a fixed charge coverage of 1.3-to-1 at all
times.
(e) The Company is not permitted to incur any additional indebtedness in
excess of $50,000, except for indebtedness created in the ordinary course
of business or purchases of equipment that create a purchase money
security interest, without the written approval of the lender.
ACQUISITION OF CERTIFIED MAINTENANCE SERVICES, INC.
On July 1, 1997 (subsequent to the June 30, 1997 year end), the Company
acquired all of the outstanding shares of Certified in exchange for the
assumption of Certified's net liabilities. Certified is a company that services
indoor and outdoor signage and lighting. Through a network of subcontractors,
as well as its own service fleet and staff, Certified specializes in providing
service nationwide to multi-store retail outlets such as department stores,
grocery stores, gas stations, office complexes and clothing outlets. Upon
acquisition, the operations of Certified were merged with the installation and
service operations of Don Bell to form a single operating division.
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ACQUISITION OF DON BELL INDUSTRIES, INC.
On September 7, 1995, the Company acquired all of the outstanding shares of
Don Bell a Port Orange, Florida, manufacturer of commercial signs in exchange
for 275,000 newly issued shares of La-Man Common Stock, the $750,000 Convertible
Note and cash of $360,000. The convertible note, which is convertible into La-
Man common stock at $4.76 per share, is payable in equal annual installments of
$250,000 in the last three years of the note. Interest is payable semi-annually
and the Company has a call feature at 105% of principal in year one reducing
annually to 100% in year five. As an adjustment to the purchase price,
additional notes payable totaling $626,477 were issued on January 31, 1997 to
the previous owners of Don Bell. Such notes were paid in full and retired with
the proceeds of a refinancing of the Company's indebtedness on August 28, 1997.
ACQUISITION OF VISION TRUST MARKETING, INC.
In November 1994, the Company purchased the outstanding shares of common stock
of Vision (whose operations were subsequently discontinued in December, 1996),
an authorized agent of MCI. Under the terms of the acquisition agreement, La-
Man canceled certain contractual advances due from Vision in the amount of
$180,195 and assumed the net liabilities of Vision. It also entered into a
consulting agreement with the prior owner of Vision and issued 70,000 newly
issued shares of common stock under its 1994 Amended and Restated Employee and
Consultant Stock Compensation Plan as consideration for consulting fees under
the agreement.
PRINCIPAL PRODUCTS
Signage and Related Products. The Company's signage segment accounted for 90%
and 88% of consolidated sales for 1997 and 1996, respectively and includes the
design, manufacture and sale of custom signage by Don Bell, the sale of stock
institutional signage by Stewart Corporation, the production of graphic arts and
screen printed products by Stewart Industries and the service, maintenance and
installation of lighting and signage by both Don Bell and Certified.
Don Bell is a producer of electronic message centers, custom designed
identification systems and custom graphic systems for commercial clients. Don
Bell specializes in developing and installing interior and exterior themed
signage programs for shopping malls, parks, speedways, restaurants, vacation
destinations and other facilities with a themed image. Deposits of 20% to 50%
of a total sale are generally received before manufacture of a custom sign
project begins. In addition, depending upon the value of the project,
installment payments are received with final payment due upon installation and
receipt of all necessary governmental and zoning permits. In addition to
outright sales, Don Bell offers leases to customers which are generally for five
year terms.
Don Bell's product line is very diverse and includes single and multiple face
fluorescent backlit identification signs, changeable copy reader boards,
electronic time and temperature displays, large pylon electronic and non-
electronic identification signs, monochrome electronic message centers and
multi-color wedge-based electronic displays. In addition, Don Bell often
produces smaller peripheral signs to complement larger signs and create a
signage theme for its customers.
On September 16, 1997, Don Bell entered into a marketing agreement with
Electronic Sign Corporation d/b/a Ad Art, a California corporation that is a
leader in the industry in the production of wedge-based, colored-lens electronic
signs. Under the marketing agreement, Don Bell has
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exclusive rights to market the west coast manufacturer's wedge-based product in
seven southeastern states and will be permitted to market on a non-exclusive
basis world-wide. The signs sold under this agreement will be manufactured by
Don Bell with only the wedge-based components being supplied by the west coast
manufacturer. In coordination with this manufacturer, Don Bell will continue
development of the Emotion(R) Windows-based software to be used in conjunction
with the wedge-based hardware. There is presently no other Windows-based
computer software on the market for operation of these wedge-based signs. Access
to this top-of-the-line wedge-based technology positions Don Bell amongst the
elite electronic sign manufacturers in the world. Management believes that
wedge-based products will be the preeminent sign product of the future with
their low operating cost and brilliant video displays.
Sales of custom signage by Don Bell accounted for 36% and 32% of consolidated
sales and 40% and 37% of signage segment sale for 1997 and 1996, respectively.
Don Bell does not depend upon a single customer, or a few customers, the loss of
any one or more of which would have a material adverse effect upon Don Bell.
From time to time, however, Don Bell does enter into contracts of significant
value that may represent more than ten percent of Don Bell's sales in any one
particular year. Since these large contracts vary in amount from year to year
and are not with the same customer or group of customers each year, Don Bell
does not have a significant economic dependence upon a single customer or group
of customers.
Stewart Corporation markets custom designed and standard sign products
specifically designed for outdoor use by institutional organizations such as
churches, schools, funeral homes and governmental/military installations. The
Company continually seeks markets in other institutional organizations. The
signs and signage products sold by Stewart Corporation are constructed from
quality materials intended to provide years of service to the institutional
customer. A twenty-year comprehensive warranty is provided with each sign
product sold by Stewart Corporation, and warranty claims have historically been
less than one percent of sales. The sign cabinet is constructed of heavy gauge
aluminum extrusions which are welded at mitered corners. The exterior of the
sign cabinet is painted in various, selected customer colors utilizing high
quality automotive paints. The formed faces of the signs are constructed of a
polycarbonate product principally manufactured by General Electric under the
product name Lexan. The Lexan provides a sign face which is long lasting,
weather and hazard resistant and extremely shatterproof. The actual design of
the sign can be selected from various stock models which have been designed by
Stewart Corporation or a sign may be custom designed by the customer with
Stewart Corporation's assistance.
The signs are internally illuminated by fluorescent lamps for night
visibility, and have facing which permits the user to customize the message or
announcement on the sign. The signs are supported by an external structure
called a yoke, which utilizes rectangular steel or aluminum tubing from the
frame's base plate up to and around the sign. The signs utilize a steel base
plate which can be bolt mounted on a concrete, stone or steel pylon base. The
signs are designed for ease of installation by the customer.
Sign and sign component manufacturing historically have been carried out under
Stewart Corporation's supervision by non-affiliated manufacturing and assembly
businesses. The majority of the sign manufacture is now handled by one
unaffiliated company with a limited amount of manufacturing being completed by
Don Bell. Drawings and specifications are submitted to the manufacturer, prices
are negotiated and Stewart Corporation places individual orders with the vendor
based on the agreed upon prices. Products are shipped directly to the customer
from the third-party
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manufacturer and, consequently, Stewart Corporation does not maintain an
inventory of stock signs at its facilities. Deposits of up to 50% of the sales
price are received from the customer at the time the order is placed with final
payment generally due 30 days after shipment. The manufacturing process utilizes
molds, the engineering and design of which are proprietary to Stewart
Corporation. The Company is currently in the process of expanding its sign
production facilities in Port Orange, Florida to provide capacity to produce
nearly all of the signs sold by Stewart Corporation and reduce or eliminate
Stewart Corporation's dependence upon its present third-party manufacturer.
Initially, the Company planned to construct the Stewart Corporation signs at the
Don Bell facilities. However, due to the significant difference in cost
structure in manufacturing mass-produced institutional signs versus
manufacturing the high-custom signs historically produced by Don Bell,
management determined that a separate production plant would result in more
efficient and profitable production of the Stewart Corporation signs.
Sales of institutional signs by Stewart Corporation accounted for 46% and 47%
of total consolidated sales and 52% and 54% of the signage segment's sales
during 1997 and 1996, respectively. Stewart Corporation does not depend upon a
single customer, or a few customers, the loss of any one or more of which would
have a material adverse effect upon Stewart Corporation. No single customer of
Stewart Corporation accounted for sales equal to ten percent or more of
Stewart Corporation revenues during 1997 or 1996.
Sales to churches and schools accounted for 67% and 28% of Stewart
Corporation's sales during 1997 and 75% and 24% of Stewart Corporation's sales
during 1996, respectively with the remainder of sales coming from the
governmental/military, funeral home and other markets. While churches and
schools will continue to be core markets, Stewart Corporation intends to
continue to pursue opportunities in additional markets. Sales in the
governmental/military market are expected to significantly increase in future
years.
Both Don Bell and Certified provide installation, service and maintenance on
interior and exterior lighting and signage. Prior to the acquisition of
Certified on July 1, 1997, the majority of the service work performed by Don
Bell was performed under five year maintenance agreements on signs sold by Don
Bell. The acquisition of Certified expanded this business to include service on
other manufacturers' signs as well as service of interior and exterior lighting.
The service and installation department of Don Bell was merged with the
operations of Certified to form a single service division within the Company.
Through a network of subcontractors and its own fleet of 31 service trucks in
Port Orange, Orlando and Tampa, Florida, as well as Atlanta, Georgia and Las
Vegas, Nevada, the Company specializes in providing service nationwide to multi-
store retail outlets such as department stores, grocery stores, gas stations,
office complexes and clothing outlets while continuing to sell service contracts
on signs manufactured by Don Bell.
Service sales accounted for approximately 6% and 7% of consolidated sales and
7% and 8% of signage segment sales for 1997 and 1996, respectively. Management
expects service revenues to triple in future years as a result of the
acquisition of Certified on July 1, 1997.
Stewart Industries produces graphic arts and screen printed products. Stewart
Industries also uses computers to design and produce die cut vinyl letters,
symbols, and logos for signs. Stewart Corporation purchases changeable screen
printed copy letters and lettered signs for its church and school signs from
Stewart Industries. Approximately 71% of Stewart Industries sales during both
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1997 and 1996 were to Stewart Corporation. These intercompany sales are
eliminated in the consolidated financial statements. Sales of graphic arts and
screen printed products to third-party purchasers accounted for less than one
percent of consolidated sales and less than two percent of signage segment sales
for both 1997 and 1996.
Filtration and Related Products. The filtration segment, which accounted for
10% and 12% of consolidated sales for 1997 and 1996, respectively, includes the
manufacture and sale of a line of products which, when installed in compressed
air lines, substantially reduce or totally eliminate water and condensate
problems and most foreign contaminants, such as moisture, oil, dust, rust, and
the like, in the air line.
The Company is presently producing the Pneumatic/Dryer(R) in a base model
designated Model L-100 and accepts special orders on other sizes and variations.
The Pneumatic/Dryer(R) is designed to be installed in a compressed air line
within six feet of the end use. These products remove moisture and impurities
from compressed air lines at rates ranging from 10 standard cubic feet per
minute (SCFM) to 150 SCFM. The Pneumatic/Dryer(R) has a replaceable cartridge
which can be changed in most models without disconnecting the air line.
The Extractor/Dryer (R) is designed to remove moisture and impurities from
compressed air lines at higher levels of volume than the Pneumatic/Dryer(R) (15
SCFM - 2000 SCFM). The Extractor/Dryer (R) uses a two-step air filtration
process, rather than a single-stage process, to remove moisture and harmful
contaminants from compressed air lines. The Company currently manufactures ten
sizes of the Extractor/Dryer (R) which have been used in a variety of systems
and equipment, including industrial, automotive, atomic energy plants, hospital,
dental, bakery and sandblasting equipment and numerous other applications. It
can be used to supplement the Pneumatic/Dryer(R) for demanding applications,
such as spray painting. The various Extractor/Dryers and Pneumatic/Dryers
accounted for approximately 7% of consolidated sales in 1997 and 8% of
consolidated sales in 1996.
The Pneuguard (R) is an advanced air tool lubricator which supplies a precise
amount of lubricant to the inside of an air tool. Its unique design, which
combines a ball check valve, a flow sensor and pressure diaphragm, prevents
sudden surges of lubricant at start-up or impulse operations. Moreover, unlike
gravity-fed devices, the Pneuguard(R) efficiently lubricates air tools in any
position in which it is set. The LA-MAN Dryer/Pneuguard(R), as indicated by its
name, combines the moisture and contaminant- removing function of the
Pneumatic/Dryer(R) with the lubricating function of the Pneuguard(R). The use
of this product facilitates the continuous operation of compressed air
machinery. Sales of the Pneuguard(R) and Dryer/Pneuguard(R) accounted for less
than one percent of consolidated sales in both 1997 and 1996.
The Company also manufactures and markets replacement filters and filter
materials for each of its filtration devices. Replacement filter sales
represented 3% of consolidated net sales during both 1997 and 1996.
PATENT AND TRADEMARK PROTECTION
The Company is the owner of ten issued U.S. patents. A U.S. patent gives the
patent owner the exclusive right to exclude others from making, using, and
selling the invention for seventeen years from the grant of the patent. The
issued patents are: U.S. Reg. No. 4,464,186 relating to the
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Pneumatic Liquid Evaporator/Extractor (expires in the year 2001); No. 4,483,417
relating to the Pneuguard(R) Lubricator (expires in 2001); No. 4,487,618
relating to the Extractor/Dryer (R) (expires in 2001); No. 4,810,272 relating to
the Air Inlet Valve Arrangement for Pneumatic Equipment (expires in 2006); No.
Re32,989 (Reissue of No. 4,600,416) relating to the Air Line Vapor Trap (expires
in 2003); No. 4,874,408 relating to a Liquid Drain Assembly (expires in 2006);
No. 4,925,466 relating to a Filter Cartridge Assembly (expires in 2007); No.
5,030,262 relating to the Air Vapor Trap and Drain (expires in 2008); No.
5,114,443 relating to the Air Line Vapor Trap (expires in 2009) and No.
5,261,946 relating to the Air Line Vapor Trap With Air Warming System (expires
in 2010).
The Company also is the owner of nine foreign patents and patents
applications: Canadian Nos. 1,206,889 relating to the Pneumatic Dryer (expires
2003), 1,197,477 relating to the Extractor/Dryer(R) (expires 2002),1,207,674
relating to the Pneuguard(R) Lubricator (expires 2003), and 1,267,057 relating
to the Air Line Vapor trap(expires 2007), Canadian Patent Application No.
2,064,401 for the Air Line Vapor With Air Warming System; Japanese Patent Nos.
1,410,903 relating to the Airline Lubricator (expires 2002), and 1,899,252
relating to the Air Line Vapor Trap (expires 2001), Taiwanese Patent No. UM
55136 relating to the Air Inlet Valve Arrangement for Pneumatic Equipment
(expires 2000), and Swedish Patent No. 101,861 relating to the Airline
Lubricator (next renewal date July 13, 1997).
The Company is the owner of U.S. Reg. No. 1,287,666 for the trademark LA-
MAN(R), Reg. No. 1,328,054 for PNEUGUARD(R), Reg. No. 1,596,100 for
EXTRACTOR/DRYER(R), and Reg. No. 1,790,935 for ENCAPULATOR(R), all on the
Principal Register of the U.S. Patent and Trademark Office, Reg. No. 1,359,880
for the mark EXTRACTOR(R) on the Supplemental Register and Reg No. 1,844,119
for "We make Compressed Air Work". A Trademark is exclusive to the owner and is
used to identify the Company's products and distinguish them from products sold
by others, Federal trademark protection is perpetual, but the Company must
renew its trademarks every 10 years.
The Company believes its filtration and lubrication products are proprietary
assets of the Company's filtration segment. The Company intends to maintain all
patents and trademarks material to its business for their complete respective
terms. Patents generally are granted for 17-year terms and are nonrenewable;
trademarks are renewable for 10-year terms. The products and services of SEMCO,
Stewart Corporation, Stewart Industries and Don Bell are non-proprietary and, as
a result, trademarks and patents are not deemed material to the Company's
signage segment.
MARKETING AND DISTRIBUTION
Don Bell markets all products through a staff of commissioned salespersons and
commissioned independent sales contractors and, primarily electronic message
centers, through dealers. It also participates in conventions, advertising
programs and trade associations. Its long-time reputation as a quality
manufacturer is a valued source of sales leads.
SEMCO, through Stewart Corporation, markets its signs by direct marketing
efforts which include direct mail, telephone calls on prospective church, school
and institutional customers, and direct calls made upon the procurement
personnel of various national churches and church denominations, school board
officials and school procurement personnel. Stewart Corporation also
participates in church, school and governmental/military conventions,
denominational meetings and
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other events attended by representatives of potential church, school and
governmental/military customers. Stewart Corporation also advertises its
products and services through church denominational publications and bulletins,
and publications of schools, school boards and school administrative personnel.
Stewart Corporation's management estimates that approximately 68% of church sign
sales are the result of direct marketing activities, and approximately 96% of
school sign sales are the result of direct marketing activities.
Stewart Corporation also markets products through joint venture and similar
arrangements with the denominational headquarters of various organized churches.
Under the joint venture marketing strategy, Stewart Corporation products are
presented in denominational publications which are disseminated to member
churches. Stewart Corporation is presented as an appointed supplier of the
signs and related products and member churches are encouraged to purchase such
products from Stewart Corporation. Under such joint marketing arrangements,
Stewart Corporation remits a commission to the denominational headquarters based
upon product sales. Stewart Corporation management estimates that approximately
32 % of church sign sales are to joint ventures.
Stewart Corporation has established a joint venture marketing arrangement with
the Sunday School Board of the Southern Baptist Convention, one of the largest
Protestant denominations in the United States. The Sunday School Board endorsed
Stewart Corporation as its official representative to market church signs to
Southern Baptist churches, and Stewart Corporation remits a commission to the
Sunday School Board for sales produced under the agreement. Stewart Corporation
and the Sunday School Board jointly plan and administer the advertising and
marketing under this agreement. Approximately 24% and 23% of sales of church
signs for 1997 and 1996, were made through the joint venture arrangement with
the Southern Baptist Convention.
Stewart Corporation has established a marketing arrangement with the Gospel
Publishing House (Assemblies of God denomination). The Gospel Publishing House
endorses Stewart Corporation as its official representative to market church
signs to Assemblies of God churches and other churches regularly serviced by the
Gospel Publishing House. Stewart Corporation pays a commission to the Gospel
Publishing House for sales produced under the agreement. The Gospel Publishing
House plans and executes the church sign advertising and all customer responses
are forwarded to Stewart Corporation. Approximately 7% of sales of church signs
for both 1997 and 1996 were made through the marketing agreement with Gospel
Publishing House.
Stewart Corporation has also established such joint venture and similar
arrangements with Messenger Publishing House (Pentecostal Church of God
denomination), the Church Growth Institute, and Randall House Publishing of the
Free Will Baptist Church. Other than discussed above, no joint venture
arrangement comprised more than 5% of total sales during 1997 or 1996.
The average size of a sale under the joint venture agreements is approximately
the same as the average size of a sale to other customers of Stewart
Corporation. Stewart Corporation will also endeavor to establish similar joint
venture arrangements with other church denominational headquarters. The total
number of churches presently operating in the United States and Canada,
including denominational churches, is estimated by management at 375,000.
Stewart Corporation also intends to utilize joint venture arrangements in
sign marketing to schools, whereby Stewart Corporation will secure sign product
endorsements from school boards
10
<PAGE>
and other administrative and governing bodies. Management estimates that there
are approximately 170,000 schools, colleges and universities in the United
States.
Don Bell and Certified market service agreements through direct sales calls as
well as the sale of five year service agreements on signs manufactured by Don
Bell. Through a network of subcontractors, as well as its own fleet of service
trucks in Port Orange, Orlando and Tampa, Florida, as well as Atlanta, Georgia
and Las Vegas, Nevada, the Company specializes in providing service nationwide
to multi-store retail outlets such as department stores, grocery stores, gas
stations, office complexes and clothing outlets. As a result, a significant
portion of marketing is dedicated to direct sales calls on the corporate or
regional headquarters of national retailers. In addition to national and
regional sales, the company markets service to local retailers such as
automobile dealers and shopping malls. The Company also cross markets its
signage and lighting services to provide a full range of services to its current
customers.
The Company's filtration and lubrication business uses various techniques in
marketing its products, such as trade media advertising, direct mail, attendance
at trade shows and direct customer contact. Presently, approximately five
percent of La-Man's products are sold by seven non-exclusive commissioned
representatives. The balance is sold directly by the Company principally to end
users, warehouse distributors and jobbers. The Company has expanded its
marketing strategy to target the original equipment manufacturer ("OEM") market
directly, rather than through distributors.
BACKLOG
Don Bell's customers place orders on an as-needed basis. Deposits of up to 50%
are obtained with the order from customers based on negotiations of the sales
contract. Delivery and installation are dependent on the size and customization
required of the order and are usually completed within two months, except for
long-term contracts. Don Bell does not have "backlog orders" which it is not
able to fill in accordance with its usual practice. However, it did have
contracts in process exceeding $2,400,000 in contract value as of June 30, 1997.
Stewart Corporation's customers place orders on an as-needed basis. Stewart
Corporation authorizes the manufacture of the sign when it obtains a deposit,
customarily 50% of the order, from the customer. The completed sign is shipped
to the customer approximately 6-8 weeks after the deposit is received by Stewart
Corporation. As of June 30, 1997, Stewart Corporation did not have any firm
orders for products which it had not been able to fill in accordance with its
usual practice.
Most of the Company's filtration customers place orders on an as-needed
basis, which orders generally have been filled in accordance with the usual
practice of filling orders within one to five days after receipt of such orders
and in accordance with the delivery requirements of the Company's customers.
The Company did not have any firm orders for products which it had not been able
to fill in accordance with its usual practice. The Company's larger customers
provide the Company with "blanket orders," i.e., scheduled orders at designated
prices over the course of six month or twelve month periods. Such orders are
subject to modification by the customer from time to time.
11
<PAGE>
EMPLOYEES
The Company presently has 159 full-time employees. The following table shows
the breakdown of employees:
<TABLE>
<S> <C> <C>
Signage Segment:
Commercial Signage Port Orange, Florida 63
Institutional Signage Sarasota, Florida 49
Installation and Service Various Locations 26
Graphic Arts and Screen Printing Sarasota, Florida 5
---
143
Filtration Segment Orlando and Port Orange Florida 12
Executive Offices Orlando, Florida 4
159
===
</TABLE>
The Company considers its relationships with its employees satisfactory and is
not a party to any collective bargaining agreement.
COMPETITION
Don Bell and Certified are in a highly competitive market, primarily for
medium-to-large sign programs and electronic message systems, with both national
and local sign makers. The strength of its sales force, quality of its products
and electronics, price and name recognition are the keys to its successful sales
record. The sign and lighting service industry is dominated by small, single
location service companies. Don Bell's and Certified's multiple location
dispatch centers in Port Orange, Orlando and Tampa, Florida as well as Atlanta,
Georgia and Las Vegas, Nevada, in combination with an extensive network of
subcontractors enable service to the entire country, which gives the Company a
competitive advantage in the signage and lighting service market.
Stewart Corporation encounters substantial competition on signs and related
products from a myriad of local signage companies which operate throughout the
United States and Canada. In the opinion of the management of Stewart
Corporation, the principal factors in such competition are product pricing,
service, quality, design, production and delivery time, and product warranties.
Stewart Corporation products contain materials of high quality. A twenty- year
sign warranty is also provided. Stewart Corporation management believes that
the comparative quality of the Stewart Corporation sign product, together with
related services provided and the extensive product warranty, permit Stewart
Corporation to effectively compete with other sign companies. Additionally,
Stewart Corporation believes that its joint venture marketing strategy provides
access to potential church and school customers which is generally not available
to such local concerns. Stewart Corporation is aware of only one other sign
company, Signs Plus, that markets its products in a manner similar to Stewart
Corporation. Stewart Corporation believes such competing entity does not have a
joint venture marketing relationship with any church denomination headquarters
or school board that has a joint venture marketing agreement with Stewart
Corporation. Stewart Corporation also competes with a number of smaller
companies, particularly, in the sale of lower volume economy signs.
12
<PAGE>
The Company's filtration manufacturing segment is subject to substantial
competition from a number of companies. At present, screening devices such as
filters and cumbersome water traps are the principal methods of attempting to
remove moisture and other impurities from compressed air lines. The Company is
not aware of any product presently produced and marketed that offers the range
of uses, effectiveness and ease of installation provided by the Company's line
of products. The principal methods of competition include performance, service
and price. Management believes the Company's product prices are within the
range of the prices of its competitors.
GOVERNMENT REGULATION
The Company has no knowledge of any U. S. governmental regulations which
adversely affect its business operations. In the manufacture of its products
for government agencies, the Company is required to meet certain governmental
specifications. The Company has had no difficulty satisfying these
requirements.
ENVIRONMENTAL PROTECTION COMPLIANCE
The Company has no knowledge of any federal, state or local environmental
compliance regulations which materially affect its current business activities.
The Company has not expended any capital to comply with environmental
protection statutes and does not anticipate that such expenditures will be
necessary in the future with respect to its products.
RESEARCH AND DEVELOPMENT COSTS
Don Bell is expected to incur continuing research and development costs for
enhancement of its message centers and for reduction of manufacturing costs.
Stewart Corporation and Stewart Industries' operations do not require the
expenditure of any sums for research and development. The Company's expenditures
for its last two fiscal years on research and development of new filtration and
lubrication products were not significant
ITEM 2. PROPERTIES
- -------------------
The Company maintains its executive offices in a 5,250 square foot leased
facility in an office and retail complex in Orlando, Florida under a five year
lease expiring in 2000.
Don Bell operates in its owned manufacturing facilities; a 38,000 square foot
structure in Port Orange, Florida. This building, situated on eight acres of
land owned by Don Bell, is a one and one half-story, steel frame structure with
a metal roof and slab floor. Don Bell also owns an adjacent 1.0 acre parcel of
land. This adjacent parcel is wooded and would require significant improvement
before any structures could be constructed upon it. In addition to the owned
facilities, Don Bell and Certified operate services branches out of the
corporate headquarters in Orlando, Florida and in a 3,380 square foot facility
in Tampa, Florida leased under an agreement that expires in February, 1998.
Service trucks are stationed at customers' facilities in Atlanta, Georgia and
Las Vegas, Nevada.
13
<PAGE>
Stewart Corporation leases approximately 8,175 feet of office space in
Sarasota, Florida for a five-year term that ends on December 31, 2000. Stewart
Industries leases, for its graphics and screen print operation, space in
Sarasota, Florida for a one-year term that ends on January 31, 1998. SEMCO does
not have separate offices and conducts its business from the offices of Stewart
Corporation.
The Filtration segment operates in its owned manufacturing facilities; an
8,750 square foot structure in Port Orange, Florida. This building, situated on
approximately one acre of land adjacent to the Don Bell property, is a one-
story, steel frame structure with a metal roof, slab floor, heat and partial
central air conditioning.
The Company is presently in the process of acquiring an additional facility in
which to manufacture signs for Stewart Corporation. The new facility will be
approximately 14,000 square feet and is adjacent to both the Don Bell and
Filtration facilities.
All properties currently owned by the Company, as well as the planned facility
for the manufacture of signs for Stewart Corporation, are pledged as collateral
against the letter of credit, notes and line of credit entered into with
SouthTrust on August 28, 1997.
ITEM 3. LEGAL PROCEEDINGS.
- ---------------------------
In November 1996, the agency contracts between Vision and MCI were abruptly
terminated by MCI. The contract for commercial long-distance customers was
originally executed in 1994 and was restated and extended for a new five-year
term in May 1996. This contract revision had been proposed by MCI in September
1995 and discussed with Vision over a period of eight months. In reliance on the
new contract, Vision invested heavily in staff, facilities and equipment in
anticipation of significant commission revenue as a result of the enhancements
in the revised contract. A lawsuit was filed by Vision on April 16, 1997 seeking
the recovery of damages from MCI.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- -------------------------------------------------------------
None.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
14
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
- ---------------------------------------------------------------------------
MATTERS.
- --------
The Company's common stock is quoted on the NASDAQ Small Cap Market under the
trading symbol "LAMN" but is not traded on any exchange. The following table
indicates the range of high and low bid prices for the common stock for each
full quarterly period within the two most recent fiscal periods ended June 30,
1997 and June 30, 1996 as such quotes were supplied by the NASDAQ Small Cap
Market to the National Quotation Bureau, Inc. and reported to the Company by the
National Quotation Bureau, Inc. The market quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
Fiscal Year Common Stock Bid Prices
-----------------------
Ending Quarter Ending High Low
------------- ------------------ -------- --------
<S> <C> <C> <C>
June 30, 1996 September 30, 1995 $1.38 $0.63
December 31, 1995 2.25 1.00
March 31, 1996 1.44 0.97
June 30, 1996 1.41 0.88
June 30, 1997 September 30, 1996 2.13 0.88
December 31, 1996 2.00 1.00
March 31, 1997 2.00 1.09
June 30, 1997 2.69 1.25
</TABLE>
As of September 16, 1997 there were approximately 900 holders of record of
the Common Stock.
The Company has never paid and does not anticipate paying any cash dividends
on its Common Stock in the foreseeable future, but instead intends to retain all
working capital and earnings, if any, for use in the Company's business
operations and in the expansion of its business.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- -------------------------------------------------------------------------
RESULTS OF OPERATIONS.
- ---------------------
RESULTS OF OPERATIONS
The Company's consolidated financial statements include the accounts of the
Company and its subsidiaries Heritage, SEMCO, Stewart Corporation, Stewart
Industries, TracTel, Vision and Don Bell and Don Bell Nevada (since September 7,
1995). The financial statements do not include the accounts of Certified, which
was acquired on July 1, 1997.
Results of operations from continuing activities include the operations of the
Company and its wholly owned subsidiaries SEMCO, Stewart Corporation, Stewart
Industries, TracTel, Don Bell and
15
<PAGE>
Don Bell Nevada. Discontinued operations include the activities of Vision, which
was discontinued in December 1996 and Heritage, which was discontinued in
August, 1996.
Except for the historical information contained herein, certain matters
addressed in this Annual Report on Form 10-KSB may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1993, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.
Such forward looking statements are subject to a variety of risks and
uncertainties that could cause actual results to be different materially from
those anticipated by the Company's management. The Private Securities
Litigation Reform Act of 1995 (the "1995 Act") provides certain "safe harbor"
provisions for forward-looking statements. All forward-looking statements made
in this Annual Report on Form 10-KSB are made pursuant to the 1995 Act.
YEAR ENDED JUNE 30, 1997 COMPARED WITH YEAR ENDED JUNE 30, 1996
Sales from continuing operations increased by 20% from $13,267,545 in 1996 to
$15,945,627 in 1997. The increased sales resulted from increases in both the
signage and filtration segments.
Signage sales, which accounted for 90% of consolidated sales in 1997 and 88%
of consolidated sales in 1996, increased 22% from $11,679,565 in 1996 to
$14,299,463 in 1997. The increase was partially the result of including a full
12 months of operations of Don Bell in 1997 compared to only 10 months in 1996
after the acquisition in September, 1995. Overall sales of custom signs
produced by Don Bell, which accounted for 36% of consolidated sales in 1997 and
32% of consolidated sales in 1996, increased by approximately 35% from 1996 to
1997. Approximately 20% of that increase can be attributed to the longer period
of inclusion with the remaining 15% of the increase attributable to increased
volume. This increase is the result of more concentrated sales efforts by Don
Bell combined with the division's ability to accept larger projects as a result
of the cash flow support provided by the Company since the acquisition of Don
Bell. Sales of institutional signs by Stewart Corporation, which accounted for
46% of consolidated sales in 1997 and 54% of consolidated sales in 1996,
increased by approximately 17% from 1996 to 1997. The increase in sales of
institutional signs over the prior year is a direct result of the addition of
several sales positions early in fiscal 1997 as well as increased marketing
efforts in the funeral home, nursing home and governmental/military markets.
Service sales, which accounted for approximately 6% of consolidated sales in
1997 and 7% of consolidated sales in 1996, increased by approximately 6% over
the prior year. This increase is consistent with the increase in Don Bell's
sales, as the majority of the service work prior to June 30, 1997 was performed
on signs manufactured and sold by Don Bell. The financial statements do not
show the effect on service revenues of the acquisition of Certified since the
acquisition occurred after year end on July 1, 1997 and was accounted for under
the purchase method of accounting. Graphic art and screen printing sales were
minimal and consistent from 1996 to 1997.
Filtration sales, which accounted for 10% of consolidated sales in 1997 and
12% of consolidated sales in 1996, increased approximately 4% over 1996 from
$1,587,980 to $1,646,164. The increase was primarily a result of price
increases as opposed to volume increases. The Company has recently restructured
the marketing department for the filtration division and developed new marketing
techniques that are expected to increase the volume of filter sales in future
periods without sacrificing historical profit margins.
16
<PAGE>
The overall gross profit margin on sales decreased slightly from 51% in 1996
to 49% in 1997. The increase in sales, combined with the decreased margins,
resulted in a 17% increase in gross profit from $6,712,907 in 1996 to $7,822,552
in 1997. The decrease in profit margins was primarily the result of the
inclusion of Don Bell for the full period in 1997 compared to only 10 months in
1996 after the September, 1995 acquisition. The profit margins on custom signs
manufactured by Don Bell are approximately 35%, compared with profit margins on
institutional signs of approximately 56% and filtration products of
approximately 59%.
Income from operations increased 8% over the prior year from $953,973 in 1996
to $1,031,627 in 1997. The increase in operating income was the result of the
$1,109,645 increase in gross profit being partially offset by a $1,031,991
increase in operating expenses.
Operating income from the signage segment increased 16% from $1,246,040 in
1996 to $1,448,813 in 1997. Essentially all of the increase in operating income
from the signage segment came from increased operating income on institutional
signs sold by Stewart Corporation. Stewart Corporation's sales staff was
increased and the size of the facilities was increased early in 1997. While
these changes increased the operating costs of Stewart Corporation, sales and
profit margins were also increased resulting in a 25% increase in operating
income at the division. Operating income for custom signs and service sales was
consistent from 1996 to 1997. In addition, operating costs of the corporate
offices were consistent from 1996 to 1997.
Non-operating income and expense increased from a net expense of $54,758 in
1996 to a net contribution to income of $157,775 in 1997, a net increase of
$212,533. The primary cause of this increase was the sale of three billboards
previously owned by Don Bell at a gain of approximately $260,000 in November,
1996. In addition, interest income increased by $28,427 as a result of
increased leasing activities at Don Bell. Interest expense increased by $31,874
as a result of having debt outstanding for the full year in 1997 for the
acquisition of Don Bell compared to having the debt outstanding for only 10
months in 1996 subsequent to the acquisition of Don Bell in September, 1995.
The income tax benefit contributed $229,000 to income from continuing
operations in 1997 compared to $125,000 in 1996. The income tax benefit results
from the reversal of a valuation reserve necessary to adjust the net deferred
tax asset to the amount that management believes is more likely than not to be
realized. As of June 30, 1997, the valuation allowance for deferred income tax
assets is $367,000 and the net deferred tax asset recorded is $375,000.
Income from continuing operations increased by 38% from $1,024,215 in 1996 to
$1,418,402 in 1997. Of the total $394,187 increase, 20% resulted from an
increase in operating income, 54% resulted from an increase in other income and
expenses and 26% resulted from an increase in the deferred income tax benefit.
Earnings per common share and common equivalent share from continuing
operations increased by 12% from $0.34 per share in 1996 to $0.38 per share in
1997. The effect of common stock equivalents diluted earnings per common share
and common equivalent share from continuing operations by $0.02 per share in
1996 and $0.05 per share in 1997. Earnings per common share - assuming
17
<PAGE>
full dilution from continuing operations increased by 6% from $0.34 per share in
1996 to $0.36 per share in 1997.
The loss from discontinued operations includes the loss from operations and
wind-down costs of Heritage, the Company's package wholesaling subsidiary that
was discontinued in August, 1996 and Vision, the Company's telemarketing
subsidiary that was discontinued in December, 1996. The wind-down of Heritage
was completed during 1997. All costs expected to be incurred in the continued
wind-down of Vision have been accrued at June 30, 1997.
Earnings per common share and common equivalent share after the effects of
discontinued operations increased by 33% from $0.18 per share in 1996 to $0.24
per share in 1997. Earnings per common share - assuming full dilution after the
effects of discontinued operations increased by 28% from $0.18 per share in 1996
to $0.23 per share in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by continuing operating activities for 1997 was $662,854.
Net income from continuing operations provided cash of $1,395,458 net of non-
cash charges for depreciation and amortization, net gains on disposals of fixed
assets, stock contributions to the Company's 401(k) plan, the realization of
deferred income and the recognition of the deferred tax benefit. This cash
provided was offset by a net change of $732,604 in the Company's operating
assets and liabilities. A total of $509,768 in cash was used in the operation
and wind down of the discontinued segments.
Net cash provided by investing activities for 1997 was $138,170. The Company
received $382,635 in proceeds from sales of fixed assets and paid $257,266 for
capital expenditures. A total of $5,966 was spent for the maintenance of the
Company's patents while other investing activities provided cash of $18,767.
Net cash used for financing activities for 1997 was $172,670. Payments
against notes payable and capital lease obligations during the year totaled
$191,420. The company received $18,750 in proceeds from the sale of stock
during the year.
The majority of the Company's long-term debt that existed at June 30, 1997
matured over the next four fiscal years resulting in future principal payments
of $306,984 in 1998, $521,781 in 1999, $484,359 in 2000, $1,048,748 in 2001 and
$86,732 thereafter. To improve future cash flow and reduce principal payments
due over the next four years, on August 28, 1997, the Company obtained a
$2,570,000 irrevocable letter of credit from SouthTrust and issued an aggregate
of $2,500,000 of its Variable/Fixed Rate Credit Enhanced Notes ("Notes") secured
by such letter of credit. The notes bear interest at a variable rate (which,
including the effect of amortization of finance costs, was an effective rate of
7.00% as of September 16, 1997). Interest payments are due on the notes on a
monthly basis with annual principal payments due each August. The notes mature
in stages through August 2012. Approximately $2.1 million of the proceeds was
used to pay off all existing Company debt, including debt obtained in the
Certified acquisition, except for the Company's 8%, $750,000 convertible note
payable. The remaining proceeds from the issuance of the notes were, or will
be,
18
<PAGE>
used to pay the closing costs of the notes and for capital expansions of the
Company's sign production facilities.
Simultaneously with the issuance of the notes, the Company obtained a $1.3
million revolving line of credit from SouthTrust. The line of credit bears
interest at one percent over the bank's prime rate and matures August, 1999 with
renewal provisions. As of September 16, 1997 no borrowings were outstanding
against the line of credit.
INFLATION
Although inflation has slowed in recent years, it continues to be a factor in
the Company's operations. In recent years, the Company has taken steps to
counteract the effects of inflation by price increases and by careful cost
control. There are no other significant factors which are expected to cause a
material increase in the general and administrative expense as a percentage of
sales.
RECENT ACCOUNTING PRONOUNCEMENTS
See the footnotes to the Company's Consolidated Financial Statements for
information relating to recent accounting pronouncements.
ITEM 7 FINANCIAL STATEMENTS
- ---------------------------
Financial statements are included at the end of this report starting at page
F-1.
PART III
THE INFORMATION REQUIRED BY ITEM 9, ITEM 10, ITEM 11 AND ITEM 12 OF THIS PART
III IS INCORPORATED BY REFERENCE FROM THE COMPANY'S DEFINITIVE PROXY STATEMENT
TO BE FILED IN CONNECTION WITH THE OCTOBER 30, 1997 MEETING OF SHAREHOLDERS OF
THE COMPANY WHICH WILL INVOLVE THE ELECTION OF DIRECTORS.
19
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
- ------------------------------------------------------------------------
FORM 8-K.
- ---------
(a) The following documents are filed as part of this Report:
<TABLE>
<S> <C>
LA-MAN CORPORATION AND SUBSIDIARIES
Report of Independent Certified Public Accountants - BDO Seidman, LLP....................... F-2
Consolidated Balance Sheet as of June 30, 1997.............................................. F-3
Consolidated Statements of Income for the years ended June 30, 1997 and 1996................ F-4
Consolidated Statements of Stockholders' Equity for the years ended
June 30, 1997 and 1996.................................................................... F-5
Consolidated Statement of Cash Flows for the years ended June 30, 1997 and 1996............. F-6
Notes to Consolidated Financial Statements.................................................. F-7
</TABLE>
Exhibit
Number Title of Exhibit
- ------ ----------------
3.1 Articles of Incorporation of Registrant/1/
-
3.2 Certificate of Merger/1/
-
3.3 Bylaws of Registrant as amended/27/
--
3.4 Amendment to Articles of Incorporation/9/
-
3.5 Articles of Incorporation of Heritage Packaging Service, Inc./14/
--
3.6 By-Laws of Heritage Packaging Services, Inc. as amended/17/
--
3.7 Certificate of Incorporation as amended of International Stained Glass
Overlay, Inc./17/
--
3.8 By-Laws of International Stained Glass Overlay, Inc./17/
--
3.9 Articles of Incorporation of Nevada SEMCO, Inc., a Nevada
corporation/20/
--
3.10 By-Laws of Nevada SEMCO, Inc./20/
--
3.11 Articles of Incorporation of TracTel Communications, Inc., a Florida
corporation/23/
--
3.12 Bylaws of TracTel Communications, Inc./23/
--
3.13 Articles of Incorporation of Vision Trust Marketing, Inc., a Florida
corporation/27/
--
3.14 Bylaws of Vision Trust Marketing, Inc./27/
--
3.15 Articles of Incorporation of Don Bell Industries, Inc., a Florida
corporation/27/
--
3.16 Bylaws of Don Bell Industries, Inc./27/
--
3.17 Articles of Incorporation of Don Bell Industries of Nevada, Inc./27/
--
3.18 Bylaws of Don Bell Industries of Nevada, Inc./27/
--
3.19 Articles of Incorporation of Certified Maintenance Service, Inc.
3.20 Bylaws of Incorporation of Certified Maintenance Service, Inc.
4.1 Specimen of Common Stock Certificate/17/
--
4.2 Specimen of Warrant Certificate (as revised)/17/
--
4.3 Form of Representative's Unit Purchase Option (as revised)/20/
--
4.4 Form of 10% Subordinated Debenture/17/
--
4.5 Form of Series SD Common Stock Purchase Warrant/17/
--
4.7 Form of Warrant Agreement among Registrant, Mathews, Holmquist &
Associates, Inc., and Continental Stock Transfer & Trust Company
(revised)/20/
--
4.8 Specimen Certificate of Common Stock to be included in Units/17/
--
20
<PAGE>
4.9 Form of March, 1993 Amendment to the 10% Subordinated Debenture/17/
--
4.10 Form of May, 1993 Amendment to the 10% Subordinated Debenture/18/
--
4.11 Form of Series SD Common Stock Purchase Warrant Certificate (as
amended)/28/
--
4.12 Form of Series DFRV Common Stock Purchase Warrant Certificate (as
amended)/28/
--
4.13 Amendment No. 1 to Warrant Agreement, dated as of December 8, 1995,
between La-Man Corporation and Continental Stock Transfer & Trust
Company, as Warrant Agent/29/
--
4.14 Amendment No. 2 to Warrant Agreement, dated as of January 10,1997,
between La-Man Corporation and Continental Stock & Transfer Company, as
Warrant Agent
10.1 Royalty Agreement Re: U.S. Patent No. 4,116,650/1/
-
10.2 License Agreement Re: U.S. Patent No. 4,116,650/1/
-
10.3 Assignment of U.S. Patent No. 4,116,650/1/
-
10.4 Agreement to Purchase Patents and Applications for Patents, Trademarks
and Applications for Trademarks and International Marketing and Sales
Rights between Registrant and J & M Company Ltd. dated November 9,
1987/16/
--
10.5 Assignment of Patents and Applications for Patents, Trademarks and
Applications for Trademarks and International Marketing and Sales Rights
to J & M Company, Ltd. dated November 9, 1987/16/
--
10.6 Assignment of Trademark/12/
--
10.7 Assignment of Patents and Patent Applications/12/
--
10.8 Merger Agreement between Nevada SEMCO, Inc. and Stewart Eleemosynary
Marketing Corporation, dated August 19, 1993/19/
--
10.9 Amendment to J & M Agreement dated May, 1992/16/
--
10.10 1988 Incentive Stock Option Plan/17/
--
10.11 1992 Stock Option and Appreciation Rights Plan/17/
--
10.12 Employment Agreement dated November 4, 1992 between Registrant and
Philip Howe Hoard/17/
--
10.13 Employment Agreement dated July 26, 1993 between Registrant and Philip
Howe Hoard/20/
--
10.14 Employment Agreement dated August 19, 1993, between J.M. Stewart
Corporation and J. Melvin Stewart/20/
--
10.15 Employment Agreement dated as of April 28, 1994 between Registrant and
J. William Brandner/21/
--
10.16 Stock Option Agreement dated as of September 6, 1994 between Registrant
and J. William Brandner/23/
--
10.17 Stock Option Agreement dated as of September 6, 1994 between Registrant
and Richard W. Coffman/23/
--
10.18 Stock Option Agreement dated as of September 6, 1994 between Registrant
and Michael J. Derrick/23/
--
10.19 Stock Option Agreement dated as of September 6, 1994 between Registrant
and Philip Howe Hoard/23/
--
10.20 Stock Option Agreement dated as of September 6, 1994 between Registrant
and Otto J. Nicols/23/
--
10.21 Stock Option Agreement dated as of September 6, 1994 between Registrant
and J. Melvin Stewart/23/
--
10.22 Stock Option Agreement dated as of September 6, 1994 between Registrant
and Max D. Tavernier/23/
--
21
<PAGE>
10.23 Telecommunications Agreement dated February 25, 1994 among Registrant,
Vision Trust Marketing, Inc. and Tampa Bay Financial, Inc./21/
--
10.24 Joint Marketing Agreement effective March 31, 1994 among Vision Trust
Marketing, Inc., TracTel Communications, Inc. and J. M. Stewart
Corporation/21/
--
10.25 Stock Purchase and Sale Agreement dated as of November 14, 1994
between and among La-Man Corporation, TracTel Communications, Inc.,
Vision Trust Marketing, Inc., Pamela J. Wilkinson and Stuart M.
Cohen/24/
--
10.26 Consulting Agreement dated as of November 17, 1994 between and among
La-Man Corporation, Vision Trust Marketing, Inc. and Pamela J.
Wilkinson/24/
--
10.27 Amendment No. 1, dated as of August 31, 1995 to Employment Agreement
between Registrant and J. William Brandner/27/
--
10.28 Amendment No. 1, dated as of August 31, 1995 to Employment Agreement
between Registrant and Philip Howe Hoard/27/
--
10.29 Amendment No. 1, dated as of August 31, 1995 to Employment Agreement
between Registrant and J. Melvin Stewart/27/
--
10.30 Stock Option Agreement dated as of September 1, 1995 between
Registrant and J. William Brandner/27/
--
10.31 Stock Option Agreement dated as of September 1, 1995 between
Registrant and Philip Howe Hoard/27/
--
10.32 Stock Option Agreement dated as of September 1, 1995 between
Registrant and J. Melvin Stewart/27/
--
10.33 Stock Purchase and Sale Agreement dated as of September 7, 1995 among
Registrant, Don Bell Industries, Inc., Worrell Enterprises, Inc. and
Gary D. Bell /26/
--
10.34 8% Convertible Note of Registrant, dated September 7, 1995, in
principal amount of $750,000 to Worrell Enterprises, Inc./26/
--
10.35 Employment Agreement dated as of September 7, 1995 among Registrant,
Don Bell Industries, Inc. and Gary D. Bell/26/
--
10.36 Employee Stock Option Agreement dated as of September 7, 1995 between
Registrant and Gary D. Bell/26/
--
10.37 La-Man Corporation 1994 Amended and Restated Employee and Consultant
Stock Compensation Plan, as amended by Amendment No. 1 thereto dated
as of August 31, 1995/26/
--
10.38 Agreement for Purchase of Assets dated as of August 27, 1996 between
Heritage Packaging Services, Inc. and Midwest Packaging Products,
Inc./31/
--
10.39 Stock Purchase and Sale Agreement dated as of July 1, 1997 among La-
Man Corporation, Certified Maintenance Service, Inc. and Mark
Manfredi.
10.40 $2,570,000 Irrevocable Letter of Credit No. SB 1326 issued by
SouthTrust Bank, National Association, on August 28, 1997 for the
account of La-Man Corporation.
10.41 Form of La-Man Corporation $2,500,000 Variable/Fixed Rate Credit
Enhanced Notes.
10.42 Trust Indenture dated August 1, 1997 between La-Man Corporation and
SouthTrust Bank, National Association.
10.43 Remarketing Agent Agreement dated as of August 1, 1997 among La-Man
Corporation, SouthTrust Bank, National Association, as Trustee and
SouthTrust Securities, Inc., as Remarketing Agent.
10.44 Revolving-Line-of-Credit Promissory Note dated August 1, 1997 from La-
Man Corporation to SouthTrust Bank, National Association.
22
<PAGE>
10.45 Credit and Security Agreement dated as of August 1, 1997 between La-
Man Corporation and SouthTrust Bank, National Association.
10.46 Real Estate Mortgage and Security Agreement dated as of August 1,
1991, by La-Man Corporation, Don Bell Industries, Inc., Don Bell
Industries of Nevada, Inc., Nevada SEMCO, Inc., JM Stuart Corporation,
JM Stuart Industries, Inc., Certified Maintenance Services, Inc. and
Vision Trust Marketing, Inc., to and for the benefit of SouthTrust
Bank, National Association.
10.47 Guaranty Agreement dated as of August 1, 1997, by Don Bell Industries,
Inc., Don Bell Industries of Nevada, Inc., Nevada SEMCO, JM Stuart
Corporation, JM Stuart Industries, Inc., Certified Maintenance
Service, Inc. and Vision Trust Marketing, Inc. to and for the benefit
of SouthTrust Bank, National Association.
10.48 Exclusive Manufacturing and Sales Agreement dated as of September __,
1997 between Don Bell Industries, Inc. and Electronic Sign Corporation
d/b/a Ad Art.
11 Computation of net income per share.
16.01 Statement of Change in Independent Principal Accountants/22/
--
22 Subsidiaries.
28.3 U.S. Patent No. 4,483,417/1/
-
28.4 Trademark Registration No. 1,287,666/1/
-
28.5 U.S. Patent No. 4,487,618/2/
-
28.6 Trademark Registration No. 1,328,054/2/
-
28.7 Trademark Registration No. 1,359,880 (Supplemental Register)/4/
-
28.8 Canadian Patent No. 1,197,477/16/
--
28.9 U.S. Patent Number 4,600,416 for the Extractor Dryer/16/
--
28.10 Canadian Patent Number 1,206,889 for the Pneumatic Dryer/16/
--
28.11 Trademark Registration Number 1,372,359/16/
--
28.12 Canadian Patent Number 1,207,674/16/
--
28.13 Japanese Patent Number 1,410,903 f or the Airline Lubricator/9/
-
28.14 U.S. Patent Number 4,865,815 for the In-Line Compressed Air Carbon
Monoxide Filter/11/
--
28.15 Taiwanese Patent Certificate Number UM 55136 for the Air Inlet Valve
Arrangement for Pneumatic Equipment/14/
--
28.16 U.S. Patent Number 5,030,262 for the Air Vapor Trap and Drain
Therefore/14/
--
28.17 U.S. Patent Number 5,114,443 for the Air Line Vapor Trap With Air
Warming System/16/
--
28.18 Japanese Patent Number 1,899,252 for the Air Line Vapor Trap/16/
--
_____________
/1/ Incorporated by reference from Registrant's Pre-Effective Amendment
-
No. 1 to the Registrant's Registration Statement on Form S-18
(Registration No. 2-89341).
/2/ Incorporated by reference from Registrant's Pre-Effective Amendment
-
No. 2 to the Registrant's Registration Statement on Form S-18
(Registration No. 2-8934 1).
/3/ Filed as an exhibit to Registrant's Form 10-Q for the period ended
-
June 30, 1986 (File No. 0-14427), and incorporated by reference.
/4/ Incorporated by reference from Registrant's Post-Effective Amendment
-
No. 1 to Registrant's Registration Statement on Form S-18
(Registration No. 2-89341).
23
<PAGE>
/5/ Filed as an exhibit to Registrant's Form 10-Q for the period ended
-
December 31, 1985 (File No. 0-14427), and incorporated by reference.
/6/ Filed as an exhibit to Registrant's Current Report on Form 8-K filed
-
on December 23, 1987 (File No. 0-14427), and incorporated by reference.
/7/ Filed as an exhibit to Registrant's Form 10-K for the period ended
-
September 30, 1986 (File No. 0-14427), and incorporated by reference.
/8/ Filed as an exhibit to Registrant's Form 10-K for the period ended
-
September 30, 1987 (File No. 0-14427), and incorporated by reference.
/9/ Filed as an exhibit to Registrant's Form 10-K for the period ended
-
September 30, 1988 (File No. 0-14427), and incorporated by reference.
/10/ Filed as an exhibit to Registrant's Current Report on Form 8-K filed
--
on October 3, 1989 (File No. 0-14427), and incorporated by reference.
/11/ Filed as an exhibit to Registrant's Form 10-K for the period ending
--
September 30, 1989 (File No. 0-14427), and incorporated by reference.
/12/ Filed as an exhibit to Registrant's Form 8-K dated March 29, 1990
--
(File No. 0-14427), and incorporated by reference.
/13/ Filed as an exhibit to Registrant's Form 8-K dated January 5, 1991
--
(File No. 0-14427), and incorporated by reference.
/14/ Filed as an exhibit to Registrant's Form 10-K for the period ending
--
September 30, 1991 (File No. 0-14427), and incorporated by reference.
/15/ Filed as an exhibit to Registrant's Form 8-K filed on September 3,
--
1992 (File No. 0-14427), and incorporated by reference.
/16/ Filed as an exhibit to Registrant's Form 10-K for the transition
--
period ending June 30, 1992 (File No. 0-14427), and incorporated by
reference.
/17/ Previously filed as an exhibit to the Registration Statement
--
(Registration No. 33-54230) and incorporated by reference.
/18/ Previously filed as an exhibit to Post Effective Amendment No. 1 to
--
the Registration Statement (Registration No. 33-54230) and incorporated
by reference.
/19/ Filed as an Exhibit to Registrant's Form 8-K dated August 19, 1993
--
(File No. 0-14427) and incorporated by reference.
/20/ Previously filed as an exhibit to Post Effective Amendment No. 2 to
--
the Registration Statement (Registration No. 33-54230) and incorporated
by reference.
/21/ Filed as an exhibit to Registrant's Form 8-K dated June 23, 1994 filed
--
on June 28,1994 (File No. 0-14427), and incorporated by reference.
24
<PAGE>
/22/ Filed as an exhibit to Registrant's Form 8-K dated January 27, 1994
--
and filed on February 3, 1994 (File No. 0-14427), and incorporated by
reference.
/23/ Filed as an exhibit to Registrant's Form 10-K for the period ending
--
June 30, 1994 (File No. 0-14427), and incorporated by reference.
/24/ Filed as an exhibit to Registrant's Form 8-K dated November 14, 1994
--
and filed on January 27, 1995 (File No. 0-14427), and incorporated by
reference.
/25/ Filed as an exhibit to Registrant's Form 8-K dated February 13, 1995
--
and filed on February 27, 1995 (File No. 0-14427), and incorporated by
reference.
/26/ Filed as an exhibit to Registrant's Form 8-K dated September 7, 1995
--
and filed effective September 22, 1995 (File No. 0-14427), and
incorporated by reference.
/27/ Filed as an exhibit to Registrant's Form 10-KSB for the period ending
--
June 30, 1995 (File No. 0-14427), and incorporated by reference.
/28/ Filed as an exhibit to Registrant's Registration Statement on Form S-3
--
(Registration No. 33-98964), and incorporated by reference.
/29/ Filed as an exhibit to Registrant's Post-Effective Amendment No. 7 to
--
Registration Statement on Form S-3 (Registration No. 33-54230), and
incorporated by reference.
/30/ Filed as an exhibit to Registrant's Form 8-K dated December 27, 1995
--
(File No. 0-14427), and incorporated by reference.
/31/ Filed as an exhibit to Registrant's Form 8-K dated August 28, 1996
--
(File No. 0-14427), and incorporated by reference.
(b) No reports on Form 8-K were filed by the Registrant during the three-
month period ended June 30, 1997, the last quarter of the period covered
by this Annual Report on Form 10-KSB.
(c) Exhibits:
3.19 Articles of Incorporation of Certified Maintenance Service, Inc.
3.20 Bylaws of Incorporation of Certified Maintenance Service, Inc.
4.14 Amendment No. 2 to Warrant Agreement, dated as of January
10,1997, between La-Man Corporation and Continental Stock &
Transfer Company, as Warrant Agent
10.39 Stock Purchase and Sale Agreement dated as of July 1, 1997 among
La-Man Corporation, Certified Maintenance Service, Inc. and Mark
Manfredi.
10.40 $2,570,000 Irrevocable Letter of Credit No. SB 1326 issued by
SouthTrust Bank, National Association, on August 28, 1997 for the
account of La-Man Corporation.
10.41 Form of La-Man Corporation $2,500,000 Variable/Fixed Rate Credit
Enhanced Notes.
10.42 Trust Indenture dated August 1, 1997 between La-Man Corporation
and SouthTrust Bank, National Association.
25
<PAGE>
10.43 Remarketing Agent Agreement dated as of August 1, 1997 among La-
Man Corporation, SouthTrust Bank, National Association, as
Trustee and SouthTrust Securities, Inc., as Remarketing Agent.
10.44 Revolving-Line-of-Credit Promissory Note dated August 1, 1997
from La-Man Corporation to SouthTrust Bank, National Association.
10.45 Credit and Security Agreement dated as of August 1, 1997 between
La-Man Corporation and SouthTrust Bank, National Association.
10.46 Real Estate Mortgage and Security Agreement dated as of August 1,
1991, by La-Man Corporation, Don Bell Industries, Inc., Don Bell
Industries of Nevada, Inc., Nevada SEMCO, Inc., JM Stuart
Corporation, JM Stuart Industries, Inc., Certified Maintenance
Services, Inc. and Vision Trust Marketing, Inc., to and for the
benefit of SouthTrust Bank, National Association.
10.47 Guaranty Agreement dated as of August 1, 1997, by Don Bell
Industries, Inc., Don Bell Industries of Nevada, Inc., Nevada
SEMCO, JM Stuart Corporation, JM Stuart Industries, Inc.,
Certified Maintenance Service, Inc. and Vision Trust Marketing,
Inc. to and for the benefit of SouthTrust Bank, National
Association.
10.48 Exclusive Manufacturing and Sales Agreement dated as of September
16, 1997 between Don Bell Industries, Inc. and Electronic Sign
Corporation d/b/a Ad Art.
11 Computation of net income per share.
22 Subsidiaries.
26
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.
By: /s/ J. William Brandner
---------------------------------
J. William Brandner, President
(Chief Executive Officer) and Director
September 25, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report had been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Philip Howe Hoard By: /s/ Robert M. Smither, Jr.
--------------------------------- ---------------------------------
Philip Howe Hoard, Vice President Robert M. Smither, Jr., Director
Secretary and Director September 25, 1997
September 25, 1997
By: /s/ J. Melvin Stewart By: /s/ Edwin M. Freakley
--------------------------------- ---------------------------------
J. Melvin Stewart, Chairman of Edwin M. Freakley, Director
the Board and Director September 25, 1997
September 25, 1997
By: /s/ Gary D. Bell By: /s/ Todd D. Thrasher
-------------------------------- ---------------------------------
Gary D. Bell, Director Todd D. Thrasher
September 25, 1997 Vice President, Treasurer (Chief
Financial Officer) and Assistant
Secretary
September 25, 1997
27
<PAGE>
LA-MAN CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
LA-MAN CORPORATION AND SUBSIDIARIES
Report of Independent Certified Public Accountants................................................. F-2
Consolidated Balance Sheet as of June 30, 1997..................................................... F-3
Consolidated Statements of Income for the years ended June 30, 1997 and 1996....................... F-4
Consolidated Statements of Stockholders' Equity for the years ended
June 30, 1997 and 1996........................................................................... F-5
Consolidated Statement of Cash Flows for the years ended June 30, 1997 and 1996.................... F-6
Notes to Consolidated Financial Statements......................................................... F-7
</TABLE>
F-1
<PAGE>
La-Man Corporation
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
La-Man Corporation
We have audited the accompanying consolidated balance sheet of La-Man
Corporation and subsidiaries as of June 30, 1997, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the two
years in the period ended June 30, 1997. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of La-Man Corporation
and subsidiaries as of June 30, 1997, and the results of their operations and
their cash flows for each of the two years in the period ended June 30, 1997 in
conformity with generally accepted accounting principles.
BDO Seidman, LLP
Orlando, Florida
August 15, 1997
(Except for Note 21 as to which the
date is August 28, 1997)
F-2
<PAGE>
La-Man Corporation
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 231,313
Accounts receivable:
Trade, less allowance for doubtful accounts of $229,000 2,107,021
Other 129,755
Inventories 1,004,352
Costs and estimated earnings in excess of billings on uncompleted contracts in progress 89,174
Prepaid expenses 377,328
Deferred tax assets 423,000
- ------------------------------------------------------------------------------------------------------------------------------------
4,361,943
- ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation 2,553,743
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Intangibles, less accumulated amortization 2,186,591
Other 373,520
- ------------------------------------------------------------------------------------------------------------------------------------
2,560,111
- ------------------------------------------------------------------------------------------------------------------------------------
$ 9,475,797
====================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 507,134
Customer deposits 629,543
Accrued expenses 930,304
Deferred income 39,246
Current maturities of long-term debt 306,984
Current portion of obligations under capital leases 11,279
- ------------------------------------------------------------------------------------------------------------------------------------
2,424,490
- ------------------------------------------------------------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
Long-term debt, less current maturities 2,141,620
Obligations under capital leases, less current portion 37,684
Deferred tax liabilities 48,000
- ------------------------------------------------------------------------------------------------------------------------------------
2,227,304
- ------------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock; $.001 par value; authorized 50,000,000 shares; issued and outstanding 3,310,869 shares 3,311
Additional paid-in capital 5,809,832
Accumulated deficit (989,140)
- ------------------------------------------------------------------------------------------------------------------------------------
4,824,003
- ------------------------------------------------------------------------------------------------------------------------------------
$ 9,475,797
====================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
F-3
<PAGE>
La-Man Corporation
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended June 30 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SALES $ 15,945,627 $ 13,267,545
COST OF SALES 8,123,075 6,554,638
- ------------------------------------------------------------------------------------------------------------------------------------
Gross profit 7,822,552 6,712,907
Operating expenses 6,790,925 5,758,934
- ------------------------------------------------------------------------------------------------------------------------------------
Income from operations 1,031,627 953,973
OTHER INCOME (EXPENSE)
Interest income 100,770 72,343
Interest expense (233,140) (201,266)
Gain on disposal of property and equipment 270,892 69,644
Miscellaneous income 19,253 4,521
- ------------------------------------------------------------------------------------------------------------------------------------
157,775 (54,758)
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income tax benefit 1,189,402 899,215
Income tax benefit 229,000 125,000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 1,418,402 1,024,215
DISCONTINUED OPERATIONS
Loss from operations of discontinued operations 281,371 541,409
Loss on disposal of discontinued operations 371,572 115,000
- ------------------------------------------------------------------------------------------------------------------------------------
652,943 656,409
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 765,459 $ 367,806
====================================================================================================================================
EARNINGS PER COMMON SHARE AND COMMON EQUIVALENT SHARE
Continuing operations $ 0.38 $ 0.34
Discontinued operations (0.14) (0.16)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 0.24 $ 0.18
====================================================================================================================================
EARNINGS PER COMMON SHARE - ASSUMING FULL DILUTION
Continuing operations $ 0.36 $ 0.34
Discontinued operations (0.13) (0.16)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 0.23 $ 0.18
====================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
F-4
<PAGE>
La-Man Corporation
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional Total
----------------------
Number Par Paid-In Accumulated Stockholders'
Of Shares Value Capital Deficit Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1995 2,357,399 $ 2,357 $ 4,721,512 $ (1,969,637) $ 2,754,232
Stock issued for accounts payable 36,000 36 44,964 - 45,000
Stock issued for purchase of Don Bell Industries 275,000 275 1,099,725 - 1,100,000
Stock contributed to 401(k) plan 49,516 50 58,155 - 58,205
Sale of common stock 10,000 10 9,990 - 10,000
Exercise of common stock warrants, net 330,750 331 224,164 - 224,495
Net income - - - 367,806 367,806
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1996 3,058,665 3,059 6,158,510 (1,601,831) 4,559,738
Issuance of five percent stock dividend 152,768 153 152,615 (152,768) -
Issuance of note payable as adjustment to
Don Bell Industries purchase price - - (626,476) - (626,476)
Stock contributed to 401(k) plan 46,915 47 71,485 - 71,532
Issuance of stock options and warrants - - 35,000 - 35,000
Exercise of common stock warrants, net 52,521 52 18,698 - 18,750
Net income - - - 765,459 765,459
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1997 3,310,869 $ 3,311 $ 5,809,832 $ (989,140) $ 4,824,003
====================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 765,459 $ 367,806
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Loss from discontinued operations 652,943 656,409
Depreciation and amortization 479,227 450,694
Gain on disposal of property, plant and equipment (270,892) (69,644)
Contribution of common stock to 401(k) plan 71,532 58,205
Realization of deferred income (52,810) (97,978)
Deferred tax benefit (250,000) (125,000)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable (467,322) (513,372)
Other receivables 155,060 (212,083)
Inventories (305,868) 215,836
Prepaid expenses (101,003) (41,139)
Accounts payable (420,299) 261,387
Customer deposits 88,791 (186,570)
Accrued expenses 318,036 247,828
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES 662,854 1,012,379
NET CASH USED FOR DISCONTINUED OPERATING ACTIVITIES (509,768) (478,094)
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (257,266) (504,598)
Payment for purchase of Don Bell Industries, Inc., net of cash acquired of $59,819 - (409,750)
Patent acquisition costs (5,966) (9,180)
Proceeds from sale of property, plant and equipment 382,635 49,459
Changes in other assets 18,767 (51,879)
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 138,170 (925,948)
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable - 1,090,000
Principal payments on notes payable (159,167) (1,147,256)
Proceeds from sales of stock, net 18,750 234,495
Payments on capital lease obligations (32,253) (37,380)
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (172,670) 139,859
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 118,586 (251,804)
CASH, beginning of year 112,727 364,531
- -----------------------------------------------------------------------------------------------------------------------------
CASH, end of year $ 231,313 $ 112,727
=============================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of La-Man Corporation
and its wholly-owned subsidiaries (the "Company"). All significant intercompany
accounts and transactions have been eliminated in consolidation.
INVENTORIES
Inventories are valued at the lower of first-in, first-out (FIFO) cost or
market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed over
the estimated useful lives of the assets by the straight-line method.
INTANGIBLE ASSETS
Intangible assets are amortized using the straight-line method over their
estimated useful lives
REVENUE RECOGNITION
The Company recognizes revenue on long-term construction contracts under the
percentage-of-completion method, measured by the percentage of contract costs
incurred to estimated total costs for each contract. Contract costs include all
direct material and labor costs and those indirect costs related to contract
performance. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined. Changes in job performance,
job conditions, and estimated profitability may result in revisions to costs and
income and are recognized in the period in which the revisions are determined.
Profit is included in revenues when its realization is reasonably assured.
EARNINGS PER SHARE
Earnings per common share and common equivalent share is determined using the
weighted average number of common shares and dilutive common equivalent shares
outstanding. Earnings per share - assuming full dilution is computed assuming
full conversion of all dilutive convertible securities into common stock at the
later of the beginning of the year or the date of issuance of the dilutive
convertible securities.
LEASING ACTIVITIES
The Company leases certain of its signs to customers under long-term
noncancellable leases which are accounted for as sales-type leases. The present
value of the minimum rentals to be received under such leases is recorded
currently as net sales revenue. The cost of the leased property is charged
against income at the time the sale is recorded.
INCOME TAXES
Income tax expense or benefit includes both current and deferred state and
federal income taxes. Deferred income taxes are provided for temporary
differences in the recognition of income and expense for financial reporting and
income tax purposes. Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of assets, liabilities
and tax carry forwards that will result in taxable or deductible amounts in
future periods based upon enacted tax laws and rates applicable to the periods
in which the differences are expected to affect taxable income. Deferred tax
liabilities are recognized when incurred; deferred tax assets, when necessary,
are reduced by a valuation allowance and recognized when it is more likely than
not that the asset will be realized.
STOCK BASED COMPENSATION
The Company adopted Statement of Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123) during 1997. However, as permitted by SFAS
123, the Company has elected to continue to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for stock based compensation to employees.
Stock options granted to non-employees are valued using a Black-Scholes option
pricing model with appropriate assumptions for risk free investment rates,
expected lives, dividend yields and volatility factors. The value of options
granted to non-employees is charged to appropriate asset or expense accounts
when the options are granted.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of June 30, 1997. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash, trade
receivables, accounts payable and accrued expenses. Fair values were assumed to
approximate carrying values for these financial instruments because they are
short term in nature and their carrying amounts approximate fair values or they
are receivable or payable on demand. The fair value of the Company's long-term
debt is estimated based upon the quoted market prices for the same or similar
issues or on the current rates offered to the Company for debt of the same
remaining maturities.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" (SFAS 121) during 1997. SFAS 121 requires impairment losses to
be recorded on long-lived assets used in operations and goodwill when indicators
of impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount. The
adoption of SFAS 121 did not impact the financial statements of the Company.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior year financial statements
to conform with the current year presentation.
NOTE 2. ACQUISITIONS
On September 7, 1995, the Company acquired all of the outstanding common stock,
8% cumulative preferred stock and $935,091 of notes receivable from Don Bell
Industries, Inc. (DBI) for a total consideration of $2,210,000 comprised of
$360,000 cash, 275,000 shares of common stock and a $750,000 convertible note
payable. Additional cash, common stock or debt was contingently issuable if the
market price of the Company's common stock did not exceed $4.00 per share for
any consecutive 20-day period prior to December 31, 1996. The stock price did
not attain the prescribed $4.00 target price and, on January 31, 1997, notes
payable totaling $626,476 were issued under this contingency provision and the
value of the previously issued shares of common stock was reduced. The
acquisition has been recorded using the purchase method of accounting.
Accordingly, the purchase price was allocated to the net assets acquired based
upon their estimated fair market values. The excess of the purchase price over
the estimated fair value of net assets acquired amounted to approximately $1.1
million, which has been accounted for as goodwill and is being amortized over
its estimated life of 40 years. The operating results of DBI are included in the
Company's consolidated results of operations from the date of acquisition.
The following unaudited pro-forma summary presents the consolidated results of
continuing operations as if the acquisition of DBI had occurred at the beginning
of the period presented and does not purport to be indicative of what would have
occurred had the acquisition been made as of that date or of results which may
occur in the future.
<TABLE>
<CAPTION>
Year ended June 30 1996
- --------------------------------------------------------------
<S> <C>
Net sales $14,472,000
Net income $ 230,000
Net income per share $ .08
==============================================================
</TABLE>
NOTE 3. INVENTORIES
Inventories at June 30, 1997 consist of the following:
<TABLE>
- --------------------------------------------------------------
<S> <C>
Raw materials $ 805,774
Work in process 83,515
Finished goods 115,063
- --------------------------------------------------------------
$1,004,352
==============================================================
</TABLE>
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at June 30, 1997 consist of the following:
<TABLE>
<CAPTION>
Estimated
Useful Lives
- --------------------------------------------------------------
<S> <C> <C>
Land $ 530,000
Buildings and improvements 15-30 years 1,008,475
Leasehold improvements 30 years 57,354
Machinery and equipment 5-10 years 1,085,624
Office equipment and furniture 5-10 years 789,999
Transportation equipment 3-5 years 175,344
Signs held for lease 11 years 255,528
- --------------------------------------------------------------
3,902,324
Less accumulated depreciation 1,348,581
- --------------------------------------------------------------
$2,553,743
==============================================================
</TABLE>
Depreciation expense from continuing operations for the years ended June 30,
1997 and 1996 was $399,369 and $359,258, respectively.
NOTE 5. INTANGIBLE ASSETS
Intangible assets are summarized as follows:
<TABLE>
<CAPTION>
Useful Lives
- --------------------------------------------------------------
<S> <C> <C>
Patents 5 years $ 217,785
Goodwill 40 years 2,315,578
- --------------------------------------------------------------
2,533,363
Less accumulated amortization 346,772
- --------------------------------------------------------------
$2,186,591
==============================================================
</TABLE>
Amortization expense from continuing operations for the years ended June 30,
1997 and 1996 was $79,858 and $91,436, respectively.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. NET INVESTMENT IN SALES-TYPE LEASES
The Company is the lessor of a variety of signs and advertising display units
under agreements expiring through 2003. The Company accounts for these leases as
sales-type leases. At June 30, 1997, the net investment in sales-type leases,
included in other assets and other receivables, consists of the following:
<TABLE>
- --------------------------------------------------------------
<S> <C>
Total minimum lease payments to be received $544,957
Less unearned income 104,452
- --------------------------------------------------------------
Net investment in sales-type leases 440,505
Less current portion 126,022
- --------------------------------------------------------------
Long-term net investment $314,483
==============================================================
</TABLE>
The following is a schedule of minimum lease payments to be received as of June
30, 1997:
<TABLE>
- --------------------------------------------------------------
<S> <C>
1998 $172,291
1999 150,495
2000 130,798
2001 58,337
2002 19,239
Thereafter 13,797
- --------------------------------------------------------------
$544,957
==============================================================
</TABLE>
NOTE 7. COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED
CONTRACTS IN PROGRESS
Costs and estimated earnings on uncompleted contracts consists of the following
at June 30, 1997:
<TABLE>
- --------------------------------------------------------------
<S> <C>
Costs incurred on uncompleted contracts $ 231,887
Estimated earnings 124,269
- --------------------------------------------------------------
356,156
Billings to date (266,982)
- --------------------------------------------------------------
Costs and estimated earnings in excess
of billings on uncompleted contracts
in progress $ 89,174
==============================================================
</TABLE>
NOTE 8. DEFERRED INCOME
Deferred income consists of deferred revenues from leases sold with recourse.
The Company has sold the rights to future collection from certain operating
leases held by the Company to various financing institutions. Revenue was
recognized at the time of sale for leases sold without recourse. For leases sold
with recourse, revenue was deferred and recognized ratably over the term of the
lease. At June 30, 1997, $39,246 is outstanding under recourse provisions for
leases on which revenue recognition has been deferred.
NOTE 9. LINE OF CREDIT
The Company has a $500,000 revolving bank line of credit which was unused at
June 30, 1997. Advances on the credit line carry an interest rate of 1% over
prime. Under the terms of this loan agreement, the line of credit matures
December 27, 1997 and is collateralized by property, accounts receivable and
inventory. The agreement has covenants which require the Company to maintain
certain financial and operating ratios, including tangible net worth and
interest coverage ratio requirements. At June 30, 1997, the Company was not in
violation of any loan covenants.
NOTE 10. LONG-TERM DEBT
Long term debt at June 30, 1997 is summarized as follows:
<TABLE>
- ----------------------------------------------------------------------
<S> <C>
8.5% unsecured note payable, due in monthly
installments of $3,265 through
November 1997 $ 12,832
9.0% mortgage note payable, due in monthly
installments of $1,420 through April 2008,
secured by land of Don Bell Industries 117,696
Prime plus 2% (10.5% at June 30, 1997) term
loan, due in monthly principal installments
of $4,167 plus interest; unpaid principal
plus accrued interest due December 2000;
secured by all inventory and accounts
receivable of the Company and specific
assets of Don Bell Industries with
guarantees from all subsidiaries of La-Man
Corporation 175,042
Prime plus 1.5% (10% at June 30, 1997) term
loan, due in monthly installments of $8,106
through December 2000; secured by all
inventory and accounts receivable of the
Company and specific assets of Don Bell
Industries with guarantees from all
subsidiaries of La-Man Corporation 818,663
8% unsecured convertible note payable,
annual principal payments of $250,000
plus interest for three years beginning
September 1998; conversion price of $4.76 750,000
per share.
8% unsecured promissory notes payable,
quarterly payments of $52,206 plus interest
through January 2000. 574,371
- ----------------------------------------------------------------------
2,448,604
Less current portion 306,984
- ----------------------------------------------------------------------
Total $2,141,620
======================================================================
</TABLE>
Aggregate maturities of long-term debt over future years are as follows: 1998 -
$306,984; 1999 - $521,781; 2000 - $484,359; 2001 - $1,048,748; 2002 - $6,724 and
thereafter - $80,008.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. COMMITMENTS
LEASES
The Company conducts its operations partially from leased facilities. These
leases are classified as operating leases and expire on various dates through
2002.
The Company also leases equipment under capital leases which expire on various
dates through 2000. The total capitalized cost for this equipment is $116,267
with accumulated depreciation of $51,861 as of June 30, 1997.
As of June 30, 1997, future net minimum lease payments under capital leases and
future minimum rental payments required under operating leases that have initial
or remaining noncancelable lease terms in excess of one year are as follows:
<TABLE>
<CAPTION>
Capital Operating
Year ending June 30 Leases Leases
- --------------------------------------------------------------
<S> <C> <C>
1998 $ 13,353 $ 274,308
1999 10,028 250,621
2000 34,635 235,194
2001 - 121,938
2002 - 14,033
- --------------------------------------------------------------
58,016 $ 896,094
=========
Less amount representing interest 9,053
- --------------------------------------------------------------
Present value of minimum
lease payments $ 48,963
==============================================================
</TABLE>
Rental expense for the years ended June 30, 1997 and 1996 was approximately
$298,000 and $275,000, respectively.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements expiring at various dates
through the year 2000. As of June 30, 1997, the Company's total noncancellable
obligation under all employment contracts is approximately $671,000.
NOTE 12. INCOME TAXES
The components of deferred tax assets and liabilities consist of the following
as of June 30, 1997:
<TABLE>
- --------------------------------------------------------------
DEFERRED TAX ASSETS
<S> <C>
Accruals $ 48,000
Accounts receivable 86,000
Net operating loss and other tax carry forwards 1,114,000
Deferred income 15,000
Customer deposits 17,000
Intangible assets 5,000
- --------------------------------------------------------------
Gross deferred tax assets 1,285,000
Valuation allowance (367,000)
- --------------------------------------------------------------
Total deferred tax assets 918,000
DEFERRED TAX LIABILITIES
Sales-type lease receivables (157,000)
Inventory (35,000)
Plant and equipment (351,000)
- --------------------------------------------------------------
Net deferred tax assets $ 375,000
==============================================================
</TABLE>
The change in the valuation allowance for deferred tax assets was a decrease of
$369,000 during 1997.
Significant components of the income tax benefit are as follows:
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------
<S> <C> <C>
CURRENT
Federal $ 6,000 $ -
State 15,000 -
21,000 -
- --------------------------------------------------------------
DEFERRED
Federal (276,000) (127,000)
State 26,000 2,000
- --------------------------------------------------------------
(250,000) (125,000)
- --------------------------------------------------------------
$(229,000) $(125,000)
==============================================================
</TABLE>
At June 30, 1997, the Company had unused federal tax net operating losses
(NOLs) to carry forward against future years' taxable income of approximately
$3,072,000 expiring in various a mounts from 1999 to 2013. As a result of the
consummation of the Company's public offering and certain acquisitions, the use
of these NOLs will be limited each year under the provisions of Section 382 of
the Internal Revenue Code of 1986, as amended and the provisions of Treasury
Regulation 1.1502-21 regarding Separate Return Limitation years as follows:
<TABLE>
<CAPTION>
Maximum NOL
Year ending June 30 Available
- --------------------------------------------------------------
<S> <C>
1998 $ 880,000
1999 316,000
2000 316,000
2001 316,000
2002 316,000
Thereafter 928,000
- --------------------------------------------------------------
$3,072,000
==============================================================
</TABLE>
The following summary reconciles differences from taxes on income from
continuing operations at the federal statutory rate with the effective rate:
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------
<S> <C> <C>
Federal taxes on income at statutory rates 34% 34%
Reduction of deferred tax asset
valuation allowance (48%)
- --------------------------------------------------------------
Taxes on income (benefit) at effective rates (19%) (14%)
==============================================================
</TABLE>
F-10
<PAGE>
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. CAPITAL STOCK
On June 29, 1994, the Board of Directors adopted the amended and restated 1994
Employee and Consultant Stock Compensation Plan ("the 1994 plan"). The 1994 plan
provides for the issuance of up to 2,310,000 shares of the Company's common
stock to employees and consultants of the Company. Options granted under the
plan are not permitted to have a term in excess of five years.
On November 4, 1992, the Board of Directors adopted the 1992 Stock Option and
Appreciation Rights Plan ("the 1992 plan"). The 1992 plan provides for the
issuance of up to 603,750 shares of the Company's common stock to employees,
officers, directors and consultants of the Company. Options granted to
employees or directors under this plan must have an exercise price equal to or
greater than 85% of the fair value of the stock on the date of grant and cannot
have a term in excess of 10 years.
On April 25, 1988, the Company adopted the 1988 Incentive Stock Option Plan
("the 1988 plan"). The 1988 plan provides for the issuance of up to 175,000
shares of the Company's common stock to employees of the Company. Options
granted under this plan must have an exercise price equal to or greater than the
fair value of the stock on the date of grant and are not exercisable until 18
months from the date of grant.
On March 18, 1997, the Company entered into an agreement with an investor
relations firm and, separate from each of the above established plans, issued an
option to purchase up to 50,000 shares of the Company's common stock at an
exercise price of $1.54 per share. The options become exercisable on a defined
schedule from March 18, 1997 to March 18, 1998 and expire March 17, 2001. As of
June 30, 1997, 15,000 of the options were exercisable.
On November 22, 1996 the Company entered into an agreement with an investment
banking firm and, separate from each of the above established plans, issued
warrants to purchase up to 200,000 shares of the Company's common stock at an
exercise price of $1.77 per share. The warrants are not exercisable until
November 22, 1998 and expire November 22, 2001.
All stock options and warrants issued during 1996 and 1997 pursuant to the above
plans and agreements were issued with an exercise price that approximated the
fair market value of the stock on the date of grant. A summary of the status of
the Company's stock options and warrants for the plans and agreements discussed
above as of June 30, 1997 and 1996 and changes during the years ended on those
dates (as restated for the August 7, 1996 five percent stock dividend) is
presented below:
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Shares Price
- --------------------------------------------------------
<S> <C> <C>
Outstanding - June 30, 1995 984,638 $0.72
Granted 575,400 0.65
Exercised (347,288) 0.71
Expired (3,150) 0.71
- --------------------------------------------------------
Outstanding - June 30, 1996 1,209,600 0.69
Granted 422,500 1.59
Exercised (52,500) 0.36
Forfeited (21,000) 0.53
- --------------------------------------------------------
Outstanding - June 30, 1997 1,558,600 $0.94
========================================================
</TABLE>
The following table summarizes stock options and warrants issued under the plans
and agreements discussed above outstanding at June 30, 1997:
<TABLE>
<CAPTION>
Weighted Weighted
Range of Average Average
Exercise Exercise Remaining
Price Outstanding Price Contractual Life
- ---------------------------------------------------------------
<S> <C> <C> <C>
$ 0.48 - 0.84 1,119,300 $0.70 2.7 years
1.01 - 1.77 424,050 1.55 4.4 years
2.14 - 2.39 15,250 2.30 7.0 years
- ----------------------------------------------------------------
$ 0.48 - 2.39 1,558,600 $0.94 3.2 years
================================================================
</TABLE>
As of June 30, 1996 1,034,600 options and warrants were exercisable under the
plans and agreements discussed above at a weighted average exercise price of
$0.69. As of June 30, 1997 1,323,600 options and warrants were exercisable
under the plans and agreements discussed above at a weighted average exercise
price of $0.80 as follows:
<TABLE>
<CAPTION>
Weighted Weighted
Range of Average Average
Exercise Exercise Remaining
Price Exercisable Price Contractual Life
- ----------------------------------------------------------------
<S> <C> <C> <C>
$ 0.48 - 0.84 1,119,300 $0.70 2.7 years
1.01 - 1.77 189,050 1.33 4.5 years
2.14 - 2.39 15,250 2.30 7.0 years
- ----------------------------------------------------------------
$ 0.48 - 2.39 1,323,600 $0.80 3.0 years
================================================================
</TABLE>
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations in accounting for its
stock based compensation to employees. Accordingly, no compensation expense has
been recognized for stock based compensation issued to employees. Had
compensation cost for the Company's stock based compensation issued to employees
been determined based upon the fair value at the grant date consistent with the
methodology prescribed under Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation", the Company's pro-forma net
income for 1997 and 1996 would have been $1,377,402 and $945,215 from continuing
operations and $724,459 and $288,806 after discontinued operations,
respectively. Pro-forma earnings per common share and common equivalent share
from continuing operations would have been $0.37 for 1997 and $0.32 for 1996 and
earnings per share -assuming full dilution from continuing operations would have
been $0.36 and $0.32 for 1997 and 1996, respectively. After discontinued
operations, pro-forma earnings per common share and common equivalent share
would have been $0.23 for 1997 and $0.18 for 1996 and earnings per share -
assuming full dilution would have been $0.22 and $0.17 for 1997 and 1996,
respectively.
The weighted average fair value of options and warrants granted during 1997 and
1996 was estimated at $0.18 and $0.14 per share, respectively, based upon using
the Black-Scholes option-price model with the following weighted average
assumptions: 5% dividend yield, expected volatility of 52%, risk-free interest
rate of 6.06% and expected life of 2.5 years.
On January 13, 1994 in conjunction with a public offering of the Company's
common stock, the Company issued 620,000 common stock purchase warrants with an
exercise price of $4.76 per share that expire, as amended, on June 30, 1998. As
of June 30, 1997 all of these warrants were exercisable. In conjunction with
the same public offering, the Company issued an option to purchase 31,000
"units", each unit consisting of two shares of common stock and two
nonredeemable common stock purchase warrants, for a price of $7.80 per unit.
Each common stock purchase warrant obtainable under this option entitles the
holder to purchase one share of common stock at a price of $4.68. Both the
option to purchase the units, and the purchase warrants included in the units,
expire on January 6, 1999. As of June 30, 1997 all these units as well as the
warrants issuable under the units are exercisable.
NOTE 14. EMPLOYEE BENEFIT PLAN
The La-Man Corporation 401(k) profit sharing plan covers all employees with more
than six months of service and allows employees to defer up to 15% of their
income and contribute to the plan. The Company contributes to the plan at a
matching rate of 50% of the first six percent contributed by the employee.
Company contributions to the plan are in the form of the Company's common stock.
The Company issued to the 401(k) plan in fiscal year 1997, 46,915 shares of La-
Man Corporation's common stock at closing prices ranging from $1.00 to $1.88 per
share.
NOTE 15. EARNINGS PER SHARE
Earnings per common share and common equivalent share ("primary earnings per
share") and earnings per share - assuming full dilution ("fully diluted earnings
per share") are computed using the modified treasury stock method as prescribed
by Accounting Principles Board Opinion No. 15, "Earnings per Share" (APB 15).
Under the modified treasury stock method, earnings per share is computed by
dividing an adjusted income amount by an adjusted weighted average shares
outstanding. The adjustments to income and weighted average shares outstanding
are based upon common stock equivalents for the computation of primary earnings
per share and all potentially dilutive securities for the computation of fully
diluted earnings per share. All outstanding common stock options and purchase
warrants are common stock equivalents. The convertible note payable is dilutive
for calculation of fully diluted earnings per share. The weighted average
number of shares used in the calculation of primary earnings per share for 1997
and 1996 were 4,728,181 shares and 4,069,173 shares, respectively and the
weighted average number of shares used in the calculation of fully diluted
earnings per share for 1997 and 1996 were 4,885,681 shares and 4,219,173 shares,
respectively.
Beginning in fiscal 1998, the Company will be subject to the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings per Share" (FAS
128) that was adopted by the Financial Accounting Standard Board in February,
1997. FAS 128, which is effective for financial statements issued for periods
ending after December 15, 1997, simplifies the standards for computing earnings
per share and makes them comparable to international earnings per share
standards. Had earnings per share for 1997 and 1996 been calculated under the
provisions of FAS 128, the presentation of earnings per share would be as
follows:
<TABLE>
<CAPTION>
Year Ended June 30 1997 1996
- ---------------------------------------------------------------
<S> <C> <C>
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ 0.43 $ 0.36
Discontinued operations (0.20) (0.23)
- ---------------------------------------------------------------
Net income $ 0.23 $ 0.13
===============================================================
Weighted average number of
shares outstanding 3,274,838 2,861,739
===============================================================
EARNINGS PER COMMON SHARE-
ASSUMING DILUTION
Continuing operations $ 0.37 $ 0.32
Discontinued operations (0.16) (0.19)
- ---------------------------------------------------------------
Net income $ 0.21 $ 0.13
===============================================================
Weighted average number of
shares outstanding 4,002,220 3,338,211
===============================================================
</TABLE>
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16. INDUSTRY SEGMENTS
The Company's operations are classified into two business segments: filtration
and signage.
Operations within the filtration segment include the manufacture and sale of a
line of products which, when installed in compressed air lines, substantially
reduce or totally eliminate water and condensate problems and most foreign
contaminants in the air line.
The signage segment markets and produces custom designed and stock sign products
which are specifically designed for external use by institutional, governmental
and commercial enterprises.
The following table shows sales and operating income from continuing operations
and other financial information by industry segment as of and for the years
ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
- ---------------------------------------------------------------
<S> <C> <C>
SALES
Filtration $ 1,646,164 $ 1,587,980
Signage 14,299,463 11,679,565
- ---------------------------------------------------------------
$15,945,627 $13,267,545
===============================================================
OPERATING INCOME
Filtration $ 439,125 $ 540,640
Signage 1,448,813 1,246,040
Corporate expenses (856,311) (832,707)
- ---------------------------------------------------------------
$ 1,031,627 $ 953,973
===============================================================
DEPRECIATION AND AMORTIZATION
Filtration $ 68,493 $ 82,362
Signage 373,249 323,046
Corporate 37,485 45,286
- ---------------------------------------------------------------
$ 479,227 $ 450,694
===============================================================
IDENTIFIABLE ASSETS
Filtration $ 995,683 $ 1,056,281
Signage 7,757,381 6,618,103
Corporate 722,733 1,357,607
Discontinued segments - 351,984
- ---------------------------------------------------------------
$ 9,475,797 $ 9,383,975
===============================================================
CAPITAL EXPENDITURES
Filtration $ 18,072 $ 270,879
Signage 203,192 193,990
Corporate 36,002 1,416
Discontinued segments - 38,313
- ---------------------------------------------------------------
$ 257,266 $ 504,598
===============================================================
</TABLE>
NOTE 17. SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid $221,813 and $181,266 for interest for the years ended June 30,
1997 and 1996, respectively.
The following summarizes noncash investing and financing transactions:
<TABLE>
<CAPTION>
1997 1996
- --------------------------------------------------------------------
<S> <C> <C>
Common stock contributed to 401(k)
plan $ 71,532 $ 58,205
Common stock and notes payable
issued in purchase of Don Bell
Industries $ 626,476 $ 1,100,000
Issuance of five percent stock
dividend $ 152,768 -
Issuance of stock options and
warrants for prepaid investment
services $ 35,000 -
Capital lease obligation incurred for
fixed asset acquisition $ 30,305 -
Issuance of common stock for
payment of accounts payable $ - 45,000
Issuance of note payable for
payment of accounts payable $ - 55,000
Acceptance of note receivable for
sale of property and equipment $ - 87,492
====================================================================
</TABLE>
NOTE 18. ECONOMIC DEPENDENCE
For the years ended June 30, 1997 and 1996, the Company had one supplier which
accounted for a significant volume of consolidated purchases. For the year ended
June 30, 1997, purchases of signs from this supplier approximated $2,850,000, or
34% of consolidated purchases. For the year ended June 30, 1996, purchases of
signs from this supplier approximated $2,147,000, or 27% of consolidated
purchases. The Company is currently in the process of constructing a production
sign manufacturing facility to produce most or all of these signs in-house.
Once construction of this facility is complete and internal manufacturing is
operational, the Company's dependence upon this supplier should be eliminated.
NOTE 19. STOCK DIVIDEND
On July 12, 1996, the Company authorized a 5 percent stock dividend to be issued
August 7, 1996 to holders of record on July 26, 1996. The dividend resulted in
the issuance of an additional 152,768 shares of the Company's $.001 par value
common stock. Net income per share for the year ended June 30, 1996 has been
retroactively restated to reflect the effects of this stock dividend.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20. LEGAL PROCEEDINGS AND DISCONTINUED OPERATIONS
In November, 1996, the contracts between Vision Trust Marketing Services, Inc.
("VTM"), the Company's long-distance telephone marketing subsidiary, and MCI
Telecommunications, Inc. ("MCI") were abruptly terminated by MCI. The contract
for commercial long-distance customers was originally executed in 1994 and was
restated and extended for a new five year term in May, 1996. This contract
revision had been proposed by MCI in September, 1995 and discussed with VTM over
a period of eight months. In reliance on the new contract, VTM invested heavily
in staff, facilities and equipment in anticipation of significant commission
revenue as a result of enhancements in the revised contract. A lawsuit was
filed by VTM on April 16, 1997 seeking the recovery of damages from MCI.
Because the cancellation of the contract by MCI resulted in VTM no longer being
contracted to market MCI long-distance services, its sole line of business, the
Company discontinued the operations of VTM in December, 1996. All identifiable
assets of VTM were either transferred to other subsidiaries of the Company or
disposed of with minimal proceeds at a loss of $282,281. As of June 30, 1997
VTM has no remaining assets or liabilities. From July 1, 1996 to December,
1996, VTM operated at a loss of $281,371. Additional costs charged to expense
during the year associated with the wind down of VTM subsequent to December,
1996 amounted to $129,276 including a remaining reserve for additional costs of
$35,336 at June 30, 1997. Sales for VTM for 1997 and 1996 were $105,348 and
$429,062, respectively.
At June 30, 1996, the Company had reserved $115,000 for the discontinuance of
Heritage Packaging Services, Inc. ("Heritage"), its packaging wholesaling
subsidiary. In August, 1996, the accounts receivable, inventory and fixed
assets of Heritage were sold for cash proceeds of $35,000 and the assumption of
certain liabilities at a loss to the Company of $40,914 which was recorded
against the reserve for discontinuance. From July 1, 1996 to the sale date,
Heritage operated at a loss of $34,101 which was also recorded against the
reserve for discontinuance. The remaining $39,985 reserve for the
discontinuance of Heritage was not needed for any continuing operations or
disposal of the segment and was taken into income in December, 1996. Sales for
Heritage for 1997 and 1996 were $107,247 and $918,662, respectively.
The loss from discontinued operations for 1997 is summarized as follows:
<TABLE>
- --------------------------------------------------------
<S> <C>
Loss from operations of VTM prior
to discontinuance $ 281,371
Loss on disposal of VTM assets 282,281
VTM wind-down costs subsequent to
discontinuance including remaining
reserve of $35,336 at June 30, 1997 129,276
Reversal of unused provision for losses
on discontinuance of Heritage (39,985)
- --------------------------------------------------------
$ 652,943
========================================================
</TABLE>
NOTE 21. SUBSEQUENT EVENTS
On July 1, 1997, the Company acquired all of the outstanding common stock of
Certified Maintenance Services, Inc. ("Certified") for the assumption of
Certified's net liabilities of approximately $450,000. The acquisition was
recorded using the purchase method of accounting. Accordingly, the purchase
price was allocated to the net assets acquired based upon their estimated fair
market values. The excess of the purchase price over the estimated fair value
of net assets acquired amounted to approximately $450,000, which has been
accounted for as goodwill and is being amortized over its estimated life of 40
years.
On August 28, 1997, the Company obtained a letter of credit from a national bank
and issued notes payable supported by that letter of credit in the amount of
$2.5 million. The notes bears interest at a variable rate (which, including the
effect of amortization of finance costs, was initially an effective rate of
7.00%). Interest payments are due on the notes on a monthly basis with annual
principal payments due each August. The notes mature August, 2012.
Approximately $2.1 million of the proceeds were used to pay off all existing
Company debt, including debt obtained in the Certified acquisition, except for
the Company's 8%, $750,000 convertible note payable. The remaining proceeds
from the bond were or will be used to pay the closing costs of the bond and for
capital expansions of the Company's sign production facilities.
Simultaneous with the issuance of the notes, the Company obtained a $1.3 million
revolving line of credit with the same national bank. The line of credit bears
interest at one percent over the bank's prime rate (initially 9.5%) and matures
August, 1999 with renewal provisions. Initially, nothing was borrowed against
this line of credit.
The letter of credit, notes and line of credit are cross-collateralized by
substantially all assets of the Company with guarantees from each of the
Company's operating subsidiaries. The agreements also contain covenants which
require the Company to maintain certain operating and financial ratios beginning
in 1998.
NOTE 22. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS
130) and No. 131, "Disclosure about Segments of an Enterprise and Related
Information" (FAS 131). FAS 130 establishes standards for reporting and
displaying comprehensive income, its components and accumulated balances. FAS
131 establishes standards for the way that public companies report information
about operating segments in annual financial statements and requires reporting
of selected information about operating segments in interim financial statements
issued to the public. Both FAS 130 and FAS 131 are effective for periods
beginning after December 15, 1997. Because of the recent issuance of the
standards, management has been unable to fully evaluate the impact, if any, they
may have on future financial statement disclosures.
F-14
<PAGE>
EXHIBIT 3.19
ARTICLES OF INCORPORATION
OF
CERTIFIED MAINTENANCE SERVICE, INC.
================================================================================
The undersigned incorporator of these Articles of Incorporation, a natural
person competent to contract, hereby forms a corporation for profit under the
laws of the State of Florida.
ARTICLE I - NAME
----------------
The name of the Corporation is Certified Maintenance Service, Inc.
ARTICLE II - NATURE OF BUSINESS
-------------------------------
The Corporation is organized for the purpose of transacting any and all
lawful business and shall have those powers generally conferred by Florida
Statutes upon corporations organized in this state, and in addition to but not
in limitation of such powers, shall also have the power:
(a) To acquire by purchase, lease or otherwise, lands and interests
in lands, and to own, hold, improve, develop and manage any real estate so
acquired, and to erect, or cause to be erected, on any lands owned, held, or
occupied by the Corporation, buildings or other structures, public or private,
with their appurtenances and to manage, operate, lease, rent, rebuild, enlarge,
alter or improve any buildings or other structures, now or hereafter erected on
any lands so owned, held, or occupied and to encumber or dispose of any lands or
interests in lands and any buildings or other structures, at any time owned or
held by the Corporation. To buy, sell, mortgage, exchange, lease, hold for
investment or otherwise, use and operate real estate of all kinds, improved or
unimproved, and any right or interest therein.
(b) To acquire, by purchase, lease, manufacture or otherwise any
personal property deemed necessary or useful in the equipment, furnishing,
improvement, development or management of any property, real or personal, at any
time owned, held or occupied by the Corporation and to invest, trade and deal in
any personal property deemed beneficial to the Corporation and to lease, rent,
encumber or dispose of any personal property at any time owned or held by the
Corporation.
(c) To contract debts and borrow money, issue and sell or pledge
bonds, debentures, notes and other evidences of indebtedness and to execute such
mortgages, transfers or corporate indebtedness as required.
(d) To purchase the corporate assets of any other corporation and
engage in the same or other character of business.
<PAGE>
(e) To guarantee, endorse, purchase, hold, sell, transfer, mortgage,
pledge or otherwise acquire or dispose of the shares of the capital stock of, or
any bonds, securities, or other evidences of indebtedness created by, any other
corporation of the State of Florida or any other state or government and while
owner of such stock to exercise all the rights, powers and privileges of
ownership, including the right to vote such stock.
(f) To enter into, make, perform and carry out contracts and
agreements of every kind, for any lawful purpose, without limit as to amount,
with any person, firm, association or corporation; and to transact any further
and other business necessarily connected with the purposes of the Corporation or
calculated to facilitate the same.
(g) To carry on any or all of its operations and businesses and to
promote its objects within the State of Florida or elsewhere, without
restriction as to place or amount; and to have, use, exercise and enjoy all of
the general powers of like corporations.
(h) To engage in any and all lawful businesses, trades, occupations
and professions.
(i) To do any or all of the things herein set forth to the same
extent as natural persons might or could do and in any part of the world as
principals, agents, contractors or otherwise, alone, or in company with others
and to do and perform all such other things and acts as may be necessary,
profitable or expedient in carrying on any of the business or acts above-named.
The intention is that none of the objects and powers as hereinabove set
forth, except where otherwise specified in this Article, shall be in anywise
limited or restricted by reference to or inference from the terms of any other
objects, powers or clauses of this Article or any other Articles; but that the
objects and powers specified in each of the clauses in this Article shall be
regarded as independent objects and powers.
ARTICLE III - CAPITAL STOCK
---------------------------
The maximum number of shares of capital stock that the Corporation is
authorized to have outstanding at any time is 1,000 shares of common stock, each
having the par value of $1.00. Authorized capital stock may be paid for in
cash, services or property, at a just value to be fixed by the Board of
Directors of the Corporation at any regular or special meeting.
ARTICLE IV - COMMENCEMENT AND TERM OF EXISTENCE
-----------------------------------------------
The Corporation shall have perpetual existence. These Articles of
Incorporation shall be effective and the Corporation's existence shall commence
upon the filing of these Articles of Incorporation by the Department of State.
2
<PAGE>
ARTICLE V - ADDRESS
-------------------
The initial street and mailing address of the principal office of the
Corporation is to be at Corporate Address~. The Board of Directors may from
time to time designate such other address and place for the principal office of
the Corporation as it may see fit.
ARTICLE VI - DIRECTORS
----------------------
The Corporation shall have No. of Directors~ directors initially. The
number of directors may be increased or diminished from time to time by the
Bylaws. The shareholders shall have the right and power at any regular meeting
or at any special meeting called for such purpose to remove any director of the
Corporation with or without cause.
ARTICLE VII - INITIAL DIRECTORS
-------------------------------
The name and address of the initial directors who shall hold office until
their successors are elected and have qualified, is as follows:
Mark Manfredi
754 Monroe Road
P.O. Box 471208
Lake Monroe, Louisiana 32747-7780
ARTICLE VIII - INCORPORATOR
---------------------------
The name and post office address of the incorporator of these Articles of
Incorporation is:
Mark Manfredi
754 Monroe Road
P.O. Box 471208
Lake Monroe, Louisiana 32747-7780
ARTICLE IX - INITIAL REGISTERED OFFICE AND AGENT
------------------------------------------------
The initial registered agent of the Corporation is Mark Manfredi whose
address is 754 Monroe Road, P.O. Box 471208, Lake Monroe, Louisiana 32747-7780.
3
<PAGE>
ARTICLE X - VOTING RIGHTS
-------------------------
Except as otherwise provided by law, the entire voting power for the
election of directors and for all other purposes shall be vested exclusively in
the holders of the outstanding common shares.
ARTICLE XI - BYLAWS
-------------------
The power to adopt, alter, amend or repeal the Bylaws of the Corporation
shall be reserved to and vested in the Shareholders of the Corporation.
ARTICLE XII - INDEMNIFICATION
-----------------------------
A. The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil or criminal, administrative or investigative,
by reason of the fact that he is or was a director, officer, employee, or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement, actually and reasonably
incurred by him in connection with such action, suit, or proceeding, including
any appeal thereof, if he acted in good faith or in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, if he had no reasonable cause
to believe his conduct was unlawful. However, with respect to any action by or
in the right of the Corporation to procure a judgment in its favor, no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person is adjudged liable for negligence or misconduct in the
performance of his duty to the Corporation unless, and only to the extent that,
the court in which such action or suit was brought determines, on application,
that despite the adjudication of liability, such person is fairly and reasonably
entitled to indemnity in view of all the circumstances of the case. Any
indemnification hereunder shall be made only on a determination by a majority of
disinterested directors or a majority of shareholders that indemnification is
proper in the particular circumstances because the party to be indemnified has
met the applicable standard of conduct. Determination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or on a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the party did not meet the applicable standard of conduct. Indemnification
hereunder may be paid by the Corporation in advance of the final disposition of
any action, suit, or proceeding, on a preliminary determination that the
director, officer, employee, or agent met the applicable standard of conduct and
on receipt of an undertaking by or on behalf of the director, officer, employee,
or agent to repay such amount, unless it is ultimately determined that he is
entitled to be indemnified by the Corporation as authorized in this section.
4
<PAGE>
B. The Corporation shall also indemnify any director, officer, employee,
or agent who has been successful on the merits or otherwise, in defense of any
action, suit, or proceeding, or in defense of any claim, issue, or matter
therein, against all expenses, including attorneys' fees, actually and
reasonably incurred by him in connection therewith, without the necessity of an
independent determination that such director, officer, employee, or agent met
any appropriate standard of conduct.
C. The indemnification provided for herein shall continue as to any
person who has ceased to be a director, officer, employee, or agent, and shall
inure to the benefit of the heirs, executors, and administrators of such person.
D. In addition to the indemnification provided for herein, the
Corporation shall have the power to make any other or further indemnification,
except an indemnification against gross negligence or wilful misconduct, under
any resolution or agreement duly adopted by a majority of disinterested
directors, or duly authorized by a majority of shareholders.
E. If any expenses or other amounts are paid by way of indemnification,
otherwise than by court order or action by the shareholders, the Corporation
shall, not later than the time of delivery to the shareholders of written notice
of the next annual meeting, unless such meeting is held within three months from
the date of such payment, and, in any event, within fifteen months from the date
of such payment, deliver by mail to each shareholder of record at the time
entitled to vote for the election of directors, a statement specifying the
persons paid, the amounts paid, and the nature and status at the time of such
payment of the litigations or threatened litigation.
ARTICLE XIII - PREEMPTIVE RIGHTS
--------------------------------
Each shareholder of the Corporation shall have the right to purchase,
subscribe for, or receive a right or rights to purchase or subscribe for, at the
price at which it is offered to others, a pro rata portion of:
(1) Any stock of any class that the Corporation may issue or sell,
whether or not exchangeable for any stock of the Corporation of any class or
classes, and whether or not of unissued shares authorized by the Articles of
Incorporation as originally filed or by any amendment thereof or out of shares
of stock of the Corporation acquired by it after the issuance thereof, and
whether issued for cash, labor done, personal property, or real property or
leases thereof; or
(2) Any obligation that the Corporation may issue or sell which is
convertible into or exchangeable for any stock of the Corporation of any class
or classes, or to which is attached or pertinent any warrant or warrants or
other instrument or instruments conferring on the holder the right to subscribe
for or purchase from the Corporation any shares of its stock of any class or
classes.
5
<PAGE>
Any transfer of stock in the Corporation in violation of any such agreement
effectively restricting such transfer shall be void. Each share certificate
issued by the Corporation shall have printed or stamped thereon either a notice
that such shares are subject to transfer restrictions set forth in a
specifically referenced document or the following legend:
"The shares of capital stock evidenced by this certificate have not
been registered under applicable federal or state securities laws
and may not be sold or otherwise transferred unless so registered
or unless the Corporation receives a legal opinion acceptable to the
Corporation and its counsel that any such sale or other transfer is
exempt from such registration requirements."
ARTICLE XV - AMENDMENT
----------------------
These Articles of Incorporation may be amended in the manner provided by
law. Every amendment shall be approved by the Board of Directors, proposed by
them to the shareholders and approved at a shareholders' meeting by a majority
of the stock entitled to vote thereon, unless all the shareholders sign a
written statement manifesting their intention that a certain amendment of these
Articles of Incorporation may be made.
IN WITNESS WHEREOF, the undersigned has hereunto signed and acknowledged
the foregoing Articles of Incorporation under the laws of the State of Florida,
on the date set forth next to his signature.
/s/ Mark Manfredi August 15, 1991
----------------------- ---------------
Incorporator Date
6
<PAGE>
EXHIBIT 3.20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BYLAWS
OF
CERTIFIED MAINTENANCE SERVICE, INC.
EFFECTIVE AUGUST ____, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION CAPTION PAGE
- ------- ------- ----
<S> <C>
ARTICLE I - Meetings of Shareholders............... 1
Section 1 Annual Meeting............................................1
Section 2 Special Meetings..........................................1
Section 3 Place.....................................................1
Section 4 Action by Shareholders Without a Meeting..................1
Section 5 Notice of Meeting.........................................2
Section 6 Notice of Adjourned Meetings..............................2
Section 7 Waiver of Notice..........................................3
Section 8 Record Date...............................................3
Section 9 Shareholders' List for Meeting............................3
Section 10 Voting Entitlement of Shares..............................4
Section 11 Proxies...................................................4
Section 12 Shareholder Quorum and Voting.............................5
Section 13 Voting Trusts.............................................5
Section 14 Shareholders' Agreements..................................5
ARTICLE II - Directors...........................6
Section 1 General Powers............................................6
Section 2 Qualifications of Directors...............................6
Section 3 Number....................................................6
Section 4 Election and Term.........................................6
Section 5 Vacancy on Board..........................................6
Section 6 Removal of Directors by Shareholders......................6
Section 7 Compensation..............................................7
Section 8 Presumption of Assent.....................................7
Section 9 Directors' Meetings.......................................7
Section 10 Notice of Meetings........................................7
Section 11 Waiver of Notice..........................................7
Section 12 Quorum and Voting.........................................7
Section 13 Action by Directors Without a Meeting.....................7
Section 14 Adjournments..............................................8
Section 15 Participation by Conference Telephone.....................8
ARTICLE III - Committees...........................8
Section 1 Executive and Other Committees.............................8
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
ARTICLE IV - Officers..............................9
Section 1 Officers, Election and Terms of Office.....................9
Section 2 Resignation and Removal of Officers........................9
Section 3 Vacancies..................................................9
Section 4 Chairman of the Board......................................9
Section 5 President.................................................10
Section 6 Vice President............................................10
Section 7 Secretary.................................................10
Section 8 Treasurer.................................................11
Section 9 Delegation of Duties......................................11
ARTICLE V - Stock Certificates....................11
Section 1 Issuance..................................................11
Section 2 Signatures; Form..........................................11
Section 3 Transfer of Stock.........................................12
Section 4 Lost Certificates.........................................12
ARTICLE VI - Indemnification......................13
Section 1 Definitions...............................................13
Section 2 Indemnification of Officers, Directors,
Employees and Agents.....................................13
ARTICLE VII - General Provisions..................16
Section 1 Fiscal Year...............................................16
Section 2 Seal......................................................17
Section 3 Amendment of Bylaws.......................................17
CERTIFICATE OF ADOPTION.........................17
</TABLE>
2
<PAGE>
BYLAWS
OF
CERTIFIED MAINTENANCE SERVICE, INC.
EFFECTIVE AUGUST ____, 1997
ARTICLE I
---------
MEETINGS OF SHAREHOLDERS
------------------------
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders of
--------- --------------
this Corporation shall be held following the end of the Corporation's fiscal
year at such time as shall be determined by the Board of Directors. The annual
meeting shall be held for the election of directors of the Corporation and the
transaction of any business which may be brought before the meeting. The annual
meeting of the shareholders for any year shall be held no later than thirteen
months after the last preceding annual meeting of shareholders. The failure to
hold the annual meeting at the time stated shall not affect the validity of any
corporate action and shall not work a forfeiture of or dissolution of the
Corporation. Annual meetings shall be held at the Corporation's principal
office unless stated otherwise in the notice of the annual meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders
--------- ----------------
shall be held when directed by the President or the Board of Directors, or when
requested in writing by the holders of not less than one-tenth of all the votes
entitled to be cast on any issue proposed to be considered at the proposed
special meeting. Shareholders should sign, date, and deliver to the
Corporation's Secretary one or more written demands for the meeting describing
the purpose or purposes for which it is to be held. A meeting requested by
shareholders shall be called for a date not less than ten nor more than sixty
days after the request is made. The call for the meeting shall be issued by the
Secretary, unless the President, the Board of Directors, or shareholders
requesting the calling of the meeting shall designate another person to do so.
SECTION 3. PLACE. Meetings of shareholders may be held either within
--------- -----
or without the State of Florida. Unless otherwise directed by the Board of
Directors, meetings of the shareholders shall be held at the principal offices
of the Corporation in the State of Florida.
SECTION 4. ACTION BY SHAREHOLDERS WITHOUT A MEETING. Action that is
--------- ----------------------------------------
required or permitted to be taken at an annual or special meeting of
shareholders may be taken without a meeting, without prior notice, and without a
vote if the action is taken by the holders of outstanding stock of each voting
group entitled to vote thereon having not less than a minimum number of votes
with respect to each voting group that would be necessary to authorize or take
such action at a meeting at which all voting groups and shares entitled to vote
thereon were present and voted. In order to be effective, the action must be
evidenced by one or more written
1
<PAGE>
consents describing the action taken, dated and signed by approving shareholders
having the requisite number of votes of each voting group entitled to vote
thereon, and delivered to the Corporation by delivery to its principal office in
this State, its principal place of business, the corporate secretary, or another
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of shareholders are recorded. No written consent shall
be effective to take the corporate action referred to therein unless, within
sixty days of the date of the earliest dated consent delivered in the manner
required by this Section, written consent signed by the number of holders
required to take action is delivered to the Corporation by delivery as set forth
in this Section.
Any written consent may be revoked prior to the date that the
Corporation receives the required number of consents to authorize the proposed
action. No revocation shall be effective unless in writing and until received
by the Corporation at its principal office in this State or its principal place
of business, or received by the corporate secretary or other officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
shareholders are recorded.
Within ten days after obtaining such authorization by written consent,
notice must be given to those shareholders who have not consented in writing or
who are not entitled to vote on the action. The notice shall fairly summarize
the material features of the authorized action and, if the action be such for
which dissenters' rights are provided under Florida law, the notice shall
contain a clear statement of the right of shareholders dissenting therefrom to
be paid the fair value of their shares upon compliance with further provisions
of Florida law regarding the rights of dissenting shareholders.
A consent signed under this Section has the effect of a meeting vote
and may be described as such in any document.
Whenever action is taken pursuant to this Section, the written consent
of the shareholders consenting thereto or the written reports of inspectors
appointed to tabulate such consents shall be filed with the minutes of
proceedings of shareholders.
SECTION 5. NOTICE OF MEETING. The Corporation shall notify
--------- -----------------
shareholders in writing of the date, time, and place of each annual and special
shareholders' meeting no fewer than ten or more than sixty days before the
meeting date. Notice of a shareholders' meeting may be communicated or
delivered to any shareholder in person, or by teletype, telegraph or other form
of electronic communication, or by mail, by or at the direction of the
President, the Secretary, or the officer or persons calling the meeting. If
notice is mailed, it shall be deemed to be delivered when deposited in the
United States mail addressed to the shareholder at his address as it appears on
the stock transfer books of the Corporation, with postage thereon prepaid.
SECTION 6. NOTICE OF ADJOURNED MEETINGS. When an annual or special
--------- ----------------------------
shareholders' meeting is adjourned to a different date, time or place, notice
need not be given
2
<PAGE>
of the new date, time or place if the new date, time or place is announced at
the meeting before an adjournment is taken, and any business may be transacted
at the adjourned meeting that might have been transacted on the original date of
the meeting. If, however, after the adjournment the Board of Directors fixes a
new record date for the adjourned meeting, a notice of the adjourned meeting
must be given to persons who are shareholders as of the new record date who are
entitled to notice of the meeting.
SECTION 7. WAIVER OF NOTICE. A shareholder may waive any notice
--------- ----------------
required by the Articles of Incorporation or Bylaws before or after the date and
time stated in the notice. The waiver must be in writing, be signed by the
shareholder entitled to the notice, and be delivered to the Corporation for
inclusion in the minutes or filing with the corporate records. Attendance by a
shareholder at a meeting waives objection to lack of notice or defective notice
of the meeting, unless the shareholder at the beginning of the meeting objects
to holding the meeting or transacting business at the meeting.
SECTION 8. RECORD DATE. For the purpose of determining the
--------- -----------
shareholders entitled to notice of a shareholders' meeting, to demand a special
meeting, to vote, or to take any other action, the Board of Directors may fix
the record date for any such determination of shareholders.
The record date for determining shareholders entitled to demand a
special meeting is the date the first shareholder delivers his demand to the
Corporation. The record date for determining shareholders entitled to take
action without a meeting is the date the first signed written consent is
delivered to the Corporation under Section 4 of this Article. A record date for
purposes of this Section may not be more than 70 days before the meeting or
action requiring a determination of shareholders.
If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this Section, such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting.
SECTION 9. SHAREHOLDERS' LIST FOR MEETING. After fixing a record
--------- ------------------------------
date for a meeting, the Corporation shall prepare an alphabetical list of the
names of all its shareholders who are entitled to notice of a shareholders'
meeting, arranged by voting group with the address of, and the number and class
and series, if any, of shares held by each. The shareholders' list shall be
available for inspection by any shareholder for a period of ten days prior to
the meeting or such shorter time as exists between the record date and the
meeting and continuing through
3
<PAGE>
the meeting at the Corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the Corporation's transfer agent or registrar. A shareholder or his agent or
attorney is entitled on written demand to inspect the list, during regular
business hours and at the shareholder's expense, during the period it is
available for inspection.
The Corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or attorney is entitled to inspect the
list at any time during the meeting or any adjournment.
SECTION 10. VOTING ENTITLEMENT OF SHARES. Except as provided
---------- ----------------------------
otherwise in the Articles of Incorporation or herein, each outstanding share,
regardless of class, is entitled to one vote on each matter submitted to vote at
a meeting of the shareholders. Shares standing in the name of another
Corporation, domestic or foreign, may be voted by such officer, agent, or proxy
as the bylaws of the corporate shareholder may prescribe or, in the absence of
any applicable provision, by such person as the board of directors of the
corporate shareholder may designate. In the absence of any such designation or
in case of conflicting designation by the corporate shareholder, the President,
any Vice President, the Secretary, and the Treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares.
Shares entitled to vote held by an administrator, executor, guardian,
personal representative, or conservator may be voted by him, either in person or
by proxy, without a transfer of such shares into his name. Shares standing in
the name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
Nothing herein contained shall prevent trustees or other fiduciaries
holding shares registered in the name of a nominee from causing such shares to
be voted by such nominee as the trustee or other fiduciary may direct. Such
nominee may vote shares as directed by a trustee or other fiduciary without the
necessity of transferring the shares to the name of the trustee or other
fiduciary.
SECTION 11. PROXIES. A shareholder, other person entitled to vote on
---------- -------
behalf of a shareholder pursuant to law, or attorney in fact, may vote the
shareholder's shares in person or by proxy.
A shareholder may appoint a proxy to vote or otherwise act for him by
signing an appointment form, either personally or by his attorney in fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic,
4
<PAGE>
telecopy or equivalent reproduction of an appointment form is a sufficient
appointment form. An appointment of a proxy is effective when received by the
Secretary or other officer authorized to tabulate votes and is valid for up to
eleven months unless a longer period is expressly provided in the appointment
form.
The death or incapacity of a shareholder appointing a proxy does not
affect the right of the Corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the Secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
SECTION 12. SHAREHOLDER QUORUM AND VOTING. A majority of the shares
---------- -----------------------------
entitled to vote, represented in person or by proxy, shall constitutes a quorum
at a meeting of shareholders.
If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation or applicable law requires a greater number of
affirmative votes. After a quorum has been established at a shareholders'
meeting, a subsequent withdrawal of shareholders, so as to reduce the number of
shares entitled to vote at the meeting below the number required for a quorum,
shall not affect the validity of any action taken at the meeting or any
adjournment thereof.
SECTION 13. VOTING TRUSTS. One or more shareholders may create a
---------- -------------
voting trust, conferring on a trustee the right to vote or otherwise act for
them, by signing an agreement setting out the provisions of the trust (which may
include anything consistent with its purpose) and transferring their shares to
the trustee. When a voting trust agreement is signed, the trustee shall prepare
a list of the names and addresses of all owners of beneficial interests in the
trust, together with the number and class of shares each transferred to the
trust, and deliver copies of the list and agreement to the Corporation's
principal office. After filing a copy of the list and agreement in the
Corporation's principal office, such copy shall be open to inspection by any
shareholder of the Corporation or any beneficiary of the trust under the
agreement during business hours.
A voting trust is valid for not more than ten years after its
effective date, provided that all or some of the parties to a voting trust may
extend it for additional terms of not more than ten years each by signing an
extension agreement and obtaining the voting trustee's written consent to the
extension. An extension is valid for the period set forth therein, up to ten
years, from the date the first shareholder signs the extension agreement. The
voting trustee must deliver copies of the extension agreement and list of
beneficial owners to the Corporation's principal office. An extension agreement
binds only those parties signing it.
SECTION 14. SHAREHOLDERS' AGREEMENTS. Two or more shareholders may
---------- ------------------------
provide for the manner in which they will vote their shares by signing an
agreement for that purpose.
5
<PAGE>
When a shareholders' agreement is signed, the shareholders parties
thereto shall deliver copies of the agreement to the Corporation's principal
office. After filing a copy of the agreement in a Corporation's principal
office, such copy shall be open to inspection by any shareholder of the
Corporation, or any party to the agreement during business hours.
ARTICLE II
----------
DIRECTORS
---------
SECTION 1. GENERAL POWERS. All corporate powers shall be exercised
--------- --------------
by or under the authority of, and the business and affairs of the Corporation
shall be managed under the direction of its Board of Directors.
SECTION 2. QUALIFICATIONS OF DIRECTORS. Directors must be natural
--------- ---------------------------
persons who are eighteen years of age or older but need not be residents of this
state or shareholders of this Corporation.
SECTION 3. NUMBER. The Board of Directors of this Corporation as of
--------- ------
the date of adoption of these Bylaws shall consist of not less than one (1)
member and not more than ten (10) members. The maximum number of directors may
be increased or decreased from time to time by action of the Board of Directors,
but no decrease shall have the effect of shortening the terms of any incumbent
director. Directors are elected at each annual meeting of shareholders.
SECTION 4. ELECTION AND TERM. Each person named in the Articles of
--------- -----------------
Incorporation as a member of the initial Board of Directors shall hold office
until the first shareholders' meeting at which directors are elected and until
such person's successor shall have been elected and qualified or until such
person's earlier resignation, removal from office or death.
At the first annual meeting of shareholders and at each annual meeting
thereafter the shareholders shall elect directors to hold office until the next
succeeding annual meeting. Each director shall hold office for the term for
which such director is elected and until such director's successor shall have
been elected and qualified or until such director's earlier resignation,
removal from office or death.
SECTION 5. VACANCY ON BOARD. Any vacancy occurring in the Board of
--------- ----------------
Directors, including a vacancy from an increase in the number of directors, may
be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board of Directors. A director elected to fill
a vacancy shall hold office only until the next election of directors by the
shareholders.
SECTION 6. REMOVAL OF DIRECTORS BY SHAREHOLDERS. The shareholders
--------- ------------------------------------
may remove one or more directors with or without cause. A director may be
removed by the
6
<PAGE>
shareholders at a meeting of shareholders, provided the notice of the meeting
states that the purpose, or one of the purposes, of the meeting is removal of
the director.
SECTION 7. COMPENSATION. The Board of Directors shall have authority
--------- ------------
to fix the compensation of directors.
SECTION 8. PRESUMPTION OF ASSENT. A director of the Corporation who
--------- ---------------------
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless such director votes against such action or abstains from voting in
respect thereto because of an asserted conflict of interests.
SECTION 9. DIRECTORS' MEETINGS. The Board of Directors may hold
--------- -------------------
regular or special meetings in or out of the state. Meetings of the Board of
Directors may be called at any time by the President of the Corporation, or by
any two directors.
SECTION 10. NOTICE OF MEETINGS. Regular meetings of the Board of
---------- ------------------
Directors may be held without notice of the date, time, place or purpose of the
meetings. Special meetings of the Board of Directors must be preceded by at
least two days' notice of the date, time and place of the meeting.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
SECTION 11. WAIVER OF NOTICE. Notice of a meeting of the Board of
---------- ----------------
Directors need not be given to any director who signs a waiver of notice either
before or after the meeting. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting and waiver of any and all
objections to the place of the meeting, the time of the meeting, or the manner
in which it has been called or convened, except when a director states, at the
beginning of the meeting or promptly upon arrival at the meeting, any objection
to the transaction of business because the meeting is not lawfully called or
convened.
SECTION 12. QUORUM AND VOTING. A majority of the number of directors
---------- -----------------
fixed by these Bylaws shall constitute a quorum for the transaction of business.
If a quorum is present when a vote is taken, the affirmative vote of a majority
of directors present is the act of the Board of Directors.
SECTION 13. ACTION BY DIRECTORS WITHOUT A MEETING. Any action
---------- -------------------------------------
required or permitted by law to be taken at a Board of Directors' meeting or
committee meeting may be taken without a meeting if action is taken by all
members of the Board or the committee. The action must be evidenced by one or
more written consents describing the action taken and signed by each director or
committee member. Action taken shall be effective when the last director signs
the consent, unless the consent specifies a different effective date. The
consent signed shall have the effect of a meeting vote and may be described as
such in any document.
7
<PAGE>
SECTION 14. ADJOURNMENTS. A majority of the directors present,
---------- ------------
whether or not a quorum exists, may adjourn any meeting of the Board of
Directors to another time and place. Notice of any such adjourned meeting shall
be given to the directors who were not present at the time of the adjournment
and, unless the time and place of the adjourned meeting are announced at the
time of the adjournment, to the other directors.
SECTION 15. PARTICIPATION BY CONFERENCE TELEPHONE. Members of the
---------- -------------------------------------
Board of Directors may participate in a meeting of such Board by means of a
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
ARTICLE III
-----------
COMMITTEES
----------
SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors,
--------- ------------------------------
by resolution adopted by a majority of the full Board of Directors, may
designate from among its members an Executive Committee and one or more other
committees each of which, to the extent provided in such resolution, shall have
and may exercise all the authority of the Board of Directors, except that no
committee shall have the authority to:
(a) Approve or recommend to shareholders actions or proposals
required by law to be approved by shareholders.
(b) Fill vacancies on the Board of Directors or any committee
thereof.
(c) Adopt, amend, or repeal the Bylaws.
(d) Authorize or approve the reacquisition of shares unless pursuant
to a general formula or method specified by the Board of Directors.
(e) Authorize or approve the issuance or sale, or contract for the
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a voting group except that the Board of Directors may
authorize a committee (or a senior executive officer of the Corporation) to do
so within limits specifically prescribed by the Board of Directors.
Each committee must have two or more members who serve at the pleasure
of the Board of Directors. The Board, by resolution adopted in accordance with
this Section, may designate one or more directors as alternate members of any
such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
Neither the designation of any such committee, the delegation thereto
of authority, nor action by such committee pursuant to such authority shall
alone constitute compliance by any
8
<PAGE>
member of the Board of Directors not a member of the committee in question with
his responsibility to act in good faith, in a manner he reasonably believes to
be in the best interest of the Corporation, and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.
ARTICLE IV
----------
OFFICERS
--------
SECTION 1. OFFICERS, ELECTION AND TERMS OF OFFICE. The principal
--------- --------------------------------------
officers of this Corporation shall consist of a Chairman, a President, a
Secretary, a Treasurer and, in the discretion of the Board of Directors, one or
more Vice Presidents, each of whom shall be elected by the Board of Directors at
the first meeting of directors immediately following the annual meeting of
shareholders of this Corporation, and shall hold their respective offices from
the date of the meeting at which elected until the time of the next succeeding
meeting of the Board following the annual meeting of the shareholders. The
Board of Directors shall have the power to elect or appoint, for such term as it
may see fit, such other officers and assistant officers and agents as it may
deem necessary, and to prescribe such duties for them to perform as it may deem
advisable. Any two or more offices may be held by the same person. Failure to
elect a Chairman, President, Vice President, Secretary or Treasurer shall not
affect the existence of the Corporation.
SECTION 2. RESIGNATION AND REMOVAL OF OFFICERS. An officer may
--------- -----------------------------------
resign at any time by delivering notice to the Corporation. A resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the
Corporation accepts the future effective date, the Board of Directors may fill
the pending vacancy before the effective date if the Board of Directors provides
that the successor does not take office until the effective date.
The Board of Directors may remove any officer at any time with or
without cause. Any officer or assistant officer, if appointed by another
officer, may likewise be removed by such officer. Removal of any officer shall
be without prejudice to the contract rights, if any, of the person so removed;
however, election or appointment of an officer or agent shall not of itself
create contract rights.
SECTION 3. VACANCIES. Any vacancy, however occurring, in any office
--------- ---------
may be filled by the Board of Directors.
SECTION 4. CHAIRMAN. The Chairman of the Board of Directors shall
---------- --------
preside at all meetings of the Board of Directors, shall be deemed a senior
executive of the Corporation, and shall have and perform such other duties as
from time to time may be assigned to him by the Board of Directors.
9
<PAGE>
SECTION 5. PRESIDENT. The President shall be the chief executive
--------- ---------
officer of the Corporation and, subject to the direction of and limitations
imposed by the Board of Directors, shall have general charge of the business,
affairs and property of the Corporation and general supervision over its other
officers and agents. The President shall preside at all meetings of the
shareholders and in the absence of the Chairman, the Board of Directors. The
President, unless some other person is thereunto expressly authorized by
resolution of the Board of Directors, shall sign all certificates of stock,
execute all contracts, deeds, notes, mortgages, bonds and other instruments and
papers in the name of the Corporation and on its behalf; subject, however, to
the control, when exercised, of the Board of Directors. The President shall, at
each annual meeting, present a report of the business and affairs of the
Corporation. The President shall have the power to employ and terminate the
employment of all such subordinate officers, agents, clerks and other employees
not herein provided to be selected by the Board, as such President may find
necessary to transact the business of the Corporation, and shall have the right
to fix the compensation thereof.
SECTION 6. VICE PRESIDENT. One or more Vice Presidents may be
--------- --------------
designated by that title or such additional title or titles as the Board of
Directors may determine. A Vice President shall have the powers and perform
such duties as may be delegated to such Vice President by the Board of
Directors, or in the absence of such action by the Board, then by the President.
A Vice President (in such order of seniority as may be determined by the Board
of Directors, if any) shall, except as may be expressly limited by action of the
Board of Directors, perform the duties and exercise the powers of the President
during the absence or disability of the President; and, in such case,
concurrently with the President, shall at all times have the power to sign all
certificates of stock, execute all contracts, deeds, notes, mortgages, bonds and
other instruments and documents in the name of the Corporation on its behalf
which the President is authorized to do, but subject to the control and
authority at all times of the Board of Directors. A Vice President also shall
have such powers and perform such duties as usually pertain to such office or as
are properly required by the Board of Directors.
SECTION 7. SECRETARY. The Secretary shall keep the minutes of all
--------- ---------
meetings of the shareholders and the Board of Directors in a book or books to be
kept for such purposes, and also, when so requested, the minutes of all meetings
of committees in a book or books to be kept for such purposes. The Secretary
shall attend to giving and serving of all notices, and such Secretary shall have
charge of all books and papers of the Corporation, except those hereinafter
directed to be in charge of the Treasurer, or except as otherwise expressly
directed by the Board of Directors. The Secretary shall keep the stock
certificate book or books. The Secretary shall be the custodian of the seal of
the Corporation. The Secretary shall sign with the President all certificates
of stock as the Secretary of this Corporation and as Secretary affix or cause to
be affixed thereto the seal of the Corporation. The Secretary may sign as
Secretary of the Corporation, with the President in the name of the Corporation
and on its behalf, all contracts, deeds, mortgages, bonds, notes and other
papers, instruments and documents, except as otherwise expressly provided by the
Board of Directors, and as such, the Secretary shall affix the seal of the
Corporation thereto when required thereby. Under the direction of the Board of
Directors, or the President, the Secretary shall perform all the duties usually
pertaining to the
10
<PAGE>
office of Secretary; and such Secretary shall perform such other duties as may
be prescribed by the Board of Directors or the President.
SECTION 8. TREASURER. The Treasurer shall have the custody of all
--------- ---------
the funds and securities of the Corporation except as may be otherwise provided
by the Board of Directors, and the Treasurer shall make such disposition of the
funds and other assets of the Corporation as such Treasurer may be directed by
the Board of Directors. The Treasurer shall keep or cause to be kept a record
of all money received and paid out, and all vouchers and receipts given
therefor, and all other financial transactions of the Corporation. The
Treasurer shall have general charge of all financial books, vouchers and papers
belonging to the Corporation or pertaining to its business. The Treasurer shall
render an account of the Corporation's funds at the first meeting of the Board
of Directors immediately following the annual meeting of shareholders of this
Corporation, and at such other meetings as such Treasurer may be requested, and
such Treasurer shall make an annual statement of the finances of the
Corporation. If at any time there is a person designated as Comptroller of the
Corporation, the Treasurer may delegate to such Comptroller such duties and
powers as to the Treasurer may seem proper. The Treasurer shall perform such
other duties as are usually incident by law or otherwise to the office of the
Treasurer, and as such Treasurer may be directed or required by the Board of
Directors or the President.
SECTION 9. DELEGATION OF DUTIES. In the case of the absence or
--------- --------------------
disability of any officer of the Corporation, or in case of a vacancy in any
office or for any other reason that the Board of Directors may deem sufficient,
the Board of Directors, except as otherwise provided by law, may delegate the
powers or duties of any officer during the period of such officer's absence or
disability to any other officer or to any director.
ARTICLE V
---------
STOCK CERTIFICATES
------------------
SECTION 1. ISSUANCE. Every holder of shares in this Corporation
--------- --------
shall be entitled to have a certificate, representing all shares to which such
holder is entitled. No certificate shall be issued for any share until such
share is fully paid.
SECTION 2. SIGNATURES; FORM. Certificates representing shares in
--------- ----------------
this Corporation shall be signed by the Chairman, the President or a Vice
President, and by the Secretary or an Assistant Secretary or the Treasurer and
may be sealed with the seal of this Corporation or a facsimile thereof. The
signatures of the President, the Secretary and the Treasurer may be facsimiles
if the certificate is manually signed on behalf of a transfer agent or a
registrar, other than the Corporation itself or an employee of the Corporation.
In case any officer who signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
person were such officer at the date of its issuance.
11
<PAGE>
Every certificate representing shares which are restricted as to the
sale, disposition or other transfer of such shares shall state that such shares
are restricted as to transfer and shall set forth or fairly summarize such
restrictions upon the certificate. Alternatively, each certificate may state
conspicuously that the Corporation will furnish to any shareholder upon request
and without charge a full statement of such restrictions.
SECTION 3. TRANSFER OF STOCK. Shares of stock of the Corporation
--------- -----------------
shall be transferred on the books of the Corporation only upon surrender to the
Corporation of the certificate or certificates representing the shares to be
transferred accompanied by an assignment in writing of such shares properly
executed by the shareholder of record or his duly authorized attorney in fact
and with all taxes on the transfer having been paid. The Corporation may refuse
any requested transfer until furnished evidence satisfactory to it that such
transfer is proper. Upon the surrender of a certificate for transfer of stock,
such certificate shall be marked on its face "Canceled." The Board of Directors
may make such additional rules concerning the issuance, transfer and
registration of stock as it deems appropriate.
If any holder of any stock of the Corporation shall have entered into
an agreement with any other holder of any stock of the Corporation or with the
Corporation, or both, relating to a sale or sales or transfer of any shares of
stock of the Corporation, or wherein or whereby any restriction or condition is
imposed or placed upon or in connection with the sale or transfer of any share
of stock of the Corporation, and if a duly executed or certified copy thereof
shall have been filed with the Secretary of the Corporation, none of the shares
of stock covered by such agreement or to which it relates, of any such
contracting shareholder, shall be transferred upon the books of the Corporation
until there has been filed with the Secretary of the Corporation evidence
satisfactory to the Secretary of the Corporation of compliance with such
agreement, and any evidence of any kind or quality, of compliance with the terms
of such agreement which the Secretary deems satisfactory or sufficient shall be
conclusive upon all parties interested; provided, however, that neither the
Corporation nor any director, officer, employee or transfer agent thereof shall
be liable for transferring or effecting or permitting the transfer of any such
shares of stock contrary to or inconsistent with the terms of any such
agreement, in the absence of proof of willful disregard thereof or fraud, bad
faith or gross negligence on the part of the party to be charged; provided,
further, that the certificate of the Secretary, under the seal of the
Corporation, bearing the date of its issuance by the Secretary, certifying that
such an agreement is or is not on file with the Secretary, shall be conclusive
as to such fact so certified for a period of five days from the date of such
certificate, with respect to the rights of any innocent purchaser or transferee
for value of any such shares without actual notice of the existence of any
restrictive agreement.
SECTION 4. LOST CERTIFICATES. Any shareholder claiming a certificate
--------- -----------------
of stock to be lost or destroyed shall make affidavit or affirmation of the fact
and the fact that such shareholder is the owner and holder thereof, and give
notice of the loss or destruction of same in such manner as the Board of
Directors may require, and shall give the Corporation a bond of indemnity in
form, and with one or more sureties satisfactory to the Board of Directors,
payable as may be required by the Board of Directors to protect the Corporation
and any person
12
<PAGE>
injured by the issuance of the new certificate from any liability or expense
which it or they may incur by reason of the original certificate remaining
outstanding, whereupon the President or a Vice President and the Secretary or an
Assistant Secretary may cause to be issued a new certificate in the same tenor
as the one alleged to be lost or destroyed, but always subject to approval of
the Board of Directors.
ARTICLE VI
----------
INDEMNIFICATION
---------------
SECTION 1. DEFINITIONS. For purposes of this Article VI, the
--------- -----------
following terms shall have the meanings hereafter ascribed to them:
(a) "Agent" includes a volunteer.
(b) "Corporation" includes, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger, so that any person who is or was a
director, officer, employee, or agent of a constituent corporation, or is or was
serving at the request of a constituent corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust or
other enterprise, is in the same position with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(c) "Expenses" includes counsel's fees, including those for appeal.
(d) "Liability" includes obligations to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to any employee
benefit plan), and Expenses actually and reasonably incurred with respect to a
Proceeding.
(e) "Proceeding" includes any threatened, pending, or completed
action, suit, or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
(f) "Serving at the Request of the Corporation" includes any service
as a director, officer, employee, or agent of the Corporation that imposes
duties on such persons, including duties relating to an employee benefit plan
and its participants or beneficiaries.
(g) "Not Opposed to the Best Interest of the Corporation" describes
the actions of a person who acts in good faith and in a manner he reasonably
believes to be in the best interests of the participants and beneficiaries of an
employee benefit plan.
(h) "Other Enterprise" includes employee benefit plans.
13
<PAGE>
SECTION 2. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
--------- -----------------------------------------------------
AGENTS.
- ------
A. The Corporation shall have power to indemnify any person who was
or is a party to any proceeding (other than an action by, or in the right of,
the Corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interest of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner in which he reasonably believed to be in, or not opposed to, the best
interest of the Corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
B. The Corporation shall have power to indemnify any person, who was
or is a party to any proceeding by or in the right of the Corporation to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment of the
Board of Directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interest of
the Corporation, except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable unless, and only to the extent that, the court in which such proceeding
was brought, or any other court of competent jurisdiction, shall determine upon
application that, despite the adjudication of liability that in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
C. To the extent that a director, officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in the defense of any
proceeding referred to in subsection A or subsection B, or in the defense of any
claim, issue, or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith.
D. Any indemnification under subsection A or subsection B, unless
pursuant to determination by a court, shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee, or agent is
14
<PAGE>
proper in the circumstances because he has met the applicable standard of
conduct set forth herein. Such determination shall be made:
1. By the Board of Directors by a majority vote of a quorum
consisting of directors who are not parties to such proceeding;
2. If such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the Board of Directors (in which
directors who are parties may participate) consisting solely of two or more
directors not at the time parties to the proceeding;
3. By independent legal counsel:
a. Selected by the Board of Directors or the committee;
b. If a quorum of the directors cannot be obtained and a
committee cannot be designated, selected by majority vote of the full Board of
Directors (in which directors who are parties may participate);
4. By the shareholders by a majority vote of a quorum consisting
of shareholders who were not parties to such proceeding or, if no such quorum is
obtainable, by a majority vote of shareholders who were not parties to such
proceeding.
E. Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons designated by independent legal
counsel shall evaluate the reasonableness of expenses and may authorize
indemnification.
F. Expenses incurred by an officer or director in defending a civil
or criminal proceeding may be paid by the Corporation in advance of the final
disposition of the such proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if he is ultimately
found not to be entitled to indemnification by the Corporation pursuant to this
section. Expenses incurred by other employees and agents may be paid in advance
upon such terms or conditions that the Board of Directors deems appropriate.
G. The indemnification and advancement of expenses provided pursuant
to this Article are not exclusive, and the Corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of
shareholders, or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. However, indemnification or advancement of expenses shall not be made
to or on behalf of any director, officer, employee, or agent if a judgment or
other final adjudication establishes that his actions, or omissions to act, were
material to the cause of action so adjudicated and constitute:
15
<PAGE>
1. A violation of the criminal law, unless the director,
officer, employee, or agent had reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe his conduct was unlawful;
2. A transaction from which the director, officer, employee, or
agent derived an improper personal benefit;
3. In the case of a director, a circumstance under which the
liability provisions of Section 607.0834, Florida Statutes, are applicable; or
4. Willful misconduct or a conscious disregard for the best
interests of the Corporation in a proceeding by or in the right of the
Corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
H. Indemnification and advancement of expenses as provided in this
Article shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
I. Notwithstanding the failure of the Corporation to provide
indemnification, and despite any contrary determination of the Board or of the
shareholders in the specific case, a director, officer, employee or agent of the
Corporation who is or was a party to a proceeding may apply for indemnification
or advancement of expenses, or both, to the court conducting the proceeding, to
the Circuit Court, or to another court of competent jurisdiction. On receipt of
an application, the court, after giving any notice that it considers necessary,
may order indemnification and advancement of expenses, including expenses
incurred in seeking court ordered indemnification or advancement of expenses, if
it determines that:
1. The director, officer, employee or agent is entitled to
mandatory indemnification in which case the court shall also order the
Corporation to pay the director reasonable expenses incurred in obtaining court
ordered indemnification or advancement of expenses;
2. The director, officer, employee or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the Corporation of its power; or
3. The director, officer, employee or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether such person met
the standard of conduct set forth herein.
16
<PAGE>
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall
--------- -----------
begin on the first day of July and end on the last day of June in each year.
SECTION 2. SEAL. The Board of Directors in its discretion may adopt
--------- ----
a seal for the Corporation in such form as may be determined from time to time
by the Board of Directors.
SECTION 3. AMENDMENT OF BYLAWS. The Board of Directors shall have
--------- -------------------
the power to repeal, alter, amend, and rescind these Bylaws.
CERTIFICATE OF ADOPTION
-----------------------
I hereby certify that the foregoing Bylaws were duly adopted by the
Directors of the Corporation effective August ___, 1997.
_________________________________
Name: ___________________________
Title: __________________________
17
<PAGE>
EXHIBIT 4.14
AMENDMENT NO. 2 TO WARRANT AGREEMENT
This Amendment No. 2 to Warrant Agreement, dated as of January 7, 1997
("Amendment"), by and between LA-MAN CORPORATION, a Nevada corporation (the
"Company"), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent
(the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, the Company and the Warrant Agent are parties to a Warrant
Agreement dated as of January 6, 1994, as amended by Amendment No. 1 thereto
dated as of December 8, 1995 (as amended, the "Warrant Agreement"), in
connection with up to 713,000 Common Stock Purchase Warrants ("Warrants")
registered under the Securities Act of 1933, as amended, pursuant to a
Registration Statement on Form S-1 (Registration No. 33-54230), as amended by
post-effective amendment nos. 1-7 thereto (the "Registration Statement"),
initially declared effective by the Securities and Exchange Commission on
January 6, 1994; and
WHEREAS, pursuant to the Warrant Agreement the Warrant Agent acts on behalf
of the Company in connection with transfer, exchange and redemption of the
Warrants, the issuance of certificates representing the Warrants ("Warrant
Certificates"), the exercise of the Warrants and the rights of the holders
thereof; and
WHEREAS, the Company has determined to extend the expiration date of the
Warrants; and
WHEREAS, the Company and the Warrant Agent desire to amend the terms of the
Warrant Agreement in order to conform the terms and provisions thereof to the
modification of the expiration date of the Warrants;
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, and for the purpose of amending certain terms and
provisions of the Warrants and the Warrant Certificates and the respective
rights and obligations of the Company, the holders of the Warrant Certificates
and the Warrant Agent, the Company and the Warrant Agent hereby agree as
follows:
1. DEFINITIONS. Unless otherwise defined in this Amendment, capitalized terms
used herein shall have the meanings ascribed to them in the Warrant Agreement.
2. AMENDMENT TO WARRANT AGREEMENT. The definition of "Warrant Expiration Date"
contained in Section 1(j) of the Warrant Agreement is hereby amended by deleting
such definition in its entirety and substituting the following in lieu thereof:
<PAGE>
"(j) "Warrant Expiration Date" shall mean 5:00 P.M. (New York
time) on June 30, 1997, or the Redemption Date as defined in Section 8,
whichever is earlier; provided that if such date shall in the State of New
York be a holiday or day on which banks are authorized to close, then 5:00
P.M. (New York time) on the next following day which in the State of New
York is not a holiday or a day on which banks are authorized to close. The
Company shall have the right to extend the expiration date of the
Warrants."
3. SURVIVAL OF WARRANT AGREEMENT. Except as hereinabove amended, all terms and
provisions of the Warrant Agreement shall remain in full force and effect
following the execution and delivery of this Amendment.
4. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Nevada, without reference to the
principles of conflict of laws thereof.
5. BINDING EFFECT. This Amendment shall be binding upon and inure to the
benefit of the Company and the Warrant Agent and their respective successors and
assigns and the holders from time to time of the Warrant Certificates. Nothing
in this Amendment is intended or shall be construed to confer upon any other
person any right, remedy or claim, in equity or at law, or to impose upon any
other person any duty, liability or obligation.
6. COUNTERPARTS. This Amendment may be executed in counterparts, which taken
together shall constitute a single document.
IN WITNESS WHEREOF, the Company and the Warrant Agent have caused this
Amendment to be duly executed as of the date first above written.
LA-MAN CORPORATION CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, as Warrant Agent
By: _________________________ By:______________________________
J. William Brandner Name: William F. Seegraber
President Title: Vice President
2
<PAGE>
EXHIBIT 10.39
STOCK PURCHASE AND SALE AGREEMENT
AMONG
LA-MAN CORPORATION
("LA-MAN")
CERTIFIED MAINTENANCE SERVICE, INC.
(THE "COMPANY")
AND
MARK MANFREDI
("MANFREDI")
DATED AS OF JULY 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. DEFINITIONS..................................................................... 1
ARTICLE 2. PURCHASE AND SALE OF SHARES; CLOSING............................................ 4
Section 2.1 Transfer of Company Shares................................................. 4
Section 2.2 Consideration for Shares................................................... 4
Section 2.3 Closing; Closing Date...................................................... 4
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF MANFREDI...................................... 5
Section 3.1 Ownership.................................................................. 5
Section 3.2 Authority; Binding Effect.................................................. 5
Section 3.3 No Conflict or Violation................................................... 5
Section 3.4 Litigation................................................................. 6
Section 3.5 Documents Provided......................................................... 6
Section 3.6 Organization, Standing and Authority....................................... 6
Section 3.7 Subsidiaries and Other Interests........................................... 7
Section 3.8 Capitalization; Ownership.................................................. 7
Section 3.9 Financial Information; Undisclosed Liabilities............................. 7
Section 3.10 Tax Matters; Encumbrances.................................................. 7
Section 3.11 Title to Real and Personal Property........................................ 8
Section 3.12 Contracts.................................................................. 8
Section 3.13 Employee Matters; Major Customers.......................................... 10
Section 3.14 Labor Controversies, Etc................................................... 11
Section 3.15 Proprietary Rights......................................................... 12
Section 3.16 Condition of Assets........................................................ 12
Section 3.17 Accounts and Notes Receivable; Accounts Payable............................ 12
Section 3.18 Books and Records.......................................................... 13
Section 3.19 Compliance With Laws....................................................... 13
Section 3.20 Permits.................................................................... 13
Section 3.21 Conduct of Business........................................................ 14
Section 3.22 Documents Provided......................................................... 14
Section 3.23 Accounting Records......................................................... 15
Section 3.24 Brokerage and Financial Advisers; Other Fees............................... 15
Section 3.25 Facilities................................................................. 15
Section 3.26 No Interest in Properties; Competitors..................................... 15
Section 3.27 Adverse Factors............................................................ 15
Section 3.28 Transactions with Affiliates............................................... 15
Section 3.29 Necessary Assets........................................................... 16
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF LA-MAN.........................................16
Section 4.1 Organization, Standing and Authority........................................16
Section 4.2 Authority; Binding Effect; No Violation.....................................16
Section 4.3 Brokerage and Financial Advisers............................................16
Section 4.4 No Conflict or Violation....................................................16
ARTICLE 5. COVENANTS OF THE PARTIES.........................................................17
Section 5.1 Permits and Consents........................................................17
Section 5.2 Performance of Acts; Cooperation............................................17
Section 5.3 Notification of Certain Matters.............................................17
Section 5.4 Survival of Covenants.......................................................17
ARTICLE 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS; EXPENSES AND INDEMNIFICATION.........................................18
Section 6.1 Survival....................................................................18
Section 6.2 Expenses....................................................................18
Section 6.3 Indemnification of La-Man...................................................18
Section 6.4 Indemnification of Manfredi.................................................18
Section 6.5 Indemnification for Third Party Claims......................................19
ARTICLE 7. NON-COMPETITION COVENANT.........................................................20
Section 7.1 Non-Competition.............................................................20
Section 7.2 Scope; Enforceability.......................................................20
ARTICLE 8. MISCELLANEOUS....................................................................20
Section 8.1 Publicity...................................................................20
Section 8.2 Notices.....................................................................20
Section 8.3 Amendment; Extension; Waiver................................................22
Section 8.4 Governing Law; Venue........................................................22
Section 8.5 Binding Effect; Assignment..................................................22
Section 8.6 Confidentiality of Information and Documents................................23
Section 8.7 Severability................................................................23
Section 8.8 Entire Agreement............................................................23
Section 8.9 No Third Party Beneficiaries................................................23
Section 8.10 Counterparts................................................................23
Section 8.11 Exhibits and Schedules......................................................23
Section 8.12 Headings....................................................................23
Section 8.13 Expenses....................................................................24
Section 8.14 Actions by Affiliates.......................................................24
Section 8.15 Rules of Construction.......................................................24
</TABLE>
ii
<PAGE>
ATTACHMENTS
EXHIBIT A MANFREDI EMPLOYMENT AGREEMENT
EXHIBIT B COMPANY OFFICER'S CERTIFICATE
Schedule 3.3 Manfredi or Company Conflicts, Violations, Consents, Etc.
Schedule 3.4(a) Manfredi or Company Litigation
Schedule 3.4(b) Manfredi or Company Orders
Schedule 3.6 Jurisdictions in which Company Qualified as Foreign
Corporation
Schedule 3.7 Company Subsidiaries and Equity Interests in Other Persons
Schedule 3.9(b) Material Adverse Changes
Schedule 3.10 Tax Returns
Schedule 3.11(a) Company-Owned Real Property
Schedule 3.11(b) Encumbrances
Schedule 3.11(c) Description of Tangible Assets
Schedule 3.12(a) Company Contracts
Schedule 3.12(c) Maintenance Contract Defaults, Consents, Etc.
Schedule 3.13(a) Employee Benefit Plans
Schedule 3.13(b) Company Employee Data
Schedule 3.13(c) Employee Loans; Guaranties, Etc.
Schedule 3.13(e) Major Customers
Schedule 3.14(c) Departing Employees
Schedule 3.15 Proprietary Rights
Schedule 3.17(a) Accounts Receivable Data
Schedule 3.17(b) Accounts Payable Data
Schedule 3.17(c) Company Unsecured Creditors
Schedule 3.19 Company Noncompliance with Laws, Etc.
Schedule 3.20 Necessary Permits
Schedule 3.21 Exceptions for Ordinary Course of Business
Schedule 3.24 Certain Employee Compensation
Schedule 3.26 Director, Officer, Employee Interests
Schedule 3.28 Transactions with Affiliates
iii
<PAGE>
STOCK PURCHASE AND SALE AGREEMENT
This STOCK PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered
into as July 1, 1997, by and among LA-MAN CORPORATION, a Nevada corporation
("La-Man"), CERTIFIED MAINTENANCE SERVICE, INC., a Florida corporation (the
"Company") and MARK MANFREDI, an individual ("Manfredi")
RECITALS:
--------
Manfredi is the sole record and beneficial owner of all of the outstanding
shares of capital stock of the Company, which is engaged in the commercial sign
repair and maintenance business;
Manfredi desires to sell to La-Man, and La-Man desires to purchase and
acquire from Manfredi, all of the outstanding shares of capital stock of the
Company, for the consideration and on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, and in reliance upon the representations, warranties, conditions
and covenants herein contained and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS
In addition to other terms defined elsewhere herein, for purposes of this
Agreement the following terms shall have the following definitions:
1.1 "AFFILIATE" or "AFFILIATES" shall mean any person directly or
indirectly controlling, controlled by, or under common control with another
Person. The Company shall be considered an Affiliate of Manfredi with respect
to all periods prior to the Closing.
1.2 "AGENCY" shall mean any foreign or domestic federal, state or local
court, tribunal, legislative, executive, judicial, governmental or quasi-
governmental agency, instrumentality or authority, private arbitration tribunal,
or self-regulatory body.
1.3 "ANCILLARY DOCUMENTS" shall mean the Company Ancillary Documents and
the Manfredi Ancillary Documents.
1.4 "BUSINESS" shall mean the businesses of the Company as presently
conducted.
1.5 "CLOSING" shall mean the closing of the transactions contemplated by
this Agreement, as specified in Section 2.3.
<PAGE>
1.6 "CLOSING DATE" shall mean the date of the Closing.
1.7 "COMPANY ANCILLARY DOCUMENTS" shall mean any and all agreements,
documents or other instruments required or contemplated to be entered into,
executed and delivered by the Company pursuant to the provisions of this
Agreement.
1.8 "COMPANY GOVERNING INSTRUMENTS" shall mean the Articles of
Incorporation and Bylaws of the Company, as amended from time to time and as in
effect on the date of this Agreement.
1.9 "CONSENT" shall mean any consent, approval, permit, notice, action,
authorization or waiver of or filing with or giving of notice to any Agency or
any Person not a party to this Agreement.
1.10 "CONTRACT" shall mean any, and all manner of, contracts, licenses,
leases, instruments, commitments, agreements and other legally binding
arrangements of every type and description, whether oral or written, and whether
express or implied.
1.11 "ENCUMBRANCES" shall mean any, and all manner of, liens, pledges,
charges, security interests, mortgages, claims, options, imperfections of title,
tenancies or other rights, interests or encumbrances of any kind or nature.
1.12 "LA-MAN ANCILLARY DOCUMENTS" shall mean any and all agreements,
documents or other instruments required or contemplated to be entered into,
executed and delivered by La-Man pursuant to the provisions of this Agreement.
1.13 "LAW" AND "LAWS" shall mean federal, state, local or foreign laws,
regulations, rules, orders or administrative or judicial determinations of any
kind or nature, including without limitation any of the foregoing relating to
the environment, antitrust, trade regulation, civil rights, employment practices
and health and safety standards.
1.14 "LITIGATION" shall mean any claim, action, suit, proceeding,
arbitration, investigation, hearing or notice of hearing.
1.15 "MAINTENANCE CONTRACTS" shall mean Contracts entered into by the
Company for the repair or maintenance of signs, billboards and other outdoor
advertising structures.
1.16 "MANFREDI ANCILLARY DOCUMENTS" shall mean any and all agreements,
documents or other instruments required or contemplated to be entered into,
executed and delivered by Manfredi pursuant to the provisions of this Agreement.
1.17 "MANFREDI EMPLOYMENT AGREEMENT" shall mean the Employment Agreement
between the Company and Manfredi in the form attached hereto as Exhibit A.
---------
2
<PAGE>
1.18 "MATERIAL ADVERSE CHANGE" means, with respect to the Person to which
such term relates, any circumstances or events which, either singularly or in
the aggregate, (a) has had or could reasonably be anticipated to have any
material adverse effect on the validity or enforceability of this Agreement, (b)
has had or could reasonably be anticipated to have a material adverse effect on
the business, financial condition, results of operations, or properties of such
Person, or (c) has materially impaired or could reasonably be anticipated to
materially impair the ability of such Person to perform its obligations under
this Agreement or any other agreement, document or instrument by which such
Person or any of its assets and properties is or may be bound.
1.19 "ORDER" shall mean any judgment, order, injunction or decree of any
Agency.
1.20 "PERMIT" shall mean any permit, license, authorization, franchise, or
order of any Agency.
1.21 "PERSON" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
governmental or political subdivision or any agency or instrumentality thereof.
1.22 "PROPRIETARY RIGHTS" shall mean copyrights, rights to renew
copyrights, and copyright renewals, trademarks, trade names, service marks, and
the goodwill associated therewith, including without limitation, those listed on
Schedule 3.15 hereto or any names or marks consisting of a combination of words
- -------------
similar thereto, patents, patent rights, registrations, and applications for any
and all of the foregoing, licenses with respect to any and all of the foregoing,
all imprints, logos, colophons, and all other such like property owned by the
Company.
1.23 "SEC" shall mean the Securities and Exchange Commission.
1.24 "SECURITIES ACT" shall mean the Securities Act of 1933, and the rules
and regulations promulgated thereunder.
1.25 "SUBSIDIARY" shall mean any corporation, general or limited
partnership, or other Person a majority of the outstanding voting securities or
voting rights of which are owned of record or beneficially by another Person.
1.26 "TAX" AND "TAXES" shall mean any and all federal, state, local or
foreign income taxes (including without limitation any interest, penalties,
additions to tax and additional amounts attributable thereto) and all other
taxes of any kind or nature, charges, fees, levies or other assessments of any
kind or nature imposed by any federal, state, county, local or foreign Agency or
any subdivision thereof.
3
<PAGE>
ARTICLE 2. PURCHASE AND SALE OF SHARES; CLOSING
SECTION 2.1 TRANSFER OF COMPANY SHARES. At the Closing, Manfredi shall
sell, assign, transfer and deliver to La-Man, and La-Man shall purchase from
Manfredi, 100% of the issued and outstanding shares of capital stock of the
Company, free and clear of any and all Encumbrances, by delivering to the
Company all stock certificates evidencing such shares, duly endorsed in blank or
accompanied by stock powers or other instruments of transfer duly executed in
blank.
SECTION 2.2 CONSIDERATION FOR SHARES. In consideration of the sale and
transfer of all of the outstanding shares of capital stock of the Company to La-
Man, at the Closing:
(a) La-Man shall cause the Company to execute and deliver the
Manfredi Employment Agreement in the form attached as Exhibit A hereto, and to
---------
consummate the transactions contemplated thereby; and
(b) La-Man shall advance the Company funds to be used by the
Company for the purpose of funding certain settlement payments to certain
unsecured creditors of the Company, as contemplated in Section 3.17(c) hereof.
Manfredi acknowledges and agrees that the foregoing constitutes good and
adequate consideration for the sale and transfer by Manfredi to La-Man of all of
the outstanding shares of capital stock of the Company.
SECTION 2.3 CLOSING; CLOSING DATE. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of La-Man Corporation, 5029 Edgewater Drive, Orlando, Florida 32810 at 5:00 p.m.
local time, on the Closing Date, which shall be the date of execution and
delivery of this Agreement. At the Closing, the following shall also take
place:
(a) Manfredi and the Company shall execute and deliver to La-Man
all Ancillary Documents required to be executed and delivered by them.
(b) Manfredi shall deliver to La-Man a certificate from the
Company, substantially in the form set forth on Exhibit B and executed by the
---------
Secretary or an Assistant Secretary of the Company, setting forth and certifying
all resolutions adopted by the Board of Directors of the Company with respect to
this Agreement and the transactions contemplated hereby.
(c) The Company shall deliver to La-Man a certificate of the
Secretary of State of the State of Florida, dated within five (5) days prior to
the Closing Date, to the effect that the Company is an existing corporation and
its status is active under the Laws of each such state.
4
<PAGE>
[(d) Manfredi shall have delivered to La-Man the written opinion of
Shepard, Filburn & Goodblatt, P.A., counsel to Manfredi and the Company, dated
as of the Closing Date of Closing and reasonably satisfactory in form and
substance to La-Man and its counsel.]
(e) The Company shall deliver to La-Man such written evidence as
La-Man in its sole discretion may require, of the agreement of all unsecured
creditors of the Company listed on Schedule 3.17(c) hereto to settle all such
----------------
unsecured claims against the Company in an aggregate amount not exceeding
$126,590.36.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF MANFREDI
Manfredi hereby represents and warrants to La-Man as follows:
SECTION 3.1 OWNERSHIP.
(a) The only outstanding shares of capital stock of the Company are
comprised of 1,000 shares of common stock, $1.00 par value per share, of the
Company, registered in the name of Manfredi (the "Manfredi Shares"), all of
which shares are validly issued, fully paid and non-assessable.
(b) Manfredi is the sole record and beneficial owner of and has the
full right, power and authority to vote, sell, transfer and deliver the Manfredi
Shares to La-Man pursuant to this Agreement, and no other Person holds any
option, warrant or other right of any nature to subscribe for, purchase or
otherwise acquire any of the Manfredi Shares or any securities convertible into
or exchangeable for any of the Manfredi Shares. The certificates representing
such shares are valid and genuine and the delivery of such certificates will
transfer to La-Man legal and valid title to the Manfredi Shares free and clear
of all Encumbrances.
SECTION 3.2 AUTHORITY; BINDING EFFECT. Manfredi and the Company have the
requisite power, authority and competency to execute and deliver this Agreement
and all Ancillary Documents, and to consummate the transactions contemplated
hereby and thereby, and no other action or proceeding on the part of any Person
is necessary to authorize such execution, delivery and performance and the
consummation by Manfredi and the Company of the transactions contemplated hereby
and thereby. This Agreement is, and on the Closing Date each of the Ancillary
Documents will be, the valid and binding obligation of Manfredi and the Company,
enforceable against Manfredi and the Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar Laws affecting creditors' rights generally or by
general principles of equity.
SECTION 3.3 NO CONFLICT OR VIOLATION. Except as set forth on Schedule 3.3,
------------
the execution, delivery and performance by Manfredi and the Company of this
Agreement and each of the Ancillary Documents, does not, and the consummation by
Manfredi and the Company of
5
<PAGE>
the transactions contemplated hereby or thereby will not, with or without the
giving of notice or the lapse of time or both:
(a) violate in any material respect any provision of any Law;
(b) conflict with or result in a violation or breach of, or
constitute or result in a default under, any of the terms, conditions or
provisions of (i) any Order of any Agency to which either Manfredi or the
Company is subject or by which either of them or any of their respective assets
or businesses is bound, or (ii) any Permit held by the Company or by which the
Company or its assets or Business is bound;
(c) require any Consent of or filing with or giving of notice to
any Agency or any other Person not a party to this Agreement; or
(d) violate, or be in conflict with or constitute a default under,
or permit the termination of any provision of or result in the acceleration of
(or give the right to accelerate) the maturity or performance of any obligation
of Manfredi or the Company or result in the creation or imposition of any
Encumbrance upon any of their respective assets, properties or business under
any Contract to which either of them is a party or by which any of their
respective assets, property or businesses is bound.
SECTION 3.4 LITIGATION.
(a) Except as set forth on Schedule 3.4(a), there is no Litigation
---------------
pending, or to the best knowledge of Manfredi threatened, by or before any
Agency against Manfredi or the Company or by which Manfredi or the Company is or
may be bound or to which the assets, properties or business of Manfredi or the
Company are or may be subject; nor to the best knowledge of Manfredi or the
Company is there any basis for any such Litigation.
(b) Except as set forth on Schedule 3.4(b), neither Manfredi nor
---------------
the Company, nor any of their respective properties or assets, is subject to or
bound by any Order, or to the best knowledge of Manfredi is the subject of any
investigation by any Agency, or has received any notice of claim that he is in
material violation of any Order. Neither Manfredi nor, to his knowledge, any
other officers, directors, employees or agents of the Company, is permanently or
temporarily enjoined or barred by any Order from engaging in or continuing any
conduct or practice incident to the Business.
SECTION 3.5 DOCUMENTS PROVIDED. No statement contained herein or in any
document, certificate or other writing furnished by Manfredi or the Company to
La-Man in connection with the transactions contemplated by this Agreement
contains any untrue statement of material fact or omits to state any material
fact known to Manfredi and required to make the statements therein not
misleading.
6
<PAGE>
SECTION 3.6 ORGANIZATION, STANDING AND AUTHORITY. The Company is a
corporation duly organized and existing, and its status is active, under the
laws of the State of Florida and has all requisite corporate power and authority
to own, lease and operate its assets, property and the Business and to carry on
the Business and operations related thereto as heretofore conducted. The
Company is duly qualified or otherwise authorized as a foreign corporation to
transact business and is in good standing in each jurisdiction set forth in
Schedule 3.6, which are the only jurisdictions in which such qualification or
- ------------
authorization is required by law in connection with the Business. Except as set
forth in Schedule 3.6, the Company does not file and is not required to file any
------------
tax or similar returns in any other jurisdiction based upon the ownership or use
of property therein or the derivation of income therefrom. Manfredi has
heretofore delivered to La-Man copies of the Company Governing Instruments as
amended to date, certified by the Secretary of the Company as in effect on the
date hereof and as being true, complete and correct, and the Company is not in
violation of any of the provisions thereof.
SECTION 3.7 SUBSIDIARIES AND OTHER INTERESTS. The Company has no
Subsidiaries and, except as disclosed on Schedule 3.7 the Company does not own
------------
directly or indirectly any shares of stock or other equity interests in or of
any other Person.
SECTION 3.8 CAPITALIZATION; OWNERSHIP. The authorized capital stock of the
Company consists of 1,000 shares of common stock, par value $1.00 per share.
The only outstanding shares of capital stock of the Company are the Manfredi
Shares, all of which are validly issued, fully paid and non-assessable. No
other Person holds any option, warrant or other right of any nature to subscribe
for, purchase or otherwise acquire any shares of the capital stock or other
securities of the Company or any securities convertible into or exchangeable for
shares of capital stock or other securities of the Company, or any Contract
granting or reserving any such right.
SECTION 3.9 FINANCIAL INFORMATION; UNDISCLOSED LIABILITIES.
(a) The Company has delivered to La-Man the Company's unaudited
annual balance sheet dated as of December 31, 1996 and unaudited interim balance
sheet dated as of March 31, 1997 (collectively, "Balance Sheets") and the
Company's income and profit and loss statement for the 12 months ended December
31, 1996 ("Income Statement"). The Balance Sheets and Income Statement were
prepared on a basis consistent with prior periods and in accordance with the
books and the records of the Company.
(b) Except to the extent (i) reflected or reserved against in the
Balance Sheets or Income Statement, or (ii) disclosed on Schedule 3.9(b): (1)
---------------
the Company does not have any liabilities, whether accrued, absolute, contingent
or otherwise; and (2) since March 31, 1997 there has not been, occurred or
arisen any Material Adverse Change.
7
<PAGE>
SECTION 3.10 TAX MATTERS; ENCUMBRANCES.
(a) Except as set forth on Schedule 3.10, the Company has: (i)
-------------
duly filed with all appropriate Agencies all Tax returns and reports required to
be filed by it (ii) has paid in full all Taxes shown to be due on such tax
returns and reports; and (iii) has paid in full or fully reserved for or
otherwise accrued all Taxes due for all other periods prior to the date hereof.
(b) The Manfredi Shares will be transferred to La-Man at the
Closing free and clear of any and all Encumbrances.
SECTION 3.11 TITLE TO REAL AND PERSONAL PROPERTY.
(a) Except as specified in Schedule 3.11(a), the Company does not
----------------
own any real property necessary for the conduct of the Business after the
Closing substantially in the manner presently conducted by the Company.
(b) Except as otherwise specified on Schedule 3.11(b), the Company
----------------
has good and marketable title to all of its tangible and intangible properties
and assets (or, in the case of leased properties, valid leasehold rights as
lessee) used in connection with the Business, free and clear of all
Encumbrances.
(c) Schedule 3.11(c) sets forth a correct and complete list of (i)
----------------
all real property leased or used by the Company, together with a description of
the principal buildings, improvements and structures located thereon, (ii) all
machinery and equipment owned, leased or used by the Company, (iii) all
automobiles, trucks or other vehicles owned by or leased to the Company and (iv)
all other tangible personal property of the Company. The property listed on
Schedule 3.11(c) is in conformity in all material respects with all applicable
- ----------------
Laws and Orders and other requirements relating thereto or currently in effect
or scheduled to come into effect. Except as reflected on Schedule 3.11(c), the
----------------
fixed assets of the Company are located on real property owned or leased by the
Company.
SECTION 3.12 CONTRACTS.
(a) Except for Maintenance Contracts entered into in the ordinary
course of the Business, Schedule 3.12(a) lists all Contracts (whether in writing
----------------
or oral) by or to which the Company or any of its assets or the Business is
bound or subject, including without limitation:
(i) all real property leases;
(ii) all machinery and equipment leases;
8
<PAGE>
(iii) all licenses, leases and other agreements relating to
rights in other tangible personal property involving the payment of more than
$5,000 in the aggregate with respect to any one agreement;
(iv) all Contracts and instruments evidencing or relating to
(x) Proprietary Rights (with a description of the ownership thereof and the
rights of the Company therein) and (y) all licenses granted to any other Person
and other Contracts which relate in whole or in part to any Proprietary Rights
(and a description of the terms thereof);
(v) all policies of insurance or fidelity or surety bonds
in force with respect to directors, officers, employee benefit plan fiduciaries,
properties, assets, liabilities or operations of the Company (in each case with
a notation as to the status of premiums paid thereon)
(vi) all Contracts for the borrowing or lending of money;
(vii) all Contracts granting any person an Encumbrance on any
property or asset of the Company, including any factoring agreement for the
assignment of receivables or inventory;
(viii) all Contracts guaranteeing, indemnifying or otherwise
becoming liable for the obligations or liabilities of another;
(ix) all Contracts with respect to any discounts or
allowances or extended payment terms;
(x) all Contracts with any insurance agent, broker or other
representative or any other material arrangements with respect to the marketing
or distribution of insurance, annuity, disability income and related products
and other services, including without limitation, travel services, pension
administration, investment management or investment brokerage services and
custodial accounts;
(xi) except for local governmental approvals and permits
related to the Maintenance Contracts, all private or governmental
accreditations, licenses and approvals held by the Company;
(xii) all Contracts which restrict the Company from doing any
kind of business or from doing business in any jurisdiction or from competing
with any Person;
(xiii) all Contracts for the purchase of goods, materials,
supplies, machinery, capital assets or services in excess of $1,000 in any one
case or in excess of $5,000 in the aggregate;
9
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(xiv) all shareholders' agreements, proxies, voting trusts,
or powers of attorney to act on behalf of Manfredi or the Company or in
connection with the properties or business affairs of the Company other than
such power to so act as normally pertain to corporate officers;
(xv) all joint venture or partnership Contracts;
(xvi) all advertising or advertising-related Contracts;
(xvii) all Contracts giving any party the right to
renegotiate or require reduction in price or the repayment of any amount
previously paid;
(xviii) all brokerage Contracts (other than those relating to
the sale of insurance products) or finders' Contracts;
(xix) all Contracts for the provision of data processing
services;
(xx) all individual employment, consulting, severance,
retirement and similar Contracts involving compensation, severance, retirement
or other payments of any nature to any and all present and former directors,
officers, and employees of the Company, other than such payments as are not
covered by any fully-funded Employee Benefit Plan (as defined in Section
5.11(a)); and
(xxi) all Contracts with banks in which the Company
maintains any account or safe deposit boxes, specifying the number of each such
account or safe deposit box and the names of all persons authorized to draw
thereon or to have access thereto.
(b) The Company has delivered to La-Man certain schedules
("Maintenance Contract Schedules") reflecting all Maintenance Contracts in
effect as of June 15, 1997, listing the respective contract identification
numbers, effective dates and expiration dates of such Maintenance Contracts,
which schedules shall be accurate in all material respects as of the Closing
Date except for changes since June 15, 1997 resulting from the conduct of the
Business in the ordinary course. The Company has also delivered to La-Man true
and complete copies of the respective forms of Maintenance Contracts used by the
Company in the conduct of the Business ("Maintenance Contract Forms"). Except
as otherwise specified on Schedule 3.12(c): (i) each of the Maintenance
----------------
Contracts is in form and substance identical or substantially similar to the
applicable Maintenance Contract Form, except for such Maintenance Contracts
copies of which have been delivered to La-Man and collectively denoted as
"Dissimilar Maintenance Contracts"; (ii) each Maintenance Contract was entered
into in the ordinary course of the Business, is the valid, binding and
enforceable obligation of the Company, as the case may be, and, to the best
knowledge of Manfredi and the Company, the valid, binding and enforceable
obligation of each other Person who is a party thereto; (iii) neither the
Company, nor, to the best knowledge of Manfredi, any other Person who is a party
to any Maintenance Contract, is or on the Closing Date will be in default
thereunder; and (iv) Manfredi knows of no event which, with
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the giving of notice or the lapse of time or both, would become a default under
any Maintenance Contract.
SECTION 3.13 EMPLOYEE MATTERS; MAJOR CUSTOMERS.
(a) Schedule 3.13(a) lists all funded or unfunded employment and
----------------
consulting Contracts, executive compensation plans, stock option plans, bonus
plans, or other incentive compensation plans, deferred compensation Contracts,
severance pay arrangements, employee retirement plans, employee profit sharing
plans, stock ownership plans, pension plans, group life plans, hospitalization
insurance plans, any other "employee benefit plans" (as defined in Section 3(3)
of ERISA), or other Contracts, plans or arrangements (formal or informal) and
any predecessor or merged plans, Contracts or arrangements of other Persons of
the foregoing type or nature, providing for benefits for any employees of the
Company, whether written or oral ("Employee Benefit Plan"); and no employee of
the Company is covered by any collective bargaining agreement;
(b) Schedule 3.13(b) lists the names, departments, positions,
----------------
current annual compensation rates, effective dates of such current compensation,
the amounts of the last increase in compensation, the dates of hire and the
amount of bonus paid since June 30, 1996, of all employees of the Company;
(c) Schedule 3.13(c) lists all arrangements respecting loans to,
----------------
or guarantees of loans to, any employees of the Company (excluding travel and
sales commission advances made to employees in the ordinary course of operation
of the Business).
(d) Each employee pension benefit plan (within the meaning of
Section 3(2) of ERISA) that constitutes an Employee Benefit Plan has assets
sufficient to pay or otherwise satisfy all indebtedness, claims, obligations and
other liabilities of such Employee Benefit Plan.
(e) Schedule 3.13(e) lists any customer of the Company or the
----------------
Business which provided five percent (5%) or more of the total combined sales
revenue of the Company or the Business for the fiscal year ended December 31,
1996.
SECTION 3.14 LABOR CONTROVERSIES, ETC.
(a) There are no labor disputes with respect to the Company, the
Business pending or, to the best knowledge of Manfredi, threatened, which relate
to the employees of the Company or individuals engaged as independent
contractors in connection with the Company or the Business, and there are no
union organizing efforts in progress or, to the best knowledge of Manfredi and
the Company, threatened, involving any such individuals.
(b) Except as specified on Schedule 3.14(b), the Company has
----------------
complied in all material respects with all applicable employment, labor and
other similar Laws including any provisions thereof relating to wages, hours,
collective bargaining and the payment of social
11
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security and similar taxes, and the Company is not liable for any arrears of
wages or taxes or penalties for failure to comply with any of the foregoing.
(c) To the knowledge of Manfredi, none of the persons listed on
Schedule 3.14(c) as of June 15, 1997 has expressed any intent to leave the
- ----------------
employ of or engagement with the Company or otherwise terminate such person's
employment, agency or other relationship with the Company.
SECTION 3.15 PROPRIETARY RIGHTS. Schedule 3.15 sets forth a list of all
-------------
Proprietary Rights of the Company, which constitute all Proprietary Rights
necessary for the conduct of the Business after the Closing Date substantially
as now conducted. Except as otherwise specified on Schedule 3.15:
-------------
(a) the Company owns or uses the trademarks and trade names listed
on Schedule 3.15, each of which is in use by the Company and, to the best
-------------
knowledge of Manfredi, no other Person owns any interest in or is using or has
the right to use any such trademarks and trade names;
(b) no royalty, license, consent or other fee or consideration is
payable by the Company or, after the Closing Date, by La-Man in connection with
the ownership or use of any of the Proprietary Rights;
(c) all such Proprietary Rights are free and clear of any
Encumbrances;
(d) neither Manfredi nor the Company has received any notice with
respect to, nor to the best knowledge of Manfredi does there exist any basis
for, any alleged infringement or conflict with any rights of others with respect
to the use or exploitation of any of such Proprietary Rights by the Company in
the conduct of the Business;
(e) none of the rights of the Company to any Proprietary Rights or
any licenses relating thereto will be impaired in any material respect by the
transactions contemplated by this Agreement; and
(f) to the best knowledge of Manfredi, the conduct of the Business
as presently conducted (i) does not require the Consent of any Person who has
any interest of any nature in any of the Proprietary Rights, and (ii) does not
conflict with such Proprietary Rights of any other Person.
SECTION 3.16 CONDITION OF ASSETS. The tangible assets of the Company
necessary for the conduct of the Business after the Closing in substantially the
same manner as heretofore are in a reasonable state of repair and operating
condition except for ordinary wear and tear, and are suitable for the uses for
which intended.
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SECTION 3.17 ACCOUNTS AND NOTES RECEIVABLE; ACCOUNTS PAYABLE. (a) The
accounts and notes receivable reflected on the Interim Balance Sheet and all
accounts and notes receivable arising between March 31, 1997 and the Closing
Date arose or will arise from bona fide transactions in the ordinary course of
the Business. The reserves for doubtful accounts provided in the Interim
Balance Sheet are adequate reserves under generally accepted accounting
principles. Except as set forth on Schedule 3.17(a) or reflected as a liability
----------------
or reserve on the Interim Balance Sheet: (i) no counterclaims or offsetting
claims with respect to any material amount of the outstanding receivables have
been asserted or, to the best knowledge of Manfredi, threatened; and (ii) such
receivables are collectible at their face amounts.
(b) The Company has heretofore delivered to La-Man a schedule of
the Company's accounts payable as of March 31, 1997 ("Accounts Payable
Schedule"), which schedule shall be accurate in all material respects as of the
Closing Date except for changes since March 31, 1997 resulting from the conduct
of the Business in the ordinary course. Except as otherwise specified on
Schedule 3.17(b), the accounts payable of the Company are and as of the Closing
- ----------------
Date will be current and bona fide obligations incurred in the ordinary course
of the Business payable when due after the Closing Date without penalty or
increase in amount, except for such non-current accounts as will not cause the
Company to incur any penalties or increases in the amounts payable. Except as
otherwise set forth on Schedule 3.17(b), no supplier of goods, products or
----------------
services to the Company is withholding the fulfillment of any orders by the
Company for goods, products or services or, to the knowledge of Manfredi, is
threatening to withhold fulfillment of any such orders or to institute any
Litigation against the Company, as the result of the nonperformance by the
Company of any of its obligations to such supplier.
(c) The Company has entered into certain agreements with certain
unsecured creditors of the Company listed on Schedule 3.17(c) hereto, pursuant
----------------
to which such creditors have agreed to settle the obligations of the Company to
them specified on Schedule 3.17(c) for the settlement amounts specified on such
----------------
schedule, provided such creditors receive such settlement amounts on or before
July 1, 1997. To the knowledge of Manfredi and the Company, all such settlement
agreements are the valid, binding and enforceable obligations of those unsecured
creditors who are parties thereto.
SECTION 3.18 BOOKS AND RECORDS. The corporate books and records of the
Company are accurate in all material respects. The stock transfer records of
the Company are true and complete and reflect all issues and transfers of the
capital stock of the Company to date. The corporate records of the meetings of
the directors and shareholders of the Company as contained the Company's minute
books, reflect corporate actions and proceedings of such bodies to date. The
Company has made true and complete copies of such stock transfer records and
minute books available to La-Man and its counsel.
SECTION 3.19 COMPLIANCE WITH LAWS. The Company has complied in all
material respects with, and is not in default in any material respect under, any
applicable Laws. Except as set forth in Schedule 3.19, the Company has not
-------------
received notice of any violation or alleged
13
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violation of any applicable Law relating to the Business or the Company's
assets, and neither Manfredi nor the Company is aware of any basis for any such
claimed violation.
SECTION 3.20 PERMITS.
(a) Except as set forth on Schedule 3.20, there are no Permits
-------------
necessary for the operation of the Business after the Closing Date in
substantially the manner as presently conducted.
(b) The Permits specified in Schedule 3.20 are included in the
-------------
assets of the Company and no Consent of any Person is required with respect to
the consummation of the transactions contemplated by this Agreement and the
performance by the Company of its obligations in connection therewith.
SECTION 3.21 CONDUCT OF BUSINESS. Except as set forth in Schedule 3.21 or
-------------
in other schedules to this Agreement (but only to the extent expressly cross-
referenced in Schedule 3.21), since March 31, 1997 the Company has not, with
-------------
respect to the Business or otherwise:
(a) suffered the occurrence of any Material Adverse Change;
(b) mortgaged, pledged, or subjected to any Encumbrance any
assets or properties;
(c) sold, transferred, or leased any assets or properties,
except in the ordinary course of the Business;
(d) cancelled or compromised any debt or claim except for
adjustments made with respect to contracts for the purchase or sale of products
or services in the ordinary course of the Business, which in the aggregate are
not material;
(e) waived or released any rights of any material value;
(f) with respect to the employees of the Company, granted any
bonuses or special payments other than those, if any, required by Law and
commissions or bonuses paid in the ordinary course of the Business;
(g) declared any dividend or made any payment or distribution to
stockholders or redeemed any of its outstanding shares of capital stock;
(h) issued or sold any shares of its capital stock or any other
securities, or granted any options for the purchase of any shares of its capital
stock or other securities;
(i) entered into any transaction with Manfredi or any other
Affiliate of the Company other than in the ordinary course of the Business;
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(j) entered into any other material transaction other than in
the ordinary course of the Business; or
(k) made any material change in accounting practices customarily
followed by it.
SECTION 3.22 DOCUMENTS PROVIDED. No statement contained herein or in any
of the Ancillary Documents contains any untrue statement of material fact or
omits to state any material fact required to make the statements therein not
misleading.
SECTION 3.23 ACCOUNTING RECORDS. Except as previously disclosed by
Company to La-Man, the accounting records of the Company are in all material
respects correct, are maintained in accordance with good business practices and
are accurately reflected in the financial statements referred to in Section 3.9
hereof.
SECTION 3.24 BROKERAGE AND FINANCIAL ADVISERS; OTHER FEES. No broker,
finder or financial adviser has acted directly or indirectly as such for, or is
entitled to any compensation from, Manfredi, the Company or any of their
Affiliates in connection with this Agreement or the transactions contemplated
hereby. Except as set forth on Schedule 3.24, no employee, officer or director
-------------
of the Company or any of its Affiliates is entitled to any compensation from the
Company or any of its Affiliates in connection with this Agreement or the
transactions contemplated hereby.
SECTION 3.25 FACILITIES. The offices owned, operated, or leased by the
Company and included in its assets are in reasonable condition and repair
(ordinary wear and tear which are not such as to affect the operation of its
Business excepted) and are suitable to meet current operating requirements.
SECTION 3.26 NO INTEREST IN PROPERTIES; COMPETITORS. Except as disclosed
on Schedule 3.26, no director, officer or, to the knowledge of Manfredi or the
-------------
Company, employee of the Company directly or indirectly: (i) owns any interest
in any of the assets or properties of the Company; (ii) owns any interest in,
controls, or is an employee, officer, director, or agent of, or consultant to
any other entity which is a competitor, supplier, customer, landlord, or tenant
of the Company; or (iii) owns, holds, or has guaranteed any obligation or debt
of the Company.
SECTION 3.27 ADVERSE FACTORS. Except as set forth in this Agreement or
disclosed in or on the Schedules hereto, neither Manfredi nor the Company has
any knowledge of any present or future condition or state of facts or
circumstances which would have a material adverse effect on the Business, or the
financial condition or operations of the Company, or which could prevent the
Business from being carried on after the consummation of the transactions
contemplated by this Agreement in essentially the same manner as presently
carried on. The foregoing is not intended as a representation and warranty that
the financial condition, results of operations or
15
<PAGE>
properties of the Company or the Business may not be adversely affected in the
future by interest rate fluctuations, supply shortages, changes in national and
local economic conditions and similar unforeseeable factors beyond the control
of the Company.
SECTION 3.28 TRANSACTIONS WITH AFFILIATES. Schedule 3.28 sets forth a
-------------
list of (a) all loans, advances or other monetary obligations or liabilities of
the Company to Manfredi, any former shareholders of the Company and any
relatives of Manfredi or any former shareholder of the Company, (b) all loans,
advances or other monetary obligations or liabilities of Manfredi or any former
shareholder of the Company or any of their relatives to the Company, (c) all
assets and properties (if any) of Manfredi or any of his relatives used by the
Company in the conduct of the Business, (d) all assets and properties of the
Company having a value in excess of $5,000 in the possession of Manfredi or any
of his relatives and (e) all transactions (other than those already disclosed on
Schedule 3.28) since January 1, 1996 between or among the Company and Manfredi
- -------------
or any of his relatives not in the ordinary course of business.
SECTION 3.29 NECESSARY ASSETS. The Company owns or leases all assets and
properties necessary for the conduct of the Business after the Closing Date in
substantially the same manner as presently conducted.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF LA-MAN
La-Man hereby represents and warrants to Manfredi as follows:
SECTION 4.1 ORGANIZATION, STANDING AND AUTHORITY. La-Man is a
corporation duly organized and existing under the laws of the State of Nevada,
and its status is active, and has all requisite corporate power and authority to
own, lease and operate its assets and property and to carry on its business and
operations related thereto as heretofore conducted.
SECTION 4.2 AUTHORITY; BINDING EFFECT; NO VIOLATION. La-Man has the
requisite power and authority to execute, deliver, and perform this Agreement
and all La-Man Ancillary Documents and to consummate the transactions
contemplated hereby and thereby. Such execution, delivery, and performance have
been duly authorized by the Finance Committee of the Board of Directors of La-
Man and no other corporate action or proceeding on the part of La-Man is
necessary to authorize such execution, delivery, and performance and the
consummation of the transactions contemplated hereby. Such execution, delivery,
and performance do not require the Consent of any Person which is not provided
for in this Agreement and do not and will not contravene or violate (with or
without the giving of notice or the passage of time or both), the La-Man
Governing Instruments or any Order applicable to La-Man. This Agreement is, and
each of the La-Man Ancillary Documents on the Closing Date will be, the valid
and binding obligation of La-Man enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or moratorium or other similar Laws affecting the enforcement of
creditors' rights generally, and the availability of equitable remedies may be
limited by equitable principles of general applicability.
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SECTION 4.3 BROKERAGE AND FINANCIAL ADVISERS. No broker, finder or
financial adviser has acted directly or indirectly as such for, or is entitled
to any compensation from, La-Man or any of its Affiliates in connection with
this Agreement or the transactions contemplated hereby.
SECTION 4.4 NO CONFLICT OR VIOLATION. The execution, delivery and
performance by La-Man of this Agreement and each of the La-Man Ancillary
Documents does not, and the consummation of the transactions contemplated hereby
or thereby will not, with or without the giving of notice or the lapse of time
or both:
(a) violate in any material respect any provision of any Law;
(b) conflict with or result in a violation or breach of, or
constitute or result in a default under, any of the terms, conditions or
provisions of: (i) the La-Man Governing Instruments, (ii) any Order of any
Agency to which La-Man is subject or by which it or any of its assets, property
or business is bound or (iii) any Permit held by La-Man or by which it or any of
its assets, properties or business is bound;
(c) require any Consent of or filing with or giving of notice to
any Agency or any other Person not a party to this Agreement; or
(d) violate, or be in conflict with or constitute a default
under, or permit the termination of any provision of or result in the
acceleration of (or give the right to accelerate) the maturity or performance of
any obligation of La-Man or result in the creation or imposition of any
Encumbrance upon any of its assets, properties or business under any Contract to
which La-Man is a party or by which any of its assets, property or business is
bound.
ARTICLE 5. COVENANTS OF THE PARTIES
SECTION 5.1 PERMITS AND CONSENTS. The parties shall take all reasonable
steps as may be necessary or desirable to facilitate the obtaining of, and shall
use their best efforts and cooperate fully with the other parties hereto in
obtaining, any Consents or Permits which may be required to be obtained pursuant
to any Contracts or Laws or in connection with the consummation of the
transactions contemplated by this Agreement or the performance of their
respective obligations hereunder.
SECTION 5.2 PERFORMANCE OF ACTS; COOPERATION. Subject to the terms and
conditions of this Agreement, each party hereto shall perform all acts and
execute and deliver all documents reasonably required to consummate the
transactions contemplated by this Agreement. Each party shall cooperate with
the other parties hereto in assuring an orderly transition of ownership of the
Company and the Business and in otherwise implementing the transactions
contemplated by this Agreement.
17
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SECTION 5.3 NOTIFICATION OF CERTAIN MATTERS. Manfredi on the one hand,
and La-Man on the other hand, shall give prompt written notice (a "Special
Notice") to the other in the event it obtains knowledge of the occurrence, or
failure to occur, of any event which would cause or be likely to cause a breach
of any of their respective representations, warranties, covenants or agreements
contained in this Agreement or any Ancillary Documents. For a period of five (5)
days after giving or receiving a Special Notice, Manfredi, or La-Man, as the
case may be, shall have the right to cure, if there is a reasonable possibility
of curing, any such breach or potential breach.
SECTION 5.4 SURVIVAL OF COVENANTS. The covenants contained in this
Article 5 shall survive the Closing.
ARTICLE 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS; EXPENSES AND INDEMNIFICATION
SECTION 6.1 SURVIVAL. All representations and warranties contained in
this Agreement and the Ancillary Documents shall survive for a period of three
(3) years after the Closing Date unless a claim for indemnification shall be
made with respect thereto prior to the end of such period, in which case such
representation or warranty with respect to such claim shall survive until such
claim is satisfied, settled or dismissed; provided, however, that the
representations and warranties contained in Sections 3.1, 3.2, 3.3, 3.6, 3.8,
3.10, 3.11, 3.13, 3.15 and 3.19 shall survive until the expiration of the
applicable statute of limitations. The covenants and agreements set forth in
this Agreement and the Ancillary Documents shall survive the Closing and shall
continue until all obligations set forth herein shall have been performed or
satisfied or they shall have terminated in accordance with their terms.
SECTION 6.2 EXPENSES.
(a) Whether or not the transactions contemplated by this
Agreement are consummated, each party hereto shall pay all of such party's own
fees and expenses incident to the negotiation, preparation and execution of this
Agreement, including the fees and expenses of such party's own legal counsel,
accountants and other advisors.
(b) La-Man shall pay all sales or other transfer, stamp or
similar taxes incurred in connection with the sale and transfer of the Manfredi
Shares to La-Man.
SECTION 6.3 INDEMNIFICATION OF LA-MAN. From and after the Closing Date
and subject to the provisions of Section 6.1, Manfredi shall indemnify and hold
La-Man and its respective directors, officers, employees, agents and affiliates
(each a "La-Man Protected Party") harmless from and against any and all damages,
losses, deficiencies, liabilities, obligations, commitments, costs or expenses
of any kind or nature (including legal and other expenses reasonably incurred in
investigating and defending against the same) ("Reimbursable Amounts") incurred
by any La-Man Protected Party resulting directly or indirectly from:
18
<PAGE>
(a) any alleged untrue statement contained in any of the
representations and warranties made by Manfredi and the Company in Article 3 of
this Agreement or in any Ancillary Documents; and
(b) any failure to comply with any of the covenants or
agreements of Manfredi and the Company contained in this Agreement or any
Ancillary Documents.
SECTION 6.4 INDEMNIFICATION OF MANFREDI. From and after the Closing Date
and subject to the provisions of Sections 6.1, La-Man shall indemnify and hold
Manfredi harmless from and against any and all Reimbursable Amounts incurred by
any resulting directly or indirectly from:
(a) any alleged untrue statement contained in any of the
representations and warranties made by La-Man in this Agreement or in any La-Man
Ancillary Documents; or
(b) any failure by La-Man to comply with the covenants or
agreements of La-Man contained in this Agreement or in any La-Man Ancillary
Documents.
SECTION 6.5 INDEMNIFICATION FOR THIRD PARTY CLAIMS. The following
procedures shall be applicable with respect to indemnification for third party
claims arising in connection with any provision of this Article 6.
(a) Promptly after receipt by the party seeking indemnification
hereunder (an "Indemnitee") of written notice of the assertion or the
commencement of any claim, liability or obligation by a third party, whether by
legal process or otherwise (a "Claim"), with respect to any matter referred to
in Section 6.3 or Section 6.4 hereof, as the case may be, the Indemnitee shall
give written notice thereof (the "Notice") to the person from whom
indemnification is sought pursuant hereto (an "Indemnitor") and shall thereafter
keep the Indemnitor reasonably informed with respect thereto, provided that
failure of the Indemnitee to give the Indemnitor prompt notice as provided
herein shall not relieve the Indemnitor of its obligations hereunder unless such
failure alone and not in conjunction with other factors results in (i) a default
judgment, (ii) the expiration of the time to answer a complaint, or (iii) the
inability of the Indemnitee to adequately defend against such Claim. In case
any such Claim is brought against any Indemnitee, the Indemnitor shall be
entitled to assume the defense thereof, by written notice of its intention to
the Indemnitee within thirty (30) days after receive of the Notice, with counsel
reasonably satisfactory to the Indemnitee at the Indemnitor's own expense.
Notwithstanding the assumption by the Indemnitor of the defense of any Claim as
provided in this Section 7.5(a), the Indemnitee shall be permitted to join in
the defense of such claim and to employ counsel at its own expense.
(b) If the Indemnitor shall fail to notify the Indemnitee of its
desire to assume the defense of any such Claim within the prescribed period of
time, or shall notify the Indemnitee that it will not assume the defense of any
such Claim, then the Indemnitee shall assume the defense of any such Claim, in
which event it may do so in such manner as it may
19
<PAGE>
deem appropriate. The Indemnitor shall be permitted to join in the defense of
such Claim and to employ counsel at its own expense.
(c) No Indemnitee shall make any settlement of any Claim which
would give rise to liability on the part of an Indemnitor hereunder without the
written consent of the Indemnitor, which consent shall not be unreasonably
withheld. If a firm written offer is made to settle a Claim and the Indemnitor
desires to accept such settlement offer, but the Indemnitee elects not to
consent thereto, then the Indemnitee may continue to contest or defend such
Claim; provided, however, that the total maximum liability of the Indemnitor to
indemnify or otherwise reimburse the Indemnitee in accordance with this
Agreement with respect to such Claim shall be limited to and shall not exceed
the amount of the settlement offer rejected by the Indemnitee, plus reasonable
out-of-pocket costs and expenses (including attorneys' fees) to the date of
notice that the Indemnitor desires to accept such settlement offer.
(d) Amounts payable by an Indemnitor to an Indemnitee under
Section 6.3 or Section 6.4 hereof, as the case may be, shall be payable by the
Indemnitor as incurred by the Indemnitee.
ARTICLE 7. NON-COMPETITION COVENANT
SECTION 7.1 NON-COMPETITION. For a period of 24 consecutive months
following the Closing Date, except as otherwise approved in writing by La-Man,
Manfredi shall not, directly or indirectly and whether as principal, agent,
officer, director, employee, consultant or otherwise, alone or in association
with any other Person, carry on, be engaged in, take part in, render services
to, or own, share in the earnings of, or invest in the Securities of, any Person
which is engaged in any state or territory in the United States in any business
operations or activities in competition with or otherwise in whole or in part
similar to the Business ("Similar Business"); provided, however, that the
foregoing shall not be deemed to preclude Manfredi from investing in securities
of any Person engaged in any Similar Business (but without otherwise
participating in such Similar Business) if (a) such Securities are listed on any
national securities exchange or are registered under Section 12(g) of the
Exchange Act, (b) such investment does not exceed, in the case of any class of
securities of any one issuer, 2.0% of such issued and outstanding securities of
such issuer, and (c) such investment would not directly or indirectly prevent
the transaction of business by the Company, La-Man or any their Affiliates in
any state, district, territory or possession of the United States or any
governmental subdivision, agency or instrumentality thereof by virtue of any
Law.
SECTION 7.2 SCOPE; ENFORCEABILITY. Manfredi covenants and agrees that:
(a) this non-competition covenant is reasonable in scope, geographic area and
duration; (b) if such non-competition covenant is breached prior to the
completion of the 24-month period referred to above, such term shall begin anew,
immediately following such breach; and (c) the actual damages which La-Man may
sustain in the event of any such breach are difficult or impossible to ascertain
and that, in the event of such breach, La-Man shall be entitled to enforce its
rights hereunder by specific performance or by other action at law or in equity.
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ARTICLE 8. MISCELLANEOUS
SECTION 8.1 PUBLICITY. Except as may otherwise be required by law, no
publicity, release or announcement concerning this Agreement or the transactions
contemplated hereby shall be made without advance approval thereof by Manfredi
and La-Man.
SECTION 8.2 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission (provided acknowledgment of
receipt thereof is delivered to the sender) or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission or,
if mailed, three days after the date of deposit in the United States mails as
follows:
(i) If to Manfredi, to:
24 Canterclub Court
Debary, FL 32713
(ii) If to the Company, to:
Certified Maintenance Service, Inc.
754 Monroe Road
P.O. Box 471208
Lake Monroe, Florida 32747-7780
Attention: J. William Brandner
Vice President
with a copy to:
Marshall S. Harris, Esq.
Broad and Cassel
390 North Orange Avenue, Suite 1100
Orlando, Florida 32801
(iii) If to La-Man to:
La-Man Corporation
5029 Edgewater Drive
Orlando, Florida 32810
Attention: Mr. J. William Brandner
President and Chief Executive Officer
21
<PAGE>
with a copy to:
Marshall S. Harris, P.A.
Broad and Cassel
390 North Orange Avenue, Suite 1100
Orlando, Florida 32801
or such other address as any of the above shall have specified by notice
hereunder.
SECTION 8.3 AMENDMENT; EXTENSION; WAIVER.
(a) This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
(b) No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action of compliance with any agreement or
condition contained herein or in any Ancillary Document. The waiver by any
party hereto of any condition or of a breach of any other provision of this
Agreement or any Ancillary Document shall not operate or be construed as a
waiver of any other condition or any other provision or subsequent breach. The
waiver by any party of any of the conditions precedent to its obligations under
this Agreement shall not preclude it from seeking redress for breach of this
Agreement other than with respect to the condition so waived. All rights and
remedies of any party to this Agreement shall be cumulative and concurrent and
may be exercised singularly, successively or concurrently, at the sole
discretion of such party and may be exercised as often as occasion therefor may
exist.
SECTION 8.4 GOVERNING LAW; VENUE. This Agreement shall be governed by
and construed in accordance with the laws of the State of Florida, without
giving effect to the principles of conflicts of laws thereof. Each of the
parties hereto agrees that any suit, action or proceeding with respect to this
Agreement shall be brought against it in any state or federal court of competent
jurisdiction in Orange County, Florida and irrevocably waives any (a) right of
immunity that such party may now have or hereafter acquire from service of
process or the jurisdiction of the aforesaid courts and (b) any objection that
such party may now have or hereafter acquire to the laying of venue of any such
suit, action or proceeding in any such court. The parties hereby irrevocably
accept and submit themselves to the jurisdiction of such courts in any such
suit, action or proceeding, and agree that final judgment (with the exhaustion
of all appeals) shall be conclusive and binding in any jurisdiction in which
such party resides or owns property.
SECTION 8.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns and legal representatives. Neither this Agreement, nor any
right hereunder, may be assigned by any party hereto without the prior written
consent of the other parties hereto.
22
<PAGE>
SECTION 8.6 CONFIDENTIALITY OF INFORMATION AND DOCUMENTS. If this
Agreement terminates and the transactions contemplated hereby are not
consummated as described above, the parties hereto shall keep confidential and
shall not use in any manner any information or documents obtained from the other
parties unless ordered to do so by a court, governmental or regulatory body
having jurisdiction in the premises, or unless such information is readily
ascertainable from public or published information, or trade sources, or is
already known or subsequently developed by such party independently, or was
received from a third party not under an obligation to such other party or any
of its affiliates to keep such information confidential.
SECTION 8.7 SEVERABILITY. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable Laws. If
any provision of this Agreement or the application thereto to any Person or
circumstances shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by Law.
SECTION 8.8 ENTIRE AGREEMENT. This Agreement and the Ancillary Documents
constitute the entire agreement and understanding among La-Man, the Company and
Manfredi with respect to the subject matter hereof and thereof and supersede any
and all other agreements, arrangements and understandings among the parties with
respect to such subject matter, and no agreements, arrangements, understandings,
representations or warranties with respect to such subject matter shall be
binding upon any of the parties unless specified herein or therein.
SECTION 8.9 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended or shall be construed to give any person, other than the parties
hereto, and their successors and assigns in accordance with Section 8.5, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any Ancillary Documents or any provision contained herein.
SECTION 8.10 COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
SECTION 8.11 EXHIBITS AND SCHEDULES. The Exhibits and the Schedules to
this Agreement are a part of this Agreement as if fully set forth herein. All
references herein to Articles, Sections, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
SECTION 8.12 HEADINGS. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.
23
<PAGE>
SECTION 8.13 EXPENSES. Except as otherwise specifically provided herein,
the parties to this Agreement shall bear their respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the transactions contemplated hereby, including, without limitation, all fees
and expenses of agents, representatives, counsel, actuaries and accountants.
SECTION 8.14 ACTIONS BY AFFILIATES. To the extent that this Agreement
requires action to be taken by affiliates of the Company or La-Man, the parties
hereby agree to cause such action to be taken.
SECTION 8.15 RULES OF CONSTRUCTION.
(a) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number, and words of the masculine gender shall include the feminine
and the neuter, and, when the sense so indicates, words of the neuter gender may
refer to any gender.
(b) For purposes of this Agreement, the Company shall be
considered an affiliate of Manfredi with respect to the period prior to the
Closing, and an affiliate of La-Man with respect to the period after the
Closing.
(c) All references herein to dollar amounts are in United States
dollars and all references herein to generally accepted accounting principles
are to those in effect in the United States as of the date hereof.
(d) The terms "herein", "hereunder" and similar terms refer to
this Agreement generally and not to any one Article or Section.
(e) Any representations and warranties of the Company set forth
herein containing the phrase "to the knowledge of the Company" shall mean,
include and refer to such knowledge as may be possessed by the directors and
officers of the Company.
(f) All provisions in this Agreement requiring any party hereto
to use its best efforts, to cooperate with the other parties hereto, and to take
such action as may be reasonably necessary to achieve a particular result shall
not be construed to require such party to expend or agree to expend any funds,
or to agree to any increase in amounts otherwise payable by such party pursuant
to any contractual obligations or applicable Law, except as otherwise specified
in this Agreement.
(g) In the event that any representation of fact, belief or
opinion or any other statement contained in any schedule to this Agreement is
deemed to conflict or be inconsistent with the terms and provisions of this
Agreement, the terms and provisions of this Agreement shall govern.
24
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly signed by or on behalf of
each of La-Man, the Company and Manfredi all on the date first above written.
LA-MAN CORPORATION
By: _______________________________
Title: _____________________________
CERTIFIED MAINTENANCE SERVICE, INC.
By: _______________________________
Title: ______________________________
__________________________________
MARK MANFREDI
25
<PAGE>
EXHIBIT 10.40
IRREVOCABLE LETTER OF CREDIT
----------------------------
IRREVOCABLE LETTER OF CREDIT NO. SB-1326
OF SOUTHTRUST BANK, NATIONAL ASSOCIATION
August 28, 1997
SouthTrust Bank,
National Association
as Trustee under the Indenture
referenced below
Ft. Lauderdale, Florida
TO WHOM IT MAY CONCERN:
1. For the account of La-Man Corporation, (the "Issuer"), we hereby
authorize you to draw on us at sight, as hereinafter provided, an amount not
exceeding $2,570,000 (such amount, as reduced from time to time pursuant to
paragraph 6 below and as reinstated from time to time pursuant to paragraphs 10
and 11 below, being herein called the "Credit Amount").
2. This Letter of Credit is irrevocable and is issued to you, as trustee
under the Trust Indenture dated as of August 1, 1997 (the "Indenture"), between
you and the Issuer, pursuant to which Indenture $2,500,000 in aggregate
principal amount of the Issuer's Variable/Fixed Rate Credit Enhanced Notes (the
"Notes") are being issued. This Letter of Credit is issued pursuant to a Credit
and Security Agreement dated as of August 1, 1997 (the "Credit Agreement")
between the undersigned and the Issuer. Subject to paragraph 20 hereof,
capitalized terms used herein without definition shall have the respective
meanings assigned to them in the Indenture.
3. Of the Credit Amount, up to $2,500,000, which is an amount equal to
the principal amount of the Notes (the "Principal Portion"), may be drawn with
respect to payment of the unpaid principal amount of the Notes (whether due at
maturity, or upon acceleration, or optional or mandatory redemption, or
otherwise), or payment of the principal portion of the purchase price of Notes
tendered (or deemed tendered) to you for purchase in accordance with the
optional or mandatory tender provisions of the Indenture ("Tendered Notes"), and
up to $70,000, which is an amount equal to interest on the Notes at the rate of
18% per annum for a period of 56 days, computed on the basis of a 360-day year
(the "Interest Portion"), may be drawn with respect to payment of accrued but
unpaid interest on the Notes, or payment of the interest portion of the purchase
price of Tendered Notes. This Letter of Credit does not apply to any interest
that may accrue on the Notes after the Notes become due (whether by maturity,
<PAGE>
redemption, acceleration or otherwise), or to any premium due upon redemption of
the Notes, or to the principal of or interest or redemption premium on any
Pledged Notes.
4. Funds under this Letter of Credit are available to you against your
sight draft(s), drawn on us, stating on their face: "Drawn under SouthTrust
Bank, National Association Irrevocable Letter of Credit No. SB-1326" accompanied
by your written certificate signed by your authorized officer, appropriately
completed, in the form of Appendix A, B or C hereto, as indicated below.
Presentation of such drafts and certificates shall be made at our office located
at
SouthTrust Bank,
National Association
SouthTrust Tower
420 North 20th Street
Birmingham, Alabama 35203
Attn: International Department
or at any other office which may be designated by us by written notice delivered
to you (the office address specified above and any other office so designated by
us being herein called our "Principal Office") or transmittal by facsimile to
205/254-4240 or such other facsimile number as we shall specify by written
notice to you. We hereby agree that each draft drawn under and in compliance
with the terms of this Letter of Credit will be duly honored by us with our own
funds upon due delivery of the certificates, as specified below, if so presented
or so transmitted by facsimile on or before the expiration date hereof.
5. If a drawing is made by you hereunder at or prior to 11:00 a.m. (Ft.
Lauderdale, Florida time) on a Business Day, and provided that the documents so
presented conform to the terms and conditions hereof, payment shall be made to
you, or to your designee, of the amount specified, in immediately available
funds, not later than 12:00 p.m. (Ft. Lauderdale, Florida time) on the same
Business Day. If a drawing is made by you hereunder after 11:00 a.m. (Ft.
Lauderdale, Florida time) on a Business Day, and provided that the documents so
presented conform to the terms and conditions payment shall be made to you, or
to your designee, of the amount specified, in immediately available funds, not
later than 1:00 p.m. (Ft. Lauderdale, Florida time) on the next succeeding
Business Day. Payment under this Letter of Credit may be made by deposit of
immediately available funds into a designated account that you maintain with us.
As used herein "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the city where our Principal Office is
located are authorized or required by law to close or a day on which the payment
system of the Federal Reserve is not operational.
6. Multiple drawings may be made hereunder, provided that drawings
honored by us hereunder shall not, in the aggregate, exceed the Credit Amount.
The Credit Amount shall be reduced as follows:
Page 2
<PAGE>
(a) Payment by us of drawings with respect to principal due upon
maturity, redemption or acceleration of the Notes shall pro tanto reduce the
Principal Portion of the Credit Amount, without reinstatement.
(b) Payment by us of drawings with respect to interest due on the
Notes shall pro tanto reduce the Interest Portion of the Credit Amount, subject
to reinstatement as provided in paragraph 10 below.
(c) Payment by us of drawings with respect to the purchase of
Tendered Notes shall pro tanto reduce the Principal Portion of the Credit
Amount, to the extent of the principal portion of the purchase price so drawn,
and shall pro tanto reduce the interest Portion of the Credit Amount, to the
extent of the interest portion of the purchase price so drawn, in each case
subject to reinstatement as provided in paragraph 11 below.
(d) At any time after the principal amount of the Notes outstanding
is reduced as a result of payment of the principal of Notes due upon maturity or
redemption, the Interest Portion of the Credit Amount shall be reduced to the
maximum amount of interest that would be payable on the Notes then outstanding
for a period of 56 days at the rate of 18% per annum, computed on the basis of a
360-day year (the "Maximum Interest Coverage"). Each certificate delivered in
connection with a drawing to pay principal due upon maturity, redemption, or
acceleration of the Notes shall specify the Maximum Interest Coverage which will
be in effect upon our payment of the amount so drawn. Upon receipt by us of such
notice from you, and our payment of the principal amount so drawn, the Interest
Portion of the Credit Amount shall be reduced to the Maximum Interest Coverage
so certified by you. The Interest Portion of the Credit Amount shall not
thereafter be increased or reinstated to an amount in excess of such Maximum
Interest Coverage. If, on the date of such reduction the Interest Portion of the
Credit Amount then available for drawing hereunder is less than the Maximum
Interest Coverage (as a result of draws against the Interest Portion for which
no reinstatement has become effective), the Interest Portion shall not
thereafter be increased or reinstated to an amount greater than the Maximum
Interest Coverage.
7. For drawings under the Principal Portion to pay principal of the Notes
due upon maturity, redemption or acceleration, your drafts must be accompanied
by your written certificate in the form of Appendix A signed by your authorized
signatory and appropriately completed (an "A Drawing").
8. For drawings under the Interest Portion to pay the interest on the
Notes, your drafts must be accompanied by your written certificate in the form
of Appendix B signed by your authorized signatory and appropriately completed (a
"B Drawing").
9. For drawings under the Principal Portion and (if applicable) the
Interest Portion to pay the purchase price of Tendered Notes, your drafts must
be accompanied by your written certificate in the form of Appendix C signed by
your authorized signatory and appropriately completed (a "C Drawing").
Page 3
<PAGE>
10. At the close of business on the 10th calendar day following payment by
us of any B Drawing hereunder, the Interest Portion of the Credit Amount will be
automatically reinstated by the amount of such B Drawing unless prior to the
close of business in Ft. Lauderdale, Florida on the 10th calendar day following
payment of such B Drawing you shall receive written notice from us that the
Interest Portion has not been reinstated or that any other "Event of Default",
as defined in the Credit Agreement, has occurred and is continuing; provided,
however, that the Interest Portion shall never be reinstated to an amount in
excess of the Maximum Interest Coverage, as certified in the most recent notice
with respect to Maximum Interest Coverage received by us pursuant to paragraph 6
above.
11. Upon receipt by us of reimbursement in full of amounts due to us
because of a C Drawing with respect to any Tendered Note or Notes, we shall
promptly notify you that we have been so reimbursed and that the Credit Amount
has been reinstated by the amount of the C Drawing with respect to such Tendered
Note or Notes (such notice is herein called a "Reimbursement Notice" and shall
be in the form of Appendix D), where upon (i) the Principal Portion shall be
reinstated by the amount of the principal portion of the purchase price of such
Tendered Note or Notes, which shall be designated in our Reimbursement Notice to
you, and (ii) the Interest Portion shall be reinstated by the amount of the
interest portion of the purchase price of such Tendered Note or Notes, which
shall be designated in our Reimbursement Notice to you; provided, however, that
the Interest Portion shall never be reinstated to an amount in excess of the
Maximum Interest Coverage, as certified in the most recent notice with respect
to Maximum Interest Coverage received by us pursuant to paragraph 6 above. If we
receive reimbursement for the purchase price of less than all Notes with respect
to which a C Drawing has been made, our Reimbursement Notice shall designate the
aggregate principal amount of, and certificate numbers (if applicable), of,
Notes with respect to which we have been reimbursed. Notes with respect to which
you receive a Reimbursement Notice from us, as provided in this paragraph, shall
no longer be considered "Pledged Notes" for purposes of the Indenture and the
Credit Agreement.
12. Reductions of the Credit Amount provided for in paragraph 6 above
shall reduce the amounts which you may draw hereunder notwithstanding:
(a) the fact that such reduction is the result of a payment under
this Letter of Credit against presentation of a sight draft or certificate which
does not substantially comply with the terms of this Letter of Credit (including
without limitation (i) the fact that any draft or certificate presented upon
this Letter of Credit (or any endorsement thereon) proves to be forged,
fraudulent, invalid, unenforceable or insufficient in any respect or any
statement therein is inaccurate in any respect whatever or (ii) the failure of
any document to bear referenced, or to bear adequate reference, to this Letter
of Credit);
(b) the use to which this Letter of Credit may be put or any acts
or omissions of the Trustee in connection therewith; or
Page 4
<PAGE>
(c) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing, in making payment under this Letter of Credit;
provided that such payment shall not constitute gross negligence or willful
misconduct by us. In furtherance and not in limitation of the foregoing, we may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
13. Only you, as Trustee under the Indenture, and your successors as
provided in paragraph 15 below, may make a drawing under this Letter of Credit.
Upon the payment to your or your account of the amount specified in sight drafts
drawn hereunder, we shall be fully discharged of our obligation under this
Letter of Credit with respect to such sight drafts and we shall not thereafter
be obligated to make any further payments under this Letter of Credit in respect
of such sights drafts to you or any other person who may have made or makes a
demand for payment of principal or interest with respect to any Note.
14. This Letter of Credit shall be effective immediately and shall
automatically terminate upon the earliest of:
(a) the making by you of the final drawing available to be made
hereunder,
(b) our receipt of a certificate in the form of Appendix E hereto
appropriately completely and purportedly signed by your duly authorized
signatory,
(c) fifteen (15) days after receipt by you of written notice from us
that an "Event of Default", as defined in the Credit Agreement, has occurred and
is continuing, unless on such date an injunction or a restraining order is in
effect with respect to this Letter of Credit whereupon this Letter of Credit
shall remain in full force and effect until 15 days after the termination of
such injunction or restraining order,
(d) fifteen (15) days after receipt by you of written notice from us
that the Interest Portion will not be reinstated pursuant to the provisions
hereof,
(e) the date on which the principal amount of and interest on the
Notes shall have been paid in full,
(f) fifteen (15) days after a Conversion Date (as defined in
the Indenture),
(g) the date this Letter of Credit is surrendered to us for
cancellation, or
(h) our close of business on August 15, 2000, at our counter unless,
at our sole option, we deliver to you a written amendment signed by an
authorized signer
Page 5
<PAGE>
(specifically referring to "SouthTrust Bank, National Association Irrevocable
Letter of Credit No. SB-1326") extending the effectiveness of this Letter of
Credit to the date set forth in such amendment, in which case this letter of
Credit shall expire on such date unless further extended by further authorized
amendment, it being understood that we shall be under no obligation to grant any
such extension.
Upon the expiration of this Letter of Credit you shall immediately deliver the
same to us for cancellation.
15. You may transfer your rights in their entirety (but not in part) to
any transferee who has succeeded you as trustee under the Indenture, and such
transferred rights may be successively transferred. Such transfer shall be
effected upon the presentation to us of this Letter of Credit accompanied by a
transfer letter in the form attached hereto as Appendix F. Upon presentation of
such documents to us, we shall forthwith issue an irrevocable letter of credit
to your transferee with provisions consistent with this Letter of Credit.
16. This credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500 (the "Uniform Customs") except that Article 13(b) and
Article 17 of the Uniform Customs shall not be included in this reference to the
Uniform Customs and shall not apply hereto. This Letter of Credit shall be
deemed to be a contract made under the laws of the State of Florida and shall,
as to matters not governed by the Uniform Customs, be governed by and construed
in accordance with the laws of such State.
17. All documents, notices and other communications (hereinafter
"documents") provided or permitted by this Letter of Credit to be given or
presented to us shall be delivered to us at our Principal Office or shall be
sent to us by facsimile transmission to 205/254-4285 or such other facsimile
number as we shall specify by written notice to you, followed immediately by
original documents to our Principal Office, in each case to the specific
attention of the International Department. For purposes of this Letter of
Credit, a document shall be "presented" or a "presentation" of a document shall
be made in accordance with the terms hereof only when such document or facsimile
thereof is actually received by our International Department at our Principal
Office.
18. All documents, notices and other communications provided or permitted
by this Letter of Credit to be given or presented to you shall be delivered to
you at Corporate Trust Department, 101 N.E. 3rd Avenue, Suite 502 (Suite 100 if
mailed), Ft. Lauderdale, Florida 33301 or at any other address which may
designated by you by written notice delivered to us, or shall be sent to you by
facsimile to 954/760-7937 or such other facsimile number as you shall specify by
written notice to us.
19. Anything herein to the contrary notwithstanding, we shall give you
notice within 10 days after any B Drawing hereunder if any Interest Portion has
not been reinstated.
Page 6
<PAGE>
20. This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Notes), except only the certificates and the
sign drafts referred to herein; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or agreement except for
such certificates and such sight drafts.
21. This Letter of Credit may not be amended or modified in any way except
as permitted by the Indenture.
22. This Letter of Credit is executed and delivered on the date and year
first above written.
Very truly yours,
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
By: /s/ Michael J. Opalewski
--------------------------------
Michael J. Opalewski
Executive Vice President
Page 7
<PAGE>
APPENDIX A
TO
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
IRREVOCABLE LETTER OF CREDIT NO. SB-1326
Certificate for A Drawing
-------------------------
SouthTrust Bank, National Association, as trustee (the "Trustee"), hereby
certifies to SouthTrust Bank, National Association (the "Creditor Obligor"),
with reference to Irrevocable Letter of Credit No. SB-1326 (the "Letter of
Credit"; capitalized terms not otherwise defined herein shall have the meaning
assigned to such terms in the Letter of Credit) issued by the Credit Obligor in
favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Trustee is making a drawing under the Principal Portion of the
Letter of Credit in the amount of $___________ to be used for the payment of
unpaid principal on the Notes due upon maturity, redemption or acceleration.
Such amount (a) is due and payable with respect to the principal of the Notes,
or (b) will be due and payable on the date that the Credit Obligor is required
to pay the draft (s) accompanying this certificate.
(3) The aggregate amount of the sight draft(s) accompanying this
certificate that is allocable to the payment of principal of the Notes does not
exceed the amount available on the date hereof to be drawn under the Principal
Portion of the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has caused this certificate to executed and
delivered by its duly authorized officer on this ____ day of _____________,
_____.
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
As Trustee
By:__________________________________
Its Authorized Signatory
<PAGE>
APPENDIX B
TO
SOUTHTRUST BANK, NATIONAL ASSOCIATION
IRREVOCABLE LETTER OF CREDIT NO. SB-1326
Certificate for B Drawing
-------------------------
SouthTrust Bank, National Association, as trustee (the "Trustee"), hereby
certifies to SouthTrust Bank, National Association (the "Credit Obligor"), with
reference to Irrevocable Letter of Credit No. SB-1326 (the "Letter of Credit";
capitalized terms not otherwise defined herein shall have the meaning assigned
to such terms in the Letter of Credit) issued by the Credit Obligor in favor of
the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Trustee is making a drawing under the Interest Portion of the
Letter of Credit in the amount of $__________ to be used for the payment of
unpaid interest on the Notes. Such amount (a) is due and payable with respect to
interest on the Notes, or (b) will be due and payable on the date that the
Credit Obligor is required to pay the draft(s) accompanying this certificate.
(3) The aggregate amount of the sign draft(s) accompanying this
certificate does not exceed the amount available on the date hereof to be drawn
under the Interest Portion of the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed
and delivered by its duly authorized officer on this _____ day of
____________________, ________.
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
As Trustee
By:__________________________________
Its Authorized Signatory
<PAGE>
APPENDIX C
TO
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
IRREVOCABLE LETTER OF CREDIT NO. SB-1326
Certificate for C Drawing
-------------------------
SouthTrust Bank, National Association, as trustee (the "Trustee"), hereby
certifies to SouthTrust Bank, National Association (the "Credit Obligor"), with
respect to Irrevocable Letter of Credit No. SB-1326 (the "Letter of Credit";
capitalized terms not otherwise defined herein shall have the meaning assigned
to such terms in the Letter of Credit) issued by the Credit Obligor in favor of
the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of Credit in the
amount of $_______________ to be used to pay the purchase price of Tendered
Notes. Of the aggregate amount drawn, $_____________ is drawn under the Interest
Portion of the Letter of Credit to pay the interest portion of such purchase
price and $_______________ is drawn under the Principal Portion of the Letter of
Credit to pay the principal portion of such purchase price. The aggregate amount
so drawn is due and payable with respect to the purchase price of Tendered
Notes, or will be due and payable on the date that the Credit Obligor is
required to pay the draft(s) accompanying this certificate.
(3) The aggregate amount of the sight draft(s) accompanying this
certificate does not exceed the amount available on the date hereof to be drawn
under the Letter of Credit; the amount designated above as drawn against the
Interest Portion does not exceed the amount available on the date hereof to be
drawn under the Interest Portion of the Letter of Credit; and the amount
designated above as drawn against the Principal Portion does not exceed the
amount available on the date hereof to be drawn under the Principal Portion of
the Letter of Credit.
(4) This C Drawing is being made to pay the purchase price of the
following Tendered Notes:
Certificate Principal
Number Amount
------
(if applicable)
-------------
_____________ ______________
_____________ ______________
_____________ ______________
_____________ ______________
TOTAL $_____________
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this certificate to be
executed and delivered by its duly authorized officer on this _____ day of
________________ , _______.
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
As Trustee
By:______________________________________
Its Authorized Signatory
ii
<PAGE>
APPENDIX D
TO
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
IRREVOCABLE LETTER OF CREDIT NO. SB-1326
Reimbursement Notice
--------------------
SouthTrust Bank, National Association (the "Credit Obligor") hereby
certifies to SouthTrust Bank, National Association, as trustee (the "Trustee")
under a Trust Indenture dated as of August 1, 1997 (the "Indenture") between the
Trustee and La-Man Corporation, a Nevada corporation, with respect to
irrevocable Letter of Credit No. SB-1326 (the "Letter of Credit"; capitalized
terms not otherwise defined herein shall have the meaning assigned to such terms
in the Letter of Credit) issued by the Credit Obligor in favor of the Trustee,
that:
(1) The Credit Obligor has received reimbursement of amounts due to us
because of a C Drawing with respect to the following Tendered Notes:
Certificate Principal
Number Amount
------
(if applicable)
-------------
_____________ ______________
_____________ ______________
_____________ ______________
_____________ ______________
TOTAL $_____________
(2) The Principal Portion shall be reinstated by $___________, which was
the amount of the principal portion of the purchase price of the Tendered Notes
referred to in paragraph (1) above.
(3) The Interest Portion shall be reinstated by $ _________, which is the
amount of the interest portion of the purchase price of the Tendered Notes
referred to in paragraph (1) above.
(4) The Tendered Notes referred to in paragraph (1) above are no longer "
Pledged Notes" as defined in the Indenture.
<PAGE>
IN WITNESS WHEREOF, the Credit Obligor has caused this certificate to be
executed and delivered by its duty authorized officer on this _____ day of
_________________, ______.
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
As Credit Obligor
By:_____________________________________
Its Authorized Signatory
ii
<PAGE>
APPENDIX E
TO
SOUTHTRUST BANK, NATIONAL ASSOCIATION
IRREVOCABLE LETTER OF CREDIT NO. SB-1326
Certificate for Cancellation
----------------------------
SouthTrust Bank, National Association, as trustee (the "Trustee"), hereby
certifies to SouthTrust Bank, National Association (the "Creditor Obligor"),
with respect to Irrevocable Letter of Credit No. SB-1326 (the "Letter of
Credit"; capitalized terms not otherwise defined herein shall have the meaning
assigned to such terms in the Letter of Credit) issued by the Credit Obligor in
favor of the Trustee, that:
(1) The Trustee is the trustee under the Indenture.
(2) The Letter of Credit is hereby delivered to the Credit Obligor for
cancellation because:
(a) the Notes have been fully paid, or provision for payment in full
of the Notes has been made, in accordance with the terms of Article VII of the
Indenture; or
(b) the terms and conditions of the Indenture for the acceptance by
the Trustee of a Substitute Letter of Credit and the cancellation of the Letter
of Credit have been satisfied.
IN WITNESS WHEREOF, the Trustee has caused this certificate to be executed
and delivered by its duty authorized officer on this _____ day of August, 1997.
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
As Trustee
By:_________________________________
Its Authorized Signatory
<PAGE>
APPENDIX F
TO
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
IRREVOCABLE LETTER OF CREDIT NO. SB-1326
Transfer Letter
---------------
SouthTrust, National Association
Birmingham, Alabama
Attn:________________________
Date:________________________
Gentlemen:
With reference to your Irrevocable Letter of Credit No. SB-1326 (the
"Letter of Credit"; capitalized terms not otherwise defined herein shall have
the meaning assigned to such terms in the Letter of Credit), we hereby transfer
to ____________________ all right, title and interest of the undersigned in and
to the Letter of Credit.
We hereby certify that the transferee is the successor trustee under the
Indenture.
Please notify the transferee of this transfer.
The Letter of Credit (including amendments to this date, if any) is
returned herewith, and we request that you issue a new irrevocable letter of
credit in favor of the transferee with provisions consistent with the Letter of
Credit, as required by the terms of the Letter of Credit. This transfer shall
be void and of no effect if you fail to issue such a letter of credit to the
transferee.
Very truly yours,
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
As Trustee
By:_______________________________
Its Authorized Signatory
<PAGE>
EXHIBIT 10.41
1
INTEREST ON THIS NOTE IS INCLUDABLE IN GROSS INCOME
FOR PURPOSES OF FEDERAL AND STATE INCOME TAXATION.
THE PRINCIPAL OF AND INTEREST ON THE NOTES ARE PAYABLE FROM PAYMENTS TO BE MADE
UNDER THE IRREVOCABLE, DIRECT-PAY LETTER OF CREDIT ISSUED BY SOUTHTRUST BANK,
NATIONAL ASSOCIATION, REFERENCED HEREIN, WHICH CONSTITUTES A BINDING AND
ENFORCEABLE OBLIGATION THEREOF, OR UNDER ANY IRREVOCABLE, DIRECT-PAY LETTER OF
CREDIT ISSUED IN SUBSTITUTION THEREFOR IN ACCORDANCE WITH THE INDENTURE
REFERENCED HEREIN. THE NOTES ARE NOT DEPOSITS OR OBLIGATIONS OF SOUTHTRUST
BANK, NATIONAL ASSOCIATION, OR ANY AFFILIATE THEREOF, OR OF ANY ISSUER OF ANY
SUBSTITUTE LETTER OF CREDIT. THE NOTES AND THE SAID LETTERS OF CREDIT ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION. THE NOTES ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING LOSS OF PRINCIPAL AMOUNT INVESTED.
LA-MAN CORPORATION
VARIABLE/FIXED RATE CREDIT ENHANCED NOTE
No. R-1
Dated Date: August 28, 1997 Maturity Date: August 1, 2012 CUSIP: 50354K AA 0
La-Man Corporation, a corporation organized under the laws of the State of
Nevada (the "Issuer", which term includes any successor corporation under the
Indenture hereinafter referenced), for value received, hereby promises to pay to
CEDE & CO.,
or registered assigns, the principal amount of
TWO MILLON FIVE HUNDRED THOUSAND DOLLARS
($2,500,000)
on the Maturity Date specified above and to pay interest on said principal
amount from the date hereof or the most recent date to which interest has been
paid or duly provided for, until the principal amount hereof shall become due
and payable, at the Variable Rate or the Fixed Rate, as hereinafter provided.
1
<PAGE>
Authority for Issuance
- ----------------------
This Note is one of a duly authorized issue of notes of the Issuer,
aggregating $2,500,000 in principal amount and of the above designation (the
"Notes"), issued pursuant to a Trust Indenture dated as of August 1, 1997 (the
"Indenture") between the Issuer and SouthTrust Bank, National Association, a
national banking association (the "Trustee", which term includes any successor
trustee under the Indenture), with its designated corporate trust office (the
"Designated Office") presently located in Ft. Lauderdale, Florida.
Security
- --------
The Notes are general obligations of the Issuer. Pursuant to the Indenture
the Issuer has agreed to make payments at times and in amounts sufficient to pay
Debt Service when due on the Notes and to pay the purchase price of Notes
tendered for purchase pursuant to the Mandatory Tender and Optional Tender
provisions of the Indenture (the "Issuer Note Payments").
The obligation of the Issuer to pay the principal of, premium (if any) and
interest on this Note in the amounts and at the times, places and rates, and in
the coin or currency, herein prescribed, is absolute and unconditional, and no
reference herein to the Indenture or the Letter of Credit and no provision of
this Note or the Indenture shall operate or be construed to alter or impair said
obligation.
As security for the payment of the Notes, the Issuer will cause SouthTrust
Bank, National Association (in its capacity as issuer of the initial letter of
credit referred to below, the "Credit Obligor") to issue an irrevocable letter
of credit in favor of the Trustee in the amount of (i) the aggregate principal
amount of the Notes, to enable the Trustee to pay the principal amount of Notes
when due and to pay the principal portion of the purchase price of Notes
tendered (or deemed tendered) to the Trustee for purchase, plus (ii) interest on
the Notes at the Maximum Rate for a period of 56 days, to enable the Trustee to
pay interest on the Notes when due and to pay the interest portion of the
purchase price of Notes tendered (or deemed tendered) to the Trustee for
purchase. The initial letter of credit will expire, unless earlier terminated
or extended, on August 15, 2000. Subject to the terms and conditions of the
Indenture, the Issuer may, at its option, replace the initial letter of credit
and any subsequent letter of credit with a substitute letter of credit meeting
the requirements of the Indenture with respect thereto. The initial letter of
credit so delivered to the Trustee and any substitute letter of credit delivered
to the Trustee pursuant to the Indenture are herein referred to as the "Letter
of Credit". The initial Letter of Credit is issued pursuant to various credit
and security agreements among the Credit Obligor, the Issuer, and certain
persons related to the Issuer, which evidence, guarantee, or provide security
for the obligations of the Issuer to reimburse the Credit Obligor for draws
under the Letter of Credit and the observance and performance of various
agreements of the Issuer and related persons with respect thereto (collectively
the "Credit Documents").
2
<PAGE>
Copies of the Indenture, the initial Letter of Credit and the Credit
Documents are on file at the Designated Office of the Trustee and reference is
hereby made to such documents for the provisions, among others, with respect to
the respective rights, duties, obligations and security of the Issuer, the
Trustee, the Credit Obligor and the owners of beneficial interests in the Notes
and the terms and conditions upon which the purchase, transfer and exchange of
beneficial ownership interests in the Notes are to be made by means of a Book-
Entry System administered by the Securities Depository, to and by all of which
terms, conditions and provisions of said documents the owner of any beneficial
interest in this Note, by the acquisition hereof, hereby assents and agrees to
be bound.
Payment of Debt Service
- -----------------------
Interest at the Variable Rate and interest at the Fixed Rate for a Fixed
Rate Period of less than 6 months shall be computed on the basis of a 360 day
year for the actual number of days elapsed. Interest at the Fixed Rate for each
Fixed Rate Period of 6 months or more shall be computed on the basis of a 360-
day year with 12 months of 30 days each. Interest shall be payable on overdue
principal of this Note and (to the extent legally enforceable) on any overdue
installment of interest on this Note at the rate of interest last applicable to
this Note when such overdue principal or interest became delinquent.
Interest on this Note shall be payable in arrears on the following dates
(each such date being herein called an "Interest Payment Date") (or, if such
Interest Payment Date is not a Business Day, on the Business Day next following
such Interest Payment Date): (1) with respect to interest payable at the
Variable Rate, on (i) the first day of each month in each year during the
Variable Rate Period and (ii) on the day immediately following any Variable Rate
Period (each such date being herein called a "Variable Rate Interest Payment
Date"); (2) with respect to interest payable at a Fixed Rate for any Fixed Rate
Period of less than 6 months, on the day immediately following such Fixed Rate
Period (each such date being herein called a "Fixed Rate Interest Payment
Date"); and (3) with respect to interest payable at a Fixed Rate for any Fixed
Rate Period of 6 months or more, (i) on the first day of the calendar month that
is 6 months after the first day of the calendar month in which such Fixed Rate
Period began, (ii) semiannually thereafter, and (iii) on the day immediately
following such Fixed Rate Period (each such date being herein called a "Fixed
Rate Interest Payment Date").
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date (or, if such Interest Payment Date is not a Business Day,
on the Business Day next following such Interest Payment Date), will, as
provided in the Indenture hereinafter referenced, be paid to the person in whose
name this Note is registered at the close of business on the Regular Record Date
for such interest, which shall be the day (whether or not a Business Day) next
preceding any Variable Rate Interest Payment Date or any Fixed Rate Interest
Payment Date with respect to a Fixed Rate Period of less than 6 months, or the
15th day (whether or not a Business Day) next preceding any Fixed Rate Interest
Payment Date with respect to a Fixed Rate Period of 6 months or more. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holder on such Regular Record Date, and shall be paid
to the person in whose name this Note is registered at the close
3
<PAGE>
of business on a Special Record Date for the payment of such defaulted interest
to be fixed by the Trustee; notice of such Special Record Date to be given to
Holders of the Notes not less than 10 days prior to such Special Record Date.
Payment of interest on this Note due on any Interest Payment Date shall be
made by check or draft mailed by the Trustee to the person entitled thereto at
the address thereof appearing in the Note Register maintained by the Trustee.
Such payments shall be deemed timely made if so mailed on the Interest Payment
Date (or, if such Interest Payment Date is not a Business Day, on the Business
Day next following such Interest Payment Date). Payment of the principal of
(and premium, if any, on) this Note and payment of accrued interest on this Note
due upon redemption on any date other than an Interest Payment Date shall be
made only upon surrender of this Note at the Principal Office of the Trustee.
Upon the terms and conditions of the Indenture the Holder of any Note in a
principal amount of not less than $100,000 may request that payment of Debt
Service on such Note be made by wire transfer to an account of such Holder
maintained at a bank in the continental United States or by any other method
providing for payment in same-day funds that is acceptable to the Trustee.
All payments of principal of, premium, if any, and interest on this Note
shall be made in such coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and private debts.
Interest Rate
- -------------
This Note may bear interest at either a variable rate or a fixed rate, and
if at a fixed rate, for varying periods of time, with such consequences as are
specified in the Indenture, without any notation being made hereon. Each owner
of this Note takes it subject to the terms then applicable hereto, and may
obtain from the Trustee verification of the then applicable provisions hereof.
Variable Rate
-------------
The Notes shall initially bear interest at a Variable Rate. Upon the
expiration of any Fixed Rate Period, the Notes shall again bear interest at the
Variable Rate, unless the day immediately following such Fixed Rate Period is
the effective date of a continuation or conversion of the interest rate to a
Fixed Rate (such date being herein called a "Conversion Date"). Once the
Variable Rate becomes effective, it shall remain in effect until and including
the day immediately prior to the earlier of (i) a Conversion Date or (ii) the
final maturity of the Notes. Each period during which the Variable Rate is in
effect is herein called a "Variable Rate Period."
The Variable Rate shall be a fluctuating rate per annum determined by the
Remarketing Agent periodically during a Variable Rate Period as provided in the
Indenture and described herein. The Variable Rate shall be determined on the
first day of each Variable Rate Period (beginning upon initial issuance of the
Notes and upon any change from a Fixed Rate Period to a Variable Rate Period)
and on each Thursday during such Variable Rate Period (or, if any such
Page 4
<PAGE>
day for determination is not a Business Day, on or as of the immediately
preceding Business Day). The Variable Rate so determined shall become effective
(i) in the case of a determination in connection with the initial issuance of
the Notes or a change from a Fixed Rate Period to a Variable Rate Period, the
first day of the Variable Rate Period, and (ii) in any other case, on the Friday
immediately following the date of determination, and once effective shall remain
in effect until and including the following Thursday, or, if sooner, the ending
day of such Variable Rate Period; provided, however, that if the Remarketing
Agent fails to determine the Variable Rate on any such determination date, the
last Variable Rate in effect shall remain in effect until and including the next
Thursday, or, if sooner, the ending day of such Variable Rate Period, and
provided further, if the Remarketing Agent fails to determine the Variable Rate
on two consecutive determination dates therefor, the Variable Rate shall be
equal to the Maximum Rate until and including the day preceding the effective
date of a Variable Rate change for which the Remarketing Agent shall have
determined the Variable Rate in accordance with the terms of the Indenture.
The Variable Rate shall be determined by the Remarketing Agent and shall be
the lowest interest rate that would, in the opinion of the Remarketing Agent,
result in the market value of the Notes being 100% of the principal amount
thereof on the date of such determination, taking into account relevant market
conditions and credit rating factors as they exist on such date; provided,
however, that the Variable Rate may never exceed the Maximum Rate. The Maximum
Rate is the lesser of (i) the rate of 18% per annum or (ii) for any period
during which the Notes are supported by a Letter of Credit, the maximum rate per
annum, specified therein, upon which there has been calculated the amount
available to be drawn on such Letter of Credit to pay interest on the Notes.
Upon the request of any Noteholder, the Trustee shall confirm (by telephone and
in writing, if so requested) the Variable Rate then in effect. SouthTrust
Securities, Inc., Birmingham, Alabama, has been appointed as "Remarketing Agent"
pursuant to the Indenture. The Indenture permits the Issuer, with the consent
of the Credit Obligor, to remove such Remarketing Agent and appoint a successor,
subject to certain terms and conditions specified in the Indenture.
Fixed Rate
----------
The Notes shall bear interest at a Fixed Rate during each period of time
specified by the Issuer as provided in the Indenture and described herein. Each
period during which a Fixed Rate is in effect is herein called a "Fixed Rate
Period". The Fixed Rate shall be a fixed rate per annum which shall be
applicable during the entire Fixed Rate Period and for each Fixed Rate Period
shall be determined by the Remarketing Agent as provided in the Indenture and
described herein.
The Issuer may elect that the Notes bear interest at a Fixed Rate for any
period after the initial Variable Rate Period by delivery of written notice of
such election to the Trustee not less than 45 days prior to the proposed
Conversion Date. Such notice shall specify the first day and the last day of
the Fixed Rate Period elected; provided, however, that (i) if such election is
made during a Fixed Rate Period, the specified Conversion Date may not be sooner
than the first day immediately following the Fixed Rate Period then in effect,
(ii) the Conversion Date may not
Page 5
<PAGE>
be less than 45 days prior to the Stated Expiration Date of the Letter of Credit
(if any) then in effect, (iii) the designated Fixed Rate Period may not be less
than 15 days, and (iv) the Fixed Rate Period may not extend beyond the day
immediately prior to the final maturity of the Notes. Any such election by the
Issuer shall be irrevocable after 10:00 a.m. (Ft. Lauderdale, Florida time) on
the last Business Day immediately prior to the proposed Conversion Date.
Not less than 1 nor more than 10 days prior to the proposed Conversion
Date, the Remarketing Agent shall determine the interest rate for such Fixed
Rate Period (the "Fixed Rate"), which shall be the lowest interest rate that
would, in the opinion of the Remarketing Agent, result in the market value of
the Notes being 100% of the principal amount thereof on the date of such
determination, taking into account relevant market conditions and credit rating
factors as they exist on such date, and assuming that the Fixed Rate Period
began on such date; provided, however, that the Fixed Rate may not exceed the
Maximum Rate.
Notwithstanding the foregoing, a Fixed Rate shall not be established if (1)
the Issuer delivers to the Trustee written notice of revocation of its election
to establish the Fixed Rate before 10:00 a.m. (Ft. Lauderdale, Florida time) on
the last Business Day immediately prior to the proposed Conversion Date, or (2)
prior to 10:00 a.m. (Ft. Lauderdale, Florida time) on the Conversion Date the
Trustee does not receive (i) an Opinion of Note Counsel stating in effect that
such conversion to a Fixed Rate is lawful under applicable law, and (ii) the
Substitute Letter of Credit (if any) that is to be effective on such Conversion
Date. If all conditions to the establishment of a Fixed Rate are not satisfied,
the Notes shall continue (or, if a Fixed Rate Period ended on the preceding day,
shall begin) to bear interest at the Variable Rate from the proposed Conversion
Date.
Optional Tender
- ---------------
Upon the terms and conditions provided in the Indenture and described
herein, the Holder of any Note shall have the right to tender such Note to the
Trustee or to any Tender Agent appointed pursuant to the Indenture for purchase
in whole or in part (if in part, only in an Authorized Denomination) on any
Business Day during any Variable Rate Period, but not during any Fixed Rate
Period, at a purchase price equal to 100% of the principal amount of Notes (or
portions thereof) tendered plus accrued interest to the specified purchase date
(an "Optional Tender Date"). In order to exercise such option with respect to
any Note, the Holder thereof must deliver notice thereof to the Trustee, as
provided below, at its Designated Office at least 7 days prior to the proposed
Optional Tender Date.
Any such notice of Optional Tender must be duly executed by the Noteholder
and must specify (i) the name of the registered Holder of the Note to be
tendered for purchase, (ii) the Optional Tender Date, (iii) the certificate
number (if applicable) and principal amount of such Note, and (iv) the principal
amount of such Note to be purchased (if such amount is less than the entire
principal amount, the amount to be purchased must be in an Authorized
Denomination). Such notice shall be given to the Trustee in writing. A form of
the Optional Tender Notice may be obtained from the Trustee upon request. If
any notice of Optional Tender specifies an Optional Tender Date that is not a
Business Day, then such notice shall be deemed
Page 6
<PAGE>
to specify the next following Business Day as the Optional Tender Date. Unless
a notice of Optional Tender indicates that less than the entire principal amount
of the Note is being tendered for purchase, the Holder will be deemed to have
tendered the Note in its entire principal amount for purchase. Upon delivery of
a written notice of Optional Tender, the election to tender shall be irrevocable
and binding upon such Holder and may not be withdrawn.
If a written notice of Optional Tender shall have been duly given with
respect to any Note or any authorized part thereof, the Holder of such Note
shall deliver such Note to the Trustee at its Designated Office or to the Tender
Agent at its Principal Office at or before 10:00 a.m. (Ft. Lauderdale, Florida
time) on the Optional Tender Date, together with an instrument of assignment or
transfer duly executed in blank. During a period in which the Book-Entry System
is in effect for the Notes, transfers of the beneficial ownership interests in
the Notes on such date shall be effected on the records of the Securities
Depository by the Securities Depository in accordance with rules and procedures
therefor and any requirement for physical delivery of Notes on an Optional
Tender Date shall be deemed satisfied thereby. Any Note or any authorized part
thereof for which a notice of Optional Tender has been given but which is not so
delivered to the Trustee or Tender Agent or transferred on the records of the
Securities Depository (an "Unsurrendered Note") shall nevertheless be deemed to
have been tendered by the Holder thereof on the Optional Tender Date. If there
has been irrevocably deposited in the Note Purchase Fund an amount sufficient to
pay the principal amount of plus accrued interest to the specified purchase date
on all Notes or any authorized part thereof tendered or deemed to be tendered
for purchase on an Optional Tender Date, any Unsurrendered Note shall be deemed
to have been tendered for purchase and purchased from the Holder thereof on such
Optional Tender Date and the Holder of any Unsurrendered Note shall not be
entitled to receive interest on such Unsurrendered Note for any period on and
after the Optional Tender Date.
Anything in this Note or the Indenture to the contrary notwithstanding, no
Optional Tender of Notes shall be permitted for Pledged Notes or for any Note
which is deemed Fully Paid within the meaning of the Indenture.
Mandatory Tender
- ----------------
The Holder of each Note (other than a Pledged Note or a Note that has been
deemed Fully Paid) who has not elected to retain the Note or Notes thereof under
the conditions permitted and in the manner provided in the Indenture shall be
required to tender such Note to the Trustee or Tender Agent for purchase on the
following dates (each such date being herein called a "Mandatory Tender Date"):
(i) each proposed Conversion Date, (ii) the date immediately following the
expiration of a Fixed Rate Period, (iii) the first day of the calendar month in
which the Stated Expiration Date of the Letter of Credit occurs, unless a
Substitute Letter of Credit and Related Documentation all meeting the
requirements of the Indenture therefor is delivered to the Trustee in accordance
with the terms of Section 3.10 of the Indenture, (iv) a Credit Obligor
Insolvency Date, (v) that date which is 15 days prior to the effective date of
any change in the frequency with which or the formula by which the interest rate
on the Notes is established during a Variable Rate Period, and (vi) that date
which is 15 days prior to the effective date of any change in the optional
tender terms of the Notes during
Page 7
<PAGE>
a Variable Rate Period. If any of such dates is not a Business Day, the
Mandatory Tender Date shall be deemed to be the next succeeding Business Day.
Notice of a Mandatory Tender shall be given by the Trustee by registered or
certified mail to the Noteholder or Noteholders at the address thereof appearing
on the Note Register not less than 15 days prior to the Mandatory Tender Date.
Such notice of Mandatory Tender shall, among other things, specify the Mandatory
Tender Date and, if the circumstances are such that Holders may elect to retain
their Notes, shall so state and shall state the procedure by which a Holder may
make such election.
Upon the terms and conditions provided in the Indenture, the Holder of any
Note subject to a Mandatory Tender as a result of any change in the frequency
with which or the formula by which the interest rate on the Notes is established
during a Variable Rate Period, or as a result of any change in the optional
tender terms of the Notes during a Variable Rate Period, may elect to retain the
Note or Notes thereof by written notice delivered to the Designated Office of
the Trustee not less than five days prior to the Mandatory Tender Date, which
notice shall be effective upon receipt, shall meet the requirements of the
Indenture therefor, and shall be irrevocable and binding upon the Holder
delivering the same and upon all subsequent Holders of the Notes so retained
(including any Notes issued in exchange therefor or upon transfer thereof).
All Notes to be tendered by the Holders thereof for purchase shall be
delivered at or before 10:00 a.m. (Ft. Lauderdale, Florida time) on the
Mandatory Tender Date to the Trustee at its Designated Office or to the Tender
Agent at its Principal Office, together with an instrument of assignment or
transfer duly executed in blank. During a period in which the Book-Entry System
is in effect for the Notes, transfers of the beneficial ownership interests in
the Notes on such date shall be effected on the records of the Securities
Depository by the Securities Depository in accordance with rules and procedures
therefor and any requirement for physical delivery of Notes on a Mandatory
Tender Date shall be deemed satisfied thereby. All Notes so to be purchased
that are not so delivered to the Trustee or Tender Agent on the Mandatory Tender
Date or so transferred on the records of the Securities Depository
("Unsurrendered Notes") shall nevertheless be deemed to have been tendered for
purchase by the Holders thereof on the Mandatory Tender Date. If there has been
irrevocably deposited in the Note Purchase Fund an amount sufficient to pay the
purchase price of all Notes tendered or deemed tendered for purchase on the
Mandatory Tender Date, any Unsurrendered Note shall be deemed to be tendered for
purchase and purchased from the Holder thereof on such Mandatory Tender Date and
the Holder of any Unsurrendered Note shall not be entitled to receive interest
on such Unsurrendered Note for any period on and after the relevant Mandatory
Tender Date.
After notice of a Mandatory Tender has been given by the Trustee, the Notes
shall be subject to Mandatory Tender (except with respect to Notes which the
Holders thereof have elected to retain as provided in the Indenture)
notwithstanding the fact that the reasons for giving such notice cease to exist
or are no longer applicable.
Redemption
- ----------
Page 8
<PAGE>
In the manner and with the effect provided in the Indenture, the Notes will
be subject to redemption prior to maturity as follows:
(1) Optional Redemption
-------------------
The Notes are subject to optional redemption by the Issuer with consent of
the Credit Obligor and if no Event of Default exists, as follows:
(A) during any Variable Rate Period, in whole or in part, in
authorized multiples of an Authorized Denomination on any Business Day at a
redemption price equal to 100% of the principal amount thereof plus accrued
interest to the date of redemption, without premium or penalty; and
(B) during any Fixed Rate Period, in whole or in part in authorized
multiples of an Authorized Denomination on any Business Day during the
applicable redemption period set forth in the table below at the applicable
redemption price (expressed as a percentage of principal amount) set forth
in the table below plus accrued interest to the date of redemption:
Redemption
Redemption Period Price
----------------- -------------
Fixed Rate Period of 4 years
or less:
Not subject to redemption N/A
Fixed Rate Period of more than
4 years but not more than 7 years:
Not subject to redemption prior
to 4th anniversary of Conversion Date N/A
4th anniversary of Conversion
Date through any day prior to
5th anniversary of Conversion Date 102%
5th anniversary of Conversion Date
through any day prior to
6th anniversary of Conversion Date 101%
6th anniversary of Conversion
Date and any day thereafter 100%
provided that there shall be no optional redemption which requires the payment
of a redemption premium unless there is then in effect a Letter of Credit which
may and shall be drawn on to pay such premium. If less than all Notes
Outstanding are called for redemption, the Notes or
Page 9
<PAGE>
interests of the Beneficial Owners thereon to be redeemed shall be selected as
provided in the Indenture and described herein.
(2) Mandatory Redemption
--------------------
The Notes are subject to mandatory redemption, by lot, by the Issuer at a
redemption price equal to the principal amount to be redeemed plus accrued
interest to the redemption date, without premium or penalty, on the first day in
August in the years and in the principal amounts (after credit as provided
below) set forth below:
<TABLE>
<CAPTION>
Principal
Date Amount
---- -----------
<S> <C>
1998 $110,000.00
1999 115,000.00
2000 125,000.00
2001 130,000.00
2002 135,000.00
2003 145,000.00
2004 155,000.00
2005 160,000.00
2006 170,000.00
2007 180,000.00
2008 190,000.00
2009 205,000.00
2010 215,000.00
2011 225,000.00
</TABLE>
The balance of the Notes will be paid at maturity.
Unless Notes have been preselected for mandatory redemption, as described
below, not less than 45 nor more than 60 days prior to each such scheduled
mandatory redemption date, Notes, or interests of the Beneficial Owners in the
Notes, shall be selected for redemption, in the manner provided in the
Indenture, in an aggregate principal amount equal to the principal amount
required to be redeemed and such Notes or interests therein (or portions
thereof) shall be called for redemption on such scheduled mandatory redemption
date and notice thereof given as provided in the Indenture; provided, however,
that if Notes have not been preselected for mandatory redemption, as described
below, the Issuer may, upon written direction delivered to the Trustee not less
than 60 days prior to such scheduled mandatory redemption date, direct that any
or all of the following amounts be credited against the principal amount of
Notes scheduled for redemption on such date: (i) the principal amount of Notes
delivered by the Issuer to the Trustee for cancellation and not previously
claimed as a credit; and (ii) the principal amount of Notes previously redeemed
pursuant to the optional redemption provisions of the Notes and not previously
claimed as a credit.
Upon the written request of the Issuer, the Trustee shall preselect Notes
for mandatory redemption according to the entire remaining schedule for such
mandatory redemptions set forth above; provided, however, that prior to such
preselection the principal amount of Notes
Page 10
<PAGE>
previously redeemed pursuant to the optional redemption provisions and not
already credited against such mandatory redemption requirements shall be
credited against the remaining mandatory redemption requirements in such years
and in such amounts as shall be designated by the Issuer. After taking into
account such credits, the Securities Depository or the Trustee, as appropriate,
shall proceed to select Notes by lot for mandatory redemption in accordance with
the remaining schedule. The procedure for such preselection shall provide for
the preselection of portions (equal to the smallest Authorized Denomination of
the Notes, or a multiple thereof) of the principal of Notes of a denomination
larger than the smallest Authorized Denomination.
After such preselection procedure the term "Adjusted Maturity Date", when
used with respect to any Note, or any interest of a Beneficial Owner therein,
shall mean the date on which such Note or such interest therein shall be subject
to scheduled mandatory redemption or, if such Note is not so preselected, the
stated maturity date of such Note. After Notes have been preselected for
mandatory redemption, the Securities Depository or the Trustee, as appropriate,
shall send notice of the results of such preselection to the Securities
Depository or Trustee (as appropriate), the Issuer, the Remarketing Agent, the
Credit Obligor and the holders of outstanding Notes. If portions of any Note or
any interest of a Beneficial Owner therein, of a principal amount larger than
the smallest Authorized Denomination, are assigned different Adjusted Maturity
Dates then, upon receipt of such notice of preselection, appropriate adjustments
on the records of the Securities Depository shall be made or the registered
owner of such Note shall deliver the same to the Trustee or Tender Agent in
exchange for two or more Notes according to the Adjusted Maturity Dates so
assigned, it being intended that each Note outstanding shall have a single
Adjusted Maturity Date.
(3) Notice: Selection For Redemption
--------------------------------
Any redemption shall be made in the manner, upon the notice, and on the
terms and conditions provided in the Indenture. If less than all of the
Outstanding Notes are to be redeemed during a period in which the Book-Entry
System is in effect for the Notes, the Securities Depository shall determine the
amount of the interest of each Direct Participant in the Notes to be redeemed,
on the basis of the smallest Authorized Denomination of the Notes, by lot or by
such other method as the Securities Depository shall deem fair and appropriate.
The Securities Depository shall so determine the amount of the interest of each
Direct Participant in the Notes to be redeemed in such manner so as to assure
that after such redemption no Beneficial Owner shall retain a beneficial
ownership interest in the Notes in an aggregate amount less than an Authorized
Denomination. If less than all the Outstanding Notes are to be redeemed during
a period in which the Book-Entry System is not in effect for the Notes, the
Trustee shall select the particular Notes to be redeemed not less than 30 nor
more than 60 days prior to the redemption date from the Outstanding Notes which
have not previously been called for redemption, on the basis of the smallest
Authorized Denomination of the Notes, by lot or by such method as the Trustee
shall deem fair and appropriate. The Trustee shall so select Notes for
redemption in such manner so as to assure that after such redemption no
Noteholder shall retain Notes in an aggregate amount less than an Authorized
Denomination. Notes (or portions thereof) for the redemption and payment of
which provision has been made and notice thereof given all in accordance with
the Indenture shall thereupon cease to be entitled to the benefits of the
Indenture and shall cease to bear interest from and after the date fixed for
redemption unless default be made in payment of the redemption price.
Page 11
<PAGE>
Default, Remedies, Rights of Holders, Amendments
- ------------------------------------------------
If an "Event of Default", as defined in the Indenture, shall occur, the
principal of all Notes then Outstanding may become or be declared due and
payable in the manner and with the effect provided in the Indenture.
The Indenture contains provisions permitting the Holders of specified
percentages in principal amount of Notes at the time Outstanding, on behalf of
the Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under such documents and
the consequences thereof. Any such consent or waiver by the Holder of this Note
shall be conclusive and binding upon such Holder and upon all future Holders of
this Note and of any Note issued in exchange herefor or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Note. The Indenture
provides that if the Letter of Credit is in effect and the Credit Obligor has
not dishonored any draws thereunder and there has not occurred a Credit Obligor
Insolvency Date, then (i) no amendment to the Indenture may be made without the
consent of the Credit Obligor and (ii) any remedies available under the
Indenture (other than mandatory acceleration of the Notes and mandatory draws
under the Letter of Credit) may be exercised only with the consent of the Credit
Obligor.
The Holder of this Note shall have no right to enforce the provisions of
the Indenture, or to institute any action to enforce the covenants therein, or
to take any action with respect to any default thereunder, or to institute,
appear in or defend any suit or other proceeding with respect thereto, except as
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes at any time with the consent
of a majority in principal amount of the Notes at the time Outstanding affected
by such modification.
Registration, Transfer and Exchange
- -----------------------------------
The Notes are initially issued in Authorized Denominations pursuant to a
Book-Entry System to be administered by the Securities Depository and registered
in the name of and held by the Securities Depository Nominee all as more
particularly provided in the Indenture. In the event the Book-Entry System for
the Notes is discontinued, Notes in certificated form in Authorized
Denominations will be physically distributed to the Beneficial Owners thereof,
the Notes will be registered in the names of the owners thereof on the
registration books of the Trustee pertaining thereto, the Trustee shall make
payments of principal of, purchase price of, premium (if any) and interest on
the Notes to the registered owners thereof as provided in the Notes and the
Indenture, and the provisions of this Note and of the Indenture with respect to
registration, transfer and exchange of Notes by the registered owners thereof
shall apply.
As provided in the Indenture and subject to certain limitations therein set
forth, this Note is transferable on the Note Register maintained at the
Designated Office of the Trustee, upon surrender of this Note for transfer at
such office or at the Principal Office of the Tender Agent, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee or Tender Agent duly executed by, the registered Holder hereof or the
attorney thereof,
Page 12
<PAGE>
duly authorized in writing, and thereupon one or more new Notes of the same
maturity, of any Authorized Denominations and for a like aggregate principal
amount, will be issued to the designated transferee or transferees. As provided
in the Indenture and subject to certain limitations therein set forth, the Notes
are exchangeable for other Notes of the same maturity of any Authorized
Denominations and of a like aggregate principal amount, as requested by the
Holder surrendering the same. No service charge shall be made for any transfer
or exchange hereinbefore referenced, but the Holder hereof shall pay a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the person in whose name this Note is registered as the owner hereof for
the purpose of receiving payment as herein provided and for all other purposes,
whether or not this Note is overdue, and neither the Issuer, the Trustee nor any
agent thereof shall be affected by notice to the contrary.
General
- -------
No covenant or agreement contained in this Note or the Indenture shall be
deemed to be a covenant or agreement of any officer, agent or employee of the
Issuer, and neither any member of the Board of Directors of the Issuer nor any
officer executing this Note shall be liable personally on this Note or be
subject to any personal liability or accountability by reason of the issuance of
this Note.
It is hereby certified, recited and declared that all acts, conditions and
things required to exist, happen and be performed precedent to and in the
execution and delivery of the Indenture and issuance of this Note do exist, have
happened and have been performed in due time, form and manner as required by
law.
Unless the certificate of authentication and registration hereon has been
executed by the Trustee or by the Tender Agent by the manual signature of a duly
authorized officer thereof, this Note shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this Note to be executed in its
name under seal by officers thereof as duly authorized thereunto.
LA-MAN CORPORATION
By:____________________________________
Its: President
S E A L
- -------
Attest:________________________
Its: Secretary
Page 13
<PAGE>
Certificate of Authentication and Registration
----------------------------------------------
Date of Authentication and Registration:________________________
This is one of the Notes referred to in the within mentioned Trust
Indenture and has been registered on the registration books of La-Man
Corporation maintained by the Trustee in the name of the above-named registered
owner on the Authentication and Registration Date noted above.
SOUTHTRUST BANK
NATIONAL ASSOCIATION, as Trustee
By_____________________________________
Its Authorized Signatory
Page 14
<PAGE>
Assignment
----------
For value received, __________________________ hereby sell(s), assign(s)
and transfer(s) unto ________________________________ this Note and hereby
irrevocably constitute(s) and appoint(s) attorney to transfer this Note on the
books of the within named Issuer at the office of the within named Trustee, with
full power of substitution in the premises.
Dated:___________________
_________________________________________
NOTE: The name signed to this assignment
must correspond with the name of the payee
written on the face of the within note in
all respects, without alteration,
enlargement or change whatsoever.
Signature Guaranteed: *
____________________________________
(Bank or Trust Company)
By _________________________________
(Authorized Officer)
Medallion Number: ___________________
* Signature(s) must be guaranteed by an eligible guarantor institution which is
a member of the recognized signature guarantee program, i.e., Securities
Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion Program
(SEMP), or New York Stock Exchange Medallion Signature Program (MSP).
Notice By Securities Depository
-------------------------------
Unless the within Note is presented by an authorized representative of the
Securities Depository (as defined in the Indenture referenced in the within
Note), to the Issuer or its agent for registration of transfer, exchange, or
payment, and any Note issued is registered in the name of the Securities
Depository or the Securities Depository Nominee (as defined in the Indenture
referenced in the within Note), as the case may be, or in such other name as is
requested by an authorized representative of the Securities Depository (and any
payment is made to the Securities Depository or the Securities Depository
Nominee or to such other entity as is requested by an authorized representative
of the Securities Depository), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, the Securities Depository or Securities Depository Nominee, as the
case may be, has an interest herein.
Page 15
<PAGE>
EXHIBIT 10.42
TRUST INDENTURE
DATED AUGUST 1, 1997
BETWEEN
LA-MAN CORPORATION
AND
SOUTHTRUST BANK, NATIONAL ASSOCIATION
======================================================
REGARDING
$2,500,000
VARIABLE/FIXED RATE CREDIT ENHANCED NOTES
======================================================
________________________________________________________________________________
THIS TRUST INDENTURE WAS PREPARED BY WILLIAM D. KING, FOLEY & LARDNER,
THE GREENLEAF BUILDING, 200 LAURA STREET, JACKSONVILLE, FLORIDA 32202-3527
________________________________________________________________________________
<PAGE>
TRUST INDENTURE
TABLE OF CONTENTS
This Table of Contents is not a part of this Indenture
and is only for convenience of reference)
<TABLE>
<CAPTION>
PAGE
<S> <C>
PARTIES....................................................................... 1
RECITALS...................................................................... 1
GRANTING CLAUSES.............................................................. 2
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
--------------------------------
SECTION 1.1 Definitions................................................... 2
SECTION 1.2 Acts of Noteholders...........................................10
SECTION 1.3 Form and Contents of Documents Delivered to Trustee...........11
SECTION 1.4 Compliance Certificates and Opinions..........................12
SECTION 1.5 Effect of Headings and Table of Contents......................13
SECTION 1.6 Date of Indenture.............................................13
SECTION 1.7 Enforceability................................................13
SECTION 1.8 Governing Law.................................................13
SECTION 1.9 Counterparts..................................................13
SECTION 1.10 Notices.......................................................13
SECTION 1.11 Notices to Noteholders; Waiver................................15
SECTION 1.12 Concerning the Credit Obligor and the Letter of Credit........15
SECTION 1.13 Notice to Rating Agencies.....................................15
SECTION 1.14 Successors and Assigns........................................16
SECTION 1.15 Benefits of Indenture.........................................16
ARTICLE II
GRANTING CLAUSES................................16
----------------
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE III
THE NOTES
---------
<S> <C>
SECTION 3.1 General Terms.............................................. 17
SECTION 3.2 Variable Rate.............................................. 19
SECTION 3.3 Fixed Rate................................................. 20
SECTION 3.4 Optional Tender............................................ 21
SECTION 3.5 Mandatory Tender........................................... 23
SECTION 3.6 Procedures for Purchase and Remarketing of Notes; Delivery. 26
SECTION 3.7 Execution, Authentication, Delivery and Dating............. 29
SECTION 3.8 Temporary Notes............................................ 29
SECTION 3.9 Authentication and Delivery of Notes to Original Purchasers 30
SECTION 3.10 Letter of Credit........................................... 30
SECTION 3.11 Additional Credit Enhancement.............................. 32
ARTICLE IV
REGISTRATION, BOOK-ENTRY SYSTEM, AND
GENERAL PROVISIONS REGARDING THE NOTES
--------------------------------------
SECTION 4.1 Registration of Notes...................................... 32
SECTION 4.2 Book-Entry System.......................................... 32
SECTION 4.3 Discontinuation of Book-Entry System; Registration,
Transfer and Exchange of Notes; Replacement of Mutilated,
Lost, Destroyed or Stolen Notes............................ 35
SECTION 4.4 Payment of Interest on Notes; Interest Rights Preserved.... 37
SECTION 4.5 Persons Deemed Owners...................................... 37
SECTION 4.6 Paying Agent............................................... 38
SECTION 4.7 Payments Due on Non-Business Days.......................... 38
SECTION 4.8 Cancellation............................................... 38
ARTICLE V
REDEMPTION OF NOTES
-------------------
SECTION 5.1 When Notes Are Subject to Redemption....................... 38
SECTION 5.2 Election to Redeem; Notice to Securities Depository and
Trustee.................................................... 38
SECTION 5.3 Selection of Notes to be Redeemed.......................... 39
SECTION 5.4 Notice of Redemption....................................... 39
SECTION 5.5 Deposit of Redemption Price................................ 40
SECTION 5.6 Notes Payable on Redemption Date........................... 40
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 5.7 Notes Redeemed in Part..................................... 41
ARTICLE VI
APPLICATION OF PROCEEDS OF NOTES
--------------------------------
SECTION 6.1 Application of Proceeds.................................... 41
SECTION 6.2 Proceeds Fund; Disbursements............................... 41
ARTICLE VII
REVENUES
--------
SECTION 7.1 Note Fund and Letter of Credit Draws....................... 42
SECTION 7.2 Note Purchase Fund......................................... 43
SECTION 7.3 Money for Note Payments to be Held in Trust; Repayment of
Unclaimed Money............................................ 45
SECTION 7.4 Investment of Special Funds................................ 46
ARTICLE VIII
REPRESENTATIONS AND COVENANTS
-----------------------------
SECTION 8.1 General Representations.................................... 46
SECTION 8.2 Payment of Debt Service and Purchase of Tendered Notes..... 48
SECTION 8.3 Indemnity of Trustee....................................... 48
SECTION 8.4 Obligations of Issuer Unconditional........................ 49
SECTION 8.5 General Covenants of the Issuer............................ 49
SECTION 8.6 Appointment of Successor Trustee........................... 50
SECTION 8.7 Further Assurances......................................... 50
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
------------------------------
SECTION 9.1 Events of Default.......................................... 51
SECTION 9.2 Acceleration of Maturity; Rescission and Annulment;
Exercise of Remedies....................................... 52
SECTION 9.3 Rights and Remedies of Trustee in the Event of Bankruptcy,
and the Occurrence of Similar Events Regarding the Issuer.. 53
SECTION 9.4 Subrogation Rights of Credit Obligor....................... 54
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 9.5 Application of Money Collected............................. 54
SECTION 9.6 Trustee May Enforce Claims without Possession of Notes..... 55
SECTION 9.7 Limitation on Suits by Holders............................. 55
SECTION 9.8 Unconditional Right of Noteholders to Receive Principal,
Premium and Interest....................................... 56
SECTION 9.9 Restoration of Positions................................... 56
SECTION 9.10 Rights and Remedies Cumulative............................. 56
SECTION 9.11 Delay or Omission Not Waiver............................... 57
SECTION 9.12 Control by Credit Obligor and Noteholders.................. 57
SECTION 9.13 Waiver of Past Defaults.................................... 57
SECTION 9.14 Waiver of Appraisement and Other Laws...................... 58
SECTION 9.15 Suits to Protect the Trust Estate.......................... 58
SECTION 9.16 Remedies Subject to Applicable Law......................... 59
ARTICLE X
THE TRUSTEE
-----------
SECTION 10.1 Certain Duties and Responsibilities........................ 59
SECTION 10.2 Notice of Defaults......................................... 60
SECTION 10.3 Certain Rights of Trustee.................................. 60
SECTION 10.4 Not Responsible for Recitals............................... 62
SECTION 10.5 May Hold Notes............................................. 62
SECTION 10.6 Money Held in Trust........................................ 62
SECTION 10.7 Compensation and Reimbursement............................. 62
SECTION 10.8 Eligibility of Trustee; Appointment of Co-Trustee.......... 63
SECTION 10.9 Resignation and Removal; Appointment of Successor.......... 64
SECTION 10.10 Acceptance of Appointment by Successor..................... 65
SECTION 10.11 Merger, Conversion, Consolidation or Succession to Business 65
ARTICLE XI
SUPPLEMENTAL INDENTURES AND AMENDMENTS OF LETTER OF CREDIT
----------------------------------------------------------
SECTION 11.1 Supplemental Indentures Without Consent of Noteholders..... 66
SECTION 11.2 Supplemental Indentures With Consent of Noteholders........ 67
SECTION 11.3 Discretion of Trustee; Acts of Noteholders................. 68
SECTION 11.4 Consent of Credit Obligor.................................. 68
SECTION 11.5 Execution of Supplemental Indentures....................... 69
SECTION 11.6 Effect of Supplemental Indentures.......................... 69
SECTION 11.7 Reference in Notes to Supplemental Indentures.............. 69
SECTION 11.8 Amendment of Letter of Credit.............................. 69
</TABLE>
iv
<PAGE>
<TABLE>
ARTICLE XII
THE REMARKETING AGENT
AND THE TENDER AGENT
--------------------
<S> <C>
SECTION 12.1 Temarketing Agent......................................... 70
SECTION 12.2 Tender Agent.............................................. 71
ARTICLE XIII
DEFEASANCE
----------
SECTION 13.1 Payment of Indebtedness; Satisfaction and Discharge of
Indenture................................................. 72
SECTION 13.2 Trust for Payment of Debt Service......................... 73
TESTIMONIUM............................................................... 73
SIGNATURES................................................................ 74
ACKNOWLEDGEMENTS.......................................................... 75-76
</TABLE>
EXHIBIT A: Form of Notes
EXHIBIT B: Form of Requisition
EXHIBIT C: Form of Optional Tender Notice
v
<PAGE>
TRUST INDENTURE
---------------
THIS TRUST INDENTURE dated August 1, 1997 is entered into by LA-MAN
CORPORATION, a Nevada corporation (the "Issuer"), and SOUTHTRUST BANK,
NATIONAL ASSOCIATION, a national banking association, having its principal
office in Birmingham, Alabama, and with a corporate trust office in Ft.
Lauderdale, Florida (the "Trustee").
RECITALS
--------
The Issuer has duly authorized, executed and delivered this Indenture and
has duly authorized the creation, execution and delivery pursuant hereto of
Variable/Fixed Rate Credit Enhanced Notes dated the date of delivery and payment
therefor (the "Notes") to provide financing for various corporate purposes.
As security for the payment of the Notes, the Issuer will cause SouthTrust
Bank, National Association (in its capacity as issuer of the initial Letter of
Credit referred to below, the "Credit Obligor") to issue an irrevocable letter
of credit in favor of the Trustee in the amount of (i) the aggregate principal
amount of the Notes, to enable the Trustee to pay the principal amount of the
Notes when due and to pay the principal portion of the purchase price of Notes
tendered (or deemed tendered) for purchase, plus (ii) interest on the Notes for
a period of 56 days at the rate of 18% per annum, to enable the Trustee to pay
interest on the Notes when due and to pay the interest portion of the purchase
price of Notes tendered (or deemed tendered) for purchase. The initial letter
of credit to be delivered to the Trustee and any substitute letter of credit
delivered to the Trustee pursuant to this Indenture are herein referred to as
the "Letter of Credit". The initial Letter of Credit is issued pursuant to
certain credit and security agreements among the Credit Obligor, the Issuer, and
certain persons related to the Issuer, which evidence, guarantee or provide
security for the obligations of the Issuer to reimburse the Credit Obligor for
draws under the Letter of Credit and the observance and performance of various
agreements of the Issuer and related persons with respect thereto (collectively,
the "Credit Documents").
All things have been done which are necessary to make the Notes, when
executed by the Issuer and authenticated and delivered by the Trustee hereunder,
the valid obligations of the Issuer, and to constitute this Indenture a valid
trust indenture for the security of the Notes, in accordance with the terms of
the Notes and this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
It is hereby covenanted and declared that all of the Notes are to be
authenticated and delivered and the property subject to this Indenture is to be
held and applied by the Trustee, subject to the covenants, conditions and trusts
hereinafter set forth, and the Issuer does hereby covenant and agree to and with
the Trustee, for the equal and proportionate benefit (except as otherwise
expressly provided herein) of all Holders (as hereinafter defined) of the Notes,
as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
---------------------------------
SECTION 1.1 DEFINITIONS
-----------
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) The terms defined in this Article shall have the meanings
assigned in this Article. Singular terms shall include the plural as well
as the singular, and vice versa. Any pronoun shall include both singular
and plural and cover all genders.
(2) All accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made, in accordance with generally accepted accounting principles. All
references herein to "generally accepted accounting principles" refer to
such principles as they exist at the date of application thereof.
(3) All references in this instrument to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections
and subdivisions of this instrument as originally executed.
(4) The terms "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
(5) The term person shall include any individual, corporation,
general or limited partnership, limited liability company or partnership,
joint venture, association, trust, unincorporated organization and any
government or any agency or political subdivision thereof.
Act, when used with respect to any Noteholder, has the meaning stated in
---
Section 1.2.
Act of Bankruptcy shall mean the filing of a petition in bankruptcy (or the
-----------------
other commencement of a bankruptcy or similar proceeding) by or against the
Issuer under any applicable bankruptcy, insolvency, reorganization, or similar
law, now or hereafter in effect.
Affiliate of any specified person shall mean any other person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, "control"
when used with respect to any specified person means the power to direct the
management and policies of such person, directly or
2
<PAGE>
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Authorized Denomination or Denominations means with respect to all Notes
----------------------------------------
the amount of $100,000 and any integral multiple of $5,000 in excess thereof.
Authorized Issuer Representative shall mean any officer of the Issuer or
--------------------------------
any agent of the Issuer authorized by the Issuer to act as "Authorized Issuer
Representative" for purposes of this Indenture and identified as such in writing
delivered to the Trustee.
Beneficial Owner shall have the meaning set forth in Section 4.2.
----------------
Board of Directors shall mean the board of directors of the Issuer as
------------------
constituted from time to time.
Book-Entry System means a book-entry only system of evidence of purchase
-----------------
and transfer of beneficial ownership interests in the Notes.
Business Day shall mean any day other than (1) a Saturday, a Sunday or (2)
------------
a day on which the payment system of the Federal Reserve System is not
operational, or (3) a day on which banking institutions are required or
authorized to remain closed in any of the following locations: (i) the city in
which the Designated Office of the Trustee is located, (ii) the city in which
the principal office of the Remarketing Agent is located, (iii) the city in
which the office of the Credit Obligor where drawings under the Letter of Credit
are to be made is located, or (iv) the City of New York, New York.
Conversion Date shall mean the first day of any Fixed Rate Period.
---------------
Credit Documents shall mean collectively that certain Credit and Security
----------------
Agreement dated the date of execution and delivery thereof between the Issuer
and the Credit Obligor, and all agreements, documents, guaranties, instruments,
notes, notices, and other writings executed and delivered by the Issuer or any
other person or persons which evidence, guarantee or provide security for the
obligations of the Issuer with respect to the Letter of Credit, including any
amendments or supplements to any thereof from time to time entered into pursuant
to the applicable provisions thereof, until a Substitute Letter of Credit shall
have been accepted by the Trustee, and thereafter "Credit Documents" shall mean
collectively all agreements, documents, guaranties, instruments, notes, notices,
and other writings which evidence, guarantee or provide security for the
obligations of the Issuer with respect to such Substitute Letter of Credit.
Credit Obligor shall mean SouthTrust Bank, National Association, a national
--------------
banking association (in its capacity as issuer of the Letter of Credit), and its
successors and assigns, until a Substitute Letter of Credit shall have been
accepted by the Trustee, and thereafter "Credit Obligor" shall mean the issuer
of such Substitute Letter of Credit, and its successors and assigns.
3
<PAGE>
Credit Obligor Indebtedness shall mean all indebtedness or obligations of
---------------------------
the Issuer to the Credit Obligor under the Credit Documents including without
limitation (i) the Issuer's obligation to reimburse the Credit Obligor for draws
made under the Letter of Credit and (ii) the Issuer's obligation to pay fees and
charges for the issuance and continuation of the Letter of Credit.
Credit Obligor Insolvency Date shall mean the date on which the Credit
------------------------------
Obligor notifies the Trustee in writing, or the date on which the Trustee is
notified in writing by the Issuer, or any Governmental Authority, that (i) a
receiver or conservator of the Credit Obligor or of any of the respective
properties or assets thereof shall have been appointed by any Governmental
Authority, or (ii) possession of the property and business of the Credit Obligor
shall have been taken by any Governmental Authority, or (iii) the Credit Obligor
shall have taken advantage of any reorganization, liquidation or dissolution law
or statute, or (iv) if corporate action shall have been taken by the Credit
Obligor for the purpose of effecting any of the foregoing.
Debt Service shall mean the principal of, premium (if any) and interest
------------
payable on the Notes.
Defaulted Interest shall have the meaning stated in Section 4.4.
------------------
Designated Office of the Trustee shall mean the office where the Trustee
--------------------------------
maintains its corporate trust office in Ft. Lauderdale, Florida, or such other
office as shall be designated by the Trustee by written notice to the Issuer,
the Credit Obligor and the Holders of the Notes.
Direct Participant or Direct Participants means securities brokers and
------------------ -------------------
dealers, banks, trust companies and clearing corporations which have access to
the Book-Entry System.
Event of Default shall have the meaning stated in Article IX. An Event of
----------------
Default shall "exist" if an Event of Default shall have occurred and be
continuing.
Existing Letter of Credit means the Letter of Credit held by the Trustee at
-------------------------
the time a Substitute Letter of Credit is delivered to the Trustee.
Federal Securities shall mean any of the following so long as the same are
------------------
not subject to prepayment or redemption at the option of the issuer thereof:
direct obligations of, or obligations the timely payment of the principal of and
interest on which is fully guaranteed by, the United States of America.
Financing Documents shall mean collectively the Notes, the Indenture, the
-------------------
Credit Documents, the Remarketing Agreement and the Letter of Credit.
Fixed Rate shall mean the fixed interest rate borne by the Notes during a
----------
Fixed Rate Period, more particularly described in Section 3.3.
4
<PAGE>
Fixed Rate Interest Payment Date shall mean a date on which interest
--------------------------------
calculated according to the Fixed Rate is payable on the Notes, more
particularly described in Section 3.1.(i)
Fixed Rate Period shall mean a period specified by the Issuer during which
-----------------
the Notes shall bear interest at a fixed rate per annum, more particularly
described in Section 3.3.
Fully Paid, (i) when used with respect to Indenture Indebtedness, shall
----------
have the meaning stated in Section 13.1, and (ii) when used with respect to
Credit Obligor Indebtedness, shall mean that all indebtedness under the Credit
Documents has been paid.
Governmental Authority shall mean any federal, state, county, municipal, or
----------------------
other government, domestic or foreign, and any agency, authority, department,
commission, bureau, board, court or other instrumentality thereof, having
jurisdiction in the premises.
Holder when used with respect to any Note shall mean the Noteholder with
------
respect to such Note.
Indebtedness shall mean collectively Indenture Indebtedness and Credit
------------
Obligor Indebtedness.
Indenture shall mean this instrument as originally executed or as it may
---------
from time to time be supplemented, modified or amended by one or more indentures
or other instruments supplemental hereto entered into pursuant to the applicable
provisions hereof.
Indenture Indebtedness shall mean all indebtedness of the Issuer at the
----------------------
time secured by this Indenture, including without limitation (i) all Debt
Service and (ii) all reasonable and proper fees, charges, expenses, and
disbursements of the Trustee for services performed and disbursements made under
this Indenture.
Independent, when used with respect to any person, shall mean a person who
-----------
(i) is in fact independent, (ii) does not have any direct financial interest or
any material indirect financial interest in the Issuer, the Credit Obligor, or
in any other obligor with respect to the Notes or in any Affiliate of the
Issuer, the Credit Obligor, or of such other obligor, and (iii) is not connected
with the Issuer, the Credit Obligor, or such other obligor as an officer, in-
house attorney, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
Indirect Participant means a broker, dealer, bank or other financial
--------------------
institution for which the Securities Depository holds Notes as securities
depository through a Direct Participant.
Interest Payment Date, when used with respect to any installment of
---------------------
interest on a Note, means the date specified in such Note as the fixed date on
which such installment of interest is due and payable.
5
<PAGE>
Internal Revenue Code shall mean whichever of the following shall be
---------------------
applicable in the context: the Internal Revenue Code of 1954, as amended; the
Internal Revenue Code of 1986, as amended; and the transition rules of related
legislation.
Issuer shall mean La-Man Corporation, a Nevada corporation, and its
------
successors and assigns.
Letter of Credit shall mean collectively the initial letter of credit
----------------
delivered to the Trustee on the date of delivery of the Notes, and, unless the
context or use indicates another or different meaning of intent, any Substitute
Letter of Credit accepted by the Trustee.
Letter of Representation shall mean and include (i) the Letter of
------------------------
Representation with respect to the Notes by the Issuer to the Securities
Depository and (ii) any other or subsequent agreement with respect to the Notes
among said parties by whatever name or identification.
Mandatory Tender shall mean a tender of Notes required by Section 3.5.
----------------
Mandatory Tender Date shall mean a date on which any Mandatory Tender is
---------------------
required, more particularly described in Section 3.5.
Maximum Rate shall mean the lesser of (i) the rate of 18% per annum or (ii)
------------
for any period during which the Notes are supported by a Letter of Credit, the
maximum rate per annum, specified therein, upon which there has been calculated
the amount available to be drawn on such Letter of Credit to pay interest on the
Notes.
Note shall mean any of the Notes authenticated and delivered pursuant to
----
this Indenture.
Note Counsel shall mean counsel with experience in matters relating to the
------------
issuance of obligations of the type evidenced by the Notes, who shall be
acceptable to the Issuer and the Trustee.
Note Fund shall mean the fund established pursuant to Section 7.1.
---------
Noteholder when used with respect to any Note shall mean the person in
----------
whose name such Note is registered in the Note Register (which, during the time
the Book-Entry System is in effect for the Notes, shall be the Securities
Depository or the Securities Depository Nominee).
Note Payment Date shall mean each date (including any date fixed for
-----------------
optional or mandatory redemption of Notes) on which Debt Service is due and
payable on the Notes.
Note Purchase Fund shall mean the fund established pursuant to Section 7.2.
------------------
Note Register shall mean the register or registers for the registration and
-------------
transfer of Notes maintained by the Issuer pursuant to Section 4.1.
6
<PAGE>
Note Registrar shall mean the agent of the Issuer appointed as such
--------------
pursuant to Section 4.1 for the purpose of registering Notes and transfers of
Notes.
Notes shall mean the Variable/Fixed Rate Credit Enhanced Notes, authorized
-----
to be issued pursuant to Section 3.1.
Opinion of Counsel shall mean a written opinion of counsel who may (except
------------------
as otherwise expressly provided in this Indenture) be counsel for the Issuer or
the Credit Obligor and which opinion shall be acceptable to the Trustee.
Opinion of Note Counsel shall mean a written opinion of Note Counsel, which
-----------------------
opinion shall be acceptable to the Trustee.
Optional Tender shall mean a tender of Notes at the option of the Holder
---------------
thereof pursuant to Section 3.4.
Optional Tender Date shall mean any date on which Notes are to be purchased
--------------------
pursuant to an Optional Tender.
Outstanding when used with respect to Notes shall mean, as of the date of
-----------
determination, all Notes authenticated and delivered under this Indenture,
except:
(1) Notes canceled by the Trustee or delivered to the Trustee for
cancellation,
(2) Notes for the payment of which (either at maturity or upon prior
redemption) money in the necessary amount has been deposited with the
Trustee in trust for the Holders of such Notes, provided that, if such
Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made,
(3) Unsurrendered Notes for the purchase of which money in the
necessary amount has been deposited in the Note Purchase Fund and is held
in trust for the Holders of such Unsurrendered Notes, and
(4) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered under this Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of Notes Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Issuer or any other obligor with respect to the Notes or any Affiliate of
the Issuer or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which the Trustee knows to be so owned shall be
disregarded. Notes so owned which have been
7
<PAGE>
pledged in good faith (including Pledged Notes) may be regarded as Outstanding
for such purposes if the pledgee establishes to the satisfaction of the Trustee
the pledgee's right so to act with respect to such Notes and that the pledgee is
not the Issuer or any other obligor with respect to the Notes or any Affiliate
of the Issuer, or of such other obligor.
Paving Agent shall mean the Trustee and any other person authorized by the
------------
Issuer to pay Debt Service on any Notes on behalf of the Issuer.
Pledged Notes shall mean Notes purchased pursuant to the Optional Tender or
-------------
Mandatory Tender provisions of this Indenture with money drawn under the Letter
of Credit and held by the Tender Agent or Trustee for the benefit of, or
registered in the name of, the Credit Obligor, as pledgee, pursuant to Section
3.6 of this Indenture and pursuant to any provision of the Credit Documents with
respect thereto.
Post-Default Rate shall mean (i) when used with respect to any payment of
-----------------
Debt Service on any Note, the rate specified in such Note for overdue
installments of Debt Service on such Note, computed as provided in such Note,
and (ii) when used with respect to all other payments due under this Indenture,
the rate of 12% per annum (computed on the basis of a 360-day year with 12
months of 30 days each).
Principal Office of the Tender Agent shall mean the office where the Tender
------------------------------------
Agent maintains its principal office.
Proceeds Fund shall mean the fund established pursuant to Section 6.2.
-------------
Qualified Investments shall mean:
---------------------
(1) Federal Securities,
(2) an interest in any trust or fund that invests solely in
obligations described in (1) or (4) of this definition (including without
limitation any fund or funds managed by the Trustee or any affiliate
thereof or person related thereto),
(3) a certificate of deposit or time deposit issued by (i) the
Trustee, or (ii) any other bank organized under the laws of the United
States of America or any state thereof with capital, surplus and undivided
profits of not less than $50,000,000, provided in each case such deposit is
insured by the Federal Deposit Insurance Corporation, or such deposit is
collaterally secured by the issuing bank by pledging Federal Securities
having a market value (exclusive of accrued interest) not less than the
face amount of such certificate less the amount of such deposit insured by
the Federal Deposit Insurance Corporation, and
8
<PAGE>
(4) a repurchase agreement with respect to Federal Securities,
provided that the Federal Securities subject to such repurchase agreement
are held by or under the control of the Trustee free and clear of third-
party liens, and
(5) any other investment permitted by law.
Rating Agency shall mean any nationally recognized securities rating
-------------
agency.
Regular Record Date shall mean (i) with respect to any Variable Rate
-------------------
Interest Payment Date, the day (whether or not a Business Day) next preceding
such Interest Payment Date, (ii) with respect to any Fixed Rate Interest Payment
Date for a Fixed Rate Period of less than 6 months, the day (whether or not a
Business Day) next preceding such Fixed Rate Interest Payment Date, and (iii)
with respect to any Fixed Rate Interest Payment Date for a Fixed Rate Period of
6 months or more, the 15th day (whether or not a Business Day) next preceding
such Fixed Rate Interest Payment Date.
Remarketing Agent shall mean the person appointed as "Remarketing Agent"
-----------------
pursuant to Section 12.1, until a successor Remarketing Agent shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Remarketing Agent" shall mean such successor.
Remarketing Agreement shall mean that certain Remarketing Agent Agreement
---------------------
dated as of August 1, 1997, among the Issuer, the Trustee and the Remarketing
Agent.
Securities Depository means The Depository Trust Company, a limited purpose
---------------------
trust company organized under the laws of the State of New York, and the
successors and assigns thereof, and any substitute securities depository
therefor that maintains a Book-Entry System for the Notes.
Securities Depository Nominee means the Securities Depository or the
-----------------------------
nominee of such Securities Depository in whose name there shall be registered on
the Note Register the Notes to be delivered to such Securities Depository during
a period in which the Notes are held pursuant to the Book-Entry System.
Special Funds shall mean the Note Fund, the Note Purchase Fund, the
-------------
Proceeds Fund and any other fund or account established pursuant to this
Indenture.
Special Record Date for the payment of any Defaulted Interest on the Notes
-------------------
means a date fixed by the Trustee pursuant to Section 4.4.
Stated Expiration Date shall mean the date on which the Letter of Credit
----------------------
will, by its terms, expire unless the Letter of Credit is terminated on an
earlier date in accordance with its terms.
9
<PAGE>
Substitute Letter of Credit shall mean a letter of credit delivered to the
---------------------------
Trustee in substitution for an Existing Letter of Credit then held by the
Trustee, as more particularly described in Section 3.10.
Tender Agent shall mean any person appointed as "Tender Agent" pursuant to
------------
Section 12.2, until a successor Tender Agent shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Tender Agent" shall
mean such successor.
Tender Date shall mean an Optional Tender Date or a Mandatory Tender Date,
-----------
as the case may be.
Tendered Notes shall mean Notes tendered (or deemed tendered) for purchase
--------------
pursuant to the Optional Tender or Mandatory Tender provisions of this
Indenture.
Trust Estate shall have the meaning stated in the habendum to the granting
------------
clauses to this Indenture.
Trustee shall mean SouthTrust Bank, National Association, a national
-------
banking association having its principal office in Birmingham, Alabama (in its
capacity as trustee hereunder), with its Designated Office presently located in
Ft. Lauderdale, Florida, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor.
Unsurrendered Note shall mean Notes (or portions thereof in authorized
------------------
denominations) which are deemed purchased pursuant to Optional Tender or
Mandatory Tender provisions hereof, but which have not been presented to the
Trustee by the Holders thereof; provided that any Note which the Holder thereof
elects to retain under Section 3.5(c) shall not be an Unsurrendered Note for
purposes of this Indenture.
Variable Rate shall mean the variable interest rate borne by the Notes
-------------
during a Variable Rate Period, more particularly described in Section 3.2.
Variable Rate Interest Payment Date shall mean a date on which interest
-----------------------------------
calculated at the Variable Rate is payable on the Notes, more particularly
described in Section 3.1(i).
Variable Rate Period shall mean a period during which the Notes bear
--------------------
interest at the Variable Rate, more particularly described in Section 3.2.
SECTION 1.2 ACTS OF NOTEHOLDERS
-------------------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given, made or taken by
Noteholders may be embodied in and evidenced by one or more substantially
concurrent instruments of substantially similar tenor signed by such Noteholders
in person or by an agent duly appointed in writing; and, except
10
<PAGE>
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent, or of the holding by any person of Notes, shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Issuer and (subject to
Section 10.1) in favor of the Trustee, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officers authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation, a member of a general partnership, or a general
partner of a limited partnership, or by any person purporting to act for a
limited liability company or limited liability partnership, on behalf thereof,
such certificate or affidavit shall also constitute sufficient proof of the
authority therefor.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done or suffered to
be done by the Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
SECTION 1.3 FORM AND CONTENTS OF DOCUMENTS DELIVERED TO TRUSTEE
---------------------------------------------------
(a) Whenever several matters are required to be certified by, or covered by
an opinion of, any specified person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such person, or that
they be so certified or covered by only one document, but one such person may
certify or give an opinion with respect to some matters and one or more other
such persons as to other matters, and any such person may certify or give an
opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, legal counsel, unless such person knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Issuer Representative stating that the
information with respect to such factual matters is in the possession of the
Issuer, unless such legal counsel knows, or in the exercise of reasonable care
11
<PAGE>
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
(c) Whenever any person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Wherever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report.
SECTION 1.4 COMPLIANCE CERTIFICATES AND OPINIONS
------------------------------------
(a) Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Trustee a certificate signed by an Authorized Issuer Representative stating
that all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
(b) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
condition or covenant has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
12
<PAGE>
SECTION 1.5 EFFECT OF HEADINGS AND TABLE OF CONTENTS
----------------------------------------
The Article and Section headings herein and in the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.6 DATE OF INDENTURE
-----------------
The date of this Indenture is intended as and for a date for the convenient
identification of this Indenture and is not intended to indicate that this
Indenture was executed and delivered on said date.
SECTION 1.7 ENFORCEABILITY
--------------
If any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.8 GOVERNING LAW
-------------
This Indenture shall be construed in accordance with and governed by the
laws of the State of Florida.
SECTION 1.9 COUNTERPARTS
------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 1.10 NOTICES
-------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with, the Issuer, the Trustee,
the Tender Agent, the Remarketing Agent, or the Credit Obligor shall be
sufficient for every purpose hereunder if in writing and (except as otherwise
provided in this Indenture) (i) delivered personally to the party or, if such
party is not an individual, to an officer or other legal representative of the
party to whom the same is directed, at the address specified below, (ii) mailed
by first-class, registered or certified mail, postage prepaid, addressed as
specified below, or (iii) sent by facsimile transmission to the facsimile number
specified below. The hand delivery and mailing addresses and telephone and
facsimile numbers for the parties are as follows:
13
<PAGE>
TRUSTEE
- -------
SouthTrust Bank, National Association
Corporate Trust Department
101 N.E. 3rd Avenue, Suite 100
(Suite 502 if sent by courier service)
Ft. Lauderdale, Florida 33301
Telephone number: 954/527-5628
Facsimile number: 954/760-7937
REMARKETING AGENT
- -----------------
SouthTrust Securities, Inc.
112 North 20th Street
Birmingham, Alabama 35203
Telephone number: 205/254-5400
Facsimile number: 205/254-4989
ISSUER
- ------
La-Man Corporation
5029 Edgewater Drive
Orlando, Florida 32810
Telephone number: 407/521-7477
Facsimile number: 407/521-8767
CREDIT OBLIGOR
- --------------
SouthTrust Bank, National Association
SouthTrust Tower
420 North 20th Street (35203)
P.O. Box 2554 (35290)
Birmingham, Alabama
Attn: Corporate Banking
Telephone number: 205/254-5626
Facsimile number: 205/254-4240
14
<PAGE>
(b) Any of such parties may change the address or number for receiving any
such notice or other document by giving notice of the change to the other
parties named in this Section.
(c) Any notice or other document shall be deemed delivered when actually
received by the party to whom directed (or, if such party is not an individual,
to an officer or other legal representative of the party) at the address or
number specified pursuant to this Section, or, if sent by mail, 3 days after
such notice or document is deposited in the United States mail, first class
postage prepaid, addressed as provided above.
SECTION 1.11 NOTICES TO NOTEHOLDERS; WAIVER
------------------------------
(a) Where this Indenture provides for publication of notice to Noteholders
of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, or
sent by facsimile transmission, to each Holder of such Notes, at the address of
such Holder as it appears in the Note Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the first publication of
such notice.
(b) In any case where notice to Noteholders is given, neither the failure
to send such notice, nor any defect in any notice so sent, to any particular
Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 1.12 CONCERNING THE CREDIT OBLIGOR AND THE LETTER OF CREDIT
------------------------------------------------------
(a) No consent or direction or other exercise of discretion or control by
the Credit Obligor hereunder shall be required or permitted if the Letter of
Credit is no longer in effect or if the Credit Obligor has dishonored a draw
under the Letter of Credit or a Credit Obligor Insolvency Date shall have
occurred.
(b) Nothing contained in this Indenture shall be construed to require or
permit any consent or approval by the Credit Obligor for the performance by the
Trustee of its obligations under Sections 7.1, 7.2 or 9.2, with respect to draws
under the Letter of Credit and acceleration of the maturity of the Notes, except
where such consent or approval of the Credit Obligor is expressly required or
permitted in any of such Sections.
SECTION 1.13 NOTICE TO RATING AGENCIES
-------------------------
The Trustee shall promptly furnish to each Rating Agency (if any) that
maintains a rating with respect to the Notes a notice of (i) any change of the
Trustee, the Remarketing Agent or
15
<PAGE>
the Tender Agent, (ii) any change or amendment of the Indenture or the Letter of
Credit, (iii) the expiration or renewal or extension or termination of the term
of the Letter of Credit, or substitution of the Letter of Credit, (iv) the
conversion of the interest rate on the Notes to a Fixed Rate, (v) the
acceleration of payment of principal and interest on the Notes pursuant to
Section 9.2, (vi) the payment in full, or the redemption prior to maturity, of
all Notes Outstanding hereunder, (vii) receipt of notice of the Issuer's intent
to establish a trust for the payment of the Notes in accordance with Section
13.2 or (viii) any other information required by law to be furnished by the
Trustee to any such Rating Agency.
SECTION 1.14 SUCCESSORS AND ASSIGNS
----------------------
All covenants and agreements in this Indenture by the Issuer shall bind its
successors and assigns, whether so expressed or not.
SECTION 1.15 BENEFITS OF INDENTURE
---------------------
Nothing in this Indenture or in the Notes, express or implied, shall give
to any person, other than the parties hereto and their successors hereunder, the
Holders of the Outstanding Notes, and the Credit Obligor, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
ARTICLE II
GRANTING CLAUSES
----------------
To secure the payment of Debt Service on the Notes and all other Indenture
Indebtedness and the performance of the covenants contained herein and in the
Notes, and to declare the terms and conditions on which the Notes are secured,
and in consideration of the premises and of the purchase of the Notes by the
Holders thereof, the Issuer by these presents does hereby grant, bargain, sell,
alien, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge,
set over and confirm unto the Trustee, and grant to the Trustee security title
to and a continuing security interest in, all and singular, the following
described property and all proceeds and products thereof:
I.
Money and investments from time to time on deposit in, or forming a part
of, the Special Funds, subject to the provisions of this Indenture permitting
the application thereof for the purposes and on the terms and conditions set
forth herein.
16
<PAGE>
II.
Any and all property of every kind or description which may, from time to
time hereafter, by delivery or by writing of any kind, be subjected to the lien
of this Indenture as additional security by the Issuer or anyone on its part or
with its written consent, or which pursuant to any of the provisions hereof may
come into the possession or control of the Trustee or a receiver appointed
pursuant to this Indenture; and the Trustee is hereby authorized to receive any
and all such property as and for additional security for the Notes and to hold
and apply all such property subject to the terms hereof;
TO HAVE AND TO HOLD all said property, rights and privileges of every kind
and description, real, personal or mixed, hereby and hereafter (by supplemental
indenture or otherwise) granted, bargained, sold, aliened, remised, released,
conveyed, assigned, transferred, mortgaged, hypothecated, pledged, set over or
confirmed as aforesaid, or intended, agreed or covenanted so to be, together
with all the appurtenances thereto appertaining (said property, rights and
privileges being herein called the "Trust Estate") unto the Trustee and its
successors and assigns forever;
BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and
security of the Holders from time to time of the Notes without any priority of
any such Note over any other such Note;
PROVIDED, HOWEVER, that money collected by the Trustee pursuant to the
Letter of Credit shall be used solely for the purpose of paying Debt Service on
the Notes or the purchase price of Notes tendered for purchase pursuant to the
Optional Tender or Mandatory Tender provisions hereof.
ARTICLE III
THE NOTES
---------
SECTION 3.1 GENERAL TERMS
-------------
(a) There is hereby authorized to be issued under and secured by this
Indenture Notes in aggregate principal amount of $2,500,000 and designated as
provided in the form thereof set forth on Exhibit A hereto.
(b) No additional notes may be issued hereunder.
(c) The Notes shall be issued as registered notes, without coupons, in
Authorized Denominations, in substantially the form of Exhibit A to this
Indenture, with appropriate variations, omissions, insertions, notations,
legends or endorsements required by law or usage
17
<PAGE>
or permitted or required by this Indenture. The Notes shall be numbered
separately from R-1 upward.
(d) The Notes shall mature on August 1, 2012, subject to the provisions of
Section 5.1(b) and Section 9.2.
(e) The Notes shall be dated as of the date of initial delivery thereof and
shall bear interest from such date, or the most recent date to which interest
has been paid or duly provided for, at the applicable rate per annum set forth
in this Article.
(f) The Notes shall bear interest at the Variable Rate or at the Fixed
Rate, as provided in Sections 3.2 and 3.3.
(g) Interest at the Variable Rate and interest at a Fixed Rate for each
Fixed Rate Period of less than 6 months shall be computed on the basis of a 360
day year for the actual number of days elapsed. Interest at the Fixed Rate for
each Fixed Rate Period of 6 months or more shall be computed on the basis of a
360-day year with 12 months of 30 days each.
(h) Interest shall be payable on overdue principal on the Notes and (to the
extent legally enforceable) on any overdue installment of interest on the Notes
at the Post-Default Rate.
(i) Interest shall be payable in arrears on the following Interest Payment
Dates:
(1) with respect to interest payable at the Variable Rate, on (i) the
first day of each month of each year during the Variable Rate Period and
(ii) the day immediately following any Variable Rate Period;
(2) with respect to interest payable at a Fixed Rate for any Fixed
Rate Period of less than 6 months, on the day immediately following such
Fixed Rate Period; and
(3) with respect to interest payable at a Fixed Rate for any Fixed
Rate Period of 6 months or more, (i) on the first day of the calendar month
that is 6 months after the first day of the calendar month in which such
Fixed Rate Period began, (ii) semiannually thereafter, and (iii) on the day
immediately following such Fixed Rate Period.
(j) Payment of interest on the Notes due on any Interest Payment Date shall
be made by check or draft mailed by the Trustee to the Noteholder or Noteholders
at the address thereof appearing in the Note Register. Such payments of
interest shall be deemed timely made if so mailed on the Interest Payment Date
(or, if any such Interest Payment Date is not a Business Day, on the Business
Day next following such Interest Payment Date). Payment of principal of (and
premium, if any, on) any Note and payment of accrued interest on any Note due
upon redemption on any date other than an Interest Payment Date shall be made
only upon surrender of such Note at the Designated Office of the Trustee or at
the office of any other Paying Agent therefor.
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(k) Subsection (j) of this Section to the contrary notwithstanding, upon
the written request of the Holder of any Note in a principal amount of not less
than $100,000, the Trustee will make payment of the Debt Service due on such
Note by wire transfer to an account of such Holder maintained at a bank in the
continental United States or by any other method providing for payment in same-
day funds that is acceptable to the Trustee, provided that:
(1) such written request contains adequate instructions for the method
of payment, and
(2) payment of the principal of (and redemption premium, if any, on)
such Note and payment of the accrued interest on such Note due upon
redemption on any date other than an Interest Payment Date shall be made
only upon surrender of such Note to the Trustee.
SECTION 3.2 VARIABLE RATE
-------------
(a) The Notes shall initially bear interest at a Variable Rate. Upon the
expiration of any Fixed Rate Period for the Notes, such Notes shall bear
interest at the Variable Rate (unless the day immediately following such Fixed
Rate Period is a Conversion Date), and once the Variable Rate becomes effective,
it shall remain in effect until and including the day immediately prior to the
earlier of (i) a Conversion Date or (ii) the final maturity of the Notes.
(b) The Variable Rate shall be a fluctuating rate per annum determined by
the Remarketing Agent periodically during a Variable Rate Period as provided
below in this Section.
(c) The Variable Rate shall be determined on the first day of each Variable
Rate Period (beginning upon initial issuance of the Notes and upon any change
from a Fixed Rate Period to a Variable Rate Period) and on each Thursday during
such Variable Rate Period (or, if any such day for determination is not a
Business Day, on or as of the immediately preceding Business Day). The Variable
Rate so determined shall become effective (i) in the case of a determination in
connection with the initial issuance of the Notes or a change from a Fixed Rate
Period to a Variable Rate Period, the first day of the Variable Rate Period, and
(ii) in any other case, on the Friday immediately following the date of
determination, and once effective shall remain in effect until and including the
following Thursday, or, if sooner, the ending day of such Variable Rate Period;
provided, however, that if the Remarketing Agent fails to determine the Variable
Rate on any such determination date, the last Variable Rate in effect shall
remain in effect until and including the next Thursday, or, if sooner, the
ending day of such Variable Rate Period, and provided further, if the
Remarketing Agent fails to determine the Variable Rate on two consecutive
determination dates therefor, the Variable Rate shall be equal to the Maximum
Rate until and including the day preceding the effective date of a Variable Rate
change for which the Remarketing Agent shall have determined the Variable Rate
in accordance with the terms hereof.
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(d) The Variable Rate shall be determined by the Remarketing Agent and
shall be the lowest interest rate that would, in the opinion of the Remarketing
Agent, result in the market value of the Notes being 100% of the principal
amount thereof on the date of such determination, taking into account relevant
market conditions and credit rating factors as they exist on such date;
provided, however, that the Variable Rate may never exceed the Maximum Rate. On
each Variable Rate determination date the Remarketing Agent shall deliver
written notice of the Variable Rate so determined to the Trustee, by 3:00 p.m.
(Ft. Lauderdale, Florida time), and to the Issuer and the Credit Obligor. Upon
the request of any Noteholder, the Trustee shall confirm (by telephone and in
writing, if so requested) the Variable Rate then in effect.
(e) The Variable Rate determined from time to time by the Remarketing Agent
shall be conclusive and binding on the Issuer, the Trustee and the Noteholders.
SECTION 3.3 FIXED RATE
(a) The Notes shall bear interest at a Fixed Rate during each period of
time specified by the Issuer as provided below in this Section. Upon the
expiration of a Fixed Rate Period, interest on the Notes will automatically
convert to a Variable Rate unless and until the Issuer elects to have the
interest rate converted to another Fixed Rate for a Fixed Rate Period designated
by the Issuer.
(b) The Fixed Rate shall be a fixed rate per annum which shall be
applicable during the entire Fixed Rate Period and, for each Fixed Rate Period
other than the initial Fixed Rate Period, shall be determined by the Remarketing
Agent as provided below in this Section.
(c) The Issuer may elect that the Notes bear interest at a Fixed Rate for
any period after the initial Variable Rate Period by delivery of written notice
of such election to the Trustee not less than 45 days prior to the proposed
Conversion Date. Such notice shall specify the first day and the last day of
the Fixed Rate Period elected; provided, however, that (i) if such election is
made during a Fixed Rate Period, the specified Conversion Date may not be sooner
than the first day immediately following the Fixed Rate Period then in effect,
(ii) the Conversion Date may not be less than 45 days prior to the Stated
Expiration Date of the Letter of Credit (if any) then in effect, (iii) the
designated Fixed Rate Period may not be less than 15 days, and (iv) the Fixed
Rate Period may not extend beyond the day immediately prior to the final
maturity of the Notes. The Trustee shall deliver a copy of such notice to the
Remarketing Agent, the Tender Agent and the Credit Obligor on or before the
third Business Day following the Trustee's receipt thereof. Any such election
by the Issuer shall be irrevocable after 10:00 a.m. (Ft. Lauderdale, Florida
time) on the last Business Day immediately prior to the proposed Conversion
Date.
(d) Not less than 1 nor more than 10 days prior to the proposed Conversion
Date the Remarketing Agent shall determine the interest rate for such Fixed Rate
Period, which shall be the lowest interest rate that would, in the opinion of
the Remarketing Agent, result in the market
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<PAGE>
value of the Notes being 100% of the principal amount thereof on the date of
such determination, taking into account relevant market conditions and credit
rating factors as they exist on such date, and assuming that the Fixed Rate
Period begins on such date; provided, however, that the Fixed Rate may not
exceed the Maximum Rate. The Remarketing Agent shall deliver written notice of
the Fixed Rate or Rates to the Trustee and the Issuer on the date the same are
determined.
(e) Notwithstanding the foregoing, a Fixed Rate or Fixed Rates shall not be
established if:
(1) the Issuer delivers to the Trustee written notice of revocation of
its election to establish the Fixed Rate before 10:00 a.m. (Ft. Lauderdale,
Florida time) on the last Business Day immediately prior to the proposed
Conversion Date, or
(2) prior to 10:00 a.m. (Ft. Lauderdale, Florida time) on the
Conversion Date the Trustee does not receive (i) an Opinion of Note Counsel
stating in effect that such conversion to a Fixed Rate is lawful under
applicable law, and (ii) the Substitute Letter of Credit (if any) that is
to be effective on such Conversion Date.
If all conditions to the establishment of a Fixed Rate or Fixed Rates are not
satisfied, the Notes shall continue (or, if a Fixed Rate Period ended on the
preceding day, shall begin) to bear interest at the Variable Rate from the
proposed Conversion Date.
(f) The Fixed Rate or Rates determined by the Remarketing Agent shall be
conclusive and binding on the Issuer, the Trustee and the Noteholders.
SECTION 3.4 OPTIONAL TENDER
---------------
(a) The Holder of any Note shall have the right to tender such Note to the
Trustee or Tender Agent for purchase in whole or in part (if in part, only in an
Authorized Denomination) on any Business Day during any Variable Rate Period,
but not during any Fixed Rate Period, at a purchase price equal to 100% of the
principal amount of Notes (or portions thereof) tendered plus accrued interest
to the specified purchase date. In order to exercise such option with respect
to any Note, the Holder thereof must deliver notice thereof to the Trustee, as
provided below in this Section, at its Designated Office at least 7 days prior
to the proposed Optional Tender Date.
(b) The written notice of Optional Tender must be substantially in the form
set forth on Exhibit C attached hereto, or in such other form as shall be
acceptable to the Trustee, and must be duly executed by the Noteholder and must
specify (i) the name of the registered Holder of the Note to be tendered for
purchase, (ii) the Optional Tender Date, (iii) the certificate number (if
applicable) and principal amount of such Note, and (iv) the principal amount of
such Note to be purchased (if such amount is less than the entire principal
amount, the amount to be
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purchased must be in an Authorized Denomination). Such notice shall be given to
the Trustee in writing.
(c) If any notice of Optional Tender specifies an Optional Tender Date that
is not a Business Day, then such notice shall be deemed to specify the next
following Business Day as the Optional Tender Date. Unless a notice of Optional
Tender indicates that less than the entire principal amount of the Note is being
tendered for purchase, the Holder will be deemed to have tendered the Note in
its entire principal amount for purchase.
(d) Not later than 3:00 p.m. (Ft. Lauderdale, Florida time) on the Business
Day after receipt of any such written notice of Optional Tender the Trustee
shall deliver written notice to the Tender Agent, the Remarketing Agent, the
Issuer and the Credit Obligor specifying (i) the principal amount of Notes for
which a notice of Optional Tender has been given and (ii) the proposed Optional
Tender Date therefor.
(e) Upon delivery of a written notice of Optional Tender, the election to
tender shall be irrevocable and binding upon such Holder and may not be
withdrawn. The Trustee shall, in its sole discretion, determine whether, with
respect to any Note, the Holder thereof shall have properly exercised the option
to have such Holder's Note or any authorized part thereof purchased pursuant to
this Section.
(f) If a written notice of tender shall have been duly given with respect
to any Note or any authorized part thereof, the Holder of such Note shall
deliver such Note to the Trustee at its Designated Office or to the Tender Agent
at its Principal Office at or before 10:00 a.m. (Ft. Lauderdale, Florida time)
on the Optional Tender Date, together with an instrument of assignment or
transfer duly executed in blank (which instrument of assignment or transfer
shall be in the form provided on such Note or in such other form as shall be
acceptable to the Trustee or the Tender Agent). During a period in which the
Book-Entry System is in effect for the Notes, transfers of the beneficial
ownership interests in the Notes on such date shall be effected on the records
of the Securities Depository by the Securities Depository in accordance with
rules and procedures therefor and any requirement for physical delivery of Notes
on an Optional Tender Date shall be deemed satisfied thereby. Any Note or any
authorized part thereof for which a notice of Optional Tender has been given but
which is not so delivered to the Trustee or Tender Agent or transferred on the
records of the Securities Depository shall nevertheless be deemed to have been
tendered by the Holder thereof on the Optional Tender Date.
(g) On each Optional Tender Date the Trustee shall purchase, or cause to be
purchased, all Notes or any authorized part thereof as to which written notices
of Optional Tender for purchase have been received at a purchase price equal to
100% of the principal amount thereof plus accrued interest to the Optional
Tender Date. Funds for payment of the purchase price of such Notes or such
parts shall be drawn by the Trustee from the Note Purchase Fund as provided in
Section 7.2.
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(h) If there has been irrevocably deposited in the Note Purchase Fund an
amount sufficient to pay the principal amount of plus accrued interest to the
specified purchase date on all Notes or authorized parts thereof tendered or
deemed to be tendered for purchase on an Optional Tender Date, any Unsurrendered
Notes shall be deemed to have been tendered for purchase and purchased from the
Holder thereof on such Optional Tender Date and the Holder of any Unsurrendered
Note shall not be entitled to receive interest on such Unsurrendered Note for
any period on and after the Optional Tender Date. The Trustee shall issue a new
Note or Notes in the same aggregate principal amount for any Unsurrendered Notes
which are not tendered for purchase on any Optional Tender Date and, upon
receipt by the Trustee or Tender Agent of any such Unsurrendered Notes from the
Holders thereof, shall pay, or cause to be paid, the purchase price of such
Unsurrendered Notes to the Holders thereof and cancel such Unsurrendered Notes.
(i) Anything in this Indenture to the contrary notwithstanding, no Optional
Tender of Notes shall be permitted for Pledged Notes or for any Note which is
deemed Fully Paid.
SECTION 3.5 MANDATORY TENDER
----------------
(a) The Holder of each Note other than a Pledged Note or a Note that has
been deemed Fully Paid shall be required to tender such Note to the Trustee or
Tender Agent for purchase on the following dates (each a Mandatory Tender Date;
provided, however, if any of such dates is not a Business Day, the Mandatory
Tender Date shall be deemed to be the next succeeding Business Day; provided
further, however, that in the case of clause (5) or clause (6) of this
subsection, each such Holder may elect to retain the Note or Notes thereof by
written notice meeting the requirements of subsection 3.5(c) delivered to the
Designated Office of the Trustee not less than five days prior to the Mandatory
Tender Date):
(1) each proposed Conversion Date,
(2) the date immediately following the expiration of a Fixed Rate
Period,
(3) the first day of the calendar month in which the Stated Expiration
Date of the Letter of Credit occurs, unless a Substitute Letter of Credit
and Related Documentation all meeting the requirements of this Indenture
therefor is delivered to the Trustee in accordance with the terms of
Section 3.10 of this Indenture,
(4) a Credit Obligor Insolvency Date,
(5) that date which is 15 days prior to the effective date of any
change in the frequency with which or the formula by which the interest
rate on the Notes is established during a Variable Rate Period,
(6) that date which is 15 days prior to the effective date of any
change in the optional tender terms of the Notes during a Variable Rate
Period.
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(b) Not less than 15 days prior to the Mandatory Tender Date, notice of a
Mandatory Tender shall be given by the Trustee in writing to the Tender Agent,
the Remarketing Agent, the Issuer, and the Credit Obligor and in writing by
registered or certified mail to the Noteholder or Noteholders at the address
thereof appearing on the Note Register. Such notice of Mandatory Tender shall
(1) specify the Mandatory Tender Date,
(2) state the reason for the Mandatory Tender (being the applicable
event listed in subsection (a) of this Section), and whether the then
Existing Letter of Credit or a Substitute Letter of Credit will be in
effect following the Mandatory Tender Date,
(3) state that all Notes shall be tendered by the Holders thereof on
such Mandatory Tender Date by appropriate transfer on the records of the
Securities Depository or by delivery to the Trustee at its Designated
Office or to the Tender Agent at its Principal Office at or before 10:00
a.m. (Ft. Lauderdale, Florida time) together with an instrument of
assignment or transfer duly executed in blank (which instrument of
assignment or transfer shall be in the form provided in the Notes or such
other form as shall be acceptable to the Trustee or Tender Agent),
(4) state that all Notes shall be purchased on the Mandatory Tender
Date at a purchase price equal to 100% of the principal amount thereof plus
accrued interest, if any, to the Mandatory Tender Date, and any Note that
is not so transferred on the records of the Securities Depository or so
delivered to the Trustee or Tender Agent shall be deemed to have been
tendered for purchase by the Holder thereof on the Mandatory Tender Date,
(5) in the case of a Mandatory Tender as a result of a change
described in clause (5) or clause (6) of subsection 3.5(a), state that any
Holder may elect to retain the Note or Notes thereof by written notice
meeting the requirements of subsection 3.5(c) (a description of which
requirements shall be included in such notice) delivered to the Designated
Office of the Trustee not less than five days prior to the Mandatory Tender
Date.
(c) (1) In the case of a Mandatory Tender as a result of a change
described in clause (5) or clause (6) of subsection 3.5(a), the Holder of any
Note subject to a Mandatory Tender may elect to retain the Note or Notes thereof
by written notice delivered to the Designated Office of the Trustee not less
than five days prior to the Mandatory Tender Date, which notice shall be
effective upon receipt and shall:
(i) state that the person delivering the same is a Holder and the
principal amount of the Notes such Holder is electing to retain,
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<PAGE>
(ii) state that the Holder has received notice of the Mandatory
Tender and the reason therefor,
(iii) direct the Trustee not to purchase the specified principal
amount of the Notes of the Holder.
(2) Any notice delivered to the Trustee by any Holder pursuant to this
subsection 3.5(c) shall be irrevocable and binding upon the Holder delivering
the same and upon all subsequent Holders of the Notes so retained (including any
Notes issued in exchange therefor or upon transfer thereof).
(3) Any Note which the Holder thereof elects to retain under this
subsection 3.5(c) shall not be an "Unsurrendered Note" for purposes of this
Indenture.
(d) All Notes to be tendered by the Holders thereof for purchase shall be
delivered at or before 10:00 a.m. (Ft. Lauderdale, Florida time) on the
Mandatory Tender Date, to the Trustee at its Designated Office or to the Tender
Agent at its Principal Office, together with an instrument of assignment or
transfer duly executed in blank (which instrument of assignment or transfer
shall be in the form provided in the Notes or such other form as shall be
acceptable to the Trustee or Tender Agent). During a period in which the Book-
Entry System is in effect for the Notes, transfers of the beneficial ownership
interests in the Notes on such date shall be effected on the records of the
Securities Depository by the Securities Depository in accordance with rules and
procedures therefor and any requirement for physical delivery of Notes on a
Mandatory Tender Date shall be deemed satisfied thereby. All Unsurrendered
Notes shall nevertheless be deemed to have been tendered for purchase by the
Holders thereof on the Mandatory Tender Date.
(e) On the Mandatory Tender Date, the Trustee shall purchase, or cause to
be purchased, all Notes tendered or deemed tendered for purchase on such date at
a purchase price equal to 100% of the principal amount thereof plus accrued
interest, if any, to the Mandatory Tender Date. Funds for payment of the
purchase price of such Notes shall be drawn by the Trustee from the Note
Purchase Fund as provided in Section 7.2.
(f) If there has been irrevocably deposited in the Note Purchase Fund an
amount sufficient to pay the purchase price of all Notes tendered or deemed
tendered for purchase on the Mandatory Tender Date, any Unsurrendered Notes
shall be deemed to be tendered for purchase and purchased from the Holder
thereof on such Mandatory Tender Date and the Holder of any Unsurrendered Note
shall not be entitled to receive interest on such Unsurrendered Note for any
period on and after the relevant Mandatory Tender Date. The Trustee shall issue
a new Note or Notes in the same aggregate principal amount for any Unsurrendered
Notes which are not tendered for purchase on any Mandatory Tender Date and, upon
receipt by the Trustee or Tender Agent of any such Unsurrendered Notes from the
Holders thereof, shall pay, or cause to be paid, the purchase price of such
Unsurrendered Notes to the Holders thereof and cancel such Unsurrendered Notes.
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(g) After notice of a Mandatory Tender has been given by the Trustee, the
Notes shall be subject to Mandatory Tender (except with respect to Notes which
the Holders thereof have elected to retain as provided in subsection 3.5(c))
notwithstanding the fact that the reasons for giving such notice cease to exist
or are no longer applicable.
SECTION 3.6 PROCEDURES FOR PURCHASE AND REMARKETING OF NOTES; DELIVERY
----------------------------------------------------------
OF PURCHASED AND REMARKETED NOTES
- ---------------------------------
(a) Anything in this Indenture to the contrary notwithstanding, for
purposes of this Section 3.6 during a period in which the Book-Entry System is
in effect for the Notes:
(1) the term "Note" and "Notes" when used in this Section 3.6 shall
mean and include the interests of the Beneficial Owners therein all or a
portion of which are tendered or deemed tendered for purchase pursuant to
this Indenture, and
(2) the term "Holder" and "Holders" when used in this Section 3.6
shall mean and include any Beneficial Owner or Beneficial Owners who shall
have tendered the interests (or a portion) thereof in the Notes for
purchase pursuant to this Indenture, and
(3) delivery, transfer, and registration of ownership and pledge of
the beneficial ownership interests in the Notes shall be effected on the
records of the Securities Depository by the Securities Depository in
accordance with rules and procedures therefor and any requirement for
physical delivery of Notes in connection with such tender shall be deemed
satisfied thereby.
(b) The Remarketing Agent will use its best efforts to remarket all Notes
tendered or deemed to be tendered for purchase pursuant to the Optional Tender
or Mandatory Tender provisions hereof, subject to the provisions of subsection
(h) of this Section. The Issuer may at any time, upon written direction to the
Remarketing Agent, direct the Remarketing Agent to cease or resume the
remarketing of some or all of the Notes.
(c) At or prior to 11:00 a.m. (Ft. Lauderdale, Florida time) on any Tender
Date (or at such other time to which the Trustee shall agree), the Remarketing
Agent shall give telegraphic or telephonic notice, promptly confirmed in
writing, to the Trustee specifying or confirming the names, addresses, and
taxpayer identification numbers of the purchasers of, and the principal amount
and denominations of, such Notes, if any, remarketed by it pursuant to this
Section. The Remarketing Agent shall make appropriate settlement arrangements
between the purchasers of such remarketed Notes and the Trustee, and shall
direct such purchasers by appropriate instructions to pay the purchase price of
such Notes to the Trustee at or before 12:00 noon (Ft. Lauderdale, Florida time)
on the Tender Date. The Trustee shall deposit the proceeds of any such
remarketing in the Note Purchase Fund.
(d) At or before 1:00 p.m. (Ft. Lauderdale, Florida time) on each Tender
Date the Trustee shall pay the purchase price to each Holder of a Note (or
portion thereof) tendered for
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purchase. The Trustee shall pay the purchase price of each Note tendered by
check or draft mailed by the Trustee to the Holder of such Note at such Holder's
address appearing in the Note Register or, upon the written request of such
Holder accompanied by adequate instructions, as provided in Section 3.1(k), by
wire transfer to an account of such Holder maintained at a bank in the
continental United States or by any other method providing for payment in same-
day funds that is acceptable to the Trustee. The Trustee shall pay such purchase
price from money on deposit in the Note Purchase Fund in strict compliance with
the provisions thereof; provided, that the Trustee shall not pay the purchase
price of any Unsurrendered Note, unless and until the Holder of such
Unsurrendered Note presents such Unsurrendered Note to the Trustee or Tender
Agent. All Notes so purchased by the Trustee shall be delivered by the Trustee
or Tender Agent in accordance with this Section.
(e) The Trustee and the Tender Agent shall hold all Notes delivered to them
pursuant to the Optional Tender or Mandatory Tender provisions hereof in trust
solely for the benefit of the respective Holders who shall have so delivered
such Notes until money representing the purchase price of such Notes shall have
been delivered to or for the account of such Holders.
(f) Pledged Notes shall be held subject to the following terms and
conditions:
(1) If, on the Tender Date, the Trustee receives written notice (a
"Reimbursement Notice") from the Credit Obligor stating that it has been
reimbursed for the drawing made under the Letter of Credit to pay the
purchase price of such Pledged Notes and that the Letter of Credit has been
reinstated to the extent of the amount so drawn to pay the purchase price
of such Pledged Notes (except as limited by the provisions of the Letter of
Credit relating to the "Maximum Interest Coverage", as defined therein),
then such Notes shall no longer be considered "Pledged Notes" and the
Trustee shall register such Notes as follows: (i) if such Notes have been
remarketed by the Remarketing Agent, as directed by the Remarketing Agent,
or (ii) if such Notes have not been remarketed, in the name of the Issuer.
Notes registered as directed by the Remarketing Agent shall be delivered by
the Trustee or Tender Agent to, or upon the direction of, the Remarketing
Agent. Notes registered in the name of the Issuer shall be held by the
Trustee or Tender Agent for the account of the Issuer or, upon written
request of the Issuer, shall be delivered to the Issuer.
(2) If the Trustee does not receive a Reimbursement Notice by the
close of business on the Tender Date, then the Trustee shall register such
Pledged Notes in the name of the Credit Obligor, as pledgee. Any Pledged
Notes held by the Tender Agent shall be transmitted to the Trustee. Such
Pledged Notes shall be held by the Trustee on behalf of the Credit Obligor,
as pledgee, until the Trustee receives a Reimbursement Notice with respect
to such Notes or, upon written request of the Credit Obligor, shall be
delivered to the Credit Obligor. Upon receipt by the Trustee of a
Reimbursement Notice with respect to any Pledged Notes, such Notes shall no
longer be considered "Pledged Notes" and shall, subject to the provisions
of subsection (h) of this Section, be
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disposed of as provided in paragraph (1) of this subsection (f). The
Trustee shall give prompt notice to the Tender Agent of the receipt of any
Reimbursement Notice.
(g) Notes purchased by the Trustee with money from any source other than
money drawn under the Letter of Credit shall be registered as follows: (i) if
such Notes have been remarketed by the Remarketing Agent, as directed by the
Remarketing Agent, or (ii) if such Notes have not been remarketed, in the name
of the Issuer. Notes registered as directed by the Remarketing Agent shall be
delivered by the Trustee or Tender Agent to, or upon the direction of, the
Remarketing Agent. Notes registered in the name of the Issuer shall be held by
the Trustee or Tender Agent for the account of the Issuer or, upon written
request of the Issuer, shall be delivered to the Issuer.
(h) Any provision of this Indenture to the contrary notwithstanding, if the
Notes are purchased pursuant to the Optional Tender or Mandatory Tender
provisions of this Indenture and the Letter of Credit has expired or terminated
(or will expire or terminate within 30 days), unless a Substitute Letter of
Credit has been delivered to the Trustee in accordance with Section 3.10 hereof,
the Notes may not be sold or remarketed unless (i) the Issuer demonstrates to
the reasonable satisfaction of the Remarketing Agent that (A) disclosure
materials provided to prospective Noteholders are adequate under securities laws
and practices applicable to remarketing under similar circumstances and (B) that
the Notes will continue to receive at least an "investment grade" rating by each
Rating Agency (if any) then maintaining a rating on the Notes following the
expiration or termination of the Letter of Credit, or that the Notes will be
remarketed only to one or more financial institutions capable of assessing the
risks of ownership of the Notes, in which event any rating on the Notes may be
reduced or withdrawn and (ii) the Remarketing Agent, the Trustee and the Issuer
shall have received an Opinion of Counsel stating in effect that the remarketing
of the Notes under such circumstances will not be in violation of any federal or
state laws regarding registration of, or other filing in connection with, the
offering or sale of, securities.
(i) Any Note remarketed by the Remarketing Agent that has been called for
prior redemption shall be delivered with a copy of the redemption notice, and
any Note as to which notice of Mandatory Tender has been given shall be
delivered with a copy of the notice of Mandatory Tender and any Note remarketed
by the Remarketing Agent that is subject to prepayment by acceleration under
Article IX hereof shall be delivered with a notice thereof, and in connection
with each such delivery the Remarketing Agent shall obtain an acknowledgement in
writing that each purchaser of such Notes understands the contents of such
notice.
(j) Notes purchased pursuant to the Optional Tender or Mandatory Tender
provisions of this Indenture shall not, by virtue of such purchase, be deemed
paid or canceled, but shall remain Outstanding until Fully Paid.
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SECTION 3.7 EXECUTION, AUTHENTICATION, DELIVERY AND DATING
----------------------------------------------
(a) The Notes shall be executed on behalf of the Issuer by its President or
Vice-President under its corporate seal affixed or reproduced thereon and
attested by its Secretary or one of its Assistant Secretaries. The signature of
any or all of these officers on the Notes may be manual or, to the extent
permitted by law, by facsimile. In case any officer whose signature or a
facsimile of whose signature shall appear on the Notes shall cease to be such
officer before the authentication and delivery of such Notes, such signature or
such facsimile shall nevertheless be valid and sufficient for all purposes, the
same as if such officer had remained in office until authentication and
delivery.
(b) At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Notes executed by the Issuer to the
Trustee for authentication and registration and the Trustee or the Tender Agent
shall authenticate and register and deliver such Notes as in this Indenture
provided and not otherwise.
(c) No Note shall be secured by, or be entitled to any lien, right or
benefit under, this Indenture or be valid or obligatory for any purpose, unless
there appears on such Note a certificate of authentication substantially in the
form provided for herein, executed by the Trustee or Tender Agent by the manual
signature of a duly authorized officer or other duly authorized signatory
thereof, and such certificate upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 3.8 TEMPORARY NOTES
---------------
(a) Pending the preparation of definitive Notes, the Issuer may execute,
and upon request of the Issuer the Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued, with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
(b) If temporary Notes are issued, the Issuer will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the Principal Office of the Trustee, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes the Issuer shall execute and the Trustee shall authenticate,
register and deliver in exchange therefor a like principal amount of definitive
Notes of authorized denominations. Until so exchanged, temporary Notes shall in
all respects be entitled to the security and benefits of this Indenture.
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SECTION 3.9 AUTHENTICATION AND DELIVERY OF NOTES TO ORIGINAL PURCHASERS
-----------------------------------------------------------
Upon the execution and delivery of this Indenture, Notes in the aggregate
principal amount authorized in this Article may be executed by the Issuer and
delivered to the Trustee for authentication and registration, and such Notes
shall thereupon be authenticated, registered and delivered by the Trustee to the
original purchaser or purchasers thereof.
SECTION 3.10 LETTER OF CREDIT
----------------
(a) Simultaneously with the delivery of the Notes to the original
purchasers thereof, the Issuer has caused the Credit Obligor to deliver to the
Trustee the Letter of Credit. The Letter of Credit will terminate on the Stated
Expiration Date, subject to extension (if applicable) by the Credit Obligor.
(b) The Issuer may at any time and from time to time deliver a Substitute
Letter of Credit to the Trustee in substitution for the Existing Letter of
Credit, provided that
(1) Notice of any intended delivery of a Substitute Letter of Credit
and the proposed issuer and effective date thereof is given (i) by the
Issuer to the Trustee not less than 45 days prior to the proposed effective
date of such Substitute Letter of Credit (unless a shorter period shall be
satisfactory to the Trustee and enable the Trustee to comply with this
Section), and (ii) by the Trustee to the Holders, or, if the Securities
Depository or Securities Depository Nominee is the Holder, as provided in
the Letter of Representation, not less than 30 days prior to the proposed
effective date of such Substitute Letter of Credit; and
(2) such Substitute Letter of Credit complies with the applicable
conditions set forth in subsection (d) of this Section and
(3) simultaneously with the delivery of such Substitute Letter of
Credit the Issuer delivers to the Trustee any related documentation
required by subsection (e) of this Section (the "Related Documentation").
(c) The Issuer may, but shall not be required to, deliver a Substitute
Letter of Credit to the Trustee prior to the expiration of the then Existing
Letter of Credit; provided, however, that if a Substitute Letter of Credit and
the Related Documentation are not delivered to the Trustee not less than 30 days
prior to the Stated Expiration Date of the then Existing Letter of Credit, the
Notes shall be subject to a Mandatory Tender.
(d) Each Substitute Letter of Credit delivered to the Trustee pursuant to
this Section must meet the following criteria:
(1) such Substitute Letter of Credit must have an effective date not
less than 30 days prior to the stated Expiration Date of the then Existing
Letter of Credit,
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(2) such Substitute Letter of Credit must be substantially in the same
form and of the same tenor as the Letter of Credit, except that such
Substitute Letter of Credit must provide for the payment of interest on the
Notes (or the interest portion of the purchase price of Notes tendered, or
deemed tendered, for purchase) at the Maximum Rate computed on the interest
rate basis then applicable as provided in Section 3.1(g), for not less than
56 days ,
(3) if such Substitute Letter of Credit is being delivered in
connection with a conversion of the interest rate on the Notes to a Fixed
Rate, the effective date shall be not later than the Conversion Date,
(4) if such Substitute Letter of Credit will be effective during a
Fixed Rate Period, the interest to be provided for shall be at the actual
Fixed Rate on the Notes (i) in the case of a Fixed Rate Period of less than
6 months, for the number of days in the Fixed Rate Period plus 15 (but not
less than 56 days), and (ii) in the case of a Fixed Rate Period of 6 months
or more, for 195 days, and if the Notes are subject to optional redemption,
such Substitute Letter of Credit must provide for payment of the maximum
redemption premium payable with respect to the Notes, and
(5) such Substitute Letter of Credit must have a Stated Expiration
Date that is (i) the same calendar day in the same calendar month as the
expiration date of the then existing Letter of Credit being replaced and
(ii) not sooner than one year after its effective date; provided, however,
that any Substitute Letter of Credit that is to be substituted for an
Existing Letter of Credit that is effective during a Fixed Rate Period must
have a Stated Expiration Date not sooner than the Stated Expiration Date of
such Existing Letter of Credit.
(e) Each Substitute Letter of Credit delivered to the Trustee must be
accompanied by the following, to the extent applicable:
(1) if any Rating Agency maintains a rating with respect to the Notes
at the time of delivery of such Substitute Letter of Credit to the Trustee,
written evidence from each such Rating Agency to the effect that the
substitution of the proposed Substitute Letter of Credit will not, by
itself, result in a reduction or withdrawal of its rating then assigned to
the Notes,
(2) an Opinion of Counsel for the issuer of such Substitute Letter of
Credit stating in effect that such Substitute Letter of Credit (1) is a
valid and binding obligation of the issuer thereof and (2) is exempt from
registration under the Securities Act of 1933, as amended.
(f) At the close of business on the effective date of any Substitute Letter
of Credit, the Trustee shall return the Existing Letter of Credit to the issuer
thereof, provided that any draws on such Existing Letter of Credit made on or
prior to such date have been honored. Any
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draws that, under the terms of the Indenture, are to be made on the Letter of
Credit on or prior to the effective date of a Substitute Letter of Credit shall
be made under the Existing Letter of Credit. Not later than the close of
business on the effective date of a Substitute Letter of Credit, the Issuer
shall deliver to the Trustee written evidence that all obligations of the Issuer
to the issuer of the Existing Letter of Credit for reimbursement of amounts
drawn thereunder have been satisfied, and upon receipt of such evidence any
Pledged Notes held by the Trustee or the Tender Agent for the benefit of the
issuer of the Existing Letter of Credit shall be delivered to, or upon the order
of, the Issuer.
(g) If the Trustee accepts a Substitute Letter of Credit as herein
provided, then, unless such Substitute Letter of Credit was described in a
notice of Mandatory Tender, the Trustee shall send written notice of such
substitution to the Noteholders.
(h) If Notes are redeemed prior to maturity, the Trustee shall take any
action necessary to reduce the interest portion of the Letter of Credit to the
Maximum Interest Coverage, as therein defined.
SECTION 3.11 ADDITIONAL CREDIT ENHANCEMENT
At the cost and expense of the Issuer, the Issuer may deliver to the
Trustee, and the Trustee shall accept, security for the payment of the Notes in
addition to the Letter of Credit then in effect, in the form of a confirmation
of such Letter of Credit, an additional standby letter of credit, insurance,
surety bonds, or otherwise.
ARTICLE IV
REGISTRATION, BOOK-ENTRY SYSTEM, AND
GENERAL PROVISIONS REGARDING THE NOTES
--------------------------------------
SECTION 4.1 REGISTRATION OF NOTES
---------------------
The Issuer shall cause to be kept at the Designated Office of the Trustee a
register (the "Note Register") in which, subject to such reasonable regulations
-------------
as it may prescribe, the Issuer shall provide for the registration of Notes and
registration of transfers of Notes entitled to be registered or transferred as
herein provided. The Trustee is hereby appointed "Note Registrar" for the
--------------
purpose of registering Notes and transfers of Notes as herein provided.
SECTION 4.2 BOOK-ENTRY SYSTEM
-----------------
(a) The Notes shall be initially issued pursuant to a Book-Entry System
administered by the Securities Depository with no physical distribution of any
Note to any person. One Note for each maturity will be issued, registered in
the name of the Securities Depository Nominee, and immobilized in the custody of
the Securities Depository. Beneficial ownership interests in
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the Notes may be purchased by or through Direct Participants. The holders of
these beneficial ownership interests in the Notes are referred to as the
"Beneficial Owners". The Beneficial Owners will not receive certificated bonds
- ------------------
representing their beneficial ownership interests. Ownership of the interests
in Notes in Authorized Denominations will be evidenced, and transfers of
interests in the Notes will be effected, on the records of the Securities
Depository and the Direct Participants and Indirect Participants pursuant to
rules and procedures established by the Securities Depository. During a period
in which the Book-Entry System is in effect for the Notes the Issuer, the
Trustee, and the Remarketing Agent shall treat the Securities Depository or the
Securities Depository Nominee as the only registered owner of the Notes for all
purposes under this Indenture including receipt of all principal of, purchase
price of, premium (if any) and interest on the Notes, receipt of notices,
voting, and requesting or directing the Trustee or Issuer to take or not to
take, or consenting to, certain actions under this Indenture. In the event the
Securities Depository or the Securities Depository Nominee assigns its rights to
consent or vote under this Indenture to any Direct Participant or Indirect
Participant, the Issuer, the Trustee, and the Remarketing Agent shall treat such
assignee or assignees as the only registered owner or owners of the Notes for
the purpose of exercising such rights so assigned.
(b) During a period in which the Book-Entry System is in effect for the
Notes, payments of principal, purchase price, interest, and redemption premium,
if any, with respect to the Notes will be paid by the Trustee directly to the
Securities Depository, or the Securities Depository Nominee, as provided in the
Letter of Representation; provided, that payment of the principal of (premium,
if any) and interest on such Notes due at final maturity or upon redemption in
whole of any of such Notes shall be made only upon surrender thereof at the
principal office of the Trustee. The Securities Depository and the Direct
Participants and the Indirect Participants shall be responsible for the
disbursement of such payments to the Beneficial Owners. The Securities
Depository will disburse such payments to Direct Participants and such payments
will in turn be remitted by Direct Participants and, where appropriate, Indirect
Participants, to the Beneficial Owners. All such payments to the Securities
Depository or the Securities Depository Nominee of principal of, purchase price
of, premium (if any) and interest on the Notes on behalf of the Issuer or the
Trustee shall be valid and effectual to satisfy and discharge the liability of
the Issuer and the Trustee to the extent of the amounts so paid, and the Issuer,
the Remarketing Agent and the Trustee shall not be responsible or liable for
payment to any Beneficial Owner by the Securities Depository or by any Direct
Participant or by any Indirect Participant, or for sending transaction
statements or for maintaining, supervising or reviewing records maintained by
the Securities Depository or Direct Participants or Indirect Direct
Participants.
(c) Transfers of ownership interests in the Notes by the Beneficial Owners
thereof, conveyance of notices and other communications by the Securities
Depository to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners of the Notes, will be governed by arrangements among the Securities
Depository, Direct Participants, Indirect Participants and the Beneficial
Owners, subject to any statutory and regulatory requirements as may be in effect
from time to time. For
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every transfer and exchange of beneficial ownership in the Notes, the Beneficial
Owners may be charged a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in relation thereto.
(d) Redemption notices respecting the Notes held by the Securities
Depository shall be sent to the Securities Depository Nominee by the Trustee and
redemption of Notes shall be effected as provided in Article V.
(e) A Beneficial Owner shall give notice of its election to have its
interests in the Notes purchased through its Direct Participant or Indirect
Participant to the Trustee as provided in this Indenture and shall effect
delivery of such interest by causing said Direct Participant or Indirect
Participant to transfer the interest of such Beneficial Owner in the Notes to
the Trustee (or Tender Agent) on the records of the Securities Depository. The
requirement for physical delivery of Notes in connection with an Optional Tender
or a Mandatory Tender will be satisfied when the ownership rights in the Notes
are transferred on the records of the Securities Depository
(f) In the event that (1) the Securities Depository ceases to act as the
securities depository for the Notes or (2) the Issuer determines that the
continuation of the Book-Entry System for the Notes would adversely affect the
interests of the Beneficial Owners of the Notes, the Issuer shall discontinue
the Book-Entry System. If the Issuer fails to appoint another qualified
securities depository to replace the then acting Securities Depository, the
Issuer will cause the Trustee to authenticate and deliver fully registered
certificated Notes to each Beneficial Owner in evidence of the ownership
interests thereof. If the Book-Entry System is discontinued, payments to and
transfers by the Beneficial Owners shall be governed by the provisions set forth
in this Indenture with respect thereto.
(g) The Issuer and the Remarketing Agent may enter into a custody agreement
with any bank or trust company serving as custodian (which may be the Trustee
serving in the capacity of custodian) to provide for a Book-Entry System or
similar method for the registration and transfer of the Notes.
(h) During the period in which a Book-Entry System is in effect for the
Notes in accordance herewith, the provisions of this Indenture and the Notes
shall be construed in accordance with the Letter of Representation and to give
full effect to such Book-Entry System.
(i) The Beneficial Owners of all the Notes, by their acquisition of any
beneficial interest in a Note or Notes, and the Securities Depository, the
Securities Depository Nominee, and all Direct Participants and all Indirect
Participants severally agree that the Issuer, the Remarketing Agent, and the
Trustee shall not have any responsibility or obligation to any Direct
Participant or any Indirect Participant or any Beneficial Owner with respect to
(1) the accuracy of any records maintained by the Securities Depository or any
Direct Participant or any Indirect Participant; (2) the payment by the
Securities Depository or any Direct Participant or any Indirect Participant of
any amount due to any Beneficial Owner in respect of the principal of,
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purchase price of, premium (if any) and interest on the Notes; (3) the delivery
or timeliness of delivery by the Securities Depository or any Direct Participant
or any Indirect Participant of any notice due to any Beneficial Owner which is
required or permitted under the terms of this Indenture to be given to
Beneficial Owners; or (4) any consent given or other action taken by the
Securities Depository, or the Securities Depository Nominee, as owner.
SECTION 4.3 DISCONTINUATION OF BOOK-ENTRY SYSTEM; REGISTRATION, TRANSFER
------------------------------------------------------------
AND EXCHANGE OF NOTES; REPLACEMENT OF MUTILATED, LOST, DESTROYED OR STOLEN NOTES
- --------------------------------------------------------------------------------
(a) The Securities Depository may determine to discontinue the Book-Entry
System with respect to the Notes at any time upon notice to the Issuer, the
Remarketing Agent, and the Trustee and upon discharge of its responsibilities
with respect thereto under applicable law. Upon such notice and compliance with
law the Book-Entry System for the Notes will be discontinued unless a successor
securities depository is appointed by the Issuer. In addition, the Issuer may
discontinue the Book-Entry System for the Notes at any time by reasonable notice
to the Securities Depository and to the Beneficial Owners.
(b) In the event the Book-Entry System for the Notes is discontinued,
Notes in certificated form in Authorized Denominations will be physically
distributed to the Beneficial Owners thereof and the Notes will be registered in
the names of the owners thereof on the registration books of the Trustee
pertaining thereto, the Trustee will make payments of principal of, purchase
price of, premium (if any) and interest on the Notes to the registered owners
thereof as provided in the Notes and the Indenture, and the following provisions
with respect to registration, transfer and exchange of Notes by the registered
owners of the Notes shall apply:
(1) Upon surrender for transfer of any Note at the Designated Office
of the Trustee or the Principal Office of the Tender Agent, the Issuer
shall execute, and the Trustee or Tender Agent shall authenticate and
deliver, in the name of the designated transferee or transferees, one or
more new Notes of the same maturity, of any Authorized Denominations and of
a like aggregate principal amount.
(2) At the option and expense of the Holder, Notes may be exchanged
for other Notes of the same maturity, of any Authorized Denominations and
of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at the Designated Office of the Trustee or at the Principal
Office of the Tender Agent. Whenever any Notes are so surrendered for
exchange, the Issuer shall execute, and the Trustee or the Tender Agent
shall authenticate and deliver, the Notes which the Noteholder making the
exchange is entitled to receive.
(3) All Notes surrendered upon any exchange or transfer provided for
in this Indenture shall be promptly canceled by the Trustee or the Tender
Agent.
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(4) All Notes issued upon any transfer or exchange of Notes shall be
the valid obligations of the Issuer and entitled to the same security and
benefits under this Indenture as the Notes surrendered upon such transfer
or exchange.
(5) Every Note presented or surrendered for transfer or exchange shall
(if so required by the Trustee or the Tender Agent) be duly endorsed, or be
accompanied by a written instrument of assignment or transfer in form
satisfactory to the Trustee or the Tender Agent duly executed, by the
Holder thereof or his attorney duly authorized in writing.
(6) The Issuer shall not be required (i) to transfer or exchange any
Note during a period beginning at the opening of business 15 days before
the day of the mailing of a notice of redemption of Notes and ending at the
close of business on the day of such mailing, or (ii) to transfer or
exchange any Note so selected for redemption in whole or in part, or (iii)
to exchange any Note during a period beginning at the opening of business
on any Regular Record Date for such Note and ending at the close of
business on the relevant Interest Payment Date therefor.
(7) If (i) any mutilated Note is surrendered to the Trustee, or the
Issuer and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and (ii) there is delivered to the
Issuer and the Trustee such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Issuer or the Trustee that such Note has been acquired by a bona fide
purchaser, the Issuer shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Note of like tenor, principal amount,
maturity, and bearing a number not contemporaneously outstanding.
(8) Upon the transfer or exchange of any Note, or the issuance of any
new Note under this Section, the Holder shall pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith.
(9) Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the security and benefits of this
Indenture equally and ratably with all other Outstanding Notes.
(10) The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
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SECTION 4.4 PAYMENT OF INTEREST ON NOTES; INTEREST RIGHTS PRESERVED
-------------------------------------------------------
(a) Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name that Note is registered at the close of business on the Regular Record Date
for such Interest Payment Date.
(b) Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date solely by virtue of such Holder having been such Holder; and
such Defaulted Interest shall be paid by the Issuer to the persons in whose
names such Notes are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Issuer shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Note and the date of the
proposed payment (which date shall be such as will enable the Trustee to comply
with the provisions hereof), and at the same time the Issuer shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to be paid
in respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the persons entitled
to such Defaulted Interest as in this subsection provided and not to be deemed
part of the Trust Estate. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15 nor
less than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Issuer of such Special Record Date and, in
the name and at the expense of the Issuer, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to the Noteholder or Noteholders at the
address thereof appearing in the Note Register not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the persons in whose names the Notes
are registered on such Special Record Date.
(c) Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry all the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note and each such Note shall bear
interest from such date that neither gain nor loss in interest shall result from
such transfer, exchange or substitution.
SECTION 4.5 PERSONS DEEMED OWNERS
---------------------
The Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the person in whose name any Note is registered as the owner of such Note
for the purpose of receiving payment of Debt Service on such Note and for all
other purposes whatsoever whether or not such Note is overdue, and, to the
extent permitted by law, neither the Issuer, the Trustee nor any such agent
shall be affected by notice to the contrary.
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SECTION 4.6 PAYING AGENT
------------
The Debt Service on the Notes shall, except as otherwise provided herein,
be payable at the Designated Office of the Trustee. The Trustee is hereby
appointed as Paying Agent for the purpose of paying Debt Service on the Notes on
behalf of the Issuer.
SECTION 4.7 PAYMENTS DUE ON NON-BUSINESS DAYS
---------------------------------
If any payment on the Notes is due on a day which is not a Business Day,
such payment may be made on the first succeeding day which is a Business Day and
interest shall accrue and be payable for the period to the then next succeeding
Business Day.
SECTION 4.8 CANCELLATION
------------
All Notes surrendered for payment, redemption, transfer or exchange shall
be promptly canceled or destroyed by the Trustee. No Note shall be
authenticated in lieu of or in exchange for any Note canceled as provided in
this Section, except as expressly provided by this Indenture.
ARTICLE V
REDEMPTION OF NOTES
SECTION 5.1 WHEN NOTES ARE SUBJECT TO REDEMPTION
------------------------------------
(a) The Notes shall be subject to extraordinary, optional and mandatory
redemption as provided in the form thereof set forth on Exhibit A hereto.
(b) Notes shall be redeemed in accordance with the mandatory redemption
provisions of the Notes without any direction from or consent by the Issuer.
SECTION 5.2 ELECTION TO REDEEM; NOTICE TO TRUSTEE
-------------------------------------
The election of the Issuer to exercise any right of optional redemption
shall be given by written notice to the Trustee from an Authorized Issuer
Representative not more than 60 and not less than 30 days prior to the proposed
redemption date and, if required by this Indenture, shall be accompanied by the
written consent of the Credit Obligor. In case of any redemption at the option
of the Issuer of less than all of the principal amount of the Outstanding Notes,
the Authorized Issuer Representative shall, at least 60 days prior to the date
fixed by the Issuer for redemption of Notes (unless a shorter notice shall be
satisfactory to the Trustee) notify the Trustee of such redemption date and of
the principal amount of Notes to be redeemed.
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SECTION 5.3 SELECTION OF NOTES TO BE REDEEMED
---------------------------------
(a) If less than all of the Outstanding Notes are to be redeemed during a
period in which the Book-Entry System is in effect for the Notes, the Trustee
shall give notice to the Securities Depository in accordance with the Letter of
Representation, and the Securities Depository shall determine the amount of the
interest of each Direct Participant in the Notes to be redeemed, on the basis of
the smallest Authorized Denomination of the Notes, by lot or by such other
method as the Securities Depository shall deem fair and appropriate. The
Securities Depository shall so determine the amount of the interest of each
Direct Participant in the Notes to be redeemed in such manner so as to assure
that after such redemption no Beneficial Owner shall retain a beneficial
ownership interest in the Notes in an aggregate amount less than an Authorized
Denomination.
(b) If less than all the Outstanding Notes are to be redeemed during a
period in which the Book-Entry System is not in effect for the Notes, the
Trustee shall select the particular Notes to be redeemed not less than 30 nor
more than 60 days prior to the redemption date from the Outstanding Notes which
have not previously been called for redemption, on the basis of the smallest
Authorized Denomination of the Notes, by lot or by such method as the Trustee
shall deem fair and appropriate. The Trustee shall so select Notes for
redemption in such manner so as to assure that after such redemption no
Noteholder shall retain Notes in an aggregate amount less than an Authorized
Denomination.
(c) The Trustee shall promptly notify the Issuer in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.
(d) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note which has been or is to be redeemed.
SECTION 5.4 NOTICE OF REDEMPTION
--------------------
(a) Notice of any intended redemption shall be given by the Trustee to the
Holder of each Note, all or a portion of the principal of which is to be
redeemed, not less than 30 days prior to the proposed redemption date by United
States registered or certified mail or, if the Securities Depository or
Securities Depository Nominee is the Holder, at the times and in the manner as
provided in the Letter of Representation, at the address of such Holder
appearing in the Note Register; provided, however, any Holder may waive the
requirement of notice as to the redemption (in whole or in part) of the Note or
Notes thereof. During a period in which the Book-Entry System is in effect for
the Notes, notice of any intended redemption may be given to each Beneficial
Owner, all or any portion of the interest of which in the Notes is to be
redeemed, by the Direct Participants and, where appropriate, by the Indirect
Participants, pursuant to arrangements among said parties, subject to statutory
and regulatory requirements
39
<PAGE>
in effect from time to time; provided, however, any Beneficial Owner may waive
the requirement of notice as to the redemption of the interest thereof in the
Notes.
(b) All notices of redemption shall state:
(1) the redemption date,
(2) the redemption price,
(3) the principal amount of Notes to be redeemed, and, if less than
all Outstanding Notes are to be redeemed, the respective principal amounts
of the Notes to be redeemed,
(4) that on the redemption date the redemption price of each of the
Notes to be redeemed will become due and payable and that the interest
thereon shall cease to accrue from and after said date, and
(5) the place or places where the Notes to be redeemed are to be
surrendered for payment of the redemption price.
(c) Notice of redemption of Notes to be redeemed shall be given by the
Trustee in the name of the Issuer and at the expense of the Issuer.
(d) The Issuer and the Trustee shall, to the extent practical under the
circumstances, comply with the standards set forth in Securities and Exchange
Commission's Exchange Act Release No. 23856 regarding redemption notices,
provided that their failure to do so shall not in any manner defeat the
effectiveness of a call for redemption if notice thereof is given as prescribed
in this Section.
SECTION 5.5 DEPOSIT OF REDEMPTION PRICE
---------------------------
Prior to any redemption date, the Issuer shall deposit with the Trustee
pursuant to Section 8.2 an amount of money sufficient to pay the redemption
price of all the Notes which are to be redeemed on that date. Such money shall
be held in trust for the benefit of the persons entitled to such redemption
price and shall not be deemed to be part of the Trust Estate.
SECTION 5.6 NOTES PAYABLE ON REDEMPTION DATE
--------------------------------
(a) Notice of redemption having been given as aforesaid, the Notes to be
redeemed shall, on the redemption date, become due and payable at the redemption
price therein specified and from and after such date (unless the Issuer shall
default in the payment of the redemption price) such Notes shall cease to bear
interest. Upon presentation of any such Note for redemption, or compliance with
the requirements of the Securities Depository with respect to redemption in
part, in accordance with said notice such Note shall be paid by the Issuer at
the
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redemption price. Installments of interest due on or prior to the redemption
date shall be payable to the Holders of the Notes registered as such on the
relevant Record Dates according to the terms of such Notes and the provisions of
Section 4.4.
(b) If any Note called for redemption shall not be paid upon redemption,
the principal (and premium, if any) shall, until paid, bear interest from the
redemption date at the Post-Default Rate.
SECTION 5.7 NOTES REDEEMED IN PART
----------------------
(a) During a period in which the Book-Entry System is in effect for the
Notes, the recordation and evidence of any reduction in the aggregate principal
amount of the Notes as a result of the redemption of a portion thereof shall be
made in accordance with the Letter of Representation and the rules and
procedures of the Securities Depository with respect thereto from time to time
in effect.
(b) During a period in which the Book-Entry System is not in effect for
the Notes, unless otherwise provided herein, any Note which is to be redeemed
only in part shall be surrendered at the Designated Office of the Trustee (with,
if the Issuer or the Trustee requires, due endorsement by, or a written
instrument of assignment or transfer in form satisfactory to the Issuer and the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing) and the Issuer shall execute and the Trustee shall authenticate and
deliver to the Holder of such Note, without service charge, a new Note or Notes
of any authorized denomination or denominations as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Note surrendered.
ARTICLE VI
APPLICATION OF PROCEEDS OF NOTES
--------------------------------
SECTION 6.1 APPLICATION OF PROCEEDS
-----------------------
(a) Any accrued interest received upon the sale of the Notes shall be
deposited in the Note Fund.
(b) On the date of issuance of the Notes, the proceeds of the Notes shall
be delivered to the Trustee and deposited by the Trustee in the Proceeds Fund
pursuant to Section 6.2 and applied as provided therefor.
SECTION 6.2 PROCEEDS FUND; DISBURSEMENTS
----------------------------
(a) There is hereby established with the Trustee a trust fund for the
account of the Issuer to be designated the "Proceeds Fund".
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(b) The moneys in the Proceeds Fund shall be paid out by the Trustee upon
receipt of and in accordance with one or more requisition or payment requests
substantially in the form of Exhibit A hereto appropriately completed and signed
on behalf of the Issuer by any Authorized Issuer Representative and approved by
the Credit Obligor by endorsement thereon. It is anticipated by the Issuer and
the Trustee that all or substantially all of the Proceeds Fund will be paid out
to repay Issuer indebtedness being refinanced with the proceeds of the Notes and
expenses of the issuance of the Notes, and that the balance will be paid out to
the Issuer to be used for corporate purposes.
(c) The Trustee shall not be liable for any misapplication of moneys in
the Proceeds Fund if disbursed pursuant to the provisions of this Section and
without actual knowledge that such disbursement constitutes a misapplication of
funds.
ARTICLE VII
REVENUES
--------
SECTION 7.1 NOTE FUND AND LETTER OF CREDIT DRAWS
------------------------------------
(a) There is hereby established a special trust fund in the name of the
Issuer which shall be designated the "Variable/Fixed Rate Credit Enhanced Notes
Note Fund" (the "Note Fund"). The Trustee shall be the depository, custodian
and disbursing agent for the Note Fund. The money in the Note Fund shall be
used (i) to pay Debt Service on the Notes as the same shall become due and
payable or (ii) to reimburse the Credit Obligor for amounts drawn under the
Letter of Credit, as provided in subsection (c) of this Section.
(b) There shall be deposited in the Note Fund, as and when received:
(1) in the manner provided in subsection 7.1(c) 7.2(c), all money
drawn under the Letter of Credit for the purpose of paying the principal
amount of the Notes and the premium (if any) on the Notes, and the interest
due thereon on any Note Payment Date,
(2) All payments with respect to Debt Service on the Notes made by
the Issuer pursuant to Section 8.2(a),
(3) All other money required to be deposited in the Note Fund
pursuant to this Indenture, and
(4) All other money received by the Trustee when accompanied by
written directions that such money is to be deposited in the Note Fund.
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(c) If the Letter of Credit is then in effect, on or before each Note
Payment Date, the Trustee shall, without making any prior claim or demand upon
the Issuer for the payment of any amounts under Section 8.2(a), submit a draft
under the Letter of Credit in accordance with the terms thereof (i) in an amount
equal to the amount of Debt Service due on such Note Payment Date on Notes other
than Pledged Notes and (ii) by such time (as stated in the Letter of Credit) in
advance as shall enable the Trustee to pay said Debt Service from the proceeds
of such draft on said Note Payment Date in accordance with the provisions of
this Indenture with respect thereto. Any such money drawn under the Letter of
Credit shall be deposited and held in a separate, segregated account in the Note
Fund, and shall not be commingled with other money in the Note Fund and no
investment thereof shall be made. If money from any source other than the
Letter of Credit was, at the time of such draw, on deposit in the Note Fund and
available for the payment of Debt Service on Notes other than Pledged Notes, the
Trustee shall nevertheless draw under the Letter of Credit to make such payment
of Debt Service in the amount of the Debt Service to be so paid, and the money
available from such other source shall, to the extent of the amount paid by the
Credit Obligor against such draw, be paid to the Credit Obligor. All money so
drawn under the Letter of Credit shall be used to pay Debt Service on Notes
other than Pledged Notes; Debt Service on Pledged Notes shall be paid with money
deposited in the Note Fund from any source other than the Letter of Credit.
(d) The Issuer hereby authorizes and directs the Trustee to withdraw
sufficient money from the Note Fund to pay Debt Service on the Notes as the same
become due and payable, whether at maturity, by call for redemption,
acceleration, or otherwise, which authorization and direction the Trustee hereby
accepts. Funds for such payments of Debt Service on the Notes shall be derived
from the following sources in the order of priority indicated:
(1) First: money drawn by the Trustee under the Letter of Credit,
-----
and
(2) Second: all other money on deposit in the Note Fund.
------
(e) Debt Service due on all Pledged Notes shall be paid to the Credit
Obligor.
SECTION 7.2 NOTE PURCHASE FUND
------------------
(a) There is hereby established a special trust fund in the name of the
Issuer which shall be designated the "Variable/Fixed Rate Credit Enhanced Notes
Note Purchase Fund" (the "Note Purchase Fund"). The Trustee shall be the
custodian for the Note Purchase Fund, and money in such Fund may be disbursed by
the Trustee as hereinafter provided. The money in the Note Purchase Fund shall
be used (i) to pay the purchase price of Notes due on any Tender Date or (ii) to
reimburse the Credit Obligor for amounts drawn under the Letter of Credit, as
provided in subsection (c) of this Section.
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(b) There shall be deposited in the Note Purchase Fund, as and when
received:
(1) in the manner provided in subsection 7.1(c) 7.2(c), all money
drawn by the Trustee under the Letter of Credit for the purpose of paying
the purchase price of Notes due on any Tender Date,
(2) all payments with respect to the purchase price of Tendered Notes
made by the Issuer pursuant to Section 8.2(b).
(3) the proceeds of any remarketing of Notes by the Remarketing
Agent,
(4) all other money required to be deposited in the Note Purchase
Fund pursuant to this Indenture, and
(5) all other money received by the Trustee when accompanied by
directions that such money is to be deposited in the Note Purchase Fund.
(c) If the Letter of Credit is then in effect, on or before each Tender
Date, the Trustee shall, without making any prior claim or demand upon the
Issuer for payments pursuant to Section 8.2(a) with respect to the purchase
price of Tendered Notes, and without taking into account any proceeds
anticipated (but not then received) from the remarketing of Notes by the
Remarketing Agent, submit a draft under the Letter of Credit in accordance with
the terms thereof (i) in an amount equal to the purchase price of all Notes to
be purchased on such Tender Date and (ii) by such time (as stated in the Letter
of Credit) in advance as shall enable the Trustee to pay said purchase price
from the proceeds of such draft on said Tender Date in accordance with the
provisions of this Indenture with respect thereto. Any such money drawn under
the Letter of Credit shall be deposited and held in a separate, segregated
account in the Note Purchase Fund, and shall not be commingled with other money
in the Note Purchase Fund and no investment thereof shall be made. Except as
otherwise provided in Section 7.2(f), if money from any source other than the
Letter of Credit was, at the time of such draw, on deposit in the Note Purchase
Fund and available for the payment of such purchase price, the Trustee shall
nevertheless draw under the Letter of Credit to make the payment of such
purchase price in the amount of such purchase price to be so paid, and any money
available in the Note Purchase Fund on such Tender Date from such other sources
(including without limitation, proceeds of remarketing of Notes) shall, to the
extent of the amount paid by the Credit Obligor against such draw, be paid to
the Credit Obligor. If proceeds from the remarketing of Notes are deposited in
the Note Purchase Fund after such Tender Date, the Trustee shall pay such
proceeds to the Credit Obligor.
(d) The Trustee is hereby authorized and directed to withdraw sufficient
money from the Note Purchase Fund to pay the purchase price of Notes due on any
Tender Date. Except as otherwise provided in Section 7.2(f), funds for such
payments shall be derived from the following sources in the order of priority
indicated:
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(1) First: money drawn by the Trustee under the Letter of Credit,
-----
(2) Second: money received by the Trustee from the remarketing of
------ Notes by the Remarketing Agent to persons other than
the Issuer, or any Affiliate of any thereof, and
(3) Third: all other money on deposit in the Note Purchase Fund.
-----
(e) Anything in this Indenture to the contrary notwithstanding, the
Trustee shall not purchase any Notes under Section 3.6 with proceeds received
from remarketing of Notes to the Issuer or any Affiliate thereof.
(f) Anything herein to the contrary notwithstanding, if proceeds from the
remarketing of Notes by the Remarketing Agent are actually on deposit in the
Note Purchase Fund (and not anticipated to be so on deposit) at or prior to the
time of submission by the Trustee of a draft under the Letter of Credit pursuant
to Section 7.1(c), 7.2(c), the Trustee may reduce the amount of such draft by
the amount of such proceeds.
SECTION 7.3 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST; REPAYMENT OF
---------------------------------------------------------
UNCLAIMED MONEY
- ---------------
(a) If money is on deposit in the Note Fund on any Note Payment Date
sufficient to pay Debt Service on the Notes due and payable on such Note Payment
Date, but the Holder of any Note that matures on such Date or that is subject to
redemption on such Date fails to surrender such Note to the Trustee for payment
of Debt Service due and payable on such Date, the Trustee shall segregate and
hold in trust for the benefit of the person entitled thereto money sufficient to
pay the Debt Service due and payable on such Note on such Date. Money so
segregated and held in trust shall not be a part of the Trust Estate and shall
not be invested, but shall constitute a separate trust fund for the benefit of
the persons entitled to such Debt Service.
(b) If money is on deposit in the Note Purchase Fund on any Tender Date
sufficient to pay the purchase price on the Notes to be paid on such Tender
Date, but the Holder of any Note fails to deliver such Note to the Trustee or
Tender Agent for payment of such purchase price on such Tender Date, the Trustee
shall segregate and hold in trust for the benefit of the person entitled thereto
money sufficient to pay such purchase price due and payable on such
Unsurrendered Note on such Tender Date. Money so segregated and held in trust
shall not be a part of the Trust Estate and shall not be invested, but shall
constitute a separate trust fund for the benefit of the persons entitled to such
purchase price.
(c) Any money held in trust by the Trustee for the payment of Debt Service
on or the purchase price of any Note pursuant to subsections (a) and (b) of this
Section and remaining unclaimed for 3 years after such Debt Service has become
due and payable shall be paid to the Issuer upon request of an Authorized Issuer
Representative; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment thereof, and all
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liability of the Trustee with respect to such trust money, and all liability of
the Issuer with respect thereto, shall thereupon cease; provided, however, that
the Trustee, before being required to make any such payment to the Issuer, at
the expense of the Issuer, may (but shall not be required to) cause to be
published once, in a newspaper of general circulation in the city where the
Designated Office of the Trustee is located, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be paid to the Issuer.
SECTION 7.4 INVESTMENT OF SPECIAL FUNDS
---------------------------
(a) Any money held as part of a Special Fund shall be invested or
reinvested in Qualified Investments by the Trustee in accordance with the
written instructions of the Issuer, if no Event of Default exists, to the extent
that such investment is feasible and consistent with the purposes for which such
Fund was created; provided, however, that, except as provided below, money in
the Note Fund and the Note Purchase Fund shall be invested only in Federal
Securities (or a fund thereof) with a maturity not later than the earlier of (i)
30 days after the date of such investment, or (ii) the date such money will be
needed for the payment of Debt Service on, or the purchase price of, Notes. Any
investment made with money on deposit in a Special Fund shall be held by or
under control of the Trustee and shall be deemed at all times a part of the
Special Fund where such money was on deposit, and the interest and profits
realized from such investment shall be credited to such Fund and any loss
resulting from such investment shall be charged to such Fund.
(b) The proceeds of a draw under the Letter of Credit shall not be
invested.
(c) Any investment of money in the Special Funds may be made by the
Trustee through its own bond department, investment department or other
commercial banking department providing investment services. Any certificate of
deposit issued by, or other interest-bearing deposit with, the Trustee shall be
deemed an investment rather than a deposit requiring security.
ARTICLE VIII
REPRESENTATIONS AND COVENANTS
-----------------------------
SECTION 8.1 GENERAL REPRESENTATIONS
-----------------------
The Issuer makes the following representations and warranties as the basis
for the undertakings on its part herein contained:
(1) It is duly organized and in good standing as a corporation under
the laws of the State of Nevada, and is duly authorized to transact
business as a foreign
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corporation and in good standing under the laws of the State of Florida and
of every other jurisdiction in which such authorization or qualification is
necessary.
(2) It has the power to issue the Notes and enter into this Indenture
and the Remarketing Agent Agreement and to consummate the transactions
contemplated by the Financing Documents to which it is a party.
(3) By proper corporate action the Issuer has duly authorized the
issuance of the Notes and the execution and delivery of the Financing
Documents to which it is a party, and the consummation of the transactions
contemplated therein.
(4) It has obtained all consents, approvals, authorizations and
orders of governmental authorities that are required to be obtained by it
as a condition to the issuance of the Notes and the execution and delivery
of the Financing Documents to which it is a party.
(5) The issuance of the Notes and the execution and delivery by it of
the Financing Documents to which it is a party and the consummation by it
of the transactions contemplated therein will not (i) conflict with, be in
violation of, or result in a default under its certificate of articles of
incorporation, bylaws or other constituent documents or any agreement,
instrument, order or judgment to which it is a party or is subject or (ii)
result in or require the creation or imposition of any lien of any nature
with respect to the Trust Estate, except as contemplated by the Financing
Documents.
(6) The Notes and the Financing Documents to which it is a party
constitute legal, valid and binding obligations and are enforceable against
it in accordance with the respective terms thereof, except as enforcement
thereof may be limited by (i) the exercise of judicial discretion and (ii)
bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights, to the extent constitutionally applicable.
(7) The Issuer has not created or permitted the creation of any
mortgage, pledge, encumbrance, security interest, assignment or other
charge of any kind with respect to the Trust Estate, except as effected or
contemplated by the Financing Documents.
(8) There is no action, suit, proceeding, inquiry or investigation
pending before any court or governmental authority, or threatened against
or affecting it or its properties, that involves (i) the consummation of
the transactions contemplated by, or the validity or enforceability of, the
Notes or any Financing Documents, (ii) its organization, (iii) the election
or qualification of its directors or officers, or (iv) its powers.
(9) The Issuer is not an "investment company" or a company
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
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SECTION 8.2 PAYMENT OF DEBT SERVICE AND PURCHASE OF TENDERED NOTES
------------------------------------------------------
(a) The Issuer shall:
(1) On or before 11:00 a.m. (Ft. Lauderdale, Florida time), on each
Note Payment Date, pay to the Trustee an amount equal to the Debt Service
on the Notes due on such Note Payment Date; provided, however, that (i) any
amount already on deposit in the Note Fund on the due date of such payment
and available for the payment of Debt Service on such Note Payment Date
shall be credited against the amount of such payment, and (ii) any amount
drawn by the Trustee pursuant to the Letter of Credit for the payment of
such Debt Service shall be credited against such payment; and
(2) On or before 11:00 a.m. (Ft. Lauderdale, Florida time), on each
Tender Date, pay to the Trustee an amount equal to the purchase price of
Notes tendered (or deemed tendered) for purchase on such Tender Date;
provided, however, that (i) any amount already on deposit in the Note
Purchase Fund on such Tender Date that is available for the payment of the
purchase price of such Tendered Notes shall be credited against the amount
of such payment, and (ii) any amount drawn by the Trustee pursuant to the
Letter of Credit for the payment of the purchase price of such Tendered
Notes shall be credited against such payment.
(b) The Issuer covenants and agrees that until the Indenture Indebtedness
is paid in full the Issuer shall make such payments in such amounts and at such
times as shall be necessary to enable the Trustee to pay in full in accordance
with the Indenture (i) all Debt Service on the Notes when and as the same
becomes due and payable, whether at stated maturity and due dates, by call for
acceleration, by optional or mandatory redemption, or otherwise, and (ii) the
purchase prices of all Tendered Notes when and as the same become due and
payable.
(c) Any overdue payment shall bear interest from the related Note Payment
Date until paid at the Post-Default Rate.
SECTION 8.3 INDEMNITY OF TRUSTEE
--------------------
(a) The Issuer agrees to pay, and to indemnify and hold the Trustee
harmless against, any and all liabilities, losses, damages, claims or actions
(including all reasonable attorneys' fees and expenses of the Trustee), of any
nature whatsoever incurred by the Trustee acting in good faith and without gross
negligence or willful misconduct arising from or in connection with its
performance or observance of any covenant or condition on its part to be
observed or performed under the Financing Documents.
(b) The Issuer hereby agrees that the Trustee shall not incur any
liability to the Issuer, and shall be indemnified against all liabilities, in
exercising or refraining from asserting, maintaining or exercising any right,
privilege or power of the Trustee under the Financing
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<PAGE>
Documents if the Trustee is acting in good faith and without gross negligence or
willful misconduct or in reliance upon a written request by the Issuer.
(c) If the Trustee shall be obligated to pay any claim, liability or loss,
and if in accordance with all applicable provisions of this Section the Issuer
shall be obligated to indemnify and hold the Trustee harmless against such
claim, liability or loss, then, in such case, the Issuer shall have a primary
obligation to pay such claim, liability or loss on behalf of such indemnifiable
party and may not defer discharge of its indemnity obligation hereunder until
such indemnifiable party shall have first paid such claim, liability or loss and
thereby incurred actual loss.
(d) The covenants of indemnity contained in this Section shall survive the
termination of this Indenture with respect to events or occurrences happening
prior to or upon the termination of this Indenture and shall remain in full
force and effect until the commencement of an action with respect to any such
event or occurrence shall be prohibited by law.
SECTION 8.4 OBLIGATIONS OF ISSUER UNCONDITIONAL
-----------------------------------
The obligation of the Issuer to make all payments provided for herein and
to perform and observe the other agreements and covenants on its part herein
contained shall be absolute and unconditional. The Issuer will not suspend or
discontinue any such payment or fail to perform and observe any of its other
agreements and covenants contained herein or terminate this Indenture for any
cause whatsoever, including, without limiting the generality of the foregoing,
the invalidity or unenforceability of the Notes or any of the Financing
Documents or any provision thereof, failure of consideration or commercial
frustration of purpose, any failure of the Credit Obligor to make a payment
pursuant to the Letter of Credit or to reinstate the appropriate amount thereof,
any change in the tax or other laws or administrative rulings, actions or
regulations of the United States of America or of any state, territory or
possession thereof or of the District of Columbia, or of any political
subdivision, municipality or other governmental unit of any of the foregoing, or
any failure of any party to perform and observe any agreement or covenant,
whether express or implied, duty, liability or obligation arising out of or in
connection with any of the Financing Documents.
SECTION 8.5 GENERAL COVENANTS OF THE ISSUER
-------------------------------
Until the Indenture Indebtedness is paid in full:
(a) The Issuer will maintain proper books of record and account, in which
full and correct entries will be made, in accordance with generally accepted
accounting principles (as the same exist on the date of application thereof), of
all its business and affairs. The Issuer shall furnish to the Trustee with
reasonable promptness, and within 30 days of their completion, annual financial
statements audited by certified public accountants of the Issuer and prepared in
accordance with generally accepted accounting principles (as the same exist on
the date of application thereof).
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(b) The Issuer will duly pay and discharge all taxes, assessments and
other governmental charges and liens lawfully imposed on the Issuer, and the
properties of the Issuer, provided, however, the Issuer will not be required to
pay any taxes, assessments or other governmental charges so long as in good
faith it shall contest the validity thereof by appropriate legal proceedings.
(c) Except as permitted by this Section the Issuer will maintain and
preserve its existence as a corporation under the laws of the State of Nevada
and will not voluntarily dissolve without first discharging its obligations
under this Indenture (except as permitted herein) and will comply with all valid
laws, ordinances, regulations and requirements applicable to it or to its
property.
(d) The Issuer will not in any manner transfer or convey any material
portion of its property, assets and licenses; without receipt of present and
adequate consideration therefor.
(e) The Issuer will do, execute, acknowledge, deliver and record such
further acts, conveyances, agreements, documents, instruments, financing
statements and assurances as the Trustee shall require for accomplishing the
purposes of the Financing Documents.
(f) The Issuer will (1) pay all amounts due after the dishonor of a
drawing request by or the insolvency of the Credit Obligor; and (2) not use the
proceeds of the Notes in violation of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System; and (c) will cause the proceeds from
(i) the sale of the Notes, (ii) the remarketing of the Notes and (iii) from
drawings on the Letter of Credit to be maintained in separate accounts,
segregated from each other and from any other funds provided by the Issuer to
make payments on the Notes or to reimburse the Credit Obligor.
SECTION 8.6 APPOINTMENT OF SUCCESSOR TRUSTEE
--------------------------------
Whenever necessary to avoid or fill a vacancy in the office of the Trustee,
the Issuer will appoint a successor Trustee in the manner provided in Section
10.9.
SECTION 8.7 FURTHER ASSURANCES
------------------
The Issuer will at any time or times do, execute, acknowledge, deliver and
record or cause to be done, executed, acknowledged, delivered, and recorded all
such further acts, deeds, conveyances, assignments, pledges, transfers and
assurances in law as the Trustee shall reasonably require for the better
assuring, assigning, transferring, pledging and confirming unto the Trustee, all
and singular, the property and rights herein assigned, transferred and pledged
or intended so to be.
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
------------------------------
SECTION 9.1 EVENTS OF DEFAULT
-----------------
Any one or more of the following shall constitute an event of default under
this Indenture (whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon any Note when such
interest becomes due and payable; or
(2) default in the payment of the principal of (or premium, if any,
on) any Note when such principal (or premium, if any) becomes due and
payable, whether at its stated maturity, by declaration of acceleration or
call for redemption or otherwise; or
(3) failure to pay when due the purchase price of any Note tendered
for purchase pursuant to the Optional Tender or Mandatory Tender provisions
hereof; or
(4) the occurrence of an event of default, as therein defined, under
any other Financing Document (other than the Credit Documents) and the
expiration of the grace period, if any, specified therein; or
(5) receipt of notice by the Trustee from the Credit Obligor that the
Credit Obligor has not reinstated the Credit Amount of the Letter of Credit
(as defined therein) in accordance with the terms thereof; or
(6) receipt by the Trustee of written notice from the Credit Obligor
that an event of default, as therein defined, has occurred and is
continuing under the Credit Documents; or
(7) the Credit Obligor dishonors a draw under the Letter of Credit;
or
(8) default in the performance, or breach, of any covenant,
representation or warranty of the Issuer in this Indenture (other than a
covenant or warranty a default in the performance or breach of which is
elsewhere in this Section specifically described), and continuance of such
default or breach for a period of 30 days after there has been given, by
registered or certified mail, to the Issuer, and the Credit Obligor by the
Trustee or to the Issuer, the Trustee and the Credit Obligor by the Holders
of at least 10% in principal amount of the Outstanding Notes, a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "notice of default" hereunder.
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SECTION 9.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT; EXERCISE
------------------------------------------------------------
OF REMEDIES
- -----------
(a) If an Event of Default exists under any of Section 9.1(1) 9.1(2),
9.1(3), 9.1(4), 9.1(5), 9.1(6) or 9.1(7) and the Letter of Credit is in effect,
the Trustee shall (1) declare the principal of all the Notes and the interest
accrued thereon to be due and payable immediately, by a notice in writing to the
Issuer and the Credit Obligor, and upon any such declaration such principal and
the interest accrued thereon to the date of declaration shall become immediately
due and payable and interest on the Notes shall cease to accrue from and after
the date of declaration and (2) immediately draw under the Letter of Credit to
the full extent permitted by the terms thereof to pay the principal of the Notes
and the interest accrued and to accrue thereon until and including the date of
such declaration.
(b) If an Event of Default exists under Section 9.1(8) or if any other
Event of Default exists and the Letter of Credit is no longer in effect or there
has occurred a Credit Obligor Insolvency Date, then, and in every such case, the
Trustee or the Holders of not less than 25% in principal amount of the Notes
Outstanding may (but only with the consent of the Credit Obligor if the Letter
of Credit is in effect and the Credit Obligor has not dishonored a draw thereon
and a Credit Obligor Insolvency Date has not occurred) declare the principal of
all the Notes and the interest accrued thereon to be due and payable
immediately, by a notice in writing to the Issuer (and to the Trustee, if given
by Holders). Upon any such declaration such principal and the interest accrued
thereon to the date of declaration shall become immediately due and payable and
the Trustee shall, if the Letter of Credit is then in effect, immediately draw
under the Letter of Credit to the full extent permitted by the terms thereof to
pay the principal of the Notes and the interest accrued and to accrue thereon
until and including the date of such declaration.
(c) At any time after such a declaration of acceleration has been made
pursuant to subsection (b) of this Section, the Holders of a majority in
principal amount of the Notes Outstanding may (but only with the consent of the
Credit Obligor if the Letter of Credit is in effect and an Event of Default has
not occurred under Section 9.1(7) and a Credit Obligor Insolvency Date has not
occurred), by written notice to the Issuer and the Trustee, rescind and annul
such declaration and its consequences if
(1) the Issuer has deposited with the Trustee a sum sufficient to pay
(A) all overdue installments of interest on all Notes,
(B) the principal of (and premium, if any, on) any Notes which
have become due otherwise than by such declaration of acceleration and
interest thereon at the rate or rates prescribed therefor in such
Notes,
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(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the rate or rates
prescribed therefor in the Notes, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the nonpayment of the principal
of Notes which have become due solely by such declaration of acceleration,
have been cured or have been waived as provided in Section 9.15.
No such rescission and annulment shall affect any subsequent default or impair
any right consequent thereon.
(d) Upon the occurrence of any Event of Default specified in Section 9.1
the Trustee may, only with the consent of the Credit Obligor if the Letter of
Credit is in effect and has been reinstated to the full amount required to be
available thereunder and the Credit Obligor has not dishonored a draft
thereunder and there has not occurred a Credit Obligor Insolvency Date, subject
to the terms of this Indenture, proceed to protect and enforce its rights and
the rights of the Noteholders by any suit, action or proceeding at law or in
equity, including but not limited to an action for mandamus, or for specific
performance of any agreement herein contained, or for enforcing payment and
collection of any revenues due under this Indenture or for making a demand for
payment from the Issuer, or for taking action pursuant to any other document to
which the Trustee is a party by signature, assignment, operation of law, or
otherwise.
SECTION 9.3 RIGHTS AND REMEDIES OF TRUSTEE IN THE EVENT OF BANKRUPTCY,
----------------------------------------------------------
AND THE OCCURRENCE OF SIMILAR EVENTS REGARDING THE ISSUER.
- ----------------------------------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, composition or other judicial
proceeding relative to any person obligated for payment of the Notes, the
Trustee (irrespective of whether there has been a default under this Indenture)
shall be entitled and empowered to intervene in such proceedings on behalf of
the Noteholders, to file and prove a claim or claims for the whole amount owing
and unpaid and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all advances
made, by the Trustee except as a result of its gross negligence or bad faith)
and of the Noteholders allowed in any such judicial proceedings, to collect and
receive any moneys or other property payable or deliverable on any such claims,
and to take such other action therein as the Trustee may deem necessary or
appropriate to protect the interests of the Noteholders, and any receiver,
assignee or trustee, liquidator, sequestrator (or other similar official) in any
such judicial proceeding is hereby authorized by each of the Noteholders to make
payments to the Trustee.
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SECTION 9.4 SUBROGATION RIGHTS OF CREDIT OBLIGOR
------------------------------------
If money is collected by the Trustee pursuant to the Letter of Credit, the
Credit Obligor shall be subrogated to the rights possessed under this Indenture
by the Trustee and the Holders; provided, however, that the Credit Obligor shall
be precluded from exercising or enforcing such subrogation rights until the
principal of, premium, if any, and interest on all Notes shall have been paid in
full as provided in Article hereof. For purposes of the subrogation rights of
the Credit Obligor hereunder, (i) any reference herein to the registered owners
or Holders of the Notes shall mean the Credit Obligor, (ii) any principal of,
mandatory redemption premium, optional redemption premium and interest on the
Notes paid with moneys collected pursuant to the Letter of Credit shall be
deemed to be unpaid hereunder, and (iii) the Credit Obligor may exercise any
rights it would have hereunder as the Holder of the Notes. The subrogation
rights granted to the Credit Obligor in this Indenture are not intended to be
exclusive of any other remedy or remedies available to the Credit Obligor, and
such subrogation rights shall be cumulative and shall be in addition to every
other remedy given hereunder or under the Financing Documents, or any other
instrument or agreement with respect to the reimbursement of moneys paid by the
Credit Obligor pursuant to the Letter of Credit, and every other remedy now or
hereafter existing at law or in equity or by statute.
SECTION 9.5 APPLICATION OF MONEY COLLECTED
------------------------------
(a) The Trustee shall apply the following funds solely for the purposes
for which they were collected and held under this Indenture and not otherwise:
(1) funds collected from a draw under the Letter of Credit, (2) money held in
trust under Section 7.3 for the benefit of Unsurrendered Notes, and (3) funds
and investments held in trust under Section 13.2 for the Notes to be paid
therefrom.
(b) Any money collected by the Trustee pursuant to this Article and any
other sums then held by the Trustee as part of the Trust Estate (other than the
funds referred to in subsection (a) above) shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Notes and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
(1) First: To the payment of all undeducted amounts due the Trustee
-----
under Section 10.7;
(2) Second: To the payment of the whole amount then due and unpaid
------
upon the Outstanding Notes for principal (and premium, if any) and
interest, in respect of which or for the benefit of which such money has
been collected, with interest (to the extent that such interest has been
collected by the Trustee or a sum sufficient therefor has been so collected
and payment thereof is legally enforceable at the respective rate or rates
prescribed therefor in the Notes) on overdue principal (and premium, if
any) and (to the extent legally enforceable) on overdue installments of
interest; and in case such proceeds
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shall be insufficient to pay in full the whole amount so due and unpaid
upon such Notes, then to the payment of such principal (and premium, if
any) and interest, without any preference or priority, ratably according to
the aggregate amount so due; provided, however, that payments with respect
to Pledged Notes shall be made only after all other Notes have been Fully
Paid;
(3) Third: To the payment of all amounts then due to the Credit
-----
Obligor pursuant to the Credit Documents; and
(4) Fourth: To the payment of the remainder, if any, to the Issuer or
------
to whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
SECTION 9.6 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES
------------------------------------------------------
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
SECTION 9.7 LIMITATION ON SUITS BY HOLDERS
------------------------------
No Holder of any Note shall have any right to institute any proceeding,
judicial or otherwise, under or with respect to this Indenture, or for the
appointment of a receiver or trustee or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such proceeding;
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(5) no direction inconsistent with such written request shall have
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Notes; and
(6) if the Letter of Credit is in effect and an Event of Default does
not exist under Section 9.1(5), 9.1(6), or 9.1(7), the Credit Obligor shall
have given its written consent to such direction or request;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the lien of this Indenture or
the rights of any other Holders of Notes, or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all Outstanding Notes.
SECTION 9.8 UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PRINCIPAL,
--------------------------------------------------------
PREMIUM AND INTEREST
- --------------------
Notwithstanding any other provision in this Indenture other than those set
forth in Article , the Holder of any Note shall have the right, which is
absolute and unconditional, to receive payment of the principal of (and premium,
if any) and interest on such Note on the respective stated maturities expressed
in such Note (or, in the case of redemption, on the redemption date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 9.9 RESTORATION OF POSITIONS
------------------------
If the Trustee or any Noteholder shall have instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Trustee or to such Noteholder, then and in every such case the
Issuer, the Trustee and the Noteholders shall, subject to any determination in
such proceeding, be restored to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Noteholders shall continue as
though no such proceeding had been instituted.
SECTION 9.10 RIGHTS AND REMEDIES CUMULATIVE
------------------------------
No right or remedy herein conferred upon or reserved to the Trustee or to
the Noteholders is intended to be exclusive of any other right or remedy, and
every such right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
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SECTION 9.11 DELAY OR OMISSION NOT WAIVER
----------------------------
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon an Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
SECTION 9.12 CONTROL BY CREDIT OBLIGOR AND NOTEHOLDERS
-----------------------------------------
The Holders of a majority in principal amount of the Outstanding Notes (but
only with the consent of the Credit Obligor, if the Letter of Credit is in
effect and the Credit Obligor has not dishonored any draws thereunder and there
has not occurred a Credit Obligor Insolvency Date) shall have the right, during
the continuance of an Event of Default,
(1) to require the Trustee to proceed to enforce this Indenture,
either by judicial proceedings for the enforcement of the payment of the
Notes or otherwise, and
(2) to direct the time, method and place of conducting any proceeding
for any available to the Trustee, or exercising any trust or power
conferred upon the hereunder, provided that
(A) the provisions of Section 9.2 requiring a declaration of
acceleration and a draw under the Letter of Credit may not be modified
or waived without the consent of all Noteholders,
(B) such direction shall not be in conflict with any rule of law
or this Indenture,
(C) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(D) if such direction is given by the Holders of a majority in
principal amount of Notes Outstanding, the Trustee shall have not
determined that the action so directed would be unjustly prejudicial
to the Holders not taking part in such direction.
SECTION 9.13 WAIVER OF PAST DEFAULTS
-----------------------
(a) The Holders of not less than a majority in principal amount of the
Outstanding Notes may (but only with the consent of the Credit Obligor if the
Letter of Credit is in effect and the Credit Obligor has not dishonored any
draws thereunder and there has not occurred a Credit Obligor Insolvency Date and
subject to subsection (b) below), by Act of such Noteholders
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delivered to the Trustee, the Issuer and the Issuer, on behalf of the Holders of
all the Notes, waive any past default hereunder and its consequences, except a
default
(1) in the payment of the principal of (or premium, if any) or
interest on any Note,
(2) in the payment of any amounts due by the Issuer under Section 8.2
(a) hereof, or
(3) in respect of a covenant or provision hereof which under Article
XIV cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
(b) Anything herein to the contrary notwithstanding, no default may be
waived unless the Letter of Credit shall have been reinstated to the full amount
then required to be available thereunder and the Credit Obligor shall have
rescinded any notice of default under the Credit Documents or any notice of
nonreinstatement of the Credit Amount of the Letter of Credit.
(c) Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 9.14 WAIVER OF APPRAISEMENT AND OTHER LAWS
-------------------------------------
(a) To the full extent that it may lawfully so agree, the Issuer will not
at any time insist upon, plead, claim or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption law now or hereafter in
force, in order to prevent or hinder the enforcement of this Indenture; and the
Issuer, for itself and all who may claim under it, so far as it or they now or
hereafter may lawfully do so, hereby waives the benefit of all such laws. The
Issuer, for itself and all who may claim under it, waives, to the extent that it
may lawfully do so, all right to have the property in the Trust Estate
marshalled upon any enforcement hereof.
(b) If any law in this Section referred to and now in force, of which the
Issuer or its successor or successors might take advantage despite this Section,
shall hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to constitute any part of the contract herein contained or
to preclude the application of this Section.
SECTION 9.15 SUITS TO PROTECT THE TRUST ESTATE
---------------------------------
The Trustee shall have power to institute and to maintain such proceedings
as it may deem expedient to prevent any impairment of the Trust Estate by any
acts which may be unlawful or in violation of this Indenture and to protect its
interests and the interests of the Noteholders in the Trust Estate and in the
rents, issues, profits, revenues and other income
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arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any governmental enactment, rule
or order that may be unconstitutional or otherwise invalid, if the enforcement
of or compliance with such enactment, rule or order would impair the security
hereunder or be prejudicial to the interests of the Noteholders or the Trustee.
SECTION 9.16 REMEDIES SUBJECT TO APPLICABLE LAW
----------------------------------
All rights, remedies and powers provided by this Article may be exercised
only to the extent that the exercise thereof does not violate any applicable
provision of law in the premises, and all the provisions of this Article are
intended to be subject to all applicable mandatory provisions of law which may
be controlling in the premises and to be limited to the extent necessary so that
they will not render this Indenture invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
ARTICLE X
THE TRUSTEE
-----------
SECTION 10.1 CERTAIN DUTIES AND RESPONSIBILITIES
-----------------------------------
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) If an Event of Default exists, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
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(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct, except that
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith, unless it shall be proved that the Trustee was grossly
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in principal amount of the Outstanding Notes
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 10.2 NOTICE OF DEFAULTS
------------------
Within 90 days after the occurrence of any default hereunder, the Trustee
shall transmit by mail to all Noteholders as their names and addresses appear in
the Note Register, notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived; provided, however, that, except in
the case of a default in the payment of Debt Service on any Note, the Trustee
shall be protected in withholding such notice if and so long as the Trustee in
good faith determines that the withholding of such notice is in the interests of
the Noteholders; and provided, further, that in the case of any default of the
character specified in Section 9.1(8) no such notice to Noteholders shall be
given until at least 30 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
SECTION 10.3 CERTAIN RIGHTS OF TRUSTEE
-------------------------
Except as otherwise provided in Section 10.1:
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(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper parry or
parties;
(2) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by a certificate or order executed by an Authorized
Issuer Representative;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon a certificate executed by an Authorized
Issuer Representative;
(4) the Trustee may consult with counsel and the written advice of
Independent Counsel or any Opinion of Independent Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by the Trustee hereunder in good faith and in reliance
thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction, provided, that
the Trustee cannot require such security or indemnity as a condition to the
performance by the Trustee of its obligations under Sections 7.1, 7.2 and
9.2;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books and records of the Issuer, personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
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SECTION 10.4 NOT RESPONSIBLE FOR RECITALS
----------------------------
The recitals contained herein and in the Notes, except the certificate of
authentication and registration on the Notes, shall be taken as the statements
of the Issuer, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the value or condition of the Trust
Estate or any part thereof, or as to the title of the Issuer thereto or as to
the security afforded thereby or hereby, or as to the validity or sufficiency of
this Indenture or of the Notes.
SECTION 10.5 MAY HOLD NOTES
--------------
The Trustee in its individual or any other capacity, may become the owner
or pledgee of Notes and may otherwise deal with the Issuer with the same rights
it would have if it were not Trustee.
SECTION 10.6 MONEY HELD IN TRUST
-------------------
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by this Indenture or by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise provided in Section 7.4.
SECTION 10.7 COMPENSATION AND REIMBURSEMENT
------------------------------
(a) The Issuer agrees to pay or cause to be paid:
(1) to the Trustee from time to time reasonable compensation for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust); and
(2) except as otherwise expressly provided herein, upon request,
reimbursement for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and Independent counsel), except any such
expense, disbursement or advance as may be determined by a court of
competent jurisdiction to be attributable to the Trustee's gross
negligence, or bad faith, or wilful misconduct.
(b) As security for the performance of the obligations of the Issuer under
this Section the Trustee shall be secured under this Indenture by a lien prior
to the Notes, and for the payment of such compensation, expenses, reimbursements
and indemnity the Trustee shall have the right to use and apply any money held
by it as a part of the Trust Estate; provided, however, that funds held by the
Trustee under Section 7.3 and Section 13.2 shall be used solely for the purposes
thereof and all funds received by the Trustee from the Letter of Credit shall be
used solely for the purpose of paying Debt Service on, or the purchase price of,
Notes as herein
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provided, and such funds held under Section 7.3 and Section 13.2 and such funds
received from the Letter of Credit shall never be subject to any lien imposed by
this Section in favor of the Trustee.
SECTION 10.8 ELIGIBILITY OF TRUSTEE; APPOINTMENT OF CO-TRUSTEE
-------------------------------------------------
(a) Except as provided in subsection (b), there shall at all times be a
Trustee hereunder which shall be a commercial bank or trust company organized
and doing business under the laws of the United States or of any State,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, subject to supervision or
examination by Federal or State authority.
(b) It is the purpose of this Indenture that there shall be no violation
of the law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as trustee in such
jurisdiction. It is recognized that in case of litigation under Financing
Documents, and in particular in case of the enforcement thereof on any default
or Event of Default, or in the case the Trustee deems that by reason of any
present or future law of any jurisdiction it may not exercise any of the powers,
rights, or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any action which may be
desirable or necessary in connection therewith, it may be necessary that the
Trustee appoint an additional individual or institution as a separate or co-
trustee pursuant to this section.
(c) In the event that the Trustee appoints an additional individual or
institution as a separate or co-trustee, each and every remedy, power, right,
claim, demand, cause of action, immunity, estate, title, interest and lien
expressed or intended by this Indenture to be exercised by or vested in or
conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or co-trustee but only to the extent necessary to enable such
separate or co trustee to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by such separate or
co-trustee shall run to and be enforceable by either of them. The Trustee shall
be jointly liable for the actions taken by such separate or co-trustee, if such
actions were taken at the direction of the Trustee.
(d) Should any instrument in writing from the Issuer be required by the
separate or co-trustee so appointed by the Trustee for more fully and certainly
vesting in and confining to him or it such properties, rights, powers, trusts,
duties and obligations, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Issuer. In case any
separate or co-trustee or a successor to either shall die, become incapable of
acting, resign or be removed, all the estates, properties, rights, powers,
trusts, duties and obligations of such separate or co-trustee, so far as
permitted by law, shall vest in and be exercised by the Trustee until the
appointment of a new trustee or successor to such separate or co-trustee.
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SECTION 10.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 10.10.
(b) The Trustee may resign at any time by giving written notice thereof to
the Issuer. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may (but only with the consent of the Credit Obligor if
the Letter of Credit is in effect and the Credit Obligor has not dishonored any
draws thereunder and there has not otherwise been instituted insolvency
proceedings with respect to the Credit Obligor) be removed at any time by Act of
the Holders of a majority in principal amount of the Outstanding Notes delivered
to the Trustee and the Issuer.
(d) If at any time:
(1) the Trustee shall cease to be eligible under Section 10.8 and
shall fail to resign after written request therefor by the Issuer or by any
Noteholder who has been a Holder of a Note for at least 6 months, or
(2) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer by a resolution of its Board of Directors
may remove the Trustee, or (ii) any Noteholder who has been a Holder of a Note
for at least 6 months may, on behalf of such Noteholder and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Issuer,
by a resolution of its Board of Directors, shall (with the consent of the Credit
Obligor if the Letter of Credit is in effect and the Credit Obligor has not
dishonored any draws thereunder and there has not occurred a Credit Obligor
Insolvency Date) promptly appoint a successor Trustee. In case all or
substantially all of the Trust Estate shall be in the possession of a receiver
or trustee lawfully appointed, such receiver or trustee, by written instrument,
may (with the consent of the Credit Obligor if the Letter of Credit is in effect
and the Credit Obligor has not dishonored any draws thereunder and there has not
otherwise been instituted insolvency proceedings with respect to the Credit
Obligor) similarly appoint a successor to fill such vacancy until a new Trustee
shall be so appointed by the Noteholders. If, within 1 year after such
resignation, removal or
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incapability or the occurrence of such vacancy, a successor Trustee shall (with
the consent of the Credit Obligor under the conditions herein prescribed) be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to the Issuer and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Issuer or by such receiver or trustee. If no successor Trustee
shall have been so appointed by the Issuer or the Noteholders and accepted
appointment in the manner hereinafter provided, any Noteholder who has been a
Holder of a Note for at least 6 months may, on behalf of such Noteholder and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Notes as their names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee and the address of its Principal
Office.
(g) Any successor Trustee shall be acceptable to any Rating Agency which
shall then maintain a rating with respect to the Notes.
SECTION 10.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
--------------------------------------
(a) Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the estates, properties,
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Issuer or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument conveying and transferring to
such successor Trustee upon the trusts herein expressed all the estates,
properties, rights, powers and trusts of the retiring Trustee, and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder, subject nevertheless to its lien, if
any, provided for in Section 10.7. Upon request of any such successor Trustee,
the Issuer shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such estates,
properties, rights, powers and trusts.
(b) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article, to the extent operative.
SECTION 10.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
-----------------------------------------------------------
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger,
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conversion or consolidation to which the Trustee shall be a party, or any
corporation or association succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation or association shall be otherwise qualified
and eligible under this Article, to the extent operative, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto. In case any Notes shall have been authenticated, but not delivered, by
the Trustee then in office, any successor by merger, conversion or consolidation
to such authenticating Trustee may adopt such authentication and deliver the
Notes so authenticated with the same effect as if such successor Trustee had
itself authenticated such Notes.
ARTICLE XI
SUPPLEMENTAL INDENTURES AND AMENDMENTS OF LETTER OF CREDIT
----------------------------------------------------------
SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS
------------------------------------------------------
Without the consent of the Holders of any Notes, the Issuer, when
authorized by a resolution of its Board of Directors, and the Trustee may,
subject to the provisions of Sections 11.6 and 11.7, from time to time enter
into one or more indentures supplemental hereto or in amendment hereof, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Trustee any property subject or required to be subjected
to the lien of this Indenture, or to subject to the lien of this Indenture
additional property; or
(2) to add to the conditions, limitations and restrictions on the
authorized amount, terms or purposes of issue of the Notes; or
(3) to evidence the succession of another corporation to the Issuer
and the assumption by any such successor of the covenants of the Issuer
herein and in the Notes contained; or
(4) to add to the covenants of the Issuer for the benefit of the
Holders of Notes and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture; provided, however, that with respect to any
such covenant, such supplemental indenture may provide for a particular
period of grace after default (which period may be shorter or longer than
that allowed in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to the
Trustee upon such default;
(5) to surrender any right or power herein conferred upon the Issuer;
or
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(6) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or to make
any other provisions, with respect to matters or questions arising under
this Indenture, which shall not be inconsistent with the provisions of this
Indenture, provided such action shall not adversely affect the interests of
the Holders of the Notes; or
(7) to permit fully registered Notes to be exchanged for coupon Notes
(which may be registrable as to principal only); or
(8) to make further provisions with respect to the administration and
operation of the Book-Entry System and the transfer, payment, selection for
redemption and redemption of Notes in accordance therewith; or
(9) to secure or maintain ratings from a Rating Agency, provided that
(i) the changes necessary to obtain or secure such ratings do not adversely
affect the interests of the Holders of the Notes and (ii) the Trustee
receives an Opinion of Note Counsel to the effect that such changes are
permitted by applicable law; or
(10) to modify, amend or supplement this Indenture in such manner as
to permit the qualification hereof under the Trust Indenture Act of 1939 or
any similar federal statute hereafter in effect or to permit the
qualification of the Notes for sale under the securities laws of any of the
states of the United States, and, if they so determine, to add to this
Indenture such other terms, conditions and provisions as may be permitted
by said Trust Indenture Act of 1939 or similar federal statute.
SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS
---------------------------------------------------
With the consent of the Holders of not less than a majority in principal
amount of the Notes then Outstanding affected by such supplemental or amendatory
indenture, by Act of such Holders delivered to the Issuer and the Trustee, the
Issuer, when authorized by a resolution of its Board of Directors, and the
Trustee may, subject to the provisions of Sections 11.6 and 11.7, enter into an
indenture or indentures supplemental hereto or in amendment hereof for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture or any amendment shall, without the consent of the Holder
of each Outstanding Note affected thereby,
(1) change the stated maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the interest thereon or any premium payable upon the redemption
thereof, or change any place of payment where, or the coin or currency in
which, any Note, or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
stated maturity thereof (or, in the case of redemption, on or after the
redemption date); or
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(2) reduce the percentage in principal amount of the Outstanding
Notes the consent of whose Holders is required for any such supplemental
indenture or the consent of whose Holders is required for any waiver
provided for in this Indenture of compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences; or
(3) modify or alter the provisions of the proviso to the definition
of the term "Outstanding"; or
(4) modify any of the provisions of this Section or Section 9.13,
except to increase any percentage provided thereby or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Note affected thereby; or
(5) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to the Trust Estate or any
part thereof or terminate the lien of this Indenture on any property at any
time subject hereto or deprive the Holder of any Note of the security
afforded by the lien of this Indenture; or
(6) release any rights under the Letter of Credit; provided, however,
no consent of the Noteholders will be required for any extension of the
term of the Letter of Credit by the Credit Obligor, or for the acceptance
by the Trustee of a Substitute Letter of Credit and the concomitant release
of the then Existing Letter of Credit as provided in Section 3.10, or any
amendment to the Letter of Credit which is provided for, and contemplated
by, this Indenture.
SECTION 11.3 DISCRETION OF TRUSTEE; ACTS OF NOTEHOLDERS
------------------------------------------
(a) The Trustee may in its discretion determine whether or not any Notes
would be affected by any supplemental indenture and any such determination shall
be conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Trustee shall not be liable for any
such determination made in good faith.
(b) It shall be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 11.4 CONSENT OF CREDIT OBLIGOR
-------------------------
Subject to Section 1.12, no amendment or change to this Indenture shall be
made without the prior written consent of the Credit Obligor.
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SECTION 11.5 EXECUTION OF SUPPLEMENTAL INDENTURES
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modification thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and, subject to Section 10.1, shall be fully protected in relying upon, an
Opinion of Independent Counsel stating that the execution of such supplemental
indenture or amendment is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture or consent to any such amendment which affects the Trustee's own
rights, duties or immunities under this Indenture, or otherwise.
SECTION 11.6 EFFECT OF SUPPLEMENTAL INDENTURES
---------------------------------
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 11.7 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES
---------------------------------------------
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and if required by the Trustee shall,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Issuer shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the Board of Directors
of the Issuer, to any such supplemental indenture may be prepared and executed
by the Issuer and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
SECTION 11.8 AMENDMENT OF LETTER OF CREDIT
-----------------------------
(a) The Trustee may, without the consent of or notice to the Holders of
the Notes, consent to any amendment, modification or other change of the Letter
of Credit for the purpose of curing any ambiguity or formal defect or omission
or obtaining a rating on the Notes from any Rating Agency, provided that (i) the
Trustee, in its sole judgment, shall determine that such change does not
adversely affect the interests of the Holders of the Notes and (ii) the Trustee
shall receive an Opinion of Note Counsel with respect to the Notes, to the
effect that such change is permitted by applicable law.
(b) Except as provided in subsection (a) of this Section, and except for
extensions of the term of the Letter of Credit by the Credit Obligor, no
amendment, modification or other change of the Letter of Credit shall be made
without the consent of the Holders of all Notes Outstanding.
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ARTICLE XII
THE REMARKETING AGENT
AND THE TENDER AGENT
--------------------
SECTION 12.1 REMARKETING AGENT
-----------------
(a) SouthTrust Securities, Inc. is hereby appointed as "Remarketing Agent"
for the Notes, subject to the conditions set forth in this Section.
(b) The Remarketing Agent shall signify its acceptance of the duties and
obligations imposed upon it by this Indenture by execution and delivery of an
agreement satisfactory to the Trustee.
(c) The Remarketing Agent shall be authorized by law to perform all the
duties imposed upon it by this Indenture.
(d) The Remarketing Agent may resign at any time by giving 30 days' prior
written notice thereof to the Issuer, the Trustee, and the Credit Obligor;
provided, however, that no such resignation shall become effective until a
successor Remarketing Agent has been appointed and has accepted its duties and
obligations hereunder.
(e) The Issuer may, with the prior written consent of the Credit Obligor,
remove the Remarketing Agent at any time upon 30 days' prior written notice
thereof to the Remarketing Agent, the Issuer and the Trustee.
(f) If at any time:
(1) the Remarketing Agent shall cease to be eligible under this
Section and shall fail to resign after written request therefor by the
Issuer, or
(2) the Remarketing Agent shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Remarketing Agent
or of its property shall be appointed or any public officer shall take
charge or control of the Remarketing Agent or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Issuer may remove the Remarketing Agent upon 7 days'
written notice thereof to the Remarketing Agent and the Credit Obligor.
(g) If the Remarketing Agent shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Remarketing Agent for
any cause, the Issuer shall, with the prior written consent of the Issuer and
the Credit Obligor, promptly appoint a successor Remarketing Agent.
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(h) Any successor Remarketing Agent shall be appropriately registered and
licensed, and be acceptable to the Issuer, the Trustee and to any Rating Agency
which shall then maintain a rating with respect to the Notes.
(i) The Trustee shall give notice of each resignation and each removal of
the Remarketing Agent and each appointment of a successor Remarketing Agent by
mailing written notice of such event by first-class mail, postage prepaid, to
the Holders of Notes as their names and addresses appear in the Note Register.
Each notice shall include the name of the successor Remarketing Agent and the
address of its principal office.
SECTION 12.2 TENDER AGENT
------------
(a) At the written request of the Trustee, the Issuer shall appoint an
agent to act on behalf of the Trustee in the acceptance of delivery of Notes
tendered for purchase pursuant to the Optional Tender or Mandatory Tender
provisions of this Indenture and in the authentication and delivery of Notes
pursuant to the transfer and exchange provisions of this Indenture. For all
purposes of this Indenture, (i) Notes to be purchased pursuant to the Optional
Tender or Mandatory Tender provisions of this Indenture may be delivered to the
Tender Agent, as well as the Trustee, and (ii) the authentication and delivery
of Notes by a duly authorized officer or signatory of the Tender Agent pursuant
to the transfer and exchange provisions of this Indenture shall be deemed to be
the authentication and delivery of Notes "by the Trustee".
(b) Any Tender Agent appointed hereunder shall signify its acceptance of
such appointment by execution and delivery of an agreement satisfactory to the
Trustee.
(c) Any such Tender Agent shall at all times be a bank or trust company
having its principal office in New York, New York and shall at all times be a
corporation organized and doing business under the laws of the United States or
of any state with a combined capital and surplus of at least $5,000,000 and
authorized under such laws to exercise corporate trust powers and subject to
supervision and examination by federal or state authority and shall be
acceptable to any Rating Agency which shall then maintain a rating with respect
to the Notes. If such corporation publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(d) Any corporation or association into which any Tender Agent may be
merged or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, consolidation or conversion to which any
Tender Agent shall be a party, or any corporation or association succeeding to
the corporate trust business of any Tender Agent, shall be the successor of the
Tender Agent hereunder, if such successor corporation or association is
otherwise eligible under this Section, without the execution or filing of any
further act on the part of the parties hereto or the Tender Agent or such
successor corporation or association.
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(e) Any Tender Agent may at any time resign by giving written notice of
resignation to the Trustee and the Issuer. The Trustee may at any time
terminate the agency of any Tender Agent by giving written notice of termination
to such Tender Agent and the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any Tender Agent
shall cease to be eligible under this Section, the Trustee shall promptly
appoint a successor Tender Agent, shall give written notice of such appointment
to the Issuer, and shall mail notice of such appointment to all Holders of Notes
as the names and addresses of such Holders appear on the Note Register.
(f) The Issuer shall to pay to the Tender Agent from time to time
reasonable compensation for its services.
ARTICLE XIII
DEFEASANCE
----------
SECTION 13.1 PAYMENT OF INDEBTEDNESS; SATISFACTION AND DISCHARGE OF
------------------------------------------------------
INDENTURE
- ---------
(a) Whenever all Indenture Indebtedness has been Fully Paid, then, upon
the request of an Authorized Issuer Representative, this Indenture and the lien,
rights and interests created hereby shall cease, determine and become null and
void (except as to any surviving rights of transfer or exchange of Notes herein
or therein provided for) and the Trustee shall execute and deliver a termination
statement and such instruments of satisfaction and discharge as may be necessary
and pay, assign, transfer and deliver to the Issuer or upon the order of the
Issuer, all cash and securities then held by it hereunder as a part of the Trust
Estate.
(b) A Note shall be deemed "Fully Paid" if
(1) such Note has been canceled by the Trustee or delivered to the
Trustee for cancellation, or
(2) such Note shall have matured or been called for redemption and,
on such maturity date or redemption date, money for the payment of Debt
Service on such Note is held by the Trustee in trust for the benefit of the
person entitled thereto, or
(3) such Note is alleged to have been mutilated, destroyed, lost or
stolen and has been replaced as provided in Section 5.3, or
(4) a trust for the payment of such Note has been established in
accordance with Section 13.2 and the Trustee shall have received (i) an
Opinion of Counsel experienced in bankruptcy matters stating in effect that
upon the occurrence of an Act of Bankruptcy, money and investments in such
trust will not be subject to any preference
72
<PAGE>
claim under the Federal Bankruptcy Code, which opinion shall be
satisfactory to any Rating Agency then rating the Notes and (ii) a
certificate of an Independent certified public accountant or firm thereof
to the effect that the funds on deposit in such trust and the income
therefrom without reinvestment will be sufficient to pay when due the
principal of, premium if any and interest on such Notes. The Issuer shall
give each Rating Agency that maintains a rating with respect to the Notes
10 days' notice of its intent to establish such a trust for the payment of
Notes, but failure to give any such notice shall not result in a Note not
being deemed Fully Paid.
(c) Indenture Indebtedness other than Debt Service on the Notes shall be
deemed "Fully Paid" whenever the Issuer has paid, or made provisions
satisfactory to the Trustee for payment of, all such Indenture Indebtedness
other than Debt Service on the Notes.
SECTION 13.2 TRUST FOR PAYMENT OF DEBT SERVICE
---------------------------------
(a) The Issuer may provide for the payment of any of the Notes by
establishing a trust for such purpose with the Trustee and depositing therein
cash or Federal Securities which (assuming the due and punctual payment of the
principal of and interest on such Federal Securities) will provide funds
sufficient to pay the Debt Service on such Notes as the same becomes due and
payable until the maturity or redemption of such Notes; provided, however, that
(1) such Federal Securities must not be subject to redemption prior
to their respective maturities at the option of the issuer of such
Securities,
(2) if any of such Notes are to be redeemed prior to their respective
maturities, either (i) the Trustee shall receive evidence that notice of
such redemption has been given in accordance with the provisions of this
Indenture and such Notes or (ii) the Issuer shall confer on the Trustee
irrevocable authority for the giving of such notice on behalf of the
Issuer,
(3) such trust must be established only during a Fixed Rate Period
and, if established during a Fixed Rate Period, all Notes to be retired
with funds from such trust must either mature or be called for redemption
on or before the date immediately following such Fixed Rate Period, and
(4) the Trustee has received the opinions referred to in Section
13.1(b)(4).
(b) Cash and Federal Securities deposited with the Trustee pursuant to
this Section shall not be a part of the Trust Estate but shall constitute a
separate, irrevocable trust fund for the benefit of the Holders of the Notes to
be paid from such fund. Such cash and the principal and interest payable on such
Federal Securities shall be applied by the Trustee solely to the payment of Debt
Service on such Notes. Any funds deposited with the Trustee pursuant to this
Section shall be invested only in Federal Securities meeting the requirements of
this Section.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this instrument
to be duly executed, and their respective corporate seals to be hereunto affixed
and the same attested, by officers thereof, or in the case of the Trustee,
signatories thereof, duly authorized thereunto.
LA-MAN CORPORATION
By____________________________________
Its President
[S E A L]
Attest:
___________________________________
Its Assistant Secretary
SOUTHTRUST BANK, NATIONAL
ASSOCIATION, as Trustee
By____________________________________
Its___________________________________
[S E A L]
Attest:
___________________________________
Its________________________________
74
<PAGE>
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing instrument was acknowledged before me this 28th day of
August, 1997, by J. William Brandner, the President of La-Man Corporation, a
Nevada corporation, on behalf of the corporation. Such person did not take an
oath and: (notary must check applicable box)
[_] is/are personally known to me.
[_] produced a current Florida driver's license as identification.
[_] produced _______________________________________________ as identification.
{Notary Seal must be affixed} _________________________________________________
Signature of Notary
_________________________________________________
Name of Notary (Typed, Printed or Stamped)
Commission Number (if not legible on seal):______
My Commission Expires (if not legible on seal):__
75
<PAGE>
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing instrument was acknowledged before me this 28th day of
August, 1997, by Scott A. Schuhle, the authorized signatory of SouthTrust Bank,
National Association, a national banking association, on behalf of the
association. Such person did not take an oath and: (notary must check
applicable box)
[_] is/are personally known to me.
[_] produced a current __________________ driver's license as identification.
[_] produced _______________________________________________ as identification.
{Notary Seal must be affixed} _________________________________________________
Signature of Notary
_________________________________________________
Name of Notary (Typed, Printed or Stamped)
Commission Number (if not legible on seal):______
My Commission Expires (if not legible on seal):__
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<PAGE>
EXHIBIT A
TO
TRUST INDENTURE
DATED AS OF AUGUST 1, 1997
LA-MAN CORPORATION
TO
SOUTHTRUST BANK, NATIONAL ASSOCIATION
The form of the Notes begins on the following page.
<PAGE>
EXHIBIT B
TO
TRUST INDENTURE
DATED AS OF AUGUST 1, 1997
LA-MAN CORPORATION
TO
SOUTHTRUST BANK, NATIONAL ASSOCIATION
The form of Requisition is contained on the following pages.
<PAGE>
EXHIBIT C
TO
TRUST INDENTURE
DATED AS OF AUGUST 1, 1997
LA-MAN CORPORATION
TO
SOUTHTRUST BANK, NATIONAL ASSOCIATION
The form of Optional Tender Notice is contained on the following pages.
<PAGE>
Optional Tender Notice
----------------------
SouthTrust Bank, National Association
Ft. Lauderdale, Florida
as Trustee
Re: Variable/Fixed Rate Promissory Notes, issued by La-Man Corporation
Pursuant to Trust Indenture dated August 1, 1997
----------------------------------------------------------------------
The undersigned is the registered owner of the following Note, which is
part of the above-referenced issue of Notes:
Certificate Number (if applicable): ___________________
Principal Amount: ___________________
The undersigned hereby elects to have (check one as appropriate, and be certain
to designate the principal amount tendered, if less than the entire amount):
______ the entire principal amount
______ $_____________ (must be an authorized multiple of the smallest
Authorized Denomination) of the principal amount of such Note
purchased on the following date (specify a Business Day that is at least 7 days
after notice of tender is delivered to the Trustee):
________________________
[Optional Tender Date]
<PAGE>
EXHIBIT 10.43
================================================================================
REMARKETING AGENT AGREEMENT
AMONG
LA-MAN CORPORATION
AS ISSUER
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
AS TRUSTEE
AND
SOUTHTRUST SECURITIES, INC.
AS REMARKETING AGENT
DATED AS OF AUGUST 1, 1997
================================================================================
<PAGE>
REMARKETING AGENT AGREEMENT
This Remarketing Agent Agreement (the "Remarketing Agreement") is made and
entered into by the undersigned as of August 1, 1997. For and in consideration
of the covenants herein made, and subject to the conditions herein set forth,
the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
-----------
All capitalized terms used herein without definition shall have the
meanings ascribed to them in the Trust Indenture dated as of August 1, 1997
between La-Man Corporation and SouthTrust Bank, National Association, as
Trustee, unless a different meaning clearly appears from the context.
SECTION 2. APPOINTMENT OF REMARKETING AGENT: RESPONSIBILITIES OF
-----------------------------------------------------
REMARKETING AGENT.
- -----------------
(a) Subject to the terms and conditions herein contained and pursuant to
Section 12.1 of the Indenture, the Issuer has appointed SouthTrust Securities,
Inc. and SouthTrust Securities, Inc., hereby accepts such appointment, as
exclusive remarketing agent (the "Remarketing Agent") in performing the
respective functions of determining the Variable Rate and the Fixed Rate from
time to time and the remarketing of the Notes from time to time in the secondary
market subsequent to the initial offering, issuance and sale of the Notes, all
as more fully provided herein.
(b) The Remarketing Agent, as the agent of the Issuer, agrees to determine
the Variable Rate for each interest period during the Variable Rate Period, and
the Fixed Rate for each Fixed Rate Period, all pursuant to and in accordance
with Sections 3.2 and 3.3 of the Indenture.
(c) During the Variable Rate Period, the Remarketing Agent, as agent for
the Issuer, shall, so long as no Event of Default under the Indenture has
occurred and is continuing, pursuant to the terms and provisions of the
Indenture and upon receipt of facsimile, telegraphic or telephonic notice from
the Trustee (such telegraphic or telephonic notice to be promptly confirmed in
writing) specifying the principal amount of Notes which have been tendered for
purchase pursuant to Section 3.4 of the Indenture and the Optional Tender Date,
use its best efforts to remarket all Notes so tendered for purchase at a price
of 100% of the principal amount thereof, plus accrued interest, if any, to such
Optional Tender Date; provided that the Remarketing Agent shall not undertake to
remarket such Notes if otherwise directed by the Issuer.
(d) Upon receipt of facsimile, telegraphic or telephonic notice from the
Trustee (such telegraphic or telephonic notice to be promptly confirmed in
writing) specifying the principal amount of Notes which have been tendered or
deemed to be tendered pursuant to Section 3.5 of the Indenture, and so long as
no Event of Default under the Indenture has occurred and is continuing, the
Remarketing Agent, as agent of the Issuer, agrees to use its best efforts to
<PAGE>
remarket such Notes which are tendered or are deemed to be tendered at a price
equal to 100% of the principal amount thereof, plus accrued interest, if any,
subject to the following conditions:
(i) satisfactory compensation and other terms and conditions shall
have been agreed upon by the Issuer and the Remarketing Agent;
(ii) the Remarketing Agent shall have received all documents,
including opinions of counsel, required to be delivered to it under the
terms of the Indenture;
(iii) the Remarketing Agent shall have received an offering
memorandum, or other appropriate disclosure document satisfactory in form
and substance to the Remarketing Agent, to be used in connection with its
efforts to remarket the Notes; and
(iv) the Remarketing Agent shall have received such additional
documents, certificates and legal opinions as it may reasonably request.
Further details regarding such remarketing shall be negotiated between the
Issuer and the Remarketing Agent prior to the applicable Mandatory Tender Date.
(e) To the extent that the Remarketing Agent has not arranged for the
secondary sale of Notes tendered or deemed tendered pursuant to the Indenture,
at the written direction of the Issuer and so long as no Event of Default under
the Indenture has occurred and is continuing, the Remarketing Agent shall
continue to use its best efforts to remarket such Notes, at a price equal to
100% of the principal amount thereof, plus accrued interest, if any, to the date
such Notes are to be taken up and paid for pursuant to such remarketing.
(f) Notwithstanding any of the foregoing, the Remarketing Agent shall not
offer for sale or sell Notes to the Issuer or any Affiliate of the Issuer. The
Issuer may at any time, upon written direction to the Remarketing Agent, direct
the Remarketing Agent to cease or resume the remarketing of some or all of the
Notes.
(g) The Remarketing Agent shall make appropriate settlement arrangements
for the purchase of Notes which have been remarketed as hereinabove provided
between the purchasers of such remarketed Notes and the Trustee, and shall
direct said purchasers by appropriate instructions to pay all moneys for the
purchase price of such remarketed Notes to the Trustee at the time and as
provided in the Indenture.
SECTION 3. EXCLUSIVE AGENT: RESIGNATION AND REMOVAL OF REMARKETING AGENT.
-------------------------------------------------------------
The Issuer has agreed and the Issuer hereby agrees that, unless this
Remarketing Agreement has been previously terminated pursuant to the terms
hereof, the Remarketing Agent shall act as exclusive Remarketing Agent for the
Issuer in connection with the remarketing of Notes tendered or deemed tendered
with respect to the Notes on the terms and conditions herein contained at all
times. Upon the notice and in the manner provided in Section 12.1 of the
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<PAGE>
Indenture, the Remarketing Agent may at any time resign or be removed and be
discharged of the duties and obligations created by this Remarketing Agreement
or may be removed at any time.
SECTION 4. FURNISHING OF OFFERING MATERIALS.
--------------------------------
(a) The Issuer agrees to furnish the Remarketing Agent at the Issuer's
expense, with as many copies as the Remarketing Agent may reasonably request of
the Offering Circular (the "Offering Circular") in connection with the issuance
of the Notes and any subsequent remarketing of the same as herein provided, and
shall, at the Issuer's expense, amend or supplement the Offering Circular
(and/or the documents incorporated by reference therein), so that at all times
the Offering Circular will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. In
addition, the Issuer will, at its own expense, take all steps reasonably
requested by the Remarketing Agent which the Remarketing Agent or its counsel
may consider necessary or desirable (i) to register the sale of the Notes by the
Remarketing Agent under any federal or state securities law or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended, or (ii) to enable
the Remarketing Agent to establish a "due diligence" defense to any action
commenced against the Remarketing Agent in respect of the Offering Circular and
any supplement or amendment thereto.
(b) In the event the Remarketing Agent is asked to remarket the Notes in
any situation which requires compliance with Rule 15c2-12 of the Securities
Exchange Act of 1934, as amended (the "Rule") including without limitation one
of the following circumstances:
(i) where the Notes are to be converted from a Fixed Rate Period of
nine months or less to a Fixed Rate Period of more than nine months; or
(ii) where the authorized denomination of the Notes will be reduced
from $100,000 or more to less than $100,000; or
(iii) where the authorized denominations of the Notes are currently
less than $100,000 (whether or not the remarketing involves a conversion to
a different interest period and regardless of the length thereof),
(1) the Issuer will provide such Remarketing Agent, prior to the date such
Remarketing Agent bids for, offers or sells any Notes, an offering circular the
Issuer deems final as of its date (exclusive of pricing and other sales
information);
(2) if a preliminary offering circular or other disclosure document is
prepared, the Issuer will provide such Remarketing Agent with such number of
copies thereof as such Remarketing Agent may need to supply at least one copy
thereof to each potential customer who requests it; and
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<PAGE>
(3) the Issuer shall provide to Remarketing Agent, within 7 Business Days
after the interest rate is determined or by the time "money confirmations" are
to be sent to customers, whichever is earlier, with a number of copies of the
final offering circular or disclosure document adequate to supply at least one
copy of such final offering circular or disclosure document to any customer or
any potential customer for a period commencing on the date such final offering
circular or disclosure document is available and extending for the underwriting
period as defined in the Rule (the "Underwriting Period") and, thereafter, for
as long as may be required by the Rule. During the Underwriting Period, if
requested by such Remarketing Agent or the Issuer, the Issuer agrees to
cooperate with such Remarketing Agent and the Issuer in updating, by written
supplement or amendment or otherwise, the final offering circular or disclosure
document.
SECTION 5. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
------------------------------------------------------------
REMARKETING AGENT.
- -----------------
The Remarketing Agent, by its acceptance hereof, represents, warrants,
covenants and agrees with the Issuer as follows:
(a) The Remarketing Agent is a corporation authorized by law to perform
all the duties imposed upon it as Remarketing Agent by the Indenture and this
Remarketing Agreement;
(b) The Remarketing Agent has full power and authority to take all actions
required or permitted to be taken by the Remarketing Agent by or under, and to
perform and observe the covenants and agreements on its part contained in, the
Indenture and this Remarketing Agreement;
(c) The Remarketing Agent will keep such books and records with respect to
its duties as Remarketing Agent as shall be consistent with prudent industry
practice and to make such books and records available for inspection by the
Trustee, the Issuer, the Issuer and the Credit Obligor at all reasonable times;
and
(d) The Remarketing Agent hereby designates its principal office as the
address specified in Section 14(a) hereof.
SECTION 6. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
------------------------------------------------------------
ISSUER.
- ------
The Issuer, by its acceptance hereof, represents, warrants, covenants and
agrees with the Issuer and the Remarketing Agent as follows:
(a) The Issuer has full power, authority and competence to take all
actions required or permitted to be taken by the Issuer by or under, and to
perform and observe the covenants and agreements on its part contained in, this
Remarketing Agreement, the Indenture, the Credit Documents and any other
instrument or agreement relating thereto to which the Issuer is a party;
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<PAGE>
(b) The Issuer has, on or before the date hereof, duly taken all action
necessary to be taken by it prior to such date for: (i) the execution, delivery
and performance of this Remarketing Agreement, the Indenture, the Credit
Documents and any other instrument or agreement to which the Issuer is a party
and which has been or will be executed in connection with the transactions
contemplated by the foregoing documents and (ii) the carrying out, giving effect
to, consummation and performance of the transactions and obligations
contemplated by the foregoing agreements and by the Offering Circular;
(c) This Remarketing Agreement, the Indenture, the Credit Documents and
any other instrument or agreement to which the Issuer is a party and which has
been or will be executed in connection with the consummation of the transactions
contemplated by the foregoing documents or the Offering Circular, when executed
and delivered by the parties hereto and thereto, constitute or will constitute
valid and binding obligations of the Issuer, enforceable against the Issuer in
accordance with their respective terms, except as the enforcement (but not the
validity) thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws, judicial decisions or principles of equity relating to
or affecting the enforcement of creditors' rights or contractual obligations
generally;
(d) The execution and delivery of this Remarketing Agreement, the
Indenture, the Credit Documents and any other instrument or agreement to which
the Issuer is a party and which has been or will be executed in connection with
the consummation of the transactions contemplated by the foregoing documents or
the Offering Circular, the compliance with the terms, conditions or provisions
hereof and thereof, and the consummation of the transactions herein and therein
contemplated do not upon the date of execution and delivery thereof and will not
violate any law or any regulation, order, writ, injunction or decree of any
court or governmental instrumentality applicable to the Issuer, or result in a
breach of any of the terms, conditions or provisions of, or constitute a default
under, any mortgage, indenture, agreement or instrument to which the Issuer is a
party or by which it or any of its properties is bound;
(e) The Issuer will cooperate with the Remarketing Agent in the
qualification of the Notes for offering and sale and the determination of the
eligibility of the Notes for investment under the laws of such jurisdictions as
the Remarketing Agent shall designate and will use its best efforts to continue
any such qualification in effect so long as required for the offer and sale of
the Notes by the Remarketing Agent pursuant to this Remarketing Agreement,
provided that the Issuer shall not be required to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to general service of process in any jurisdiction where it is not now
so subject;
(f) The Issuer has no knowledge or reason to believe that any information
contained in the Offering Circular heretofore furnished to the Remarketing Agent
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, or that any supplement
or amendment to the Offering Circular, as of the date of such supplement or
amendment, will contain any untrue statement of a material fact or omit to state
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<PAGE>
a material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading; and
(g) The Issuer shall provide written notice to the Remarketing Agent prior
to the execution of any amendment or supplement to the Indenture, the Indenture
or the Credit Documents.
SECTION 7. CONDITIONS TO REMARKETING AGENT'S OBLIGATIONS.
---------------------------------------------
The obligations of the Remarketing Agent under this Remarketing Agreement
have been undertaken in reliance on, and shall be subject to, the due
performance by the Issuer of its obligations and agreements to be performed
hereunder and to the accuracy of and compliance with the respective
representations, warranties, covenants and agreements of the Issuer contained
herein (including, without limitation, those set forth in Sections 2(d) and 4)
in each case on and as of the date of delivery of this Remarketing Agreement and
on and as of each date on which Notes are to be offered and sold pursuant to
this Remarketing Agreement. The obligations of the Remarketing Agent hereunder
with respect to each date on which Notes are to be offered and sold pursuant to
this Remarketing Agreement are also subject, in the discretion of the
Remarketing Agent, to the following further conditions:
(a) The Indenture, the Indenture, the Credit Documents and the Letter of
Credit shall be in full force and effect and shall not have been amended,
modified or supplemented in any way which would materially and adversely affect
the Notes and there shall be in full force and effect, to the extent applicable,
such additional resolutions, agreements, certificates and opinions as shall be
necessary to effect the transactions contemplated by this Remarketing Agreement,
which resolutions, agreements, certificates and opinions, at the request of the
Remarketing Agent, shall be satisfactory in form and substance to the
Remarketing Agent and to its counsel;
(b) There shall have been no adverse change, in the opinion of the
Remarketing Agent, in the condition, financial or otherwise, of the Issuer or
the Credit Obligor material to the transactions contemplated by the Offering
Circular or this Remarketing Agreement since the date of the Offering Circular
and no Event of Default shall have occurred and be continuing and no event shall
have occurred and be continuing which, with the passage of time or giving of
notice or both, would constitute an Event of Default; and
(c) The Notes, in the opinion of counsel to the Remarketing Agent, shall
be exempt from registration pursuant to the Securities Act of 1933, as amended,
and, in such counsel's opinion, the Indenture shall be exempt from qualification
as an indenture pursuant to the Trust Indenture Act of 1939, as amended.
SECTION 8. TERM AND TERMINATION OF REMARKETING AGREEMENT.
---------------------------------------------
This Remarketing Agreement shall become effective upon execution by the
Remarketing Agent and the Issuer and shall continue in full force and effect
until the Notes are Fully Paid,
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<PAGE>
subject to the right of the Remarketing Agent or the Issuer to terminate this
Remarketing Agreement at any time in accordance with the terms hereof.
SECTION 9. PAYMENT OF FEES AND EXPENSES.
----------------------------
(a) In consideration of the services to be performed by the Remarketing
Agent under this Remarketing Agreement, the Issuer agrees to pay to the
Remarketing Agent such amounts as are required to reimburse it for or pay the
reasonable expenses (including, without limitation, the fees and disbursements
of its counsel, and the expenses and costs of the preparation, printing,
photocopying, execution and delivery of any supplement to the Offering Circular,
if any) incurred, advances made and compensation for services rendered pursuant
to the Indenture or this Remarketing Agreement.
(b) Additionally, the Issuer agrees to pay to Remarketing Agent a
continuing fee for services rendered as remarketing agent pursuant to the
Indenture and this Agreement as follows:
(1) So long as the Notes bear interest at the Variable Rate, the
Issuer shall pay for the services of the Remarketing Agent hereunder an
annual fee of one-fourth of one percent (.25%) per annum of the Outstanding
Notes, which fee shall be determined initially as of the date of issuance
of the Notes and annually thereafter as of August 1 of each year, and shall
be paid in arrears in equal quarterly installments of one-fourth (1/4) of
the annual fee on November 1, 1997 and on the first day of each February,
May, August and November thereafter, it being understood that upon
termination of this Agreement, fees will be paid only for that number of
days during such period during which this Agreement is in effect. Fees
shall be paid upon receipt of an invoice and shall be based on months of 30
days and years of 360 days.
(2) In addition to the annual fee described in paragraph (1), on each
Conversion Date, the Issuer shall pay the Remarketing Agent a mutually
acceptable fee on the day prior to such Conversion Date, as compensation
for the Remarketing Agent's services in remarketing the Notes at the Fixed
Rate.
(c) With respect to the remarketing of Notes that bear interest at a Fixed
Rate the Remarketing Agent shall be entitled to reimbursement of expenses and
compensation for services in amounts as shall be agreed upon by the Issuer and
Remarketing Agent.
(d) Notwithstanding anything herein or in the Indenture to the contrary,
the Remarketing Agent shall not have any obligation hereunder or under the
Indenture to remarket the Notes or otherwise perform any services with respect
thereto if the Issuer shall have failed to pay when due any amounts due
hereunder or, in the case of Notes to bear interest at a Fixed Rate, failure of
the parties hereto to agree on the compensation referred to in paragraph (c)
above not less than thirty (30) days prior to the remarketing date.
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<PAGE>
SECTION 10. INDEMNIFICATION.
---------------
(a) The Issuer agrees to indemnify and hold harmless the Remarketing Agent
and its officers, employees and each person, if any, who controls the
Remarketing Agent within the meaning of Section 15 of the Securities Act of 1933
(collectively, the "Indemnified Persons" and individually, an "Indemnified
Person") from and against any losses, claims, damages or liabilities to which
any Indemnified Person may become subject insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Offering Circular or other information provided by the Issuer
pursuant to Section 4 hereof, or arise out of, or are based upon, the omission
or alleged omission to state therein a material fact necessary to make the
statements therein not misleading, and will reimburse each Indemnified Person
for any legal or other expenses reasonably incurred by such Indemnified Person
in investigating, defending or preparing to defend any such action or claim;
provided, however, that the Issuer shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of, or is based
upon, any untrue statement or alleged untrue statement or omission or alleged
omission made in the Offering Circular in reliance upon and in conformity with
written information furnished to the Issuer by or on behalf of any Indemnified
Person specifically for inclusion therein. The indemnity agreement in this
paragraph shall be in addition to any liability which the Issuer may otherwise
have to any Indemnified Person.
(b) Promptly after receipt by an Indemnified Person under paragraph (a) of
this Section of notice of the commencement of any action, such Indemnified
Person shall, if a claim in respect thereof is to be made against the Issuer
under such paragraph, notify the Issuer in writing of the commencement thereof.
Failure of an Indemnified Person to give such notice will reduce the liability
of the Issuer under this Remarketing Agreement by the amount of damages
attributable to the failure to give such notice, but such failure shall not
relieve the Issuer from any liability which it may have to such Indemnified
Party otherwise than under the indemnity agreement contained in this Section.
In case any such action shall be brought against any Indemnified Person, and
such Indemnified Person shall notify the Issuer of the commencement thereof, the
Issuer shall be entitled to participate in and, to the extent that it wishes, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Person, and after notice from the Issuer to such Indemnified Person
of its election so to assume the defense thereof, the Issuer shall not be liable
to such Indemnified Person under such paragraph for any legal or other expenses
subsequently incurred by such Indemnified Person in connection with the defense
thereof other than reasonable costs of any investigation; provided, however,
that if the named parties to any such action (including any impleaded parties)
include both the Remarketing Agent (or its officers or employees or any person
so controlling the Remarketing Agent) and the Issuer, and the Remarketing Agent
(or such officers or employees or such person so controlling the Remarketing
Agent) shall have reasonably concluded that there may be one or more legal
defenses available to it or him which are different from or additional to those
available to the Issuer (in which case the Issuer shall not have the right to
assume the defense on behalf of the Remarketing Agent or such officers or
employees or such person so controlling the Remarketing Agent), the Remarketing
Agent (or such officers or employees or such person so controlling the
8
<PAGE>
Remarketing Agent) shall have the right to select separate counsel to assume
such legal defenses and to otherwise participate in the defense of such action
on behalf of the Remarketing Agent (or such officers or employees or such person
so controlling the Remarketing Agent); provided further, however, that the
Issuer shall not, in connection with any one such action or separate but
substantially similar or related actions arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys at any point in time for the Remarketing Agent
and its officers and employees and all persons so controlling the Remarketing
Agent.
(c) The indemnity agreements contained in this Section shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of the Remarketing Agent or the Issuer and shall survive the
termination or cancellation of this Remarketing Agreement.
SECTION 11. NATURE OF REMARKETING AGENT'S OBLIGATIONS.
-----------------------------------------
Without limiting the foregoing, the Remarketing Agent is hereby expressly
authorized and directed to honor its obligations under and in compliance with
the terms of this Remarketing Agreement without regard to, and without any duty
on its part to inquire into, the existence of any disputes or controversies
between the Issuer, the Trustee, the Credit Obligor or any other person or the
respective rights, duties or liabilities of any of them, or whether any facts or
occurrence represented in any of the documents presented under this Remarketing
Agreement are true and correct. Furthermore, the Issuer fully understands and
agrees that the Remarketing Agent's sole obligation to the Issuer shall be
limited to honoring its obligations under and in compliance with the terms of
this Remarketing Agreement.
SECTION 12. DEALING IN NOTES BY REMARKETING AGENT.
-------------------------------------
The Remarketing Agent, in its individual capacity, may in good faith buy,
sell, own, hold and deal in any of the Notes, and may join in any action which
any Noteholder may be entitled to take with like effect as if it did not act in
any capacity hereunder. The Remarketing Agent, in its individual capacity,
either as principal or agent, may also engage in or be interested in any
financial or other transaction with the Issuer or the Issuer as freely as if it
did not act in any capacity hereunder.
SECTION 13. INTENTION OF PARTIES.
--------------------
It is the express intention of the parties hereto that neither the fixing
of any interest rate on the Notes nor any purchase, sale or transfer of any
Notes, as herein provided, shall constitute or be construed to be the
extinguishment of any Notes or the indebtedness represented thereby or the
reissuance of any Notes.
9
<PAGE>
SECTION 14. MISCELLANEOUS.
-------------
(a) Except as otherwise specifically provided in this Remarketing
Agreement, all notices, demands and formal actions under this Remarketing
Agreement shall be in writing and mailed, telegraphed or delivered to the
addresses specified in the Indenture for the delivery of notices, or in the case
of the Remarketing Agent, to:
SouthTrust Securities, Inc.
112 N. 20th Street
Birmingham, Alabama 35203
The parties hereto may, by notice given under this Remarketing Agreement,
designate other addresses to which subsequent notices, requests, reports or
other communications shall be directed.
(b) This Remarketing Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns. The terms
"successors" and "assigns" shall not include any purchaser of any of the Notes
merely because of such purchase. The issuer of a Letter of Credit securing the
Notes shall be a beneficiary of the obligations of the Issuer, the Trustee and
the Remarketing Agent hereunder, as though a signatory hereto, and may enforce
such obligations in its own name and behalf.
(c) All of the representations, warranties and covenants of the Issuer and
the Remarketing Agent in this Remarketing Agreement shall remain operative and
in full force and effect, regardless of (i) any investigation made by or on
behalf of the Remarketing Agent or the Issuer, (ii) delivery of and any payment
for any Notes hereunder, or (iii) termination or cancellation of this
Remarketing Agreement.
(d) Section headings have been inserted in this Remarketing Agreement as a
matter of convenience of reference only, and it is agreed that such section
headings are not a part of this Remarketing Agreement and will not be used in
the interpretation of any provisions of this Remarketing Agreement.
(e) If any provision of this Remarketing Agreement shall be held or deemed
to be or shall, in fact, be invalid, inoperative or unenforceable as applied in
any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions because it conflicts with any provisions of any constitution,
statute, rule of public policy, or any other reason, such circumstances shall
not have the effect of rendering the provision in question invalid, inoperative
or unenforceable in any other case or circumstance, or of rendering any other
provision or provisions of this Remarketing Agreement invalid, inoperative or
unenforceable to any extent whatever.
10
<PAGE>
(f) This Remarketing Agreement may be executed in several counterparts,
each of which shall be regarded as an original and all of which shall constitute
one and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Remarketing
Agreement to be duly executed as of the date and year first above written.
SOUTHTRUST SECURITIES, INC.
as Remarketing Agent
By____________________________________
Its___________________________________
LA-MAN CORPORATION
By____________________________________
Its President
ACKNOWLEDGMENT BY TRUSTEE
-------------------------
The undersigned, the Trustee named in the above and foregoing
Remarketing Agreement, hereby acknowledges appointment of SouthTrust Securities,
Inc., as Remarketing Agent pursuant to the terms of the Indenture and said
Remarketing Agreement.
EXECUTED this 28th day of August, 1997.
SOUTHTRUST BANK,
NATIONAL ASSOCIATION,
as Trustee
By____________________________________
Its Authorized Signatory
11
<PAGE>
Exhibit 10.44
REVOLVING LINE-OF-CREDIT PROMISSORY NOTE
----------------------------------------
DATE: As of August 1, 1997.
PROMISE TO PAY: Borrower, for value received, promises to pay to the order of
Lender the principal amount of, and all interest accruing under, this note in
accordance with the provisions of this note.
PRINCIPAL AMOUNT: Up to One Million Three Hundred Thousand and No/100th Dollars
($1,300,000.00).
LENDER: SouthTrust Bank, National Association, a national banking association,
and its successors and assigns.
BORROWER: La-Man Corporation, a Nevada corporation.
GUARANTORS: Don Bell Industries, Inc., a Florida corporation; Don Bell
Industries of Nevada, Inc., a Nevada corporation; Nevada SEMCO, Inc., a Nevada
corporation; J. M. Stewart, Corporation, a Florida corporation; J. M. Stewart
Industries, Inc., a Florida corporation; Certified Maintenance Service, Inc., a
Florida corporation; and Vision Trust Marketing, Inc., a Florida corporation;
all jointly and severally.
INTEREST: Interest shall accrue under this note on the unpaid principal
balance at a per annum rate equal to, and shall be adjusted daily as necessary
to equal, the base rate of SouthTrust Bank, National Association (the "Lender"),
in effect from time to time, as determined in the sole discretion of the Lender,
plus 100 basis points (1.00%). The base rate is not necessarily the lowest rate
charged by the Lender. The base rate is the fluctuating rate of interest
established by the Lender from time to time as an index or rate which may or may
not at any time be the best or lowest rate charged by the Lender on any loan.
Any interest rate based on a fluctuating index or base rate will, unless
otherwise provided, change each time and as of the date that the index or base
rate changes. The base rate as defined herein on the date of this note is 8.50%
and the interest rate applicable to this note as of the effective date of this
note is 9.50% per annum.
COMPUTATION OF INTEREST: Interest will be computed on the balance of principal
remaining unpaid from time to time on the basis of the actual number of days
elapsed in a year composed of 365 or 366 days, as the case may be.
REVOLVING NOTE: This is a revolving note evidencing the borrowings up to the
principal sum shown above, but notwithstanding such expression, the actual
indebtedness from time to time evidenced hereby shall be the sum of all advances
by the Lender to the Borrower hereunder, less the aggregate amount of all
principal payments made under this revolving note by the Borrower to the Lender,
it being the intent hereof and the purpose of this revolving note to provide a
revolving line of credit which the Borrower may draw against and which the
Lender will advance
<PAGE>
Exhibit 10.44
from time to time and which the Borrower may repay in whole or in part from time
to time and again draw against, provided that the principal amount outstanding
under this revolving note shall not at any time exceed the principal sum shown
above.
PRINCIPAL DISBURSEMENTS / MAINTENANCE OF LOAN-TO-VALUE PERCENTAGES: The
Borrower agrees that the disbursement of principal under this note, and the
outstanding principal balance existing from time-to-time hereunder, are
conditioned upon the maintenance of certain values relating to the Borrower's
Collateral (the capitalized terms "Collateral", "Accounts Receivable", and
"Inventory" used in this paragraph and its subparts shall have the same meanings
ascribed to them in the Mortgage and Security Agreement of even effective date
which secures payment of this note). The terms "eligible Accounts Receivable"
shall mean the Borrower's Accounts Receivable aged 90 days or less, but
excluding therefrom any Account Receivable that comprises more than 50% of the
total of all Accounts Receivable. Based upon the values so determined for
eligible Accounts Receivable and Inventory, the outstanding principal balance of
this note shall not exceed:
(a). Eighty percent (80%) of the fair market value of the eligible Accounts
Receivable; plus
(b). Fifty percent (50%) of the fair market value of the Inventory that is
considered readily salable (but in no event for purposes of this calculation
shall the Inventory be valued in excess of $1,000,000); or
(c). One million three hundred thousand dollars ($1,300,000.00);
whichever shall be the lesser sum.
A borrowing base certificate executed by the Borrower's chief financial officer
in form and content satisfactory to the Lender shall be provided to the Lender
no less frequently than monthly. In the event the eligible Accounts Receivable
and/or Inventory decline in value and the loan-to-value percentages set forth
above are exceeded, then and under such circumstances the Borrower shall, within
5 days from written notice from the Lender to the Borrower, reduce the
outstanding principal balance by the sum necessary to attain, and thereafter
maintain, the loan-to-value percentages set forth above.
GOVERNMENTAL IMPOSITIONS: In the event state documentary stamp taxes,
intangible taxes or other governmental impositions in excess of those required
to be paid upon the full amount of this revolving note or any documents
evidencing a lien to secure this revolving note are deemed to be owed to any
governmental authority, the Borrower agrees to pay the same and hold the Lender
harmless from and against any and all of the costs involved in paying the
additional taxes and any penalties or interest required to be paid thereon. If
the Lender is required to pay the same, the Borrower agrees to immediately repay
the Lender upon demand the full amount
Page 2
<PAGE>
Exhibit 10.44
paid by the Lender to any governmental authority as additional taxes, penalties,
costs and/or interest. Any sum so paid by the Lender under this paragraph shall
be added to the principal indebtedness owed under this note and shall accrue
interest at the highest lawful rate until paid.
PAYMENTS: Principal and interest are payable as follows:
(a). Interest only shall be payable in monthly installments commencing
October 1, 1997, and continuing on the same day of each month thereafter; and
(b). Unless the term of this note is extended as provided in subparagraph
(c) below, the entire unpaid principal balance and all accrued and unpaid
interest shall be due and payable in full on October 1, 1999.
(c). Commencing on or about October 1, 1998 and continuing on or about
October 1 of each year thereafter during the term of this note or any extension
thereof, the Lender shall conduct an annual review of the Borrower's overall
financial condition and economic performance, its compliance with the terms,
covenants, and obligations of this note and the instruments that secure payment
of this note, and such other matters as the Lender, in its sole discretion,
shall consider pertinent to its review and analysis of the loan evidenced by
this note. If the Lender in its sole discretion is satisfied with the results
of its review, it shall notify the Borrower in writing of its approval within 10
days after October 1 of each year this note remains outstanding, and the term of
this note shall then be extended for an additional period of two years from
October 1 of each year the Lender favorably approves the annual review. In the
event the Lender does not elect in its sole discretion to extend the term of
this note after any annual review as provided above, it shall notify the
Borrower in writing of its decision within 10 days after October 1 of the year
in which its decision not to extend the term of this note is made. Notices from
the Lender to the Borrower shall be given in writing and delivered personally or
sent by United States Certified Mail to the then current address of the Borrower
as set forth in the Lender's records.
APPLICATION OF PAYMENTS: The Borrower has established a controlled
disbursement account with the Lender, and all advances, payments, and repayments
hereunder will be made in accordance with the terms and conditions of said
controlled disbursement account.
PLACE OF PAYMENT: All payments required to be made under this note and any
instrument securing this note will be made at 100 East New York Avenue, DeLand,
Florida 32724, or at such other place that Lender may designate in writing.
INTEREST RATE AFTER MATURITY: After the maturity of this note, whether by
acceleration or in due course, all unpaid principal will bear interest at the
then highest lawful rate.
Page 3
<PAGE>
Exhibit 10.44
MAXIMUM INTEREST: The total amount or rate of interest payable under this note
in any one year, or for any other period of time for which interest rates are
required to be calculated for the purpose of determining compliance with any
applicable laws governing the maximum amount or rate of interest that may be
charged or collected under this note, will not exceed that highest amount or
rate of interest that is legally permitted. In the event that interest in
excess of the highest lawful amount is paid or collected for any such period of
time, the amount of such excess, upon discovery of same, will be applied on the
unpaid principal balance of this note as of the time of such overpayment or
collection or, if required by law, will be refunded, and the interest will be
recomputed so as not to exceed the highest lawful rate.
LATE CHARGE: If all or any portion of any payment of principal or interest due
under this note is not received by the Lender within ten (10) days following its
due date, a late charge equal to five percent (5%) of the overdue amount will
become immediately due and payable without notice.
DEFAULT: If any monetary obligation under this note or any instrument securing
payment of this note is not paid within 10 days after it is due, this note will
mature and all principal and accrued interest remaining unpaid will become
immediately due and payable, at the option of Lender, after written notice of
default to any obligor. If any non-monetary duty or obligation under this note
or any instrument securing this note is not performed or completed and a
condition of default exists as a result thereof which remains uncured after 30
days notice (or such longer cure period as the Lender may in its reasonable
discretion grant if the non-monetary condition of default is not, with the
exercise of utmost due diligence, completely correctable within said 30 days) to
any obligor under this note to cure the same, this note will mature and all
principal and accrued interest remaining unpaid will become immediately due and
payable without further notice, at the option of Lender. Failure to exercise
the option to accelerate will not constitute a waiver of the right to exercise
the same in the event of any subsequent default. Notice required from the
Lender to any obligor concerning any non-monetary default under this note or any
instrument securing this note shall be sufficient if delivered directly, sent by
United States Certified Mail with return receipt requested, or sent by express
receipted courier service to the last known address of the obligor as shown on
the records of the Lender.
SECURITY; CROSS-DEFAULT: This note is secured by a mortgage and security
agreement, and a collateral assignment of rents and leases. All instruments
securing this note are cross-defaulted with one another and with this note. At
the option of Lender, a default under any such instrument will constitute a
default under this note and vice versa.
RIGHT OF PREPAYMENT: Prepayment of the principal amount of this note or any
unpaid principal balance may be made in full or in part at any time without
penalty. All unpaid accrued interest must be paid simultaneously as a condition
to such right of prepayment.
Page 4
<PAGE>
Exhibit 10.44
ENFORCEMENT AND COLLECTION EXPENSES. All persons obligated under this note in
any capacity shall pay or reimburse the Lender for all costs, professional fees,
and expenses, including attorney's fees, reasonably incurred by Lender, whether
or not legal action is instituted, with respect to collection of the
indebtedness secured hereby, the enforcement of Lender's rights hereunder, or
incurred by the Lender in any proceeding in which the Lender is made a party or
participant, including but not limited to such fees, expenses, and costs
incurred in any phase of litigation in the trial court or on appeal, and all
matters and appearances connected with any trial, retrial, hearing, rehearing,
appeal, mediation, arbitration, condemnation proceeding, bankruptcy case,
bankruptcy proceeding or matter, administrative proceeding, criminal or civil
forfeiture, lien enforcement or foreclosure proceedings. All of such costs,
fees and expenses shall be secured by the lien of all instruments securing
payment of this note, shall bear interest at the maximum rate set forth in this
note, and, at the option of the Lender, shall be payable upon demand.
JOINT AND SEVERAL LIABILITY: All persons liable on this note as makers,
endorsers, guarantors, or in any capacity are jointly and severally liable for
all obligations represented by or arising under this note and all instruments,
if any, securing payment of this note.
WAIVERS: Each person obligated under this note in any capacity waives
presentment, demand, protest, notice of protest, dishonor, notice of maturity
and notice of non-payment on maturity.
DELIVERY: This note is made and delivered in Volusia County, Florida.
FINANCIAL STATEMENTS: The term "GAAP" shall mean generally accepted accounting
principles applied on a consistent basis throughout the periods involved. The
Borrower, and each Guarantor whose assets form any part of the Collateral that
secures payment of this note, agree to furnish periodic updated financial
statements in such form or detail as reasonably required by Lender without
expense to the Lender, as follows:
(a). Monthly: Within 30 days after the end of each calendar month, the
Borrower shall provide the Lender with a complete and accurate listing and
summary aging report of all accounts receivable, an inventory report in summary
form coinciding in substance with the Borrower's internally prepared
consolidated financial statements as of the last day of the month then ended,
and a monthly borrowing base certificate; and
(b). Quarterly: Within 45 days after the close of each fiscal quarter, the
Borrower shall provide the Lender with a true copy of the Borrower's Form 10-QSB
Report (or Form 10-Q, if applicable) as filed with the Securities and Exchange
Commission, or in the event the Borrower is not required to file such Report or
the information described below is not included therein, such comparable
consolidated
Page 5
<PAGE>
Exhibit 10.44
financial statements of the Borrower and its subsidiaries (including the
Guarantors) including a complete and accurate listing and summary aging report
of all accounts receivable, an inventory report in summary form coinciding in
substance with the Borrower's internally prepared financial statements as of the
last day of the quarter then ended, and financial statements of the Borrower
consisting of balance sheets and operating statements and a listing of all
contingent liabilities of the Borrower for the period involved and such other
statements as Lender may reasonably request. The quarterly financial information
required hereby may be unaudited and need not include all information and
disclosures required by GAAP; however, such information will reflect all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of the Borrower's management, necessary for a fair presentation of
the consolidated financial position and results from operations of the Borrower
and its subsidiaries for such quarterly periods. All of such interim financial
statements shall be taken from the books and records of the Borrower, and
certified by the chief financial officer of the Borrower as fairly presenting in
all material respects the consolidated financial position of the Borrower and
its subsidiaries as of the date thereof and the results of their operations and
their cash flows for the periods covered thereby. At the time of furnishing such
financial statements, the Borrower shall furnish the Lender with a certificate
from the President or chief financial officer of the Borrower stating that he
has reviewed the requirements of this note and the affairs of the Borrower and
that to the best of his knowledge and belief he is unaware of the occurrence of
an event which constitutes a default hereunder or which would constitute such a
default with the giving of notice or the lapse of time or both, and if so,
stating the facts with respect thereto.
(c). Annual: Within 90 days after the close of each fiscal year, the
Borrower shall furnish the Lender with a true copy of the Borrower's Form 10-KSB
Annual Report (or Form 10-K, if applicable) as filed with the Securities and
Exchange Commission, but in the event the Borrower is not required to file such
Annual Report, such comparable audited consolidated financial statements of the
Borrower and its subsidiaries (including the Guarantors) audited by certified
public accountants acceptable to the Lender and certified as fairly presenting
in all material respects the consolidated financial position of the Borrower and
its subsidiaries as of the date thereof and the results of their operations and
their cash flows for the periods covered thereby, in accordance with GAAP. In
addition, the Borrower shall provide all internal notes and back-up
documentation relating to the consolidation of the financial statements of the
Borrower and its subsidiaries, including the Guarantors. At the time of
furnishing said financial statements, the Borrower shall furnish Lender with a
certificate from the President and the chief financial officer of the Borrower
stating that they have reviewed the requirements of this note and the affairs of
the Borrower and that to the best of their knowledge and belief they are unaware
of the occurrence of an event which constitutes a default hereunder or which
would constitute such a default with the giving of notice or the lapse of time
or both, and, if so, stating the facts with respect thereto.
Page 6
<PAGE>
Exhibit 10.44
(d). Inventory Audit: If requested by the Lender and upon reasonable
advance notice, the Borrower shall make its books, records, and inventory
available to the Lender (or its designee) for inspection and audit at the
Lender's sole cost and expense. Any such audit shall be conducted without undue
disruption of Borrower's business operations, and not more frequently than
annually.
In the event the documents described in this paragraph are not provided to the
Lender within the time provided herein, for a period beginning 10 days after
written notice of such default and ending upon the curing of said noticed
default, the interest rate provided in this note may (at the Lender's option
without accelerating the balance due) increase to a rate equal to 3% above the
Lender's base rate of interest. The base rate is not necessarily the lowest
rate charged by the Lender. The base rate is the fluctuating rate of interest
established by the Lender from time to time as an index or rate which may or may
not at any time be the best or lowest rate charged by the Lender on any loan.
Any interest rate based on a fluctuating index or base rate will change each
time and as of the date that the index or base rate changes.
AFFIRMATIVE COVENANTS OF BORROWER: The Borrower covenants and agrees that from
the date hereof, and during any extension of the term hereof, until payment in
full of all principal and interest due under this note, unless the Lender shall
otherwise consent in writing, the Borrower shall:
(a). Conduct its business in the ordinary course and in substantially the
same manner and in substantially the same areas as such business is now and
heretofore has been carried on and conducted; and
(b). Comply fully with all applicable statutes, laws and regulations,
maintain the corporate existence of the Borrower and each subsidiary, if any,
and shall maintain, preserve and keep its properties and assets in good repair,
working order and condition (reasonable wear and tear, excepted), making all
needed replacements, additions, improvements and renewals thereto as are
reasonably required to carry on its business; and
(c). Maintain the following financial covenants in accordance with the
definitions set forth below:
(i). Debt to tangible net worth: The ratio of total liabilities (less
debt subordinated to the Lender) to tangible net worth (plus debt subordinated
to the Lender) which shall not exceed 3.10 to 1.00 during fiscal year 1998; 2.70
to 1.00 during fiscal year 1999; and 2.40 to 1.00 during fiscal year 2000 and
thereafter. "Tangible net worth" is defined as total assets minus total
liabilities minus any intangible assets as defined by GAAP, such as, but not
limited to, the book value of any patents, trademarks, trade-names, copyrights,
non-compete agreements, franchises, or experimental expenses or goodwill or
other amounts representing the excess of the purchase price of assets or stock
over the value assigned to them on the books of the Borrower.
Page 7
<PAGE>
Exhibit 10.44
(ii). Consolidated working capital: "Consolidated working capital"
is defined as current assets minus current liabilities, and must equal or exceed
$750,000 during fiscal year 1998, equal or exceed $1,000,000 during fiscal year
1999, and equal or exceed $1,250,000 during fiscal year 2000 and thereafter.
"Current assets" is defined as the amount at which all of the current assets of
the Borrower (and its subsidiaries, including the Guarantors) would be properly
classified as current assets shown on a consolidated balance sheet at such date
in accordance with GAAP. "Current liabilities" is defined as the amount at which
all of the current liabilities of the Borrower (and its subsidiaries, including
the Guarantors) would be properly classified as current liabilities on a
consolidated balance sheet at such date in accordance with GAAP.
(iii). Current ratio: Maintain at all times a current ratio
("current ratio" being defined as the quotient of current assets divided by
current liabilities) of 1.25 to 1.00; and
(iv). Fixed charge coverage: "Fixed charge coverage" is defined as a
fraction in which the numerator is the sum of the net income of the Borrower and
its subsidiaries, including the Guarantors, (after provision for federal and
state taxes) at the close of the Borrower's fiscal year, plus the interest,
lease, and rental expenses of Borrower for said period, plus the sum of non-cash
expenses or allowances for such period (including amortization or write-down of
intangible assets, the net addition or net decrease in the loan loss reserves
for customer accounts, depreciation, depletion, and deferred taxes and expenses)
and the denominator is the sum of the current portion of the long term debt of
the Borrower and its subsidiaries, including the Guarantors, as of the
applicable date, plus the interest, lease, and rental expenses for the said
period preceding the applicable date. The fixed charge coverage must be
maintained at not less than 1.30 at all times during the term of this note or
any extension thereof; and
(v). Dividends and withdrawals: Dividends and withdrawals are
allowable to the extent they do not result in the violation of the financial
covenants of this note; and
(vi). Additional debt: The Borrower shall not create, incur, assume
or suffer to exist any debt or obligation for money borrowed, or guarantee, or
endorse, or otherwise be or become contingently liable in connection with the
obligations of any person (including, without limitation, any subsidiary or
Guarantor) in excess of $50,000.00 annually, without the written consent of the
Lender. Any purchases of equipment that create a purchase money security
interest are exempt from this covenant.
CONTINUING DEPOSITOR RELATIONSHIP: The interest rate charged by the Lender in
this note is predicated upon a total continuing depositor relationship with the
Borrower, satisfactory to the Lender, during the term of this note.
Page 8
<PAGE>
Exhibit 10.44
NUMBER AND GENDER: Whenever the singular number is used in this note, the same
shall include the plural, and vice versa, and the neuter gender shall include
both the masculine and feminine genders.
SIGNED, SEALED, AND DELIVERED at Daytona Beach, Volusia County, Florida as of
the date and year first above written.
LA-MAN CORPORATION
By: /s/ J. William Brandner
-------------------------------------
J. William Brandner, Its President
Documentary Stamps Have Been Affixed To The Original Mortgage And Cancelled.
CORPORATE GUARANTY
------------------
In consideration of the extension of credit evidenced by the foregoing
note, the undersigned jointly and severally hereby absolutely, irrevocably and
unconditionally guarantee payment of all principal and interest under the note
to the Lender. The liability of the undersigned shall not be partially or wholly
released by reason of any extension of time for payment, renewal, modification,
delay, waiver, surrender or release of the note, addition or release of co-
makers, endorsers, guarantors, or sureties, institution of any suit, or the
obtaining of any judgment against any party primarily or secondarily liable on
the note; and the undersigned expressly waives demand, protest, notice of
acceptance of this guaranty and notice of actions taken pursuant hereto. The
undersigned agree to be bound by all of the terms and covenants of the note,
including but not limited to all rights and remedies of the Lender. In case of
default in payment of the note, legal action may be taken by the Lender against
any one or more of the undersigned corporations regardless of whether such
action has been commenced against the maker. In any such action, any party
obligated under the note in any capacity may be joined as a party defendant at
the option of the Lender.
Dated as of August 1, 1997.
Don Bell Industries, Inc. Don Bell Industries of Nevada, Inc.
By: /s/ J. William Brandner By: /s/ J. William Brandner
------------------------------------ ---------------------------------
J. William Brandner, Its Vice President J. William Brandner, Its Vice
as Corporate Guarantor President as Corporate Guarantor
Page 9
<PAGE>
Exhibit 10.44
Nevada SEMCO, Inc. J. M. Stewart, Corporation
By: /s/ J. William Brandner By: /s/ J. William Brandner
------------------------------------ ---------------------------------
J. William Brandner, Its Vice President J. William Brandner, Its Vice
as Corporate Guarantor President as Corporate Guarantor
J. M. Stewart Industries, Inc. Certified Maintenance Service, Inc.
By: /s/ J. William Brandner By: /s/ J. William Brandner
------------------------------------ ---------------------------------
J. William Brandner, Its Vice President J. William Brandner, Its Vice
as Corporate Guarantor President as Corporate Guarantor
Vision Trust Marketing, Inc.
By: /s/ J. William Brandner
------------------------------------
J. William Brandner, Its President
as Corporate Guarantor
Page 10
<PAGE>
Exhibit 10.45
CREDIT AND SECURITY AGREEMENT
Dated as of August 1, 1997
Between
LA-MAN CORPORATION
and
SOUTHTRUST BANK, NATIONAL ASSOCIATION
Regarding $2,500,000
Variable/Fixed Rate Credit Enhanced Notes
This Credit and Security Agreement was prepared by Larry R. Stout, of Monaco,
Smith, Hood, Perkins, Loucks, and Stout, 444 Seabreeze Boulevard, Suite 900,
Daytona Beach, Florida 32115
<PAGE>
Exhibit 10.45
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Defined Terms and General Provisions:.....................................1
-------------------------------------
1.1. Definitions.........................................................1
-----------
1.2. Principals of Interpretation........................................5
----------------------------
1.3. Date of Credit Agreement............................................6
------------------------
1.4. Separability Clause.................................................6
-------------------
2. Issuance of Letter of Credit; Reimbursement and Fees:.....................7
-----------------------------------------------------
2.1. Issuance of Letter of Credit........................................7
----------------------------
2.2. Reimbursement.......................................................7
-------------
2.3. Commissions and Fees................................................7
--------------------
2.4. Increased Costs.....................................................8
---------------
2.5. Place and Time of Payments..........................................9
--------------------------
2.6. Late Payments.......................................................9
-------------
2.7. Computation of Charges.............................................10
----------------------
2.8. Statements of Account..............................................10
---------------------
2.9. Obligations of Issuer Absolute.....................................10
------------------------------
2.10. Pledged Notes.....................................................11
-------------
3. Conditions Precedent to Issuance of Letter of Credit:....................12
-----------------------------------------------------
3.1. Conditions Precedent...............................................12
3.2. Additional Matters.................................................14
4. Security for Obligations:................................................15
-------------------------
4.1. Security...........................................................15
--------
4.2. Further Assurances.................................................15
------------------
5. Representations, Warranties and General Covenants:.......................15
--------------------------------------------------
5.1. Organization and Qualification.....................................15
------------------------------
5.2. Corporate Power and Authorization..................................15
---------------------------------
5.3. Enforceability.....................................................16
--------------
5.4. Financial Statements...............................................16
--------------------
5.5. Taxes..............................................................16
-----
5.6. Title to Collateral................................................16
-------------------
5.7. Place of Business..................................................16
-----------------
5.8. Full Disclosure....................................................17
---------------
5.9. Issuer's Name......................................................17
-------------
5.10. Existing Debt.....................................................17
-------------
5.11. Insolvency........................................................17
----------
5.12. Environmental Matters.............................................17
---------------------
5.13. No Approval.......................................................18
-----------
5.14. Mortgage and Security Agreement...................................18
-------------------------------
5.15. Representations True..............................................18
--------------------
</TABLE>
ii
<PAGE>
Exhibit 10.45
<TABLE>
<S> <C>
6. Affirmative Covenants of Issuer:.........................................18
--------------------------------
6.1. Insurance..........................................................18
---------
6.2. Corporate Existence: Qualification.................................19
----------------------------------
6.3. Taxes..............................................................19
-----
6.4. Compliance with Laws...............................................19
--------------------
6.5. Annual Financial Statements........................................19
---------------------------
6.6. Interim Financial Statements.......................................20
----------------------------
6.7. Visits and Inspections.............................................20
----------------------
6.8. Payments of Obligations............................................21
-----------------------
6.9. Conduct of Business................................................21
-------------------
6.10. Maintenance of Properties.........................................21
-------------------------
6.11. Additional Documents..............................................21
--------------------
6.12. Notice to Credit Obligor..........................................21
------------------------
6.13. Mortgage and Security Agreement...................................21
-------------------------------
6.14. Maintenance of Remarketing Agreement..............................21
------------------------------------
7. Negative Covenants of Issuer:............................................22
-----------------------------
7.1. Indebtedness.......................................................22
------------
7.2. Liens and Security Interests.......................................22
----------------------------
7.3. Mortgage and Security Agreement....................................22
-------------------------------
7.4 Revolving Letter-of-Credit Note....................................22
-------------------------------
8. Events of Default and Remedies:..........................................22
-------------------------------
8.1. Events of Default..................................................22
-----------------
8.2. Remedies...........................................................25
--------
8.3. Additional Rights..................................................25
-----------------
8.4. Acceleration of Reimbursement......................................26
-----------------------------
8.5. Waivers; Application of Proceeds...................................26
--------------------------------
8.6. No Remedy Exclusive................................................27
-------------------
8.7. Agreement to Pay Attorneys' Fees...................................27
--------------------------------
8.8. No Additional Waiver Implied by One Waiver.........................27
------------------------------------------
8.9. Remedies Subject to Applicable Law.................................27
----------------------------------
9. Indemnification: Liability of Credit Obligor:...........................27
----------------------------------------------
9.1. General Matters....................................................27
---------------
9.2. Letter of Credit Matters...........................................28
------------------------
9.3. Liability of the Credit Obligor....................................28
-------------------------------
10. Miscellaneous:...........................................................29
--------------
10.1. Continuing Obligation.............................................29
---------------------
10.2. Costs and Expenses................................................29
------------------
10.3. Headings..........................................................30
--------
10.4. No Usury..........................................................30
--------
10.5. Survival of Covenants.............................................30
---------------------
10.6. Addresses.........................................................31
---------
10.7. Venue and Jurisdiction............................................31
----------------------
</TABLE>
iii
<PAGE>
Exhibit 10.45
<TABLE>
<S> <C>
10.8. Controlling Law...................................................31
10.9. Participation.....................................................31
10.10. Miscellaneous....................................................32
10.11. Waiver of Right to Trial by Jury.................................32
11. Survival:................................................................32
---------
</TABLE>
iv
<PAGE>
Exhibit 10.45
CREDIT AND SECURITY AGREEMENT
-----------------------------
THIS CREDIT AND SECURITY AGREEMENT dated as of August 1, 1997, is entered
into by LA-MAN CORPORATION, a Nevada corporation, (the "Issuer"), and SOUTHTRUST
BANK, NATIONAL ASSOCIATION, a national banking association (the "Credit
Obligor").
RECITALS:
---------
The Issuer has applied to the Credit Obligor for a $2,570,000 letter of
credit facility to secure those certain $2,500,000 La-Man Corporation
Variable/Fixed Rate Credit Enhanced Notes (the "Notes"), said Notes to be issued
pursuant to a Trust Indenture between La-Man Corporation ("Issuer") and
SouthTrust Bank, National Association, as Trustee ("Trustee") dated as of August
1, 1997 (the "Indenture").
The Issuer's obligations under this Agreement will be secured by the
collateral and interests described herein, as well as by that certain Real
Estate Mortgage and Security Agreement executed in favor of the Credit Obligor
(variously referred to therein as "SouthTrust", "Mortgagee", or "Secured Party")
by the Issuer (variously referred to therein as the "Mortgagor", "Issuer", or
"Debtor"), and the Guarantors (variously referred to respectively therein as the
"Mortgagor", the "Debtor" or the "Debtors") dated as of August 1, 1997 and
granting a first Lien on the Collateral in favor of the Credit Obligor.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Credit Obligor to issue the Letter of Credit, the Issuer and the Credit Obligor
hereby covenant, agree and bind themselves as follows:
1. DEFINED TERMS AND GENERAL PROVISIONS:
-------------------------------------
1.1. Definitions. For all purposes of this Agreement, except as
-----------
otherwise expressly provided or unless the context otherwise requires, the
following terms, shall have the following meanings when used herein:
Affiliate - any director or officer of the Issuer or any Person who,
directly, indirectly or beneficially, owns 10% or more of the capital stock of
the Issuer or any member of the immediate family of any such officer, director
or stockholder, or any corporation or other entity which is controlled by,
controls, or is under common control with the Issuer, including, without
limitation, the Guarantors.
Base Rate - the rate of interest designated by SouthTrust Bank, National
Association, periodically as its "Base Rate." The Base Rate is not necessarily
the lowest rate charged by such bank.
<PAGE>
Exhibit 10.45
Collateral - the Real Estate and the "Collateral" as described in the
Mortgage and Security Agreement.
Collateral Assignment of Rents and Leases - a collateral pledge and
assignment of the rents, revenues, issues and profits derived from the Real
Estate dated as of August 1, 1997 executed by the Issuer and the Guarantor, Don
Bell Industries, Inc., in favor of Credit Obligor.
Credit Agreement or Agreement - this Credit and Security Agreement as
originally executed or as it may from time to time be supplemented, modified or
amended by one or more instruments entered into pursuant to the applicable
provisions hereof.
Credit Amount - the maximum aggregate amount available to be drawn under
the Letter of Credit, as reduced from time to time and reinstated from time to
time pursuant to the terms and conditions of the Letter of Credit.
Credit Documents shall mean collectively this Credit Agreement, the
Mortgage and Security Agreement, the Guaranty Agreement, the Indemnity
Agreement, the Collateral Assignment of Rents and Leases, and all agreements,
documents, guaranties, instruments, notes, notices, and other writings executed
and delivered by the Issuer or any other person or persons which evidence or
provide security for (i) the obligations of the Issuer with respect to the
Letter of Credit, including any amendments or supplements to any thereof from
time to time entered into pursuant to the applicable provisions thereof, until a
Substitute Letter of Credit shall have been accepted by the Trustee, and
thereafter "Credit Documents" shall mean collectively all agreements, documents,
guaranties, instruments, notes, notices, and other writings which evidence or
provide security for the obligations of the Issuer with respect to such
Substitute Letter of Credit, and (ii) the Obligations.
Credit Facilities - the Letter of Credit to be issued for the benefit of
the Issuer pursuant to Section 2.1 hereof, together with the obligation of the
Issuer to make reimbursement therefor pursuant to this Agreement and all other
obligations of the Issuer hereunder with respect to the Letter of Credit.
Credit Obligor - SouthTrust Bank, National Association, a national banking
association, in the capacity as issuer of the Letter of Credit, and its
successors and assigns.
Credit Obligor Indebtedness shall mean all indebtedness or obligations of
the Issuer to the Credit Obligor under the Credit Documents including without
limitation (i) the Issuer's obligation to reimburse the Credit Obligor for draws
made under the Letter of Credit and (ii) the Issuer's obligation to pay fees and
charges for the issuance and continuation of the Letter of Credit and (iii) the
Issuer's indebtedness or obligations with respect to the Obligations.
Page 2
<PAGE>
Exhibit 10.45
Default Rate - the rate of interest applicable to overdue amounts pursuant
to Section 2.6 hereof.
Drawing - any drawing under or with respect to the Letter of Credit.
Event of Default - those events enumerated in Section 8.1 hereof. An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
Financing Documents - this Agreement, the Indenture, the Notes, the
Guaranty Agreement, and the Credit Documents, together with each and every
mortgage, deed of trust, guarantee, note, security agreement, financing
statement or other instrument executed and delivered in connection with issuance
of the Notes or to evidence or to secure the obligations of the Issuer with
respect to the Notes, under the Indenture, or hereunder.
Financing Participants -the Issuer, the Credit Obligor, the Trustee, the
holders of the Notes, the Registrar of the Notes and the Remarketing Agent (as
defined in the Indenture).
Guarantors - Don Bell Industries, Inc., a Florida corporation; Don Bell
Industries of Nevada, Inc., a Nevada corporation; Nevada SEMCO, Inc., a Nevada
corporation; J. M. Stewart, Corporation, a Florida corporation; J. M. Stewart
Industries, Inc., a Florida corporation; Vision Trust Marketing, Inc., a Florida
corporation; and Certified Maintenance Service, Inc., a Florida corporation; all
jointly and severally.
Guaranty Agreement - the unconditional guaranty agreement executed by
Guarantors dated as of August 1, 1997 in favor of Credit Obligor in which said
Guarantors guarantee the due and prompt payment of all Obligations of the Issuer
to Credit Obligor, and any additional guaranty agreements which may be executed
by any of said Guarantors from time to time.
Indemnity Agreement - that certain indemnity agreement executed by the
Issuer and the Guarantor, Don Bell Industries, Inc., dated as of August 1, 1997
in favor of Credit Obligor covering liability to the Credit Obligor for
environmental matters relating to the Real Estate in form and substance
satisfactory to Credit Obligor.
Indenture - that certain Trust Indenture between the Issuer and Trustee
dated as of August 1, 1997, pursuant to which the Notes will be issued.
Issuer - La-Man Corporation, a Nevada corporation.
Letter of Credit - Irrevocable Letter of Credit No. SB-1326 in the form of
Exhibit A, and all substitute letters of credit issued therefor under the terms
hereof, issued by the Credit Obligor to the Trustee with respect to the Notes.
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Exhibit 10.45
Lien - any interest in property (real, personal or mixed, and tangible or
intangible) securing an obligation owed to, or a claim by, a Person other than
the owner of the property, whether such interest is based on the common law,
statute or contract, and including, but not limited to, a security interest,
security title orLien arising from a security agreement, mortgage, deed of
trust, deed to secure debt, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes. The term
"Lien" shall include covenants, conditions, restrictions, leases and other
encumbrances affecting any property. For the purpose of this Agreement, the
Issuer shall be deemed to be the owner of any property which it has acquired or
holds subject to a conditional sale agreement or other arrangement pursuant to
which title to the property has been retained by or vested in some other Person
for security purposes.
Mortgage and Security Agreement- that certain Real Estate Mortgage and
Security Agreement dated as of August 1, 1997, executed by the Issuer and the
Guarantors in favor of Credit Obligor wherein the Issuer and the Guarantors are
granting to the Credit Obligor a security interest in, and first lien upon,
certain real estate located in Volusia County, Florida and certain business
assets comprised of tangible and intangible personal property owned by the
Issuer and the Guarantors, respectively.
Note shall mean any Note authenticated and delivered pursuant to the
Indenture.
Notes shall mean the $2,500,000 Variable/Fixed Rate Credit Enhanced Notes
authorized to be issued by the Issuer pursuant to the Indenture.
Obligations - all indebtedness or obligations of the Issuer to the Credit
Obligor of every description, including indebtedness or obligations of the
Issuer to the Credit Obligor under this Agreement or secured hereby by the
Mortgage and Security Agreement, including without limitation (i) the Issuer's
obligation to reimburse the Credit Obligor for draws made under the Letter of
Credit, (ii) the Issuer's obligation to pay fees and charges for the issuance
and continuation of the Letter of Credit, (iii) the Issuer's obligation to pay
the Revolving Line-of-Credit Note, and (iv) all other loans, advances, debts,
liabilities, obligations, covenants and duties owing, arising, due or payable
from the Issuer to Credit Obligor of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, whether
arising under this Agreement, any of the Credit Documents or any of the other
Financing Documents or otherwise, whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however evidenced or acquired,
including, without limitation, those evidenced by or reflected in the Mortgage
and Security Agreement or the Notes referenced therein. The term includes,
without limitation, all interest, charges, expenses, fees, attorneys' fees and
any other sums chargeable to the Issuer under any of the Financing Documents and
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<PAGE>
Exhibit 10.45
all rights Credit Obligor may at any time or times have to reimbursement in
connection with any letter of credit or guaranty issued for the Issuer's
benefit.
Permitted Liens - shall mean (i) any Lien which provides security for the
Obligations, (ii) any purchase money security interest in favor of the vendor of
tangible personal property constituting any part of the Collateral, (iii) Liens
for ad valorem, tangible and intangible property taxes on the Collateral not
then delinquent, (iv) Liens characterized as "Miscellaneous Liens" under Part
II, Chapter 713, Florida Statutes, if paid or satisfied in the normal course of
business, and (v) those matters set forth in Schedule B of the title policy
referenced in Section 3.1 (i) of this Agreement.
Person - an individual, partnership, corporation, joint stock company,
firm, land trust, business trust, limited liability company, unincorporated
organization, or other business entity, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees
of the Issuer that is covered by Title IV of ERISA.
Pledged Notes - Notes purchased pursuant to the optional or mandatory
tender provisions of the Indenture with money drawn under the Letter of Credit.
Real Estate - the real property and interests described in the Mortgage and
Security Agreement.
Reimbursement Acceleration - as defined in Section 8.4 hereof.
Revolving Line-of-Credit Note - that certain revolving line-of-credit
promissory note from the Issuer, as "Borrower", in favor of the Credit Obligor,
as "Lender" in the principal sum of up to $1,300,000 of even effective date with
this Agreement, the payment and performance of which is unconditionally
guaranteed by the Guarantors.
Solvent shall mean, when used with respect to any Person, that (i) such
Person does not intend to incur, and does not believe and has no reason to
believe that it will incur, debts beyond its ability to pay as they become due;
(ii) the sum of such Person's assets is greater than all of such Person's
liabilities at fair valuation; (iii) such Person has sufficient cash flow to
enable it to pay its debts as they become due; and (iv) such Person does not
have unreasonably small capital to carry on such Person's business as
theretofore operated and all businesses in which such Person is about to engage.
"Fair valuation" is intended to mean that value which can be obtained if the
assets are sold within a reasonable time in arm's-length transactions in an
existing and nontheoretical market.
SouthTrust - SouthTrust Bank, National Association, a national banking
association.
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Exhibit 10.45
Stated Expiration Date - the date on which the Letter of Credit will, by
its terms, expire, or such earlier date as provided herein or in the Letter of
Credit if said Letter of Credit is terminated on an earlier date in accordance
with its terms.
Tendered Notes - Notes tendered (or deemed tendered) for purchase pursuant
to the optional or mandatory tender provisions of the Indenture.
Trustee - SouthTrust Bank, National Association, a National banking
association, in its capacity as trustee under the Indenture. and its successors
and assigns.
1.2. Principles of Interpretation. The following principles shall
----------------------------
govern the interpretation of this Agreement:
(a) The terms defined in this Article have the meanings
assigned to them in this Article. Singular terms shall include the plural as
well as the singular and vice versa.
(b) All accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall be
made, in accordance with generally accepted accounting principles. All
references herein to "generally accepted accounting principles" or "GAAP" refer
to such principles as they exist at the date of application thereof.
(c) All references in this instrument to designated "articles,"
"sections" and other subdivisions are to the designated articles, sections and
subdivisions of this instrument as originally executed.
(d) The terms "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular article, section or other subdivision.
(e) Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings ascribed to them in the Indenture.
1.3. Date of Credit Agreement. The date of this Agreement is
------------------------
intended as and for a date for the convenient identification of this Agreement
and is not intended to indicate that this Agreement was executed and delivered
on said date.
1.4 Separability Clause. If any provision in this Agreement shall
-------------------
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
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Exhibit 10.45
2. ISSUANCE OF LETTER OF CREDIT; REIMBURSEMENT AND FEES:
-----------------------------------------------------
2.1. Issuance of Letter of Credit.
----------------------------
(a) The Issuer hereby requests and instructs the Credit Obligor
to issue the Letter of Credit substantially in the form provided in Exhibit A
hereto. The Credit Obligor hereby agrees so to issue the Letter of Credit,
subject to the terms and conditions of this Agreement.
(b) The Letter of Credit shall be issued to the Trustee on the
date of delivery of the Notes to the original purchaser or purchasers thereof
from the Issuer.
(c) The Credit Obligor shall be under no obligation to extend
the Stated Expiration Date of the Letter of Credit beyond August 15, 2000. The
Credit Obligor, at its sole discretion, may elect to extend the Stated
Expiration Date of the Letter of Credit to such date as the Credit Obligor shall
determine upon the Credit Obligor's receipt of a written notice from the Issuer
requesting such extension and upon the Issuer's payment to the Credit Obligor of
a fee for such extension, which fee shall be determined by the Credit Obligor in
its sole discretion. Provided a written notice from the Issuer requesting such
extension is delivered to the Credit Obligor not less than 180 days prior to the
Stated Expiration Date, the Credit Obligor shall advise the Issuer in writing
not less than 150 days prior to the Stated Expiration Date of its intentions
regarding the Issuer's request.
2.2. Reimbursement. On each date that the Credit Obligor honors any
-------------
Drawing under the Letter of Credit, the Issuer shall immediately reimburse the
Credit Obligor for the amount of such Drawing.
2.3. Commissions and Fees.
--------------------
(a) As consideration for the issuance of the Letter of Credit,
the Issuer shall pay to the Credit Obligor commissions at the rate of one
percent (1.0%) per annum on the Credit Amount available under the Letter of
Credit existing on the date the commission is due. Such commissions shall be
payable in advance, on the date the Letter of Credit is issued and thereafter on
the fifteenth day of each August, throughout the term of the Letter of Credit.
The commission payable on each due date specified in this subsection shall be
calculated on the assumption that the Credit Amount available on such due date
will be available for the entire period for which such commission is payable.
The commission payable on the issuance date of the Letter of Credit shall be
prorated for the period ending August 15, 1998.
(b) On each date that a draft is honored under any Letter of
Credit, the Issuer shall pay to the Credit Obligor a transaction fee of $150.00.
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Exhibit 10.45
(c) On each date that any Letter of Credit is transferred in
accordance with its terms, the Issuer shall pay to the Credit Obligor such
amount as shall at the time of such transfer then be the charge which the Credit
Obligor is customarily making for transfers of similar letters of credit.
2.4. Increased Costs.
---------------
(a) If, after the date of delivery of this Agreement, any
change in any law or regulation or in the interpretation, administration or
enforcement thereof by any court or governmental authority charged with the
administration thereof or any action by any governmental authority (whether or
not constituting or resulting from such change) shall either:
(1) impose, modify or deem applicable any reserve,
assessment, special deposit or similar requirement against letters of credit
issued by the Credit Obligor; or
(2) impose on the Credit Obligor any other condition
regarding this Agreement or the Letter of Credit;
and the result of any such event shall be to increase the cost to the Credit
Obligor of issuing or maintaining the Letter of Credit (which increase in cost
shall be the result of the Credit Obligor's reasonable allocation of the
aggregate of such cost increases resulting from such events and shall be
calculated without giving effect to any participation granted in the Letter of
Credit), then, upon demand by the Credit Obligor, the Issuer shall immediately
pay to the Credit Obligor from time to time, as specified by the Credit Obligor
in writing, such additional amounts which shall be sufficient to compensate the
Credit Obligor for such increased costs.
The Credit Obligor shall deliver to the Issuer a certificate as to such
increased costs incurred by the Credit Obligor as a result of any event referred
to in this subsection (a), and such certificate shall be conclusive, absent
manifest error, as to the amount thereof. In making the determination
contemplated by such certificate, the Credit Obligor may make such reasonable
estimates, assumptions, allocations and the like that the Credit Obligor deems
to be appropriate.
(b) If, after the date of this Agreement, the Credit Obligor
shall have determined that the adoption or implementation of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Credit Obligor with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the Credit Obligor's capital, on the
Credit Facilities or otherwise, as a consequence of its obligations hereunder
and the Credit Facilities to a
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<PAGE>
Exhibit 10.45
level below that which the Credit Obligor could have achieved but for such
adoption, change or compliance (taking into consideration the Credit Obligor's
policies with respect to capital adequacy) by an amount deemed by the Credit
Obligor to be material, then from time to time, promptly upon demand by the
Credit Obligor, the Issuer hereby agrees to pay the Credit Obligor such
additional amount or amounts as will compensate the Credit Obligor for such
reduction. A certificate of the Credit Obligor claiming compensation under this
subsection and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive absent manifest error. In determining any such
amount, the Credit Obligor may make such reasonable estimates, assumptions,
allocations and the like that the Credit Obligor deems to be appropriate.
2.5. Place and Time of Payments.
--------------------------
(a) All payments by the Issuer to the Credit Obligor hereunder
shall be made in lawful currency of the United States and in immediately
available funds to the Credit Obligor at its address set forth in Section 10.6
hereof or at such other address within the continental United States as shall be
specified by the Credit Obligor by notice to the Issuer.
(b) All amounts payable by the Issuer to the Credit Obligor
hereunder for which a payment date is expressly set forth herein (including
without limitation payments due pursuant to Sections 2.2. and 2.3) shall be
payable without notice or written demand by the Credit Obligor. All amounts
payable by the Issuer to the Credit Obligor hereunder for which no payment date
is expressly set forth herein shall be payable on written demand by the Credit
Obligor to the Issuer .
(c) The Credit Obligor may, at its option, send written notice
to the Issuer of amounts payable pursuant to Sections 2.2 and 2.3, but the
failure to send such notice shall not affect or excuse the Issuer's obligation
to make payment of the amounts required by such Sections on the due date
specified in such Sections.
(d) Payments which are due on a day which is not a Business Day
shall be payable on the next succeeding Business Day, and any interest payable
thereon shall be payable for such extended time at the specified rate.
2.6. Late Payments. With respect to all amounts payable to the
-------------
Credit Obligor by the Issuer pursuant to this Article (i) which are not paid on
the due date, in the case of amounts payable immediately or payable on a
specified date, or (ii) which are not paid within ten (10) days of written
notice to the Issuer, in the case of amounts not so payable, the Issuer agrees
to pay to the Credit Obligor on demand (a late charge of five percent (5%) of
any such amount or amounts which shall not have been paid within 10 days of the
due date as specified above and (b) interest at a variable per annum rate equal
to the Base Rate plus 2.5%, for each day from the specified date of payment to
the date payment is made (the "Default Rate").
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Exhibit 10.45
2.7. Computation of Charges. The interest and charges provided for
----------------------
in this Agreement payable in arrears based upon annual rates shall be computed
on the basis of a 360-day year, for actual days elapsed. All interest rates
based upon the Base Rate shall change when and as the Base Rate shall change,
effective on the opening of business on the date of any such change, unless such
change is announced after the close of regular banking hours, in which case such
change shall be effective on the following day.
2.8. Statements of Account. The Credit Obligor will account to the
---------------------
Issuer annually with a statement of charges and payments made pursuant to this
Agreement, and each such account rendered by the Credit Obligor shall be deemed
final, binding and conclusive against the Issuer unless the Credit Obligor is
notified by the Issuer in writing to the contrary within forty-five (45) days of
the date each account was rendered. Such notice shall be deemed an objection
only to those items specifically objected to therein.
2.9. Obligations of Issuer Absolute. The obligations of the Issuer
------------------------------
under this Agreement shall be absolute, unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including, without limitation, the following:
(a) any lack of validity or enforceability of any Letter of
Credit, the Notes or any other Financing Documents;
(b) any amendment or waiver of or any consent to departure from
all or any of the Letter of Credit, the Notes or any other Financing Documents;
(c) the existence of any claim, set-off, defense or other
rights which the Issuer may have at any time against any Financing Participant,
or any other person or entity, whether in connection with this Agreement, any
Letter of Credit, the Notes or any other Financing Document, or any unrelated
transaction;
(d) any statement or any other document presented under any
Letter of Credit proves to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein proves to be untrue or inaccurate in any
respect whatsoever;
(e) payment by the Credit Obligor under any Letter of Credit
against presentation of a draft or certificate which does not comply with the
terms of any said Letter of Credit, provided such payment shall not have
constituted gross negligence or willful misconduct by the Credit Obligor; and
(f) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, provided the same shall not have
constituted gross negligence or willful misconduct by the Credit Obligor.
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Exhibit 10.45
2.10. Pledged Notes.
-------------
(a) As additional security for the payment and performance of
the Obligations, the Issuer hereby pledges, assigns, hypothecates and transfers
to the Credit Obligor all its right, title and interest in the Pledged Notes,
and does hereby grant to the Credit Obligor a security interest in the Pledged
Notes and all amounts payable thereon and the proceeds thereof.
(b) If the Credit Obligor is reimbursed for the purchase price
of less than all Pledged Notes with respect to which a Drawing has been made,
the Pledged Notes with respect to which the Credit Obligor has been reimbursed
by the Issuer shall, if no Event of Default exists, be released from the pledge
and assignment made hereby and shall be delivered to or upon the order of the
Issuer.
(c) All payments of principal and interest on Pledged Notes
shall be made directly to the Credit Obligor. If, while the Credit Obligor or
its designated agent holds Pledged Notes, the Issuer shall receive any interest
or principal payment in respect of such Pledged Notes, the Issuer agrees to
accept the same as agent for the Credit Obligor and to hold the same in trust on
behalf of the Credit Obligor and to deliver the same forthwith to the Credit
Obligor. All sums of money so paid in respect of principal, premium or interest
on such Pledged Notes which are received by the Issuer and paid to the Credit
Obligor, or which shall be received directly by the Credit Obligor from the
Trustee, shall be credited against the reimbursement obligation of the Issuer as
provided in Section 2.2 hereof.
(d) If an Event of Default exists, the Credit Obligor may,
without notice, exercise all rights, privileges or options pertaining to any
Pledged Notes as if it were the absolute owner thereof, upon such terms and
conditions as it may determine, all without liability except to account to the
Issuer for property actually received by it. In addition to the rights and
remedies granted to it in this Agreement, the Credit Obligor or its designated
agent shall have the authority to exercise all rights and remedies of a secured
party under the Florida Uniform Commercial Code. The Issuer shall be liable for
any deficiency if the proceeds of any sale or other disposition of the Pledged
Notes and the Collateral are insufficient to pay all amounts to which the Credit
Obligor is entitled. The Credit Obligor shall have no duty to exercise any of
such rights, privileges or options and shall not be responsible for any failure
to do so or any delay in so doing.
(e) Except as contemplated herein, without the prior written
consent of the Credit Obligor, the Issuer agrees that it will not sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Pledged Notes, nor will it create, incur or permit to exist any pledge,
lien, mortgage, hypothecation, security interest, charge, option or any other
encumbrance with respect to any of the Pledged Notes, or any interest therein,
or any proceeds thereof, except for the lien and security interest provided for
by this Agreement.
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Exhibit 10.45
(f) The Issuer further agrees to do or cause to be done all
such other reasonable acts and things as may be necessary to make any
disposition or sale of any portion or all of the Pledged Notes permitted by this
Agreement valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all courts
or governmental authorities having jurisdiction over any such disposition or
sales, all at the Issuer's expense.
3. CONDITIONS PRECEDENT TO ISSUANCE OF LETTER OF CREDIT:
-----------------------------------------------------
3.1. Conditions Precedent. The obligation of the Credit Obligor to
--------------------
issue the Letter of Credit is subject to the receipt by the Credit Obligor of
the following documents, each of which shall be satisfactory to the Credit
Obligor in form and substance:
(a) Financing Documents. An executed counterpart of each of
-------------------
the Financing Documents.
(b) Issuance of Notes. Evidence that the Notes have been
-----------------
executed, issued and delivered.
(c) Offering Circular. A copy of the Offering Circular
-----------------
distributed in connection with the offering and sale of the Notes, executed or
certified on behalf of the Issuer.
(d) Opinion of Counsel to Credit Obligor. An opinion of
-------------------------------------
counsel to Credit Obligor (Monaco, Smith, Hood, Perkins, Loucks, & Stout, P.
A.), in form and substance satisfactory to the Credit Obligor.
(e) Opinion of Counsel for Issuer. An opinion of counsel for
-----------------------------
the Issuer and the Guarantors (Broad & Cassel, P. A.) in substantially the form
of Exhibit B hereto and as to such other matters as the Credit Obligor may
reasonably request.
(f) Corporate Documents and Approvals. A copy of the Issuer's
---------------------------------
Articles or Certificate of Incorporation, certified by an appropriate
governmental authority, a copy of the Issuer's By-laws, certified as true and
correct by the Issuer's Secretary, and a certified copy of all corporate action
taken by the Issuer approving the Financing Documents and the consummation of
the transactions contemplated thereby (including, without limitation, a
certificate or proceedings setting forth the resolutions of the board of
directors and/or executive committee thereof of the Issuer for such purpose).
(g) Certificate of Issuer. A certificate by the Issuer to
---------------------
the effect that, as of the date of delivery of the Letter of Credit and after
giving effect thereto: (i) no Event of Default shall have occurred and be
continuing; (ii) no event shall have
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Exhibit 10.45
occurred and be continuing which, with notice or lapse of time or both, would
constitute an Event of Default under this Agreement, and (iii) the
representations and warranties made by the Issuer in Article 5 hereof shall be
true on and as of the date with the same force and effect as if made on and as
of such date.
(h) Insurance. Certificates of insurance evidencing the
----------
issuance of all insurance policies required by this Agreement or by the Mortgage
and Security Agreement.
(i) Title Policy. A title insurance policy issued by a company
------------
acceptable to the Credit Obligor insuring the mortgage lien created by the
Mortgage and Security Agreement on the Real Estate in an amount not less than
the face amount of the Letter of Credit. The title insurance policy shall (i)
insure title to all Real Property and all recorded easements benefiting such
Real Property, (ii) provide for the deletion of the standard exceptions
customarily contained in title insurance policies upon compliance with
reasonable underwriting requirements, (iii) delete the standard survey exception
with the survey presented by the Issuer to Credit Obligor, and (iv) insure the
right of access to and from the Real Property. Such policy must delete the
standard construction or mechanic's lien exception, and must not contain any
"pending disbursement clause" or any exception for defects, encumbrances or
rights of parties in possession that would be disclosed by an inspection or
accurate survey of the Real Property. Such policy may contain only such
exceptions and encumbrances as shall be acceptable to the Credit Obligor.
(j) Survey. An as-built survey of the Real Estate prepared by
------
a professional land surveyor, dated not earlier than 60 days prior to the date
of delivery of the Letter of Credit, showing the relation of such real property
to public roads for access purposes, the location of all structures then
situated on such real property, and all easements, rights-of-way, encroachments,
setback lines and other encumbrances, visible or listed in the title insurance
policies delivered to the Credit Obligor, and certifying that no part of such
real property is located within a flood plain.
(k) Owners' Title Affidavits. Owners' Affidavits as to the
------------------------
title of the Real Estate in form and substance satisfactory to Credit Obligor.
(l) Zoning. Evidence that the intended use of the Real Estate
------
is in accordance with applicable zoning, land use planning and building
restrictions.
(m) Appraisals. Market-value appraisals of the Real Estate
----------
and the remainder of the Collateral prepared by appraisers acceptable to the
Credit Obligor, showing a market value for the Real Estate and the remainder of
the Collateral in amounts satisfactory to the Credit Obligor.
(n) Incumbency Certificates. Incumbency certificates, dated
-----------------------
as of the date of this Agreement, executed by the Secretary or Assistant
Secretary of
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Exhibit 10.45
each of the Issuer and the Guarantors, which shall identify by name and title
and bear the signature of the officer of the Issuer authorized to sign this
Agreement and the Financing Documents on behalf of the Issuer and the
Guarantors. The Credit Obligor shall be entitled to rely upon such incumbency
certificates in completing the transactions contemplated herein or in any
Financing Document and in all its other dealings with the Issuer and the
Guarantors.
(o) Lien Search. A report from the appropriate recording
-----------
office indicating that there are no Liens against that portion of the Collateral
constituting personal property except Permitted Liens satisfactory to the Credit
Obligor.
(p) Consents. Consents and agreements of the landlords of
--------
each of the premises leased by the Issuer or the Guarantors on which 5% or more
(based on the appraised value) in the aggregate of tangible personal property
constituting any part of the Collateral is located as provided in Section 5.1
hereof (if any), all in form satisfactory to Credit Obligor.
(q) Disbursement Authorizations. Such disbursement
---------------------------
authorizations, draw requests, and other documents and writings as Credit
Obligor shall have requested evidencing the Issuer's request for disbursement of
funds.
(r) Documentation. All instruments and proceedings in
-------------
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to Credit Obligor, and Credit Obligor shall
have received on the date of this Agreement copies of all documents, including
records of corporate proceedings, which it may have requested in connection
therewith, including, without limitation, certified copies of resolutions
adopted by the board of directors and/or the executive committee thereof of the
Issuer and the Guarantors, certificates of good standing, and certified copies
of the Articles of Incorporation and By-Laws, and all amendments thereto, of the
Issuer and the Guarantors.
3.2. Additional Matters. In addition to any document described
------------------
above, the Credit Obligor may in its reasonable discretion request the execution
and delivery of such additional legal opinions, certificates, proceedings,
instruments and other documents as the Credit Obligor or its counsel may
reasonably request to evidence (i) compliance by the Issuer with legal
requirements, (ii) the truth and accuracy, as of the date of delivery of the
Letter of Credit, of the respective representations of the Issuer and the
Guarantors contained in the Financing Documents, and (iii) the due performance
or satisfaction by the Issuer, at or prior to the date of delivery of the Letter
of Credit, of all agreements then required to be performed and all conditions
then required to be satisfied by the Issuer and the Guarantors pursuant to the
Financing Documents.
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Exhibit 10.45
4. SECURITY FOR OBLIGATIONS:
-------------------------
4.1. Security. The Obligations shall be secured by each of the
--------
following:
(a) A first priority perfected security interest in the
Collateral, subject to Permitted Liens;
(b) The Mortgage and Security Agreement and the rights and
interests described therein; and
(c) The Guaranty Agreement;
(d) The Collateral Assignment of Rents and Leases;
(e) The Indemnity Agreement; and
(f) This Agreement.
4.2. Further Assurances. The Issuer agrees to execute and deliver,
-------------------
or cause the execution and delivery of, such security agreements, deeds of trust
mortgages, assignments, guaranties, consents, subordination agreements, and
financing statements as may be required by Credit Obligor to evidence such
security, all in form satisfactory to Credit Obligor, as well as such consents
and agreements of the landlords of each of the premises leased by the Issuer on
which the Collateral is located (if any), all in form satisfactory to Credit
Obligor.
5. REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS:
--------------------------------------------------
The Issuer represents, warrants and covenants to and with Credit Obligor,
which representations, warranties and covenants shall survive until the
Obligations are indefeasibly satisfied in full, that:
5.1. Organization and Qualification. The Issuer is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power to own its properties and to
carry on its business as now being conducted; and is duly qualified to do
business and is in good standing in every jurisdiction in which the character of
the properties owned by it or in which the character of its business makes its
qualification necessary.
5.2. Corporate Power and Authorization. The Issuer has full power
---------------------------------
and authority to enter into this Agreement, to borrow hereunder, and to execute
and deliver the other Financing Documents and to incur the obligations provided
for herein, all of which have been authorized by all proper and necessary
corporate action.
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<PAGE>
Exhibit 10.45
5.3. Enforceability. This Agreement and each of the other Financing
--------------
Documents constitute a valid and legally binding obligation of the Issuer
enforceable in accordance with their respective terms (as limited by bankruptcy,
insolvency and similar proceedings and general principles of equity) and will
not violate, conflict with, or constitute any default under any law, government
regulation, the Issuer's Articles of Incorporation or By-Laws, or any other
agreement or instrument binding upon the Issuer.
5.4. Financial Statements. All financial statements and reports
--------------------
furnished by the Issuer to Credit Obligor are complete and correct and fairly
present the financial condition of the Issuer and the results of its operations
and transactions as of the dates and for the periods referred to and have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved. There are no liabilities, direct or indirect, fixed or
contingent, of the Issuer as of the date of such financial statements which are
not reflected therein or in the notes thereto. Neither said financial
statements nor any other financial statements, reports, and information
furnished by the Issuer to Credit Obligor contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading. There is no fact known to the Issuer, or
reasonably ascertainable by the Issuer with diligent inquiry, which the Issuer
has failed to disclose to Credit Obligor in writing which has a material adverse
effect or, so far as the Issuer can now foresee, will have a material adverse
effect upon the Collateral, business, prospects, profits or condition (financial
or otherwise) of the Issuer or the ability of the Issuer to perform this
Agreement.
5.5. Taxes. The Issuer has filed all federal, state and local tax
-----
returns which are required to be filed and has paid, or made adequate provision
for the payment of, all taxes which have or may become due pursuant to said
returns or to assessments received by the Issuer, including, without limitation,
all applicable federal, state, and local employee withholding taxes.
5.6. Title to Collateral. Except for the security interests granted
-------------------
herein, the Issuer and the Guarantors (respectively, as designated in the
Mortgage and Security Agreement), are the sole owners of the Collateral free
from any adverse Liens (except Permitted Liens), security interests or other
encumbrances. The Issuer and the Guarantors shall defend the Collateral against
all claims and demands of all other parties who at any time claim any interest
in the Collateral.
5.7. Place of Business. The Issuer's chief executive office is
-----------------
located at 5029 Edgewater Drive, Orlando, Florida 32810 and has been located in
the State of Florida at all times material to this Agreement. A security
interest in all Collateral constituting intangible personal property can be
perfected in the State of Florida, and the Collateral constituting tangible
personal property is and shall at all times be located at the sites identified
in the Mortgage and Security Agreement, except for rolling stock (i.e. trucks
with inventory) and inventory, equipment and work in
Page 16
<PAGE>
Exhibit 10.45
process which, in the ordinary course of business, is temporarily located at job
sites of customers, subcontractors and other fabricators.
5.8. Full Disclosure. All information furnished by the Issuer to the
---------------
Credit Obligor concerning the Issuer, its financial condition, the Collateral,
or otherwise for the purpose of obtaining credit or an extension of credit, is,
or will be at the time the same is furnished, accurate and correct in all
material respects and complete insofar as completeness may be necessary to give
the Credit Obligor a true and accurate knowledge of the subject matter.
5.9. Issuer's Name. The Issuer has not changed its name or been
-------------
known by any other name within the last five (5) years, nor has it been the
surviving corporation in a merger effected within the last five (5) years. The
Issuer does not now use nor has it ever used any trade or fictitious name in the
conduct of its business, but the Issuer has qualified to do business in the
State of Florida under the name of La-Man Corporation of Nevada.
5.10. Existing Debt. The Issuer is not in default with respect to
-------------
any of its existing debt, including debt to Credit Obligor, or with respect to
any material agreement to which it is a party.
5.11. Solvency. The Issuer is now and, after giving effect to the
transactions contemplated hereby, will at all times be Solvent.
5.12. Environmental Matters. The Issuer is in compliance with all
---------------------
Environmental Regulations and with all other federal, state and local laws and
regulations relating to the environment and pollution, including such laws and
regulations regulating hazardous, radioactive and toxic materials and
underground petroleum products storage tanks. Other than pending lawsuits
disclosed in the Title or Owners' Affidavits, no assessment notice of (primary
or secondary) liability or notice of financial responsibility, and no notice of
any action, claim, investigation, proceeding, or inquiry to determine such
liability or responsibility, or the amount thereof, or to impose civil penalties
has been received by the Issuer, and there are no facts, conditions or
circumstances known to the Issuer which could result in any investigation or
inquiry if all such facts, conditions, and circumstances, if any, were fully
disclosed to the applicable governmental authority. The Issuer has paid any
environmental excise taxes due and payable, including without limitation, those
imposed pursuant to Sections 4611, 4661, or 4681 of the Internal Revenue Code of
1986, as amended from time to time. The Issuer has not obtained and is not
required to obtain (but will obtain if so required in the future) any permits,
licenses, or similar authorizations to construct, occupy, operate or use any
buildings, improvements, fixtures or equipment in connection with its business
by reason of any Environmental Regulations. No oil, toxic or hazardous
substances or solid wastes have been disposed of or released by the Issuer in
connection with the operation of its business and the Issuer will not dispose of
or release oil, toxic or hazardous substances or solid wastes at any time in its
operation of its business (the
Page 17
<PAGE>
Exhibit 10.45
terms "hazardous substance" and "release" shall have the meanings specified in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), and the terms "solid waste" and "disposal,"
"dispose" or "disposed' shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA'), except that if such
acts are amended to broaden the meanings thereof, the broader meaning shall
apply herein).
5.13. No Approval. No authorization or approval or other action by,
-----------
and no notice to or filing with, any federal, state, or local government body,
agency, or authority is required for the due execution, delivery, and
performance by the Issuer of this Agreement or the Financing Documents.
5.14. Mortgage and Security Agreement. All representations of the
-------------------------------
Issuer and the Guarantors or any entity named as "Borrower" or "Debtor" under
the Mortgage and Security Agreement or any of the Financing Documents are true
and correct as of this date.
5.15. Representations True. No representation or warranty by the
--------------------
Issuer contained herein or in any certificate or other document furnished by the
Issuer pursuant hereto contains any untrue statement of material fact or omits
to state a material fact necessary to make such representation or warranty not
misleading in light of the circumstances under which it was made.
6. AFFIRMATIVE COVENANTS OF THE ISSUER:
The Issuer agrees and covenants that until the Obligations have been
indefeasibly paid in full and until the Letter of Credit is no longer
outstanding, the Issuer shall cause each of the Guarantors to, and itself shall:
6.1. Insurance. Maintain insurance with insurance companies
---------
satisfactory to Credit Obligor on such of its properties, in such amounts and
against such risks as is customarily maintained in similar businesses operating
in the same vicinity, and shall file with Credit Obligor upon request, from time
to time, a detailed list of the insurance then in effect, stating the names of
the insurance companies, the amounts and rates of the insurance, dates of
expiration thereof, and the properties and risks covered thereby, and, within 10
days after notice in writing from Credit Obligor, shall obtain such additional
insurance as Credit Obligor may reasonably request. All such policies shall
name the Credit Obligor as a named insured and provide that any losses payable
thereunder shall (pursuant to loss payable clauses, in form and content
acceptable to the Credit Obligor, to be attached to each policy) be payable to
the Credit Obligor, and provide that the insurance provided thereby, as to the
interest of the Credit Obligor, shall not be invalidated by any act or neglect
of the Issuer, nor by the commencing of any proceedings by or against the Issuer
in bankruptcy, insolvency, receivership or any other proceedings for the relief
of a debtor, nor by any foreclosure, repossession or other proceedings relating
to the property insured, nor by any occupation of such property or the use of
Page 18
<PAGE>
Exhibit 10.45
such property for purposes more hazardous than permitted in the policy. The
Issuer hereby assigns to the Credit Obligor all right to receive proceeds,
directs any insurer to pay all proceeds directly to the Credit Obligor, and
authorizes the Credit Obligor to endorse any check or draft for such proceeds
and apply the same toward satisfaction of the Obligations. The Issuer shall
furnish to the Credit Obligor insurance certificates, in form and substance
satisfactory to the Credit Obligor, evidencing compliance by it with the terms
of this Section and, upon the request of the Credit Obligor at any time, the
Issuer shall furnish the Credit Obligor with photostatic copies of the policies
required by the terms of this Section. The Issuer will cause each insurer under
each of the policies to agree (either by endorsement upon such policy or by
letter addressed to the Credit Obligor) to, give the Credit Obligor at least 10
days' prior written notice of the cancellation of such policies in whole or in
part or the lapse of any coverage thereunder. The Issuer agrees that it will
not take any action or fail to take any action which action or inaction would
result in the invalidation of any insurance policy required hereunder. The
Issuer shall furnish to the Credit Obligor such evidence of insurance, and proof
of payment of the same, as Credit Obligor may require.
6.2. Corporate Existence: Qualification. Maintain its corporate
----------------------------------
existence and, in each jurisdiction in which the character of the property owned
by it or in which the transaction of its business makes its qualification
necessary, maintain good standing.
6.3. Taxes. During each fiscal year, accrue all current tax
-----
liabilities of all kinds, all required withholding of income taxes of employees,
all required old age and unemployment contributions, all required payments to
employee benefit plans, and pay the same when they become due.
6.4. Compliance with Laws. Comply with all applicable statutes and
--------------------
governmental regulations, including, without limitation, Environmental
Regulations, and pay all taxes, assessments, charges, claims for labor,
supplies, rent, and other obligations. Specifically, the Issuer shall (and the
Issuer shall cause the Guarantors, respectively, to) pay when due all taxes and
assessments upon the Collateral, this Agreement, the Letter of Credit or any
Financing Document, including, without limitation, any stamp taxes or
intangibles taxes imposed by virtue of the transactions outlined herein.
6.5. Annual Financial Statements. Within 90 days after the close of
---------------------------
each fiscal year, furnish Credit Obligor with a true copy of the Issuer's Form
10-KSB Annual Report (or Form 10-K, if applicable) as filed with the Securities
and Exchange Commission, or in the event the Issuer is not required to file such
Annual Report, such comparable audited consolidated financial statements of the
Issuer and its subsidiaries (including the Guarantors) audited by certified
public accountants acceptable to the Credit Obligor and certified as fairly
presenting in all material respects the consolidated financial position of the
Issuer and its subsidiaries as of the date thereof and the results of their
operations and their cash flows for the periods
Page 19
<PAGE>
Exhibit 10.45
covered thereby, in accordance with GAAP. In addition, the Issuer shall provide
all internal notes and back-up documentation relating to the consolidation of
the financial statements of the Issuer and its subsidiaries, including the
Guarantors. At the time of furnishing said financial statements, the Issuer
shall furnish Credit Obligor with a certificate from the President and the chief
financial officer of the Issuer stating that they have reviewed this Agreement
and the affairs of the Issuer and that to the best of their knowledge and belief
they are unaware of the occurrence of an event which constitutes an Event of
Default hereunder or which would constitute such an Event of Default with the
giving of notice or the lapse of time or both, and, if so, stating the facts
with respect thereto.
6.6. Interim Financial Statements. Within 45 days after the close of
----------------------------
each fiscal quarter, the Issuer shall provide the Credit Obligor with a true
copy of the Issuer's Form 10-QSB Report (or Form 10-Q, if applicable) as filed
with the Securities and Exchange Commission, or in the event the Issuer is not
required to file such Report or the information described below is not included
therein, such comparable consolidated financial statements of the Issuer and its
subsidiaries (including the Guarantors) including a complete and accurate
listing and summary aging report of all accounts receivable, an inventory report
in summary form coinciding in substance with the Issuer's internally prepared
financial statements as of the last day of the quarter then ended, and financial
statements of the Issuer consisting of balance sheets and operating statements
and a listing of all contingent liabilities of the Issuer for the period
involved and such other statements as Credit Obligor may reasonably request.
The quarterly financial information required hereby may be unaudited and need
not include all information and disclosures required by GAAP; however, such
information will reflect all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of the Issuer's management, necessary for
a fair presentation of the consolidated financial position and results from
operations of the Issuer and its subsidiaries for such quarterly periods. All
of such interim financial statements shall be taken from the books and records
of the Issuer, and certified by the chief financial officer of the Issuer as
fairly presenting in all material respects the consolidated financial position
of the Issuer and its subsidiaries as of the date thereof and the results of
their operations and their cash flows for the periods covered thereby. At the
time of furnishing such financial statements, the Issuer shall furnish Credit
Obligor with a certificate from the President or chief financial officer of the
Issuer stating that he has reviewed this Agreement and the affairs of the Issuer
and that to the best of his knowledge and belief he is unaware of the occurrence
of an event which constitutes an Event of Default hereunder or which would
constitute such an Event of Default with the giving of notice or the lapse of
time or both, and if so, stating the facts with respect thereto.
6.7. Visits and Inspections. Permit persons designated by Credit
----------------------
Obligor to inspect the Collateral any and all of the property and corporate and
financial books and records of the Issuer or the Guarantors and, to discuss,
respectively, its affairs with its officers and employees at such reasonable
times as
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<PAGE>
Exhibit 10.45
Credit Obligor shall request and furnish Credit Obligor with such miscellaneous
information as it may request.
6.8. Payments of Obligations. Duly and punctually pay all of the
-----------------------
Obligations of the Issuer to Credit Obligor and to pay all other debt in
accordance with the terms of such debt.
6.9. Conduct of Business. Conduct its business as now conducted and
-------------------
do all things necessary to preserve, renew and keep in full force and effect its
rights, privileges and franchises necessary to continue its business.
6.10. Maintenance of Properties. Keep its properties in good repair,
-------------------------
working order and condition, reasonable wear and tear excepted, and from time to
time make all needed and proper repairs, renewals, replacements, additions, and
improvements thereto and comply with the provisions of all leases to which it is
a party or under which it occupies property so as to prevent any loss or
forfeiture thereof or thereunder.
6.11. Additional Documents. Join the Credit Obligor in executing any
--------------------
security agreements, assignments, consents, financing statements or other
instruments, in form satisfactory to the Credit Obligor, as the Credit Obligor
may from time to time request in connection with the Collateral and the other
security for the Obligations referred to in Section 4.1 hereof.
6.12. Notice to Credit Obligor. Immediately notify the Credit
------------------------
Obligor of (a) any event causing a material loss or depreciation in value of the
Collateral and the amount of such loss or depreciation, or (b) there is any
change in the control of the Issuer resulting in a Person or "group of Persons"
(as those terms are defined by the Securities and Exchange Commission) who have
the present power to appoint or elect 50% or more of the members of the board of
directors of the Issuer.
6.13. Mortgage and Security Agreement. Duly and strictly comply with
-------------------------------
each and every affirmative covenant of the Issuer or any "Mortgagor" or "Debtor"
under the Mortgage and Security Agreement (it being the intention of the parties
that this requirement shall continue notwithstanding termination of the Mortgage
and Security Agreement or satisfaction of the obligations of the Issuer secured
thereby).
6.14. Maintenance of Remarketing Agreement. Maintain in force, at
------------------------------------
all times, a remarketing agreement under which a remarketing agent agrees to
attempt to remarket Notes which are tendered for repurchase under the terms of
the Indenture. Both the identity of the remarketing agent and the terms of the
remarketing agreement must be satisfactory to the Credit Obligor in all
respects.
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<PAGE>
Exhibit 10.45
7. NEGATIVE COVENANTS OF THE ISSUER:
Until the Obligations have been indefeasibly repaid and satisfied in full
and until the Letter of Credit is no longer outstanding, without the prior
written consent of Credit Obligor, the Issuer shall not:
7.1. Indebtedness. Create, incur, assume or suffer to exist any
------------
debt or obligation for money borrowed, or guarantee, or endorse, or otherwise be
or become contingently liable in connection with the obligations of any Person
(including, without limitation, any Affiliate or Guarantor) in excess of
$50,000.00 annually, without the written consent of the Credit Obligor.
7.2. Liens and Security Interests. Create, incur, assume, or suffer
----------------------------
to exist any mortgage, security deed, deed of trust, security interest, pledge,
encumbrance. Lien or charge of any kind (including charges on property
purchased under conditional sales or other title-retention agreements) on any of
its property or assets, now owned or hereafter acquired, except for Permitted
Liens.
7.3. Mortgage and Security Agreement. Engage in any action or
-------------------------------
perform any act or fail to perform any act which either itself or with the
giving of notice or the passage of time or otherwise would violate the
provisions of the Mortgage and Security Agreement.
7.4. Revolving Line-of-Credit Note. Violate the provisions contained
-----------------------------
under the heading entitled "Affirmative covenants of Borrower" contained in the
Revolving Line-of-Credit Note, and fail to cure the same within the time or
times provided therein, it being the intention and agreement of the parties
hereto that said provisions are incorporated herein by reference and shall
remain in full force and effect until the Obligations are fully satisfied and
discharged, notwithstanding the payment in full of the Revolving Line-of-Credit
Note.
8. EVENTS OF DEFAULT AND REMEDIES:
-------------------------------
8.1. Events of Default. Any one or more of the following shall
-----------------
constitute an event of default (an "Event of Default") under this Agreement
(whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in any payment required under Article 2 hereof or
under any other provision hereof, as and when the same shall become due and
payable; or
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<PAGE>
Exhibit 10.45
(b) default in the performance of, or breach of, any covenant or
agreement of the Issuer in this Agreement (other than a covenant or agreement, a
default in the performance or breach of which is elsewhere in this Section
specifically dealt with) which, in the opinion of the Credit Obligor, is
susceptible to being cured or remedied within 30 days after notice of default or
breach, but is not cured or remedied by the Issuer within said time ; or
(c) the sale or other transfer of all or any portion of the
Collateral or any interest therein, except for (1) sales of inventory and the
disposition of obsolete equipment and other property in the ordinary course of
business, (2) transfers made with the prior written consent of the Credit
Obligor (which consent may be granted or refused by the Credit Obligor in its
sole discretion), or (3) tenant leases in form approved by the Credit Obligor;
or
(d) the creation or suffering to exist by the Issuer of any Lien
or encumbrance on the Collateral, other than (1) Permitted Liens, (2) the lien
of this Agreement and the lien of the Credit Documents securing the Obligations,
(3) the Lien for ad valorem taxes not then delinquent, and (4) Liens created
with the prior written consent of the Credit Obligor, which consent may be
granted or refused by the Credit Obligor in its sole discretion; or
(e) the filing of a petition in bankruptcy (or the other
commencement of a bankruptcy or similar proceeding) (1) by the Issuer under any
applicable bankruptcy, insolvency, reorganization, or similar law, now or
hereafter in effect, or (2) against the Issuer, and the Issuer fails to timely
contest or obtain the dismissal of such petition or proceeding within 30 days
following the filing thereof (or such longer period as the Credit Obligor may
grant in its sole discretion); or
(f) any representation or warranty made by the Issuer herein, in
the Credit Documents, or in any document, instrument or certificate furnished to
the Credit Obligor in connection with the issuance of the Letter of Credit or
the consummation of the transactions contemplated by the Financing Documents
shall at any time prove to have been false or incorrect in any material respect
as of the time made and said false and incorrect statement is deemed by Creditor
Obligor in good faith to have a material adverse impact on the Issuer's credit
worthiness and (as it applies to this Agreement) is not, in the Credit Obligor's
opinion, susceptible to cure or remedy; or
(g) the Issuer shall default with respect to the Notes or the
occurrence of a default or an Event of Default, as therein defined, under any of
the Financing Documents and the default or Event of Default is not cured or
otherwise remedied prior to the expiration of any applicable grace or cure
period; or
(h) the entry against the Issuer of a full judgment, decree or
order for the payment of money in excess of $50,000, and the continuance of such
Page 23
<PAGE>
Exhibit 10.45
judgement, decree or order unsatisfied and in effect for any period of thirty
(30) consective days without a stay of execution; or
(i) a default under any bond, debenture, note or other evidence
of indebtedness of the Issuer in excess of $50,000 or under any indenture or
other instrument under which any such evidence of indebtedness has been issued
or by which it is governed and the expiration of the applicable period of grace,
if any, specified in such evidence of indebtedness, indenture or other
instrument; provided, however, that, if such default under such evidence of
indebtedness, indenture or other instrument shall be cured by the Issuer, or be
waived by the holders of such indebtedness, in each case as may be permitted by
such evidence of indebtedness, indenture or other instrument, or if the Issuer
is diligently and in good faith contesting such alleged default by appropriate
legal proceedings to the Credit Obligor's reasonable satisfaction, then the
Event of Default hereunder by reason of such default shall be deemed likewise to
have been thereupon cured or waived; or
(j) if the cancellation, termination or limitation of any
guaranty of the Issuer's obligations under this Agreement or Obligations shall
occur, or if any such Guarantor shall be in default under or breach the terms of
any guaranty agreement between the Credit Obligor and such Guarantor; or if any
subordination agreement executed by any creditor of the Issuer or of any such
Guarantor in favor of the Credit Obligor should be canceled, terminated, or
breached; or
(k) if the Issuer shall be criminally convicted under any law
that could lead to a forfeiture of any property of the Issuer; or
(l) any material loss, theft, damage or destruction not fully
covered by insurance (as required by this Agreement and subject to such
deductibles as Credit Obligor shall have agreed to in writing), or the making of
any levy, seizure, or attachment of any of the Collateral except in all cases as
may be specifically permitted by other provisions of this Agreement; or
(m) there shall occur any material adverse change in the
consolidated financial condition or results of operations of the Issuer and its
subsidiaries in the aggregate; or
(n) if a creditor of the Issuer shall obtain possession of any
of the Collateral (having a value of $10,000.00 or more) by any legal means; or
(o) there shall occur a cessation of a substantial part of the
business of the Issuer for a period which significantly affects said Issuer's
capacity to continue its business, on a profitable basis; or the Issuer shall
suffer the loss or revocation of any license or permit now held or hereafter
acquired by the Issuer which is necessary to the continued or lawful operation
of its business; or the Issuer
Page 24
<PAGE>
Exhibit 10.45
shall be enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs; or any material lease or agreement pursuant to which the Issuer leases,
uses or occupies any of its properties shall be canceled or terminated prior to
the expiration of its stated term; or any part of the Collateral shall be taken
through condemnation or the value of such properties shall be impaired through
condemnation; or
(p) Credit Obligor shall reasonably and in good faith deem
itself insecure, based upon the existence of objective facts, standards, or
criteria; or
(q) if a default or event of default or breach occurs under any
Financing Document (other than the breaches enumerated in items (a) through (p)
above), or under or with respect to any of the Obligations, or under any other
note, evidence of indebtedness, loan agreement, security agreement, guaranty,
pledge, mortgage, assignment, or security document executed by the Issuer and
delivered to the Credit Obligor, and the default or event of default is not
cured or otherwise remedied prior to the expiration of any applicable grace or
cure period.
The Issuer agrees that default under any Financing Document shall
constitute default with respect to all Financing Documents and vice versa.
8.2. Remedies. If any Event of Default shall have occurred and be
--------
continuing, the Credit Obligor may exercise any of the following remedies:
(a) give written notice of such Event of Default to the Trustee,
whereupon an event of default shall occur under the Indenture and the Trustee
shall declare the Notes immediately due and payable and shall make a draw under
the Letter of Credit to pay the principal of the Notes and the interest accrued
thereon to the date of such declaration;
(b) upon notice to the Issuer, declare all amounts. if any. not
otherwise immediately due under this Agreement to be, and all such amounts shall
thereupon become, due and payable to the Credit Obligor, without presentment,
demand, protest, or other notice of any kind. all of which are expressly waived,
anything in this Agreement to the contrary notwithstanding;
(c) exercise its banker's lien or right of set-off; and/or
(d) proceed to protect its rights by suit in equity, action at
law or other appropriate proceedings, whether for the specific performance of
any covenant or agreement of the Issuer herein contained or in aid of the
exercise of any power or remedy granted to the Credit Obligor under any other
Financing Document.
8.3. Additional Rights. Without limiting the foregoing, upon the
-----------------
occurrence of any Event of Default, and at any time thereafter, Credit Obligor
shall
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<PAGE>
Exhibit 10.45
have the rights and remedies of a secured party under the Uniform Commercial
Code in addition to the rights and remedies provided herein or in any other
instrument or paper executed by the Issuer. Credit Obligor may require the
Issuer to assemble the Collateral and to make the same available to Credit
Obligor at a place to be designated by Credit Obligor which is reasonably
convenient to both parties. Unless the Collateral is perishable or threatens to
decline speedily in value, or is of a style customarily sold on a recognized
market, Credit Obligor will give the Issuer reasonable notice of the time after
which any private sale or other intended disposition thereof is to be made. The
requirement of reasonable notice shall be met if such notice is mailed postage
prepaid to the Issuer at least 10 days before the time of such sale or
disposition. The Issuer shall pay Credit Obligor on demand any and all expenses,
including legal expenses and reasonable attorneys' fees, incurred or paid by
Credit Obligor in protecting or enforcing the Obligations secured hereby and
other rights of Credit Obligor hereunder, including its right to take possession
of the Collateral.
8.4. Acceleration of Reimbursement. If an Event of Default exists
-----------------------------
under this Agreement and the maturity of all the Notes has not been accelerated
pursuant to the terms of the Indenture and the Letter of Credit is in effect,
the Issuer agrees to pay to the Credit Obligor, promptly upon demand by the
Credit Obligor therefor, an amount equal to the maximum amount available to be
drawn under the Letter of Credit, said occurrence being herein referred to as a
"Reimbursement Acceleration". All amounts so paid to the Credit Obligor (or
recovered by the Credit Obligor by legal or other action in the event the Issuer
shall fail or refuse to make payment as required by this Section) shall be held
by the Credit Obligor in reserve as security for reimbursement for any draws the
Credit Obligor may be required to pay under the Letter of Credit. The Credit
Obligor may maintain any reserve held under the terms of this Agreement in any
manner the Credit Obligor may see fit, and the Credit Obligor may invest the
same in such investment or investments (including but not limited to
certificates of deposit issued by the Credit Obligor) as the Credit Obligor may
choose or not invest the same. The Credit Obligor shall not be required to pay,
or to account to the Issuer or anyone else for. any interest or other earnings
on any reserve at any time held by the Credit Obligor under this Agreement,
except that any interest, income or profits from any investment of such reserve
made by the Credit Obligor shall become a part of such reserve.
8.5. Waivers; Application of Proceeds. The Issuer waives notice
--------------------------------
prior to Credit Obligor's taking possession or control of any of the Collateral
or any bond or security that might be required by any court prior to allowing
Credit Obligor to exercise any of Credit Obligor's remedies, including, without
limitation, the issuance of an immediate writ of attachment or similar writs.
The Issuer agrees that Credit Obligor may apply the net proceeds received from
the Collateral among the Obligations toward satisfaction of the same in its sole
discretion. Any such proceeds remaining after satisfaction in full of the
Obligations, and the other obligations and liabilities of the Issuer to Credit
Obligor shall be distributed as required by applicable laws.
Page 26
<PAGE>
Exhibit 10.45
8.6. No Remedy Exclusive. No remedy herein conferred upon or reserved
-------------------
to the Credit Obligor is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise any
right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof but any such right or power may be
exercised from time to time and as often as may be deemed expedient.
8.7. Agreement to Pay Attorneys' Fees. If the Issuer should default
--------------------------------
under any of the provisions of this Agreement and the Credit Obligor should
employ attorneys or incur other expenses for the collection of any payments due
hereunder or the enforcement of performance or observance of any agreement or
covenant on the part of the Issuer herein contained, the Issuer will on demand
therefor pay to the Credit Obligor the reasonable fees of such attorneys and
such other reasonable expenses so incurred.
8.8. No Additional Waiver Implied by One Waiver. If any agreement
------------------------------------------
contained in this Agreement should be breached by the Issuer and thereafter
waived by the Credit Obligor, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder.
8.9. Remedies Subject to Applicable Law. All rights, remedies
----------------------------------
and powers provided by this Article may be exercised only to the extent the
exercise thereof does not violate any applicable provision of law in the
premises, and all the provisions of this Article are intended to be subject to
all applicable mandatory provisions of law which may be controlling in the
premises and to be limited to the extent necessary so that they will not render
this Agreement invalid or unenforceable.
9. INDEMNIFICATION: LIABILITY OF CREDIT OBLIGOR:
---------------------------------------------
9.1. General Matters. The Issuer agrees to defend, indemnify and
hold harmless the Credit Obligor, its directors, officers, employees,
accountants, attorneys, and agents, (the "Indemnitees") from and against, and on
demand to reimburse Indemnitees for, any and all claims, demands, judgments,
damages, actions, causes of action, injuries, orders, penalties, costs and
expenses (including attorneys' fees and costs of court) of any kind whatsoever
arising out of or relating to any breach or default by the Issuer or any other
Person (including any Guarantor) under this Agreement or any Financing Document
or the failure of the Issuer to observe, perform or discharge the Issuer's
duties hereunder or thereunder. Without limiting the generality of the
foregoing, the Issuer's obligation to indemnify Indemnitees shall include
indemnity from any and all claims, demands, judgments, damages, actions, causes
of action, injuries, orders, penalties, costs and
Page 27
<PAGE>
Exhibit 10.45
expenses arising out of or in connection with the activities of the Issuer, its
predecessors in interest, third parties who have trespassed on the Issuer's
property, or parties in a contractual relationship with the Issuer, whether or
not occasioned wholly or in part by any condition, accident or event caused by
an act or omission of the Indemnitees, which: (a) arise out of the actual,
alleged or threatened discharge, dispersal, release, storage, treatment,
generation, disposal, or escape of radioactive materials, radioactivity,
pollutants or other toxic or hazardous substances, including any solid, liquid,
gaseous, or thermal irritant or contaminant, including smoke, vapor, soot,
fumes, acids, alkalis, chemicals, and waste (including materials to be recycled,
reconditioned or reclaimed); or (b) actually or allegedly arise out of the use,
specification, or inclusion of any product, material, or process containing
chemicals or radioactive material, the failure to detect the existence or
proportion of chemicals or radioactive material in the soil, air, surface water
or groundwater, or the performance or failure to perform the abatement of any
pollution source or the replacement or removal of any soil, water, surface
water, or groundwater containing chemicals or radioactive material; or (c)
arises out of or relates to breach by the Issuer of any of the provisions of
Section 5.14 hereof relating to Environmental Regulations. In addition, the
Issuer will indemnify and hold Indeminitees harmless from and against any
liability, claim, cost or expense incurred by Indemnitees or imposed against
Indemnitees for any stamp tax, intangible tax, or other tax, fee or charge
imposed by any governmental entity arising out of or relating to the Letter of
Credit or this Agreement or the transactions anticipated herein.
9.2. Letter of Credit Matters. The Issuer agrees to defend,
------------------------
indemnify and hold harmless Indemnitees (as defined in the previous Section)
from and against, and on demand to reimburse Indemnitees for, any and all
claims, damages, losses, liabilities, reasonable costs or expenses whatsoever
which Indemnitees may incur (or which may be claimed against Indemnitees by any
person or entity whatsoever) by reason of or in connection with the execution
and delivery or transfer of, or payment or failure to pay under, any Letter of
Credit; provided, that the Issuer shall not be required to indemnify Indemnitees
--------
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by (i) the willful misconduct or gross negligence
of the Credit Obligor in determining whether a draft or certificate presented
under any Letter of Credit complies with the terms of said Letter of Credit or
(ii) the Credit Obligor's negligent or willful failure to pay under any Letter
of Credit after the presentation to it by the Trustee of a draft and certificate
strictly complying with the terms and conditions of said Letter of Credit.
9.3. Liability of the Credit Obligor. For the exclusive benefit of
-------------------------------
the Credit Obligor and as between the Credit Obligor and the Issuer only, the
Issuer assumes all risks of the acts or omissions of the Trustee and any
transferee of any Letter of Credit with respect to its use of said Letter of
Credit. Neither the Credit Obligor nor any of its officers or directors shall be
liable or responsible for: (i) the use which may be made of any Letter of Credit
or for any acts or omissions of the
Page 28
<PAGE>
Exhibit 10.45
Trustee and any transferee in connection therewith; (ii) the validity,
sufficiency or genuineness of documents, or of any endorsement(s) thereon, even
if such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (iii) payment by the Credit Obligor against
presentment of documents which do not strictly comply with the terms of any
Letter of Credit, including but not limited to, failure of any documents to bear
any reference or adequate reference to any Letter of Credit; or (iv) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except only that the Issuer shall have a claim against the Credit
Obligor, and the Credit Obligor shall be liable to the Issuer, to the extent,
but only to the extent, of any direct, as opposed to consequential, damages
suffered by the Issuer which the Issuer proves were caused by (A) the Credit
Obligor's willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms of said
Letter of Credit or (B) the Credit Obligor's willful or negligent failure to pay
under any Letter of Credit after the presentation to it by the Trustee of a
draft and certificate strictly complying with the terms and conditions of said
Letter of Credit In furtherance and not in limitation of the foregoing, the
Credit Obligor may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
10. MISCELLANEOUS:
--------------
10.1. Continuing Obligation. This Agreement is a continuing
---------------------
obligation and shall (i) be binding upon the Issuer and the Credit Obligor,
their successors and assigns, and (ii) inure to the benefit of and be
enforceable by the Issuer and Credit Obligor and their successors and assigns;
provided, that the Issuer may not assign all or any part of this Agreement
- --------
without the prior written consent of the Credit Obligor.
10.2. Costs and Expenses. The Issuer shall bear all expenses of the
------------------
Credit Obligor in connection with investigation, review and approval of this
transaction, the preparation of this Agreement, the Letter of Credit, and the
Financing Documents, and also in connection with any amendment or modification
thereto, including, without limitation, (i) all legal fees, expenses and
disbursements and other actual third-party expense reimbursements incurred or
sustained by Credit Obligor in connection with this character, and (ii) all
travel, appraisal, audit, search and filing fees incurred or sustained by Credit
Obligor in connection with this transaction. The Issuer agrees to indemnify and
save Credit Obligor harmless against all broker's and finder's fees, if any. If,
at any time or times hereafter, whether before or after the occurrence of an
Event of Default, the Credit Obligor employs counsel to advise or provide other
representation with respect to the Agreement, or to collect the balance of
Obligations, or to take any action in or with respect to any suit or proceeding
relating to this Agreement or any of the Financing Documents, or to protect,
collect, or liquidate the Collateral or to attempt to enforce any security
interest or Lien granted to the Credit Obligor by the Issuer; then in any such
events. all of the reasonable attorneys' fees arising from such
Page 29
<PAGE>
Exhibit 10.45
services and any expenses, costs and charges relating thereto shall constitute
additional obligations of the Issuer payable on demand of the Credit Obligor.
Without limiting the foregoing, the Issuer shall pay or reimburse the Credit
Obligor for all recording and filing fees, intangibles taxes, documentary and
revenue stamps, other taxes or other expenses and charges payable in connection
with this Agreement, the Letter of Credit or any Financing Document, or the
filing of any Financing Document, financing statements or other instruments
required by the Credit Obligor in connection with the Obligations. In addition,
the Issuer shall upon demand reimburse Credit Obligor for all costs of audits
and appraisals performed by Credit Obligor. Fees, costs and expenses described
in this Section may include accountants' fees, costs and expenses; costs and
expenses incurred by Credit Obligor's loan administration staff, audit staff and
appraisal staff, court costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses; long distance telephone
charges; air express charges; telegram charges; secretarial over-time charges;
and expenses for travel, lodging and food paid or incurred in connection with
the performance of such services and activities. the Issuer acknowledges and
agrees that legal counsel to Credit Obligor does not represent the Issuer as the
Issuer's attorney, that the Issuer has retained counsel of its own choice and
has not and will not rely upon any advice from Credit Obligor's counsel, that
the Issuer's reimbursement of expenses pursuant to this Agreement (even if
effected by payment directly by the Issuer to Credit Obligor's counsel) shall
not be deemed to establish any attorney-client relationship between the Issuer
and Credit Obligor's counsel.
10.3. Headings. Except for the definitions set forth in Article 1, the
--------
headings of the articles, sections, paragraphs and subdivisions of this
Agreement are for convenience of reference only, are not to be considered a part
hereof, and shall not limit or otherwise affect any of the terms hereof.
10.4. No Usury. In no event shall the amount of interest due or
--------
payable on the Obligations under this Agreement, the Letter of Credit exceed the
maximum rate of interest allowed by applicable law, and in the event any such
payment is inadvertently paid by the Issuer or inadvertently received by the
Credit Obligor, then such excess sum shall be credited as payment of principal,
unless the Issuer elects to have such excess sum refunded to the Issuer
forthwith. It is the express intent of the parties that the Issuer not pay and
the Credit Obligor not receive, directly or indirectly, interest in excess of
that which may be legally paid by the Issuer under applicable law.
10.5. Survival of Covenants. All covenants, agree agreements,
---------------------
representations and warranties made herein and in certificates or reports
delivered pursuant hereto shall be deemed to have been material and relied on by
Credit Obligor, notwithstanding any investigation made by or on behalf of Credit
Obligor, and shall survive the execution and delivery to Credit Obligor of any
Financing Document.
Page 30
<PAGE>
Exhibit 10.45
10.6. Addresses. Any notice or demand which by any provision of this
---------
Agreement is required or provided to be given shall be deemed to have been
sufficiently given or served for all purposes by being delivered in person to
the party to whom the notice or demand is directed or by being sent as first
class mail, postage prepaid, to the following address: If to the Issuer, then to
La-Man Corporation, 5029 Edgewater Drive, Orlando, Florida 32810 Attention: Mr.
J. William Brandner; or if any other address shall at any time be designated by
the Issuer in writing to Credit Obligor at the time of such designation to such
other address; and if to Credit Obligor, 100 East New York Avenue, DeLand,
Florida 32724 Attention: Asset-Based Lending Department; or if any other address
shall at any time be designated in writing to the Issuer, to such other address.
10.7. Venue and Jurisdiction. The Issuer agrees that any legal action
----------------------
brought by the Credit Obligor to collect the Obligations or to assert any claim
against the Issuer under any Financing Document, or any part thereof, may be
brought in any court in the State of Florida having subject matter jurisdiction,
waives its right to object to any such action on grounds it is brought in the
improper venue, and irrevocably consents that any legal action or proceeding
against it under, arising out of, or in any manner relating to the Obligations,
or any Financing Document may be brought in the Circuit Court of Volusia County,
Florida or in any other Circuit Court of the State of Florida or in the U.S.
District Court for the Middle District of Florida. The Issuer, by the execution
of this Agreement, expressly and irrevocably assents and submits to the personal
jurisdiction of any such court in any such action or proceeding. The Issuer
consents to the service of process relating to any such action or proceeding by
mail to the address set forth in this Agreement.
10.8. Controlling Law. This Agreement shall be governed by and
---------------
construed in accordance with the laws of the State of Florida; provided,
however, that if any of the Collateral shall be located in any jurisdiction
other than Florida, the laws of such jurisdiction shall govern the method,
manner and procedure for foreclosure of Credit Obligor's lien upon such
Collateral and the enforcement of Credit Obligor's other remedies in respect of
such Collateral to the extent that the laws of such jurisdiction are different
from or inconsistent with the laws of Florida.
10.9. Participation. The Issuer acknowledges that Credit Obligor may,
-------------
at its option, sell participation interests in the Obligations to participating
banks. The amounts of any such participations shall be determined solely by the
Credit Obligor. The Issuer agrees with each present and future participant in
the Obligations, the names and addresses of which will be furnished to the
Issuer, that if an Event of Default should occur, each present and future
participant shall have all of the rights and remedies of Credit Obligor with
respect to any deposit due from any participant to the Issuer. The execution by
a participant of a participation agreement with Credit Obligor, and the
execution by the Issuer of this Agreement, regardless of the order of execution,
shall evidence an agreement between the Issuer and said participant in
accordance with the terms of this Section.
Page 31
<PAGE>
Exhibit 10.45
10.10. Miscellaneous. Time is of the essence with respect to this
--------------
Agreement. This Agreement and the instruments and agreements referred to herein
or called for hereby supersede and incorporate all representations, promises,
and statements, oral or written, made by the Credit Obligor in connection with
the Obligations. The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against either party. This
Agreement may not be varied, altered, or amended except by a written instrument
executed by an authorized officer of the Credit Obligor. This Agreement may be
executed in any number of counterparts, each of which, when executed and
delivered, shall be an original, but such counterparts shall together constitute
one and the same instrument.
10.11. Waiver of Right to Trial by Jury. THE ISSUER AND CREDIT OBLIGOR
--------------------------------
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY PERTAINING OR
RELATING TO THIS AGREEMENT, THE LETTER OF CREDIT, THE FINANCING DOCUMENTS, OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
WITH THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO
OR INCIDENTAL TO ANY DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS
AGREEMENT, THE LETTER OF CREDIT, THE FINANCING DOCUMENTS, OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
OR IN CONNECTION WITH THE TRANSACTIONS RELATED THERETO OR CONTEMPLATED THEREBY
OR THE EXERCISE OF EITHER PARTY'S RIGHTS AND REMEDIES THEREUNDER, IN ALL OF THE
FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE. THE ISSUER AND CREDIT OBLIGOR AGREE THAT EITHER
OR BOTH OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED AGREEMENT BETWEEN THE PARTIES
IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY
WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
11. SURVIVAL:
---------
Reference is made herein to the Mortgage and Security Agreement for
purposes of requiring continued compliance by the Issuer with the terms thereof
throughout the term of this Agreement and for purposes of determining in certain
cases what constitutes an Event of Default. Should for any reason the Mortgage
and Security Agreement cease to have force and effect, its provisions shall
continue to be deemed incorporated herein by reference as provided herein
notwithstanding said termination, and the Issuer shall continue to comply with
the terms of said Mortgage and Security Agreement until such time as the
Obligations hereunder are indefeasibly paid in full.
Page 32
<PAGE>
Exhibit 10.45
IN WITNESS WHEREOF, the Issuer and the Credit Obligor have caused this
instrument to be executed and delivered by their duly authorized officers, all
as of the year and date first above written.
ISSUER:
LA-MAN CORPORATION
By:/s/ J. William Brander
-------------------------------
J. William Brandner, Its President
Attest:/s/ Philips Howe Hoard
---------------------------
Its Secretary
CREDIT OBLIGOR:
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
By:/s/ Michael J. Opalewski
-------------------------------
Michael J. Opalewski
Executive Vice President
Page 33
<PAGE>
Exhibit 10.46
THIS INSTRUMENT PREPARED BY
AND RETURN AFTER RECORDING TO:
LARRY R. STOUT
P.0. BOX 15200
DAYTONA BEACH, FL 32115
REAL ESTATE MORTGAGE AND SECURITY AGREEMENT
-------------------------------------------
DATE: As of August 1, 1997
MORTGAGOR: La-Man Corporation, (As to Parcel 1 only)
5029 Edgewater Drive
Orlando, Florida 32810
MORTGAGOR: Don Bell Industries, Inc., (As to Parcels 2 and
3 only)
365 Oak Place
Port Orange, Florida 32127
MORTGAGEE: SouthTrust Bank, National Association
100 East New York Avenue
DeLand, Florida 32724
AMOUNT OF INITIAL INDEBTEDNESS SECURED HEREBY: $3,870,000.00
MAXIMUM AMOUNT OF INDEBTEDNESS SECURED HEREBY: $5,000,000.00
RECITALS
--------
A. For identification and reference purposes, the Mortgagor, La-Man
Corporation, a Nevada corporation, may be referred to herein as "La-Man
Corporation", "Mortgagor", "Issuer" or "Debtor", as the context provides or so
implies. SouthTrust Bank, National Association, a national banking association,
may be referred to herein as "SouthTrust", "Mortgagee", "Credit Obligor", or
"Secured Party" as the context provides or so implies. Don Bell Industries,
Inc., a Florida corporation, may be referred to herein as "Don Bell Industries",
"Mortgagor", "Guarantor", or "Debtor" as the context provides or so implies.
Don Bell Industries of Nevada, Inc., a Nevada corporation, Nevada SEMCO, Inc., a
Nevada corporation, J. M. Stewart, Corporation, a Florida corporation, J. M.
Stewart Industries, Inc., a Florida corporation, Certified Maintenance Service,
Inc., a Florida corporation, and Vision Trust Marketing, Inc., a Florida
corporation, may be referred to herein as "Guarantors" or "Debtors", singularly
or collectively as the context provides or so implies.
B. La-Man Corporation, as "Issuer" and SouthTrust, as "Credit Obligor" have
entered into a Credit and Security Agreement of even effective date herewith
(the
<PAGE>
Exhibit 10.46
"Credit Agreement") under the terms of which SouthTrust has agreed to issue
for the benefit of La-Man Corporation a letter of credit facility in the
aggregate amount of $2,570,000 (the "Letter of Credit") to secure La-Man
Corporation's $2,500,000 Variable/Fixed Rate Credit Enhanced Notes (the
"Notes"); as a result, La-Man Corporation has incurred certain "Obligations" as
defined in the Credit Agreement in favor of SouthTrust; La-Man Corporation is
also indebted to SouthTrust pursuant to a revolving line-of-credit promissory
note of even effective date herewith in the principal sum of up to $1,300,000
(the "Revolving Line-of-Credit Note") which is an Obligation under the Credit
Agreement; and La-Man Corporation may now be, or may hereafter become, otherwise
indebted, obligated or liable to SouthTrust. Capitalized terms used herein but
not otherwise defined herein shall have the respective meanings ascribed to them
in the Credit Agreement.
C. The Notes are being issued pursuant to a Trust Indenture between La-Man
Corporation and SouthTrust, as Trustee, (the "Indenture") dated as of August 1,
1997, and pursuant to the "Financing Documents" referred to therein.
D. La-Man Corporation is the owner of certain real property particularly
described in Exhibit "A" as "Parcel 1", and Don Bell Industries is the owner of
certain real property particularly described in Exhibit "A" as "Parcel 2" and
"Parcel 3". Parcels 1, 2, and 3 are collectively referred to herein as the
"Mortgaged Property".
E. La-Man Corporation, Don Bell Industries, and the remaining Guarantors named
in paragraph A above, own certain tangible and intangible personal property more
particularly described below in paragraph 27 and its subparts called the
"Property" (as therein defined) which, together with the Mortgaged Property,
constitutes the "Collateral", all of which secures payment of the Obligations
owed by La-Man Corporation to SouthTrust.
F. SouthTrust has required, as a condition precedent to entering into the
Credit Agreement, approving the Revolving Line-of-Credit Note, and otherwise
making credit available to La-Man Corporation, that La-Man Corporation, Don Bell
Industries, and the remaining Guarantors execute and deliver this Real Estate
Mortgage and Security Agreement (the "Mortgage") in favor of SouthTrust,
encumbering and pledging the Collateral owned respectively by them to the
fullest extent possible to secure payment of all Obligations owed to SouthTrust
by La-Man Corporation. This Mortgage, the Credit Agreement, the Notes, the
Revolving Line-of-Credit Note, the guaranty agreements of the Guarantors (the
"Guaranty Agreement"), the Financing Documents (as defined in the Credit
Agreement) and every other certificate, assignment, agreement, instrument,
mortgage, security agreement, financing statement, instrument or document
executed in connection with or pursuant to the Credit Agreement, the Notes, and
the Revolving Line-of-Credit Note are hereinafter sometimes collectively
referred to as the "Loan Documents".
Real Estate Mortgage and Security Agreement
Page 2
<PAGE>
Exhibit 10.46
NOW, THEREFORE, the undersigned, in consideration of the indebtedness above
mentioned, and to secure the prompt payment of same, with the interest thereon,
and any extensions or renewals of same, and to further secure the performance of
the covenants, conditions and agreements hereinafter set forth, and to secure
all other indebtedness of every description of La-Man Corporation to SouthTrust,
including, without limitation, the obligation to make reimbursement to
SouthTrust pursuant to the Credit Agreement and to pay the indebtedness owed
under the Revolving Line-of-Credit Note, hereby mortgage, encumber, pledge,
transfer and assign the Mortgaged Property and remaining Collateral unto
SouthTrust, its successors and assigns forever, to have and to hold all parts
thereof subject however to the terms and conditions herein. The Mortgagors
therefore covenant and agree with SouthTrust as to the Mortgaged Property, and
La-Man Corporation and all of the Guarantors as Debtors covenant and agree with
SouthTrust as to all remaining Collateral, as follows:
1. PERFORMANCE OF CREDIT AGREEMENT, REVOLVING LINE-OF-CREDIT NOTE, LOAN
DOCUMENTS AND MORTGAGE. La-Man Corporation will perform, observe and comply
with all provisions hereof and of the Credit Agreement and Revolving Line-of-
Credit Note secured hereby, and will duly and punctually pay to SouthTrust the
sums of money expressed in the Loan Documents with interest thereon and all
other sums required to be paid by La-Man Corporation pursuant to the provisions
of this Mortgage, and will perform, fulfill and pay all its Obligations under
the Loan Documents.
2. SECURED INDEBTEDNESS; FUTURE ADVANCES; MAXIMUM AMOUNT AND TIME. This
Mortgage shall secure (a) all indebtedness and Obligations of La-Man Corporation
to SouthTrust as evidenced by the Loan Documents, all of which is
unconditionally guaranteed by the Guarantors, (b) any future advances made by
SouthTrust to La-Man Corporation, and (c) all other indebtedness of La-Man
Corporation to SouthTrust, however and wherever incurred or evidenced, whether
primary, secondary, direct, indirect, absolute, contingent, sole, joint or
several, due or to become due, or which may be hereafter contracted or acquired,
whether arising in the ordinary course of business or otherwise. The total
amount of indebtedness secured hereby may decrease or increase from time to
time, but the total unpaid balance so secured at any one time shall not exceed
the maximum principal amount specified above, plus interest thereon, and any
disbursements made for the payment of taxes, levies, or insurance on the
Mortgaged Property, and for maintenance, repair, protection, and preservation of
the Mortgaged Property, with interest on such disbursements, all as provided in
this Mortgage. This Mortgage shall not secure any future advances made more
than twenty years from the date hereof.
3. TITLE COVENANTS; AFTER ACQUIRED PROPERTY. Mortgagors covenant that the
Mortgaged Property is free from all encumbrances except as may be specifically
stated and set forth in the commitment for the mortgagee's policy of title
insurance that shall
Real Estate Mortgage and Security Agreement
Page 3
<PAGE>
Exhibit 10.46
be delivered to the Mortgagee simultaneously with this Mortgage, that lawful fee
simple ownership of and good right to encumber the Mortgaged Property are vested
in Mortgagors, and that Mortgagors hereby fully warrant the title to the
Mortgaged Property and will defend the same against the lawful claims of all
persons whomsoever. The Mortgaged Property shall include all easements, rights
of way, streets, ways, alleys, passages, sewer rights, waters, water courses,
water rights and powers, and all estates, rights, titles, interests, privileges,
liberties, tenements, hereditaments, and appurtenances whatsoever, in any way
belonging, relating or appertaining thereto, or which hereafter shall in any way
belong, relate or be appurtenant thereto, whether now owned or hereafter
acquired by the Mortgagors, and the reversion and reversions, remainder and
remainders, rents, issues, and profits thereof, and all the estate, right,
title, interest, property, possession, claim and demand whatsoever at law, as
well as in equity, of the Mortgagors of, in and to the same. The lien of this
Mortgage will automatically attach, without further act, to all after acquired
property attached to and/or used in the operation of the Mortgaged Property or
any part thereof.
4. IMPROVEMENTS, FIXTURES, ETC. This Mortgage extends to and shall encumber
all buildings, improvements, fixtures or appurtenances, building materials,
equipment, fittings and personal property of every kind or character now owned
or hereafter acquired now or hereafter erected or existing upon the Mortgaged
Property, including all elevators and all gas, steam, electric, water, cooking,
refrigerating, lighting, plumbing, heating, air conditioning, ventilation, and
power systems, machines, appliances, fixtures and appurtenances, even though
they be detached or detachable, and in general all building materials and
equipment of every kind and character used or useful in connection with said
improvements, all of which shall be deemed part of the Mortgaged Property.
5. MAINTENANCE, REPAIR, COMPLIANCE WITH USE RESTRICTIONS. Mortgagors shall
permit, commit, or suffer no waste, impairment, or deterioration of the
Mortgaged Property. Mortgagors shall maintain the Mortgaged Property in good
condition and repair. If Mortgagors fail to do so, then Mortgagee, without
waiving the option to foreclose, may take some or all measures that Mortgagee
reasonably deems necessary or desirable for the maintenance, repair,
preservation, or protection of the Mortgaged Property, and any expenses
reasonably incurred by Mortgagee in so doing shall become part of the
indebtedness secured hereby, shall, at the option of the Mortgagee become
immediately due and payable, and shall bear interest at the highest lawful rate.
Mortgagee shall have no obligation to care for and maintain the Mortgaged
Property, or, having taken some measures therefor, to continue the same or take
other measures. Mortgagors shall perform all of Mortgagors' obligations, if
any, under any declaration of covenants and restrictions (or similar instrument)
affecting the Mortgaged Property, and will comply with all applicable zoning,
land use plans, or other restrictions and prohibitions imposed by governmental
authority.
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
6. HAZARD INSURANCE. If any buildings now or hereafter constitute part of the
Mortgaged Property, Mortgagors shall keep the same insured against loss or
damage by fire and other hazards included within the term "extended coverage,"
and against such other hazards as Mortgagee may require, in the full insurable
value thereof (or such lesser amounts as Mortgagee may authorize in writing),
with an insurer of high financial reputation and to which Mortgagee has no
reasonable objection. The policy or policies of insurance shall contain a
standard mortgagee clause in favor of Mortgagee and shall be delivered to
Mortgagee. Mortgagors shall pay all premiums and charges for the maintenance
and renewal of the insurance, and shall furnish Mortgagee with receipts and
proofs thereof not less than ten days before the expiration thereof, without
notice or demand from Mortgagee. If Mortgagors fail to do so, then Mortgagee,
without waiving the option to foreclose, may obtain such insurance for the
protection of Mortgagee, and any expenses reasonably incurred by Mortgagee in so
doing shall become part of the indebtedness secured hereby, shall, at the option
of Mortgagee, become immediately due and payable, and shall bear interest at the
highest lawful rate specified in any note evidencing any indebtedness secured
hereby. In the event of loss, the insurance proceeds shall be applied by
Mortgagee to the reduction of the indebtedness secured hereby, or to the
restoration and repair of the Mortgaged Property, at the option of the
Mortgagee. Mortgagee shall have the full power to settle or compromise claims
under all policies and to demand, receive, and receipt for all moneys becoming
payable thereunder. In the event of foreclosure of this Mortgage or transfer of
the Mortgaged Property in full or partial satisfaction of the indebtedness
secured hereby, all interest of Mortgagors in the policy or policies of
insurance (including any claim to proceeds attributable to losses previously
occurring but not yet paid to Mortgagors) shall pass to the purchaser, grantee,
or transferee.
7. RENTS AND PROFITS. This Mortgage shall extend to and encumber all rents,
issues, profits, proceeds, and revenues derived from the Mortgaged Property, but
Mortgagors may receive the same while this Mortgage is not in default.
8. RECEIVER. If this Mortgage falls into default, Mortgagee shall be entitled
to the appointment of a receiver to take charge of the Mortgaged Property, and
the rents, issues, profits, proceeds, and revenues arising therefrom, and hold
the same subject to the direction of a court of competent jurisdiction,
regardless of the solvency of Mortgagors or the adequacy of the security.
9. TAXES, ASSESSMENTS AND LIENS. Mortgagors shall pay all taxes, assessments,
liens and other charges upon or with respect to the Mortgaged Property before
the same become delinquent, and shall furnish Mortgagee with receipts and proofs
thereof at least ten days before the last day allowed for payment free from
penalty, without notice or demand from Mortgagee. If Mortgagors fail to do so,
then Mortgagee, without waiving the option to foreclose, may pay the same,
together with any penalty that may have accrued thereon, and with any expense
attending the same, including the
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
reasonable charge for services of counsel, or for any person employed to aid in
the discharge or in the matter of the adjustment thereof, or for advice in
respect thereto, and any amounts so paid shall become part of the indebtedness
secured hereby, shall, at the option of Mortgagee, become immediately due and
payable, and shall bear interest at the highest lawful rate.
10. INSPECTION AND APPRAISALS. Mortgagee and Mortgagee's representatives may
enter upon the Mortgaged Property for inspection at all reasonable times and in
a reasonable manner, both before and after default. If at any time (but not
more frequently than annually) or for any reason, the Mortgagee, in its
reasonable discretion, determines that the value of the Mortgaged Property may
have declined significantly in value, within 30 days from the Mortgagee's
written request to the Mortgagors, the Mortgagors shall provide to the
Mortgagee, at Mortgagors' sole cost and expense, a current appraisal of the
Mortgaged Property by an appraiser satisfactory to the Mortgagee. The
Mortgagors shall cooperate fully with any such request and provide all documents
and information as such appraiser may request and allow the appraiser access to
the Mortgaged Property in connection with such appraiser's performance and
preparation of such appraisal.
11. EMINENT DOMAIN. This Mortgage extends to and shall encumber any judgments,
awards, damages, and settlements hereafter rendered or paid and resulting from
condemnation proceedings with respect to the Mortgaged Property or the taking of
the Mortgaged Property or any part thereof under the power of eminent domain,
and Mortgagee may require that any sums payable to Mortgagors and arising out of
the power of eminent domain with respect to the property shall be applied to the
indebtedness secured hereby.
12. ENFORCEMENT AND COLLECTION EXPENSES. The Mortgagors shall pay or reimburse
Mortgagee for all costs, professional fees, and expenses, including attorney's
fees, reasonably incurred by Mortgagee, whether or not legal action is
instituted, with respect to collection of the indebtedness secured hereby, the
enforcement of Mortgagee's rights hereunder, or incurred by the Mortgagee in any
proceeding in which the Mortgagee is made a party or participant, including but
not limited to such fees, expenses, and costs incurred in any phase of
litigation in the trial court or on appeal, and all matters and appearances
connected with any trial, retrial, hearing, rehearing, appeal, mediation,
arbitration, condemnation proceeding, bankruptcy case, bankruptcy proceeding or
matter, administrative proceeding, criminal or civil forfeiture, lien
enforcement or foreclosure proceedings. All of such costs, fees and expenses
shall be secured by the lien of this Mortgage, and shall bear interest at the
highest lawful rate from the date paid or advanced by the Mortgagee.
13. ACCELERATION UPON DEFAULT. If any obligated party shall fail to pay any
indebtedness secured hereby promptly when due (or within such grace period as
may
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
be provided in any instrument evidencing the indebtedness or the Obligations),
or if any obligated party shall materially breach any other covenant herein or
otherwise materially default hereunder, then Mortgagee may declare all
indebtedness and Obligations secured hereby to be accelerated and immediately
due and payable. Mortgagee's failure to declare an acceleration shall not impair
the right to do so in the event of a continuing or subsequent breach or default.
14. ACCELERATION UPON TRANSFER OF MORTGAGED PROPERTY. If all or any part of
the Mortgaged Property or an interest therein is sold or transferred by
Mortgagors in any manner whatsoever without Mortgagee's prior written consent,
Mortgagee may, at Mortgagee's option, declare all of the Obligations secured by
this Mortgage to be accelerated and immediately due and payable.
15. NO WAIVER. No delay by Mortgagee in exercising any option, right, or
remedy hereunder or otherwise afforded by law shall waive or preclude the
exercise thereof during the continuance of any breach or default hereunder. No
waiver by Mortgagee of any provision, breach, or default shall be a waiver of
any other provision or a consent to any subsequent breach or default.
16. DEFAULT UNDER OTHER MORTGAGES. If any portion of the Mortgaged Property or
any part thereof is now or hereafter encumbered by any other mortgage held by
Mortgagee, then, at the option of Mortgagee, any default hereunder shall also be
a default under each and all of such other mortgages, and any default under any
of such other mortgages shall also, at Mortgagee's option, be a default
hereunder. Any default by Mortgagors in any term, covenant, or provision of any
other mortgage held by any other party that may now or hereafter encumber the
Mortgaged Property, or any part thereof, shall, at the option of Mortgagee, also
constitute a default hereunder.
17. EXTENSIONS, LENIENCIES, AND RELEASES. Mortgagee may grant extensions of
time for payment and other leniencies with respect to any indebtedness secured
hereby, and may waive or fail to enforce any of Mortgagee's rights hereunder and
may release a portion or portions of the Mortgaged Property from the lien
hereof, without releasing or diminishing the obligation or liability of any
person constituting a Mortgagor, or any Guarantor or endorser.
18. SUBROGATION. Mortgagee shall be subrogated to the lien (notwithstanding
its release of record) of any vendor, mortgagee, or other lienholder paid or
discharged by the proceeds of any loan or advance made by the Mortgagee to the
Mortgagors and secured hereby.
19. RELEASE AND SATISFACTION. Whenever the outstanding Obligation secured
hereby are satisfied and paid in full, and no commitment exists to make
advances, the Mortgagee shall on written demand by Mortgagors give a full
release and satisfaction
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
hereof, in recordable form.
20. DEFAULT UNDER LOAN DOCUMENTS. Any default under any Loan Document that is
not cured or remedied prior to the expiration of any applicable grace or cure
period, shall, at Mortgagee's option, constitute a default under this Mortgage
and all remaining Loan Documents entitling the Mortgagee to accelerate all
indebtedness owed under the Obligations secured hereby and foreclose this
Mortgage or seek any other remedy available to the Mortgagee as provided by law
or equity.
21. PROHIBITION AGAINST ADDITIONAL FINANCING OR OTHER LIENS. An important
component of the consideration for the extension of credit evidenced by Credit
Agreement, Revolving Line-of-Credit Note, and the remaining Loan Documents
secured by this Mortgage is the Mortgagors' equity in the Mortgaged Property and
the maintenance of such equity (as increased through future appreciation, if
any) during the term of this Mortgage. This is and shall remain a first
Mortgage. The Mortgagors covenant and agree not to create or permit the
creation of any other indebtedness, or to further encumber the Mortgaged
Property or any portion thereof with a mortgage, charge, lien or encumbrance
without first obtaining the written consent of the Mortgagee. Any default in
the provisions of this paragraph shall entitle the Mortgagee, at its option, to
declare all sums secured by this Mortgage to be immediately due and payable.
22. FURTHER ASSURANCES. At any time, and from time to time, upon request by
the Mortgagee, the Mortgagors and the Guarantors will make, execute and deliver
or cause to be made, executed and delivered, to the Mortgagee and, where
appropriate, to cause to be recorded and/or filed and from time to time
thereafter to be re-recorded and/or re-filed at such time and in such offices
and places as shall be deemed desirable by the Mortgagee any and all such other
and further mortgages, instruments of further assurance, certificates and other
documents as may, in the opinion of the Mortgagee, be necessary or desirable in
order to effectuate, complete, enlarge, or perfect, or to continue and preserve
the obligations of La-Man Corporation under the Credit Agreement, Revolving
Line-of-Credit Note, the Loan Documents and this Mortgage, and the lien of this
Mortgage as a first and prior lien upon all of the Mortgaged Property, whether
now owned or hereafter acquired by the Mortgagors.
23. ENVIRONMENTAL MATTERS. The Mortgagors and the Mortgaged Property are in
compliance with all environmental regulations and with all other federal, state
and local laws and regulations relating to the environment and pollution,
including such laws and regulations regulating hazardous, radioactive and toxic
materials and underground petroleum products storage tanks. No assessment
notice of (primary or secondary) liability or notice of financial
responsibility, and no notice of any action, claim, investigation, proceeding,
or inquiry to determine such liability or responsibility, or the amount thereof,
or to impose civil penalties has been received by the Mortgagors, and
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
there are no facts, conditions or circumstances known to the Mortgagors which
could result in any investigation or inquiry if all such facts, conditions, and
circumstances, if any, were fully disclosed to the applicable governmental
authority. The Mortgagors have paid, if applicable, any environmental excise
taxes due and payable, including without limitation, those imposed pursuant to
Sections 4611, 4661, or 4681 of the Internal Revenue Code of 1986, as amended
from time to time. The Mortgagors have not obtained and are not required to
obtain any permits, licenses, or similar authorizations to construct, occupy,
operate or use any buildings, improvements, fixtures or equipment in connection
with its business by reason of any environmental regulations. No oil, toxic or
hazardous substances or solid wastes have been disposed of or released by the
Issuer in connection with the operation of the Mortgaged Property and the
Mortgagors will not dispose of or release oil, toxic or hazardous substances or
solid wastes at any time in its operation of their respective businesses (the
terms "hazardous substance" and "release" shall have the meanings specified in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), and the terms "solid waste" and "disposal,"
"dispose" or "disposed' shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA'), except that if such
acts are amended to broaden the meanings thereof, the broader meaning shall
apply herein).
24. PERMITTED LIENS. The term "Permitted Liens" as used in this Mortgage shall
mean (a) any lien which provides security for the Obligations, (b) any purchase
money security interest in favor of the vendor of tangible personal property
constituting any part of the Collateral, (c) liens for ad valorem, tangible and
intangible property taxes on the Collateral not then delinquent, (d) liens
characterized as "Miscellaneous Liens" under Part II, Chapter 713, Florida
Statutes, if paid or satisfied in the normal course of business, and (e) those
matters set forth in Schedule B of the mortgagee policy of title insurance
referenced in paragraph 3 of this Mortgage.
25. LIEN ON INDENTURE SPECIAL FUNDS; ADDITIONAL PROPERTY. This Mortgage shall
act as a security agreement with respect to (a) all money and investments from
time to time on deposit in, or forming a part of, the funds and accounts
established under the Indenture (herein called the "Special Funds"), subject to
the prior lien of the Indenture with respect to the Special Funds and the
provisions of the Indenture permitting the application thereof for the purposes
and on the terms and conditions set forth therein, and (b) any and all other
real or personal property of every kind and nature from time to time hereafter
by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or
transferred to SouthTrust as and for additional security hereunder by the La-Man
Corporation or by anyone on in the behalf of, or with the written consent of,
the La-Man Corporation.
26. SECURITY AGREEMENT RE: MORTGAGED PROPERTY. This Mortgage shall act as a
security agreement and provide for a security interest in: (a) all property and
fixtures affixed to or located on Mortgaged Property which, to the fullest
extent permitted by law, shall be deemed fixtures and a part of the Mortgaged
Property; (b) all articles of
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
personal property and all materials delivered to the Mortgaged Property for use
in any construction being conducted thereon, and owned by Mortgagors; (c) and
all contract rights, general intangibles, actions and rights in action,
including all rights to insurance proceeds relating to the Mortgaged Property;
and (d) all cash and non-cash proceeds, products, replacements, additions,
substitutions, renewals, and accessions of any of the foregoing. Mortgagors as
Debtors hereby grant to Mortgagee as Secured Party a security interest in all
fixtures, rights in action and personal property described herein. This Mortgage
is a self-operative security agreement with respect to such property, but
Mortgagors agree to execute and deliver on demand such other security
agreements, financing statements and other instruments as Mortgagee may request
in order to perfect its security interest or to impose the lien hereof more
specifically upon any such property. Mortgagee shall have all the rights and
remedies in addition to those specified herein of a secured party under the
Florida Uniform Commercial Code.
27. SECURITY AGREEMENT RE: THE PROPERTY. This Mortgage shall act as a
security agreement with respect to all property described herein of La-Man
Corporation and of each of the Guarantors, collectively the "Debtors", and the
Debtors hereby pledge to SouthTrust as Secured Party and give the Secured Party
a continuing and unconditional lien and security interest (the "Security
Interest") in the following described tangible and intangible personal property
and in all increases and profits therefrom, in all substitutions therefor, and
in all proceeds thereof in any form (the "Property"), all in accordance with the
following terms, covenants, and conditions.
(a). Description of the Property. The Property is described as
---------------------------
follows:
(i). Accounts Receivable: All accounts receivable of the
--------------------
Debtors, whether now owned or hereafter acquired by the Debtors and whether now
existing or hereafter arising, and all proceeds of the foregoing, whether cash
or non-cash (the "Accounts Receivable"); and
(ii) Contract rights and general intangibles. All of each
---------------------------------------
Debtor's right to receive payments from any source and for any reason, whether
characterized as accounts, chattel paper, choses-in-action, contract rights,
general intangibles, instruments, securities, notes or otherwise; and all of
each Debtor's intangibles, including without limitation copyrights, trademarks,
trade names, service marks, patent drawings, designs and formulas; and all of
each Debtor's contract rights including, without limitation, each Debtor's
rights under distribution contracts, franchise agreements, license agreements,
sales contracts, unfilled customer orders, and lease agreements, hazard,
casualty, liability, or other insurance policy, including without limitation,
any unearned premiums and all insurance proceeds or sums payable in lieu
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
(iii). Inventory, equipment, motor vehicles, furniture and
---------------------------------------------------
fixtures, etc. The Debtors' interests in all tangible personal property
- -------------
including, without limitation, the Debtors' interests in all inventory,
equipment, machinery, computer equipment and peripherals, furniture, and
furnishings, and all replacements thereof and substitutes therefor, and the
Debtors' interests in all accessories, additions, attachments and other goods
now or hereafter installed in or affixed thereto or used in connection
therewith, whether any of the foregoing now owned or hereafter acquired by the
Debtors, or any of them, and wherever located, and all proceeds thereof (but
inclusion of proceeds shall not be deemed to imply that Secured Party authorizes
the sale or other transfer or disposition of any such Property). The term
"Inventory" as used herein also includes the Debtors' interests in all goods,
merchandise, raw materials, work in process, finished goods, and other tangible
personal property held for sale or lease or furnished under contracts of service
or used or consumed in the Debtors' respective businesses and returned and
repossessed goods; together with all documents now or hereafter evidencing any
such Inventory; and all proceeds and products of the same. The term "Equipment"
as used herein also includes the Debtors' motor vehicles and interests in other
property described in Exhibit "B-1" attached to Schedule 2 of that UCC-1
Financing Statement attached as composite Exhibit "B" hereto and incorporated
herein by reference, together with all replacements, accessories, parts,
equipment and accessions now attached to or used in connection therewith or
which hereafter at any time may be placed in or added thereto, and fixtures
(including leasehold improvements), machinery and appliances which are attached
to real property owned, leased or occupied by any Debtor. With respect to such
Inventory and Equipment, the Debtors hereby warrant and agree that:
(1). The Inventory and Equipment is being used solely for
business and not for family or personal use. The motor vehicles are titled and
licensed in the State of Florida.
(2). Except for rolling stock (i.e. trucks or other motor
vehicles with Equipment and Inventory), Inventory, Equipment and work in process
which, in the ordinary course of business, is temporarily located at job sites
of customers, subcontractors and other fabricators, the Inventory and Equipment
will be kept at the respective addresses of the Debtors set forth in composite
Exhibit "B" attached hereto, which is the address of the principal office of
each respective Debtor's business within the State of Florida.
(3). Each Debtor has full and clear title to its Inventory
and Equipment except for Permitted Liens, and will at all times keep its
Inventory and Equipment free from any other lien, security interest or
encumbrance.
(4). Each Debtor will at all times keep its Inventory and
Equipment insured for its full value (less normal deductibles) against loss,
damage,
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
theft and other risks normally insured against, and any loss shall be
payable to the Secured Party as its interest may appear. Each Debtor will
furnish such evidence of insurance coverage as Secured Party may reasonably
require. Upon cancellation or the failure of any Debtor to procure such
insurance, or to remove any prohibited encumbrance upon said Property, the
Secured Party may procure such insurance or remove any prohibited encumbrance on
the Property and the amount so paid by the Secured Party shall be immediately
repayable and shall be added to and become a part of the indebtedness and
Obligations secured hereby and shall bear interest at the highest rate allowed
by law until paid.
(5). Each Debtor will keep its Inventory and Equipment in
good order and repair in accordance with normal business practices (reasonable
wear and tear excepted) and will not waste or destroy said Property or any
portion thereof. Each Debtor will not use its Inventory or Equipment in
violation of any statute or ordinance or any policy of insurance thereon, and
the Secured Party may examine and inspect such Property at any reasonable time
or times wherever located.
(6). Each Debtor will pay promptly when due all license
fees, registration fees, taxes and assessments upon its Inventory and Equipment
or for its ownership, use or operation or in any way related to the Security
Interest granted herein or as perfected. At its option, the Secured Party may
discharge taxes, liens or security interests or other encumbrances at any time
levied or placed on the Property, may pay for insurance on said Property, and
may pay for the maintenance and preservation of said Property. Each Debtor
agrees to immediately reimburse Secured Party on demand for any payment made, or
any expense incurred, by Secured Party, pursuant to the foregoing authorization
and any amount so paid by the Secured Party shall be added to and become a part
of the indebtedness and Obligations secured hereby and shall bear interest at
the highest rate allowed by law until paid. Until default, each Debtor may
retain possession of said Property, respectively, and use it in any lawful
manner not inconsistent herewith and not inconsistent with any policy of
insurance thereon.
(b). Representations of the Debtors. The Debtors represent and
------------------------------
warrant, and so long as the Obligations remain outstanding or unpaid they shall
be deemed continuously to represent and warrant that: (i) each item constituting
the Property is genuine and in all respects what it purports to be; (ii) the
Debtors are the owners, respectively, of the Property free of all security
interests or other encumbrances except the Security Interest and Permitted
Liens; and (iii) the Debtors are authorized to enter into the security agreement
contained in this Mortgage.
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
(c). Covenants of the Debtors. Until satisfied or terminated as
-------------------------
otherwise provided herein, each of the Debtors covenants and warrants that each
(i) will defend its interest in the Property against the claims of all persons;
(ii) will keep its interest in the Property free from all security interests or
other encumbrances except the Security Interest; (iii) will not assign, sell,
transfer, deliver or otherwise dispose of the Property or any interest therein
or attempt to do the same without the prior written consent of the Secured
Party, intending hereby to allow for retirement and replacement of Equipment and
the sale of the Inventory in the ordinary course of business; (iv) will notify
the Secured Party promptly in writing of any change in each Debtor's address,
name or identity specified above; (v) in connection herewith, will execute and
deliver to the Secured Party such financing statements and other documents, pay
all costs of title searches and filing financing statements and other documents
in all public offices reasonably requested by the Secured Party, and take such
other action as the Secured Party may reasonably deem advisable to perfect the
Security Interest created hereby; and (vi) will pay taxes, filing or
registration fees, assessments and other charges of every nature which may be
levied or assessed against the Property or related to the Security Interest
granted herein. The Debtors appoint the Secured Party as the Debtors' attorney-
in-fact to perform all acts which the Secured Party deems appropriate to perfect
and continue the Security Interest, to protect and preserve the Property and to
endorse and transfer all or any part of the Property.
(d). Default. In the event of a monetary default hereunder which is
-------
not paid or cured within 10 days after it is due, or in the event of a non-
monetary default hereunder which remains uncured after 30 days notice (or such
longer cure period as the Secured Party may in its reasonable discretion grant
if the non-monetary condition of default is not, with the exercise of utmost due
diligence, completely correctable within said 30 days), the Secured Party may
declare the Obligations to be immediately due in accordance with the terms of
the Loan Documents, and the Secured Party's rights with respect to the Property
shall be those of a secured party under the Florida Uniform Commercial Code or
such other applicable law from time to time in effect if any part of the
Property is located outside of the State of Florida. The Secured Party shall
also have any additional rights granted herein, in the Loan Documents, or and in
any other agreement now or hereafter in effect between the Debtors and the
Secured Party. If requested by the Secured Party, the Debtors will assemble the
Property and make it available to the Secured Party at a place to be designated
by the Secured Party. In the event of default, the Debtors hereby irrevocably
consent to any act by the Secured Party or its agents in entering upon any
premises for the purpose of either (i) inspecting the Property or (ii) taking
possession of the Property, and the Debtors hereby waive their right to assert
against the Secured Party or its agents any claim based upon trespass or any
similar cause of action for entering upon any premises where the Property may be
located. The Debtors agree that any notice by the Secured Party of the sale or
disposition of Property or any other intended action hereunder, whether required
by the Florida Uniform Commercial Code or otherwise, shall constitute reasonable
notice
Real Estate Mortgage and Security Agreement
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<PAGE>
Exhibit 10.46
to the Debtors if the notice is mailed by regular or certified mail, postage
prepaid, at least ten days before the action to the Debtor's then current
address as set forth in the Secured Party's records, or to any other address
which the respective Debtor has specified in writing to the Secured Party as the
address to which notices shall be given to that Debtor. The Debtors shall pay
all costs and expenses incurred by the Secured Party in enforcing its rights in
the Security Interest in the same manner and to the same extent as provided for
its rights with respect to the Mortgaged Property, whether suit is brought or
not and to the extent of Debtors' liability for repayment of any of the
Obligations, they shall be liable for any deficiency in the event that
disposition of the Collateral does not satisfy the Obligations in full.
(e). Secured Party's power to act. The Debtors authorize the Secured
----------------------------
Party without notice to any Debtor (i) to take from any party and hold
collateral (other than the Property) for the payment of the Obligations or any
part thereof and to exchange, enforce or release such collateral or the Property
or any part thereof (ii) to accept and hold any endorsement or guaranty of
payment of the Obligations or any part thereof and to release or substitute any
such endorser or guarantor or any party who has given any security interest in
any collateral as security for the payment of the Obligations or any part
thereof or any party in any way obligated to pay the Obligations or any part
thereof and (iii) to waive or fail to enforce any of Secured Party's rights
against any Debtor or any such collateral and (iv) upon the occurrence of any
default, to direct the order or manner of the disposition of the Collateral, or
any part thereof, and any other collateral and the enforcement of any
endorsements and guaranties relating to the Obligations or any part thereof as
the Secured Party in its sole discretion may determine. Upon the Debtors'
failure to perform any of their duties hereunder, the Secured Party may, but
shall not be obligated to, perform any of such duties and the Debtors shall
forthwith upon demand reimburse the Secured Party for any expense incurred by
the Secured Party in so doing. The Secured Party shall exercise reasonable care
in the custody and preservation of the Property to the extent required by law
and it shall be deemed to have exercised reasonable care if it takes such action
for that purpose as the Debtors shall reasonably request in writing, however, no
omission to do any act not requested by the Debtors shall be deemed a failure to
exercise reasonable care and no omission to comply with any requests by the
Debtors shall of itself be deemed a failure to exercise reasonable care. The
Debtors shall take all necessary steps to preserve rights against prior parties
to instruments or chattel paper constituting the Property, and the Secured Party
shall have no obligation to take any such steps. The Secured Party or its
nominee need not collect interest on or principal of any of the Property nor
give any notice with respect to it to any third party.
(f). Further security. As further security for payment of the
-----------------
Obligations (i) the Debtors grant to the Secured Party a lien and security
interest in and upon any and all property of any of the Debtors which is or may
hereafter be in the Secured Party's possession in any capacity, including
without limitation, all monies owed or to be owed
Real Estate Mortgage and Security Agreement
Page 14
<PAGE>
Exhibit 10.46
by the Secured Party to any of the Debtors, and with respect to all such
property, the Secured Party shall have the same rights hereunder as it has with
respect to the Collateral (ii) without limiting any other right of the Secured
Party, wherever the Secured Party has the right to declare any of the
Obligations to be immediately due and payable (whether or not is has so
declared), the Secured Party may elect to set off against such Obligations all
monies then owed to any of the Debtors by the Secured Party in any capacity
whether due or not, and if the Secured Party so elects, it shall be deemed to
have exercised its right of set off immediately at the time its right to such
election accrued.
(g). Delays or omissions, right to cure, remedies cumulative. No
-------------------------------------------------------
delay or omission by the Secured Party in exercising any right hereunder or with
respect to the Property or the Obligations shall operate as a waiver of that or
any other right and no single right and no single or partial exercise of any
right shall preclude the Secured Party from any other or further exercise of
that right or the exercise of any other right or remedy. The Secured Party may
cure any default by any Debtor in any reasonable manner without waiving the
default so cured and without waiving any other prior or subsequent default by
the Debtors. All rights and remedies of the Secured Party hereunder and under
the Florida Uniform Commercial Code shall be deemed cumulative. The provisions
of this Mortgage are cumulative and in addition to the provisions of any of the
Loan Documents, and Secured Party shall have all the benefits, rights and
remedies of and under any of the Loan Documents.
(h). Miscellaneous matters. The rights and benefits of the Secured
---------------------
Party hereunder shall, if the Secured Party agrees, inure to any party acquiring
an interest in the Obligations or any part thereof. The rights hereunder shall
inure to the benefit of the parties hereto and their respective successors and
assigns. The Debtors authorize the Secured Party to file, in jurisdictions
where this authorization will be given effect, a financing statement signed only
by the Secured Party describing the Property in the same manner as it is
described herein; and from time to time at the request of Secured Party, execute
one or more financing statements and such other documents (and pay the cost of
filing or recording the same in all public offices deemed necessary or desirable
by the Secured Party) and do such other acts and things, all as the Secured
Party may request to establish and maintain a valid security interest in the
Collateral (free of all other liens and claims whatsoever, except Permitted
Liens) to secure the payment of the Obligations, including, without limitation,
to deposit with Secured Party any certificate or other evidence of title
issuable with respect to any of the Property and notation thereon of the
security interest hereunder. The Secured Party shall have the right to hold
possession of any part of the Property in order to perfect its Security Interest
therein if perfection requires possession.
28. GENERAL PROVISIONS. The singular shall include the plural and any gender
shall be applicable to all genders when the context permits or implies.
Mortgagee's/Secured
Real Estate Mortgage and Security Agreement
Page 15
<PAGE>
Exhibit 10.46
Party's rights expressed herein are in addition to and cumulative of any other
rights and remedies provided by law or equity. When the context permits, but
only in compliance with any restrictions relating thereto, the terms
"Mortgagor(s)", "Guarantor(s)", "Debtor(s)", and "Secured Party" shall extend to
and shall include their respective legal representatives, successors and
assigns. Any agreement hereafter made by Mortgagors and Mortgagee or by the
Debtors and the Secured Party pursuant to this Mortgage shall be superior to the
rights of the holder of any intervening lien or encumbrance. Time is of the
essence.
IN WITNESS WHEREOF, Mortgagors, La-Man Corporation and Don Bell Industries,
Inc., and Guarantors (as Debtors) have caused this Real Estate Mortgage and
Security Agreement to be executed on their behalf as of the date first stated
above.
WITNESSES (ALL PARTIES) MORTGAGORS:
/s/ Larry R. Stout La-Man Corporation:
- -----------------------------
Signature of first witness
/s/ Larry R. Stout By: /s/ J. William Brandner
- ----------------------------- -----------------------------------------
Printed name of first witness J. William Brandner, Its President
/s/ Julia A. Rademacher Don Bell Industries, Inc.:
- -----------------------------
Signature of second witness
/s/ Julia A. Rademacher By: /s/ J. William Brandner
- ----------------------------- -----------------------------------------
Printed name of second witness J. William Brandner, Its Vice President
================================================================================
WITNESSES (ALL PARTIES) DEBTORS:
/s/ Larry R. Stout La-Man Corporation:
- -----------------------------
Signature of first witness
/s/ Larry R. Stout
- -----------------------------
Printed name of first witness By: /s/ J. William Brandner
-----------------------------------------
J. William Brandner, Its President
/s/ Julia A. Rademacher
- -----------------------------
Signature of second witness Don Bell Industries, Inc.:
/s/ Julia A. Rademacher
- -----------------------------
Printed name of second witness By: /s/ J. William Brandner
-----------------------------------------
J. William Brandner, Its Vice President
Don Bell Industries of Nevada, Inc.
By: /s/ J. William Brandner
-----------------------------------------
J. William Brandner, Its Vice President
Real Estate Mortgage and Security Agreement
Page 16
<PAGE>
Exhibit 10.46
WITNESSES (ALL PARTIES) DEBTORS (CONTINUED):
/s/ Larry R. Stout J. M. Stewart, Corporation
- -----------------------------
Signature of first witness
/s/ Larry R. Stout
- -----------------------------
Printed name of first witness By: /s/ J. William Brandner
-----------------------------------------
J. William Brandner, Its Vice President
/s/ Julia A. Rademacher
- -----------------------------
Signature of second witness J. M. Stewart Industries, Inc.
/s/ Julia A. Rademacher
- -----------------------------
Printed name of second witness By: /s/ J. William Brandner
-----------------------------------------
J. William Brandner, Its Vice President
Certified Maintenance Service, Inc.
By: /s/ J. William Brandner
-----------------------------------------
J. William Brandner, Its Vice President
Vision Trust Marketing, Inc.
By: /s/ J. William Brandner
-----------------------------------------
J. William Brandner, Its President
Nevada SEMCO, Inc.
By: /s/ J. William Brandner
-----------------------------------------
J. William Brandner, Its Vice President
Real Estate Mortgage and Security Agreement
Page 17
<PAGE>
Exhibit 10.46
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing Real Estate Mortgage and Security Agreement was acknowledged
before me August 28, 1997, by J. William Brandner as the:
(1) President of La-Man Corporation, a Nevada corporation;
(2) President of Vision Trust Marketing, Inc., a Florida corporation;
(3) Vice President of Don Bell Industries, Inc., a Florida corporation;
(4) Vice President of Don Bell Industries of Nevada, Inc., a Nevada
corporation;
(5) Vice President of Nevada SEMCO, Inc., a Nevada corporation;
(6) Vice President of J. M. Stewart, Corporation, a Florida corporation;
(7) Vice President of J. M. Stewart Industries, Inc., a Florida corporation;
and
(8) Vice President of Certified Maintenance Service, Inc., a Florida
corporation;
on behalf of each corporation. He is (check one) [_] personally known to me
or [X] has produced his driver's license as identification.
/s/ Julia A. Rademacher
- -----------------------------
Notary Public, State of Florida at Large
[SEAL]
Real Estate Mortgage and Security Agreement
Page 18
<PAGE>
Exhibit 10.47
GUARANTY AGREEMENT
------------------
FOR VALUE RECEIVED, and to induce SOUTHTRUST BANK, NATIONAL ASSOCIATION
("Lender"), to extend credit or other financial accommodation or benefit, with
or without security, to or for the account of LA-MAN CORPORATION, a Nevada
corporation, whose address is 5029 Edgewater Drive, Orlando, Florida 32810
(herein called "Borrower") pursuant to this unlimited, continuing and
unconditional guaranty agreement (the "Guaranty" or "Guaranty Agreement" as the
context so implies or provides), the undersigned Guarantors, jointly and
severally, hereby become surety for and irrevocably and unconditionally
guarantee to Lender the payment when due, whether by acceleration or otherwise,
of any and all Obligations (as hereinafter defined) of Borrower to Lender. The
mailing address of the Lender for any notices required hereunder, until changed
in writing by the Lender, is 100 East New York Avenue, DeLand, Florida 32724.
RECITALS
--------
A. Borrower as "Issuer" and Lender as "Credit Obligor" have entered into a
Credit and Security Agreement of even effective date herewith (the "Credit
Agreement") under the terms of which the Lender has agreed to issue for the
benefit of the Borrower a letter of credit facility in the aggregate amount of
$2,570,000 (the "Letter of Credit") to secure the Borrower's $2,500,000
Variable/Fixed Rate Credit Enhanced Notes (the "Notes"); as a result, the
Borrower has incurred certain "Obligations" as defined in the Credit Agreement
in favor of the Lender; the Borrower is also indebted to the Lender pursuant to
a revolving line-of-credit promissory note of even effective date herewith in
the principal sum of up to $1,300,000 (the "Revolving Line-of-Credit Note")
which is an Obligation under the Credit Agreement; and the Borrower may now be,
or may hereafter become, otherwise indebted, obligated or liable to the Lender.
Capitalized terms used herein but not otherwise defined herein shall have the
respective meanings ascribed to them in the Credit Agreement.
B. The Notes are being issued pursuant to a Trust Indenture between the
Borrower and the Lender, as Trustee, (the "Indenture") dated as of August 1,
1997, and pursuant to the "Financing Documents" referred to therein.
C. The Borrower and the Guarantor, Don Bell Industries, Inc., are the owners,
respectively, of certain real property encumbered by that Real Estate Mortgage
and Security Agreement executed and delivered in favor of the Lender of even
effective date herewith (the "Mortgage"), with said real property (the
"Mortgaged Property") being particularly described in Exhibit "A" attached to
the Mortgage.
D. The Borrower and the Guarantors individually own certain tangible and
intangible personal property more particularly described in the Mortgage called
therein the "Property" which, together with the Mortgaged Property, constitutes
the
<PAGE>
Exhibit 10.47
"Collateral", all of which secures payment of the Obligations owed by the
Borrower to the Lender.
E. The Lender has required, as a condition precedent to entering into the
Credit Agreement, approving the Revolving Line-of-Credit Note, and otherwise
making credit available to the Borrower, that the Guarantors individually
execute and deliver this Guaranty Agreement in favor of the Lender to further
secure payment of the Obligations owed to the Lender by the Borrower. This
Guaranty Agreement, the Mortgage, the Credit Agreement, the Notes, the Revolving
Line-of-Credit Note, the Financing Documents (as defined in the Credit
Agreement) and every other certificate, assignment, agreement, instrument,
mortgage, security agreement, financing statement, instrument or document
executed in connection with or pursuant to the Credit Agreement, the Notes, and
the Revolving Line-of-Credit Note are hereinafter sometimes collectively
referred to as the "Loan Documents".
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and in order to induce the Lender to extend credit or other
financial accommodation or benefit to or for the account of the Borrower, the
undersigned covenant and agree as follows:
1. The term "Obligations" as used herein and as defined above shall
include, without limitation, all liabilities and obligations of Borrower to
Lender in connection with the extension of credit or other financial
accommodation or benefit to the Borrower by Lender as evidenced by the Loan
Documents, and all extensions or renewals thereof and all sums payable under or
by virtue thereof including, without limitation, all amounts of principal and
interest and all expenses (including attorneys' fees and costs of collection as
specified therein) incurred in the collection thereof or the enforcement of
rights thereunder, plus any disbursements made for the payment of taxes, levies,
or insurance on the Collateral, and for maintenance, or repair, protection and
preservation of the Collateral, with interest on such disbursements. The
Obligations shall also include, without limitation, all performance obligations
of Borrower under the Loan Documents executed contemporaneously herewith.
2. Each of the undersigned waives notice of acceptance of this
Guaranty and notice of the Obligations to which it may apply, and waives
presentment, demand for payment, protest, notice of dishonor or nonpayment of
the Obligations and any suit or the taking of other action by Lender against and
any other notice to any party liable thereon (including the undersigned), except
as provided herein.
3. Lender may at any time and from time to time without notice to
the undersigned (except as required by law), without incurring responsibility to
the undersigned, without impairing, releasing or otherwise affecting the
obligations of the undersigned in whole or in part and without the endorsement
or execution by the undersigned of any additional consent, waiver or guaranty
(a) change the manner, place or terms of payment, change or extend the time of
or renew or alter, any of the
2
<PAGE>
Exhibit 10.47
Obligations, or any security therefor, and may loan additional monies or extend
additional credit to Borrower, with or without security, thereby creating new
liabilities which shall automatically become a part of the Obligations, the
payment of which shall be guaranteed hereunder, and the guaranty herein made
shall apply to the Obligations as so changed, extended, renewed, increased or
otherwise altered; (b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and secure the Obligations and any offset
thereagainst; (c) exercise or refrain from exercising any rights against
Borrower or others (including the undersigned) or act or refrain from acting in
any other manner; (d) settle or compromise any of the Obligations or any
security therefor and may subordinate the payment of all or any part thereof to
the payment of the Obligations (whether or not due) of Borrower to creditors of
Borrower other than Lender and the undersigned; and (e) apply any sums from any
sources to any of the Obligations without regard to any part of which may remain
unpaid.
4. No invalidity, irregularity or unenforceability of all or any
part of the Obligations or of any security therefor shall affect impair or be a
defense to this Guaranty, and this Guaranty is a primary and absolute obligation
of the undersigned.
5. This Guaranty is a continuing one, and the Obligations to which
it applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. This Guaranty shall continue until written
notice of the release of the undersigned has been given by the Lender. Lender,
by its acceptance hereof, agrees that upon payment to Lender in full of the
Obligations, this Guaranty shall be of no further force and effect.
6. All notices provided to be given to Lender herein shall be sent
by registered or certified mail with return receipt requested, to the address of
the Lender set forth herein.
7. Any and all rights and claims of the undersigned against Borrower
or any of its property shall be subordinate and subject in right of payment to
the prior payment in full of the Obligations.
8. As additional security for the Obligations, Lender is hereby
given a lien upon, security title to and a security interest in all property of
the undersigned now or at any time hereafter in possession of Lender in any
capacity whatsoever, including but not limited to any balance or share of any
deposit, account, trust, agency or special account, or items of monies of the
undersigned now or hereafter in the possession or control of or otherwise with
Lender, to include all dividends and distributions thereon or other rights in
connection therewith, and Lender shall have such right to such property as
authorized by law. Without limiting the generality of the foregoing, Lender
shall have a prior perfected security interest to secure the Obligations and may
at any time or from time to time at its option and without notice: (a)
appropriate and apply towards the payment of any of the Obligations the balance
of any such account of the undersigned, and (b) transfer into its own name or
that of its nominee any such property in the possession or custody of Lender.
3
<PAGE>
Exhibit 10.47
9. The undersigned shall be in default hereunder upon: (a) non-
payment of the Obligations (or any party thereof) when due after the expiration
of any applicable cure or grace period; (b) failure of Borrower or the
undersigned to perform any agreement creating or otherwise affecting any
liability or any provision hereof after the expiration of any applicable cure or
grace period; (c) the dissolution, termination of existence, insolvency, or the
appointment of a receiver of any material part of the property of Borrower or
any subsidiary of the Borrower (including the undersigned), representing more
than 10% of the net assets or operating income of the Borrower and its
subsidiaries (including the undersigned) on a consolidated basis, and a general
assignment for the benefit of creditors or the commencement of any proceedings
in bankruptcy or insolvency by Borrower or the undersigned, or the failure to
timely contest or to obtain dismissal within, 30 days following the filing (or
such longer period as the Lender may grant in its sole discretion) of any
involuntary proceeding seeking the adjudication of Borrower or the undersigned
as bankrupt or insolvent; (d) the entry of a final, unappealable judgment having
a material adverse affect on the consolidated financial condition of Borrower
and its subsidiaries; (e) the taking of possession of any substantial part of
the property of Borrower or the undersigned at the instance of any governmental
authority; (f) the merger, consolidation or reorganization of Borrower or the
undersigned without Lender's prior written consent; (g) the determination by
Lender based upon objective facts and standards that a material adverse change
has occurred in the consolidated financial condition of Borrower and its
subsidiaries (including the undersigned) from the conditions set forth in the
most recent financial statement of any such part heretofore furnished to Lender
or from the condition of the Borrower as heretofore most recently disclosed to
Lender in any manner; (h) the making of, or any material omission in, any
representation or statement by the Borrower or the undersigned to the Lender in
connection with the Obligations that is false or misleading in any material
respect and is deemed by the Lender in good faith to have a material adverse
impact on the creditworthiness of the Borrower or the undersigned; (i) the
issuing of any attachment or garnishment against any material property of the
Borrower or the undersigned, or the filing of any lien (other than "Permitted
Liens" as defined in the applicable Loan Documents) against any property of
Borrower or the undersigned, and the same are not removed or remedied before the
expiration of any applicable cure or grace period.
10. Upon the occurrence of any default hereunder, Lender shall have
all of the remedies of a creditor and to the extent applicable, of a secured
party, under all applicable law. Without limiting the generality of the
foregoing, Lender may, at its option and without notice or demand: (a) declare
any of the Obligations accelerated and due and payable at once; and (b) take
possession of the Collateral or any other property held as security for the
Obligations wherever located, and sell, resell, assign, transfer and deliver all
or any part of said property of Borrower or the undersigned, at any broker's
board or exchange or at any public or private sale, for cash or on credit or for
future delivery, and in connection therewith Lender may grant options and may
impose reasonable conditions such as requiring any purchaser of any stock so
sold to represent that such stock is purchased for investment purposes only,
and, upon any
4
<PAGE>
Exhibit 10.47
such sale, Lender, unless prohibited by law the provisions of which cannot be
waived, may purchase all or any part of said property to be sold, free from and
discharged of all trusts, claims, right of redemption and equities of the
undersigned whatsoever; and (c) set-off against any or all of the Obligations or
other liabilities of the undersigned all money owed by Lender in any capacity to
the undersigned whether or not due, and also set-off against the Obligations of
Borrower or the obligations of the undersigned to Lender all money owed by
Lender in any capacity to the Borrower or the undersigned, and Lender shall be
deemed to have exercised such right of set-off and to have made a charge against
any such money or property immediately upon the occurrence of such default
although made or entered on the books subsequent thereof. Until all of the
Obligations of Borrower to Lender have been paid and performed in full, no
Guarantor shall have any right of subrogation to Lender against Borrower, and
each Guarantor hereby waives any rights to enforce any remedy which Lender may
have against Borrower and any rights to participate in any security for the
Obligations.
11. The undersigned shall pay all costs of collection and reasonable
attorneys' fees, including reasonable attorneys' fees of any suit out of court,
in trial, on appeal, in bankruptcy proceedings or otherwise, incurred or paid by
Lender in enforcing the payment of the Obligations or enforcing or preserving
any right or interest of Lender hereunder, including the collection, sale or
delivery of the Collateral from time to time pledged hereunder, and after
deducting such fees, costs and expenses from the proceeds of sale or collection,
Lender may apply any residue to pay any of the Obligations and the undersigned
shall continue to be liable for any deficiency with interest, which shall remain
a liability and obligation of the undersigned until paid in full.
12. If claim is ever made upon Lender for repayment or recovery of
any amount or amounts received by Lender in payment or on account of any of the
Obligations and Lender repays all or part of said amount by reason of any
judgment, decree or order of any court or administrative body having
jurisdiction over Lender or any of its property or any settlement or compromise
of any such claim effected by Lender with any such claimant (including
Borrower), then the undersigned agree that any such judgment, decree, order,
settlement or compromise shall be binding upon each of the undersigned,
notwithstanding any revocation hereof or the cancellation of any instrument
evidencing the Obligations, and the undersigned shall be and remain liable to
Lender hereunder for the amount so repaid or recovered to the same extent as if
such amount had never originally been received by Lender.
13. Any acknowledgment, new promise, payment of principal or
interest, or otherwise, whether by Borrower or others (including any of the
undersigned), with respect to any of the Obligations shall, if the statute of
limitations in favor of the undersigned against Lender shall have commenced to
run, toll the running of such statute of limitations and, if the period of such
statute of limitations shall have expired, prevent the operation of such statute
of limitations.
5
<PAGE>
Exhibit 10.47
14. Lender shall not be bound to take any steps necessary to preserve
any rights in any of the property of the undersigned against prior parties who
may be liable in connection therewith, and the undersigned hereby agrees to take
any such steps. Lender may nevertheless at any time after and during the
continuance of a default (a) take any action it may deem appropriate for the
care or preservation of such property or of any rights of the undersigned or
Lender therein; (b) demand, sue for, collect or receive any money or property at
any time due, payable or receivable on account of or in exchange for any
property of the undersigned; (c) compromise and settle with any person liable on
such property; or (d) extend the time of payment or otherwise change the terms
thereof as to any party liable thereon, all without notice to, without incurring
responsibility to, and without affecting any of the obligations of the
undersigned.
15. No delay on the part of Lender in exercising any of its options,
powers or rights, or partial or single exercise thereof, shall constitute a
waiver thereof. No waiver of any of its rights hereunder, and no modification
or amendment of this Guaranty, shall be deemed to be made by Lender unless the
same shall be in writing, duly signed on behalf of Lender, and each such waiver,
if any, shall apply only with respect to the specific instance involved, and
shall in no way impair the rights of Lender or the obligations of the
undersigned to Lender in any other respect at any other time.
16. Lender shall not be required to proceed first against Borrower,
or any other person, firm or corporation, whether primarily or secondarily
liable, or against any Collateral held as security by it, before resorting to
any one or more of the undersigned for payment, and the undersigned shall not be
entitled to assert as a defense to the enforceability of the guarantee set forth
herein any defense of Borrower with respect to any of the Obligations.
17. The undersigned hereby subordinates any and all indebtedness of
Borrower now or hereafter owed to any Guarantor to all Obligations of Borrower
to Lender, and agrees with Lender that the undersigned shall not demand or
accept any payment of principal or interest from Borrower, shall not claim any
offset or other reduction of the undersigned's obligations hereunder because of
any such indebtedness and shall not take any action to obtain any of the
security described in and encumbered by the security instruments; provided,
however, that, if Lender so requests, such indebtedness shall be collected,
enforced and received by the undersigned as trustee for Lender and be paid over
to Lender on account of the indebtedness of Borrower to Lender, but without
reducing or affecting in any manner the liability of the undersigned under the
other provisions of this Guaranty.
18. Each of the undersigned warrants and represents to Lender that
all financial statements heretofore delivered by the undersigned to Lender are
true and correct in all respects as of the date hereof. Each of the undersigned
agrees to provide Lender a complete and current financial statements as provided
in the Loan Documents.
6
<PAGE>
Exhibit 10.47
19. This Guaranty may not be changed orally or by implication, and no
liability or obligation of the undersigned can be released or waived by Lender
or any officer or agent of Lender, except by a writing, signed by a duly
authorized officer of Lender. Each Guarantor acknowledges that his Guaranty
shall be irrevocable until all indebtedness guaranteed hereby for the payment of
the Obligations has been completely repaid and all obligations and undertakings
of the Borrower under, by reason of, or pursuant to the Obligations or Loan
Documents have been completely performed.
20. If from any circumstances whatsoever fulfillment of any provision
of this Guaranty, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by any applicable usury
statute or any other applicable law, with regard to obligations of like
character and amount, then ipso facto the obligation to be fulfilled shall be
---- -----
reduced to the limit of such validity, so that in no event shall any exaction be
possible under this Guaranty that is in excess of the limit of such validity,
but such obligation shall be fulfilled to the limit of such validity. The
provisions of this paragraph shall control over every other provision of this
Guaranty.
21. The failure of any other person to sign this Guaranty shall not
release or affect the obligations or liability of the undersigned. The
obligations of the undersigned shall be joint and several and the term
"undersigned" shall include each as well as all of them.
22. The term "undersigned" wherever used herein shall mean the
undersigned or any one or more of them. Anyone executing this Guaranty shall be
bound by the terms hereof without regard to execution by anyone else. This
Guaranty is binding upon the undersigned, its administrators, successors or
assigns, and shall inure to the benefit of the Lender, its successors, endorsees
or assigns. This Guaranty shall in no event be impaired by any change which may
arise by reason of the dissolution of Borrower or Guarantor.
23. This Guaranty has been executed and delivered in the State of
Florida and shall be construed in accordance with the laws of Florida. Wherever
possible, each provision of this Guaranty shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Guaranty shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty. To the extent permitted by applicable law, each of the undersigned
hereby waives any provision of law that renders any provision hereof prohibited
or unenforceable in any respect.
7
<PAGE>
Exhibit 10.47
IN WITNESS WHEREOF, the undersigned Guarantors have caused this Guaranty
Agreement to be executed on their behalf as of August 1, 1997.
GUARANTORS:
Don Bell Industries, Inc. Don Bell Industries of Nevada, Inc.
By: /s/ J. William Brandner By: /s/ J. William Brandner
---------------------------- ----------------------------
J. William Brandner, Its Vice J. William Brandner, Its Vice
President President
Nevada SEMCO, Inc. J. M. Stewart, Corporation
By: /s/ J. William Brandner By: /s/ J. William Brandner
---------------------------- ----------------------------
J. William Brandner, Its Vice J. William Brandner, Its Vice
President President
J. M. Stewart Industries, Inc. Certified Maintenance Service, Inc.
By: /s/ J. William Brandner By: /s/ J. William Brandner
---------------------------- ----------------------------
J. William Brandner, Its Vice J. William Brandner, Its Vice
President President
Vision Trust Marketing, Inc.
By: /s/ J. William Brandner
--------------------------------
J. William Brandner, Its President
8
<PAGE>
Exhibit 10.47
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing Guaranty Agreement was acknowledged before me August 28, 1997, by
J. William Brandner as the:
(1) President of Vision Trust Marketing, Inc., a Florida corporation;
(2) Vice President of Don Bell Industries, Inc., a Florida corporation;
(3) Vice President of Don Bell Industries of Nevada, Inc., a Nevada
corporation;
(4) Vice President of Nevada SEMCO, Inc., a Nevada corporation;
(5) Vice President of J. M. Stewart, Corporation, a Florida corporation;
(6) Vice President of J. M. Stewart Industries, Inc., a Florida corporation;
and
(7) Vice President of Certified Maintenance Service, Inc., a Florida
corporation;
on behalf of each corporation. He is (check one) [_] personally known to me
or [X] has produced his driver's license as identification.
/s/ Julia A. Rademacher
- ------------------------------------------
Notary Public, State of Florida at Large
[SEAL]
9
<PAGE>
EXHIBIT 10.48
EXCLUSIVE MANUFACTURING
AND
SALES AGREEMENT
This Exclusive Manufacturing and Sales Agreement ("Agreement") is made and
entered into as of September 16, 1997, by and between ELECTRONIC SIGN
CORPORATION d/b/a AD ART, a California corporation ("Manufacturer"), and DON
BELL INDUSTRIES, INC., a Florida corporation ("DBI").
RECITALS:
A. Manufacturer is engaged in the business of designing, manufacturing,
assembling, selling and installing electronic wedge based display systems ("Ad
Art Display Systems") throughout the world;
B. DBI is engaged in the business of assembling, selling, installing and
operating electronic display systems, including black and white and four-color
animated light bulb display systems ("Display Systems");
C. DBI desires to purchase from Manufacturer various components of
Manufacturer's Ad Art Display Systems for the purpose of assembling such
components, together along with other materials, in Display Systems to be sold
by DBI in the Exclusive Territory (as hereinafter defined) and in the Non-
Exclusive Territory (as hereinafter defined); and
D. In consideration of the agreement of DBI to purchase components from
Manufacturer, Manufacturer is willing to grant to DBI the exclusive right to
market Display Systems utilizing Manufacturer's Components in the Exclusive
Territory, and certain non-exclusive rights to market Display Systems utilizing
Manufacturer's Components in the Non-Exclusive Territory, all on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Manufacturer and DBI hereby agree
as follows:
1. DEFINITIONS. In addition to terms defined elsewhere in this Agreement, the
following terms shall have the following meanings:
<PAGE>
1.1 "AFFILIATE" of a Person means any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by or is
under common Control with such Person.
1.2 "COMPONENTS" means Modules containing lamps (points) of which there
are 256 in the 1-inch configuration, 64 in the one and 1/2-inch configuration,
and 64 in the 2-inch configuration. "Modules" means and include the following:
Software
Cabling - Jumpers
Cabinet Supports
Louvers
Lenses
Circuit Boards
Lamps
DIC Card
Transformers
1.3 (A) "CONTROL" (and "CONTROLS" and "CONTROLLED") means (a) the
ownership of more than 50% of the voting securities or other voting interests of
another Person, or (b) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of another Person.
1.4 "DIRECT MARKETING" means the marketing, solicitation and sale of a
product or service directly by the manufacturer of such product or the provider
of such service, including solicitation by direct mail, but excluding the
marketing, solicitation and sale or rental directly or indirectly through any
distributor, sales agent, sales representative or other Person.
1.5 "EXCLUSIVE TERRITORY" means the states of Alabama, Arkansas, Florida,
Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee.
1.6 "GAMING INDUSTRY" means all businesses engaged in legalized gambling
activities, including without limitation casinos.
1.7 "NON-EXCLUSIVE TERRITORY" means all other states in the United States
other than the Exclusive Territory and all other countries and territories,
worldwide.
1.8 "PERSON" means an individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint stock company, trust,
estate or unincorporated organization, and any federal, state or municipal
government or any political subdivision thereof, any court, commission, board,
bureau, agency or instrumentality
<PAGE>
exercising executive, legislative, judicial, regulatory or administrative
functions or authority, and any other type of entity or organization.
1.9 "SPORTS INDUSTRY" means all businesses engaged in the ownership and/or
operation of individual and team sports stadiums and indoor arenas, but
specifically does not include motor speedways and other facilities related to
auto racing or other motor sports racing activities.
2. SALE AND PURCHASE OF COMPONENTS. DBI shall pay Manufacturer to manufacture
and deliver Components to DBI, and Manufacturer shall manufacture and deliver
such Components to DBI, as follows:
2.1 OUTPUT REQUIREMENTS. Manufacturer shall manufacture and sell to DBI,
on the terms hereinafter set forth, all Components required by DBI for Display
Systems to be offered for sale by DBI in the Exclusive Territory and the Non-
Exclusive Territory.
2.2 COMPONENT PRICING. The purchase price to be paid by DBI to
Manufacturer for Components ordered by DBI under this Agreement shall be as
follows:
1" (5 watt) .................$3.50 per each lamp
1 1/2" (5 watt) ...............$4.25 per each lamp
1 1/2" (8 watt) ...............$Price TBD
2" ............................$6.50 per each lamp
Manufacturer shall have the right to adjust the above Component prices on an
annual basis by a percentage equal to the annual percentage increase, if any, in
the Consumer Price Index as customarily measured.
2.3 PRODUCT REQUIREMENTS. DBI shall notify Manufacturer in writing from
time to time of the quantity and types of Components which DBI desires
Manufacturer to manufacture, by presenting Manufacturer with DBI's purchase
order within a reasonable time prior to the date on which DBI wishes to take
delivery of the Components so ordered. All such Components shall be ETL approved
or approved by a comparable testing laboratory.
2.4 DELIVERY OF COMPONENTS. Unless otherwise agreed in writing by DBI, all
Components and products and services ordered by DBI from Manufacturer under this
Agreement shall be delivered or furnished by Manufacturer to DBI, F.O.B.
Stockton, California, within 30 days following Manufacturer's receipt of DBI's
purchase order as provided in Section 2.3 hereof.
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2.5 MARKETING MATERIALS. Each of DBI and/or Manufacturer may develop at
its own expense sale and marketing materials. However, in the event DBI desires
to use marketing materials developed by Manufacturer, or in the event
Manufacturer desires to use marketing materials developed by DBI, the party
producing such marketing materials shall be reimbursed by the other party 50% of
all direct costs associated with the development of such marketing materials,
and the other party shall pay all reproduction costs associated with its use of
such marketing materials. DBI shall submit all advertising and marketing
materials to be utilized by DBI under this Agreement to Manufacturer for
Manufacturer's approval prior to DBI's use of such materials. Unless
Manufacturer delivers written notice of any objections to such materials to DBI
within five (5) business days after delivery of such materials by DBI to
Manufacturer, Manufacturer will be deemed to have approved the use of such
materials.
2.6 TAXES AND DUTIES. Any and all federal, state or municipal excise,
sales, service or use taxes or fees or customs duties now or hereafter payable
in respect of any materials or services furnished or provided by Manufacturer to
DBI under this Agreement shall be the sole obligation of and shall be paid by
DBI, except as may be otherwise specified in this Agreement. Notwithstanding the
foregoing, DBI shall not be obligated to pay any taxes of any nature based on
income earned by Manufacturer on the sale of materials and services under this
Agreement.
2.7 PERMITS AND LICENSES. DBI, at its sole cost and expense, shall obtain
all permits and licenses necessary for the shipment and installation of any and
all Components purchased by DBI pursuant to this Agreement. Manufacturer shall
cooperate with DBI in obtaining all such permits and licenses, including without
limitation the supplying by Manufacturer to DBI of engineering drawings,
electrical and computer specifications (as required), artwork and other items as
DBI may reasonably request in order to obtain such permits or licenses.
2.8 WARRANTIES.
(a) Manufacturer shall warrant to DBI, and DBI shall have the right
to pass such warranty on to its customers, that each Component manufactured
pursuant to the terms of this Agreement will be free from defects in materials
and workmanship for a period of one (1) year following the date of installation
by DBI of the Display System containing such Component. Manufacturer's liability
under such warranty shall be limited to the replacement or repair of defective
Components, to be performed at Manufacturer's production facility in Stockton,
California. Defective Component parts will be shipped by DBI at the expense of
DBI to Manufacturer in Stockton, California. Replacement or repaired Component
parts will be shipped by Manufacturer at its expense (excluding applicable
customs duties) using the same method of shipment used by DBI, to a site
designated by DBI. Repaired parts or replacements will be returned by
Manufacturer to DBI in 10 days or less.
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(b) Manufacturer represents and warrants to DBI that each Component
manufactured and delivered to DBI under this Agreement will not infringe upon
patent, trademark, trade name, service mark, copyright or other intellectual
property of any other Person.
2.9 DEVELOPMENT OF HARDWARE AND SOFTWARE. In the course of manufacturing
Components and designing Display Systems for DBI, Manufacturer will cooperate
with DBI in the acquisition or development of any specialized hardware or
software to be incorporated in such Display Systems that is not already
manufactured by Manufacturer; provided, however, that DBI shall reimburse
Manufacturer for any design related expenses incurred by Manufacturer in
connection with the development of any such specialized hardware or software,
and Manufacturer shall use its best efforts to conform Display Systems assembled
and sold to DBI to the instructions and specifications of DBI. Any and all
improvements, inventions and know-how, patentable or unpatentable, which may
developed in connection with this Agreement shall be the property of the party
bearing the substantial part of the design-related costs in developing same.
2.10 NEW MANUFACTURER PRODUCTS. In the event Manufacturer develops
new Display Systems products, components or technologies in the course of its
business, such new display systems, components and technologies shall be deemed
to be, and be included in the definition of, "Components" under this Agreement
and, provided Manufacturer and DBI are able to agree as to the price payable by
DBI for such new display systems, components or technology, DBI shall have all
rights with respect thereto as "Component" under this Agreement.
3. EXCLUSIVE TERRITORY AND NON-EXCLUSIVE TERRITORY.
3.1 EXCLUSIVE TERRITORY. Manufacturer hereby designates DBI as
Manufacturer's exclusive distributor of Ad Art Display Systems in the Exclusive
Territory and, while this Agreement is in effect, neither Manufacturer nor any
of its Affiliates shall, directly or indirectly, (a) market or distribute (for
sale or rental) any Ad Art Display Systems or any Components in the Exclusive
Territory, or (b) engage, appoint or otherwise use any distributor, sales agent
or sales representative to directly or indirectly market or distribute (for sale
or rental) any Ad Art Display Systems or any Components to any Person that
Manufacturer knows or reasonably should know intends to sell, rent or otherwise
distribute such Ad Art Display System or Component in the Exclusive Territory.
Notwithstanding the foregoing, Manufacturer shall have the right to sell, rent
or otherwise distribute, by Direct Marketing only, Ad Art Display Systems within
the Exclusive Territory to the Gaming Industry and the Sports Industry.
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3.2 SALES OF OTHER WEDGE-BASED SYSTEMS.
(a) Except as otherwise provided in subpart (b) herein, during the
term of this Agreement DBI shall not submit any proposal to any account or
potential account in the Exclusive Territory for the sale, lease or other
distribution of a Display System containing wedge-based components other than
Components of Manufacturer.
(b) With respect to proposals made to accounts in the Non-Exclusive
Territory, DBI shall first offer only Display Systems containing Manufacturer's
Components. However, if Manufacturer does not provide its approval of a
proposal to an account in the Non-Exclusive Territory (as required pursuant to
Section 3.3), DBI shall then have the right offer to such account a Display
System containing components other than those of Manufacturer, including without
limitation those developed by DBI. DBI shall also have the right to offer
Display Systems containing wedge-based components other than those of
Manufacturer to any account in the Gaming Industry or the Sports Industry within
the Exclusive Territory that is not deemed a Protected Account under Section 3.2
hereof and thus is an account for which DBI and Manufacturer are in competition.
4. TERM OF AGREEMENT; TERMINATION.
4.1 TERM. This Agreement shall remain in effect for a term of five (5)
years from the date hereof, and shall automatically be renewed thereafter for
successive one-year terms unless either party provides written notice to the
other party of its intent not to renew, not less than 90 days prior to the
expiration of the initial term or any renewal term.
4.2 TERMINATION. This Agreement may be terminated prior to the expiration
of the initial term or any renewal term only as follows:
(a) At any time by mutual written agreement of the parties.
(b) By either party upon 12 months' prior written notice to the other
party.
(c) By Manufacturer, in the event DBI fails to perform any of its
obligations under this Agreement and such nonperformance is not remedied or
otherwise cured to the satisfaction of Manufacturer within 30 days following
written notice from Manufacturer to DBI setting forth the nature of such
nonperformance and the actions required to be taken by DBI to remedy or cure
such nonperformance.
(d) By DBI, in the event that Manufacture fails to perform any of its
obligations under this Agreement and such nonperformance is not remedied or
otherwise cured to the satisfaction of DBI within 30 days following written
notice from DBI to
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Manufacturer setting forth the nature of such nonperformance and the actions
required to be taken by Manufacturer to remedy or cure such nonperformance.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION BY DBI. DBI shall indemnify, defend and hold harmless
Manufacturer and each of its Affiliates and their respective shareholders,
directors, officers, employees and agents from and against any and all claims,
liabilities, loss, damage and expense, including without limitation reasonable
attorneys' fees and costs, arising out of or in connection with:
(a) any actual or alleged breach by DBI of any representation or
warranty made by DBI in this Agreement;
(b) any actual or alleged breach, default or nonperformance by DBI of
any of its covenants and obligations contained in this Agreement; or
(c) subject to the warranty obligations of Manufacturer set forth in
Section 2.8 above, claims by third parties for consequential or other damages
relating to delays, defects or other problems caused or created by (i) DBI in
the assembly of Components into Display Systems sold or leased by DBI, or (ii)
defects in design or manufacture of Components resulting solely from written
instructions by DBI to Manufacturer.
5.2 INDEMNIFICATION BY MANUFACTURER. Manufacturer shall indemnify, defend
and hold harmless DBI and each of its Affiliates and their respective
shareholders, directors, officers, employees and agents from and against any and
all claims, liabilities, loss, damage and expense, including without limitation
reasonable attorneys' fees and costs, arising out of or in connection with:
(a) any actual or alleged breach by Manufacturer of any
representation or warranty made by Manufacturer in this Agreement; or
(b) any actual or alleged breach, default or nonperformance by
Manufacturer of any of its covenants and obligations contained in this
Agreement; or
(c) any claims by third-parties for consequential or other damages
caused or created as the result of defects in design or manufacture of
Components by Manufacturer; provided, however, Manufacturer shall not be
required to indemnify DBI or any of its Affiliates from any defects in design or
manufacture of Components caused by, or as the result of any action or omission
on the part of, DBI or any of its employees or agents.
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5.3 THIRD PARTY CLAIMS. Any party claiming indemnity hereunder
("Indemnified Party") shall give the party against whom indemnity is sought
("Indemnifying Party") prompt written notice after obtaining knowledge of any
claim or the existence of facts as to which recovery may be sought from the
Indemnifying Party because of the indemnity provisions set forth in this Article
5. If such claim for indemnity arises in connection with a legal action
instituted by a third party ("Third Party Claim"), the Indemnified Party hereby
agrees that, within five (5) business days after it is served with notice of the
assertion of any Third Party Claim for which it may seek indemnity hereunder,
the Indemnified Party will notify the Indemnifying Party in writing of such
Third Party Claim.
The Indemnifying Party shall, within five (5) business days after the date
that the Indemnified Party gives notice of a claim (whether a Third Party Claim
or otherwise) as provided above, notify the Indemnified Party whether it accepts
or contests its obligation of indemnity hereunder as claimed by the Indemnified
Party.
If the claim for indemnity arises in connection with a Third Party Claim
and the Indemnifying Party accepts its indemnity obligation hereunder, the
Indemnifying Party shall have the right, after conceding in writing its
obligation of indemnity hereunder, to conduct the defense of such action at its
sole expense through counsel reasonably acceptable to the Indemnified Party. The
Indemnified Party shall cooperate in such defense is reasonably necessary to
enable the Indemnifying Party to conduct its defense, including providing the
Indemnifying Party with reasonable access to such records as may be relevant to
its defense. The Indemnifying Party shall be entitled to settle any such Third
Party Claim without the prior written consent of the Indemnified Party provided
that the Indemnifying Party provides the Indemnified Party with reasonable
assurances that the Indemnified Party will be fully indemnified by the
Indemnifying Party in connection with any such Third Party Claim. The
Indemnified Party shall be entitled to retain its own counsel at its own expense
in connection with any Third Party Claim that the Indemnifying Party has elected
to defend. If the Indemnifying Party accepts its indemnity obligations hereunder
in connection with a Third Party Claim but elects not to conduct the defense
thereof, the Indemnified Party may defend and/or settle such Third Party Claim
and shall be entitled to be indemnified for the full amount of such claim and
all costs and expenses, including attorneys' fees, incurred in connection
therewith pursuant to this Article 5.
If the claim for indemnity arises in connection with a Third Party Claim
and the Indemnifying Party contests or does not accept its indemnity obligation
hereunder, the Indemnified Party shall have the right to defend and/or settle
such Third Party Claim and thereafter seek indemnity from the Indemnifying Party
pursuant to this Article 5; provided, however, that the Indemnified Party shall
not settle any such claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld.
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6. CONFIDENTIALITY. Except as otherwise agreed in writing signed by both
parties, neither DBI nor Manufacturer shall, or permit their Affiliates or their
respective shareholders, directors, officers, employees and agents to, divulge,
disclose, or otherwise communicate directly or indirectly, for any purpose or
for the benefit of any other Person, any confidential or proprietary information
relating to either of their respective businesses, products or services, except
as may reasonably be necessary for the installation, operation, maintenance and
repair of Display Systems utilizing Manufacturer's Components, provided that
each Person receiving such confidential or proprietary information for such
limited purpose shall agree in writing to be bound by the provisions of this
Article 6. Each party acknowledges that confidential and proprietary
information shall not include any: (a) information which is or becomes part of
the public domain through no fault of the other party hereto or any of its
Affiliates; or (b) information required to be disclosed by judicial action,
provided that immediately after either party receives notice of such judicial
action, it notifies the other party in writing of such action so as to give such
other party the opportunity to seek legal remedies to maintain the confidential
or proprietary aspects of such information to the extent permitted under
applicable law. Notwithstanding the foregoing, Manufacturer shall supply to DBI
with each Component manufactured hereunder, sufficient technical documentation
and information and other materials to enable DBI to install and make repairs at
the site of each Display System assembled and distributed by Bell under this
Agreement.
7. GENERAL PROVISIONS.
7.1 AMENDMENT; WAIVER. This Agreement may not be amended, nor may any
obligation of either party hereunder be waived, except by an instrument in
writing signed on behalf of each of the parties hereto. The waiver of any
condition or of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any other condition or any other provision or
subsequent breach.
7.2 INJUNCTIVE RELIEF; REMEDIES CUMULATIVE. The parties acknowledge that
monetary damages may not be an adequate remedy for any breach or nonperformance
under this Agreement and, accordingly, in the event of a breach or threatened
breach by one of the parties under this Agreement, the other party shall have
the right to obtain temporary and permanent injunctive relief against any such
breach or threatened breach without the showing of irreparable harm or that such
party's remedies at law are inadequate. All rights and remedies of any party to
this Agreement shall be cumulative and concurrent and may be exercised
singularly, successively or concurrently, at the sole discretion of such party
and may be exercised as often as occasion therefor may exist.
7.3 ARBITRATION. The parties shall resolve any disputes arising out of or
related to this Agreement through binding arbitration conducted in accordance
with the rules and regulations of the American Arbitration Association. The
arbitrator shall have the power to
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award monetary damages, equitable relief, attorneys' fees and costs, and to
order either or both parties to take or refrain from taking certain actions
required or prohibited by this Agreement. Notwithstanding the foregoing, in the
event either party hereto determines in its reasonable discretion that its
rights hereunder would be significantly impaired unless it were able to obtain
temporary injunctive relief, such party shall have the right to petition any
court described in Section 7.4 for injunctive relief as contemplated in Section
7.2, prior to submitting any dispute to arbitration in accordance with this
Section 7.3
7.4 GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without giving
effect to the principles of conflicts of laws thereof. Each of the parties
hereto agrees that any suit, action or proceeding with respect to this Agreement
shall be brought against it in any state or federal court of competent
jurisdiction in Las Vegas, Nevada and irrevocably waives any (a) right of
immunity that such party may now have or hereafter acquire from service of
process or the jurisdiction of the aforesaid courts and (b) any objection that
such party may now have or hereafter acquire to the laying of venue of any such
suit, action or proceeding in any such court. The parties hereby irrevocably
accept and submit themselves to the jurisdiction of such courts in any such
suit, action or proceeding, and agree that final judgment (with the exhaustion
of all appeals) shall be conclusive and binding in any jurisdiction in which
such party resides or owns property.
7.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives. Neither this Agreement, nor any right or
obligation hereunder, may be assigned or delegated by either party hereto
without the prior written consent of the other party hereto.
7.6 NOTICES. All notices required or permitted to be given under this
Agreement or any Purchase Agreement shall be in writing and shall be sent by (a)
certified or registered mail, postage prepaid, return receipt requested; (b)
Federal Express, next business day delivery; or (c) telecopy confirmed by first
class mail.
If to Manufacturer:
Electronic Sign Corporation d/b/a Ad Art
Attn: Terry J. Long, President
5 Thomas Mellon Circle, Suite 130
San Francisco, California 94134
Telephone: (415) 468-7025
Fax: (415) 468-5012
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If to DBI:
Don Bell Industries, Inc.
Attn: Gary D. Bell, President
385 Oak Place
Port Orange, Florida 32127
Telephone: (904) 788-8084
Fax: (904) 767-7331
with a copy to:
Marshall S. Harris, P.A.
Broad and Cassel
390 N. Orange Ave., Suite 1100
Orlando, FL 32801
Telephone: (407) 839-4200
Fax: (407) 425-8377
or to such other address as a party may designate in writing. Any notice given
pursuant to clause (a) of this Section 7.6 shall be effective four days after
the day it is mailed or upon receipt evidenced by the U.S. Postage Service
return receipt card, whichever is earlier. Any notice given pursuant to clause
(b) of this Section 7.6 shall be effective on the business day following the day
of delivery to or picked up by Federal Express. Any notice given pursuant to
clause (c) of this Section 7.6 shall be effective when transmitted.
7.7 SEVERABILITY. If any provision of this Agreement or the application
thereto to any Person or circumstances shall, for any reason and to any extent,
be invalid or unenforceable, the remainder of this Agreement and the application
of such provision to other Persons or circumstances shall not be affected
thereby, but rather shall be enforced to the greatest extent permitted by law.
7.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding among the parties with respect to the subject matter hereof and
supersedes any and all other agreements, arrangements and understandings among
the parties with respect to such subject matter, and no agreements,
arrangements, understandings, representations or warranties with respect to such
subject matter shall be binding upon either of the parties unless specified
herein or therein.
7.9 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is intended or
shall be construed to give any person, other than the parties hereto, and their
successors and assigns, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision contained herein.
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7.10 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
7.11 HEADINGS. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
7.12 EXPENSES. Except as otherwise specifically provided herein, the
parties to this Agreement shall bear their respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the transactions contemplated hereby, including, without limitation, all fees
and expenses of agents, representatives, counsel, actuaries and accountants.
7.13 ACTIONS BY AFFILIATES. To the extent that this Agreement requires
action to be taken by any Affiliates of either party hereto, such party shall
cause such action to be taken.
IN WITNESS WHEREOF, Electronic Sign Corporation d/b/a Ad Art and Don Bell
Industries, Inc. have caused this Exclusive Manufacturing and Sales Agreement to
be entered into by their duly authorized officers, as of the day and year first
above stated.
ELECTRONIC SIGN
CORPORATION
D/B/A AD ART
By:
/S/ Terry J. Long
- -----------------------
Terry J. Long, President
DON BELL INDUSTRIES, INC.
By:
/S/ Gary D. Bell
- -----------------------
Gary D. Bell, President
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Exhibit 11
LA-MAN CORPORATION
EXHIBIT 11 TO FORM 10-KSB
FOR THE PERIODS ENDED JUNE 30, 1997 AND 1996
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
1997 1996
---------------------------- ----------------------------
After After
Continuing Discontinued Continuing Discontinued
Operations Operations Operations Operations
------------ --------------- ------------ --------------
<S> <C> <C> <C> <C>
EARNINGS PER COMMON SHARE AND COMMON
EQUIVALENT SHARE:
Net income as reported $ 1,418,402 $ 765,459 $ 1,024,215 $ 367,806
Pro-forma adjustments to net income under
the modified treasury stock method of
computing earnings per share:
Reversal of interest expense 233,140 233,140 201,266 201,266
Interest income 124,849 124,849 162,927 162,927
----------- ----------- ----------- ----------
Pro-forma net income $ 1,776,391 $ 1,123,448 $ 1,388,408 $ 731,999
=========== =========== =========== ==========
Weighted average shares outstanding 3,274,838 3,274,838 2,861,739 2,861,739
Pro-forma adjustments to weighted average
shares outstanding under the modified
treasury stock method of computing
earnings per share:
Shares issuable under options and warrants 2,115,517 2,115,517 1,819,167 1,819,167
Repurchased shares (662,174) (662,174) (611,733) (611,733)
----------- ----------- ----------- ---------
Pro-forma weighted average shares oustanding 4,728,181 4,728,181 4,069,173 4,069,173
=========== =========== =========== =========
Net income per common share and common
equivalent share $ 0.38 $ 0.24 $ 0.34 $ 0.18
=========== =========== =========== ==========
EARNINGS PER COMMON SHARE - ASSUMING FULL DILUTION:
Net income as reported $ 1,418,402 $ 765,459 $ 1,024,215 $ 367,806
Pro-forma adjustments to net income under
the modified treasury stock method of
computing earnings per share:
Reversal of interest expense 233,140 233,140 201,266 201,266
Interest income 124,723 124,723 206,335 206,335
----------- ----------- ----------- ----------
Pro-forma net income $ 1,776,265 $ 1,123,322 $ 1,431,816 $ 775,407
=========== =========== =========== ==========
Weighted average shares outstanding 3,274,838 3,274,838 2,861,739 2,861,739
Pro-forma adjustments to weighted average
shares outstanding under the modified
treasury stock method of computing
earnings per share:
Shares issuable under options and warrants 2,115,517 2,115,517 1,819,167 1,819,167
Shares issuable under convertible securities 157,500 157,500 150,000 150,000
Repurchased shares (662,174) (662,174) (611,733) (611,733)
----------- ----------- ----------- ----------
Pro-forma weighted average shares oustanding 4,885,681 4,885,681 4,219,173 4,219,173
=========== =========== =========== ==========
Earnings per commons share - assuming full dilution $ 0.36 $ 0.23 $ 0.34 $ 0.18
=========== =========== =========== ==========
</TABLE>
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EXHIBIT 22
LA-MAN CORPORATION
SUBSIDIARIES
LA-MAN CORPORATION (Nevada)
Certified maintenance Services, Inc. (Florida)
Don Bell Industries, Inc. (Florida)
Don Bell Industries of Nevada, Inc. (Nevada)
Nevada SEMCO, Inc. (Nevada)
J.M. Stewart Corporation (Florida)
TracTel Communications, Inc. (Florida)
J.M. Stewart Industries, Inc. (Florida)
Vision Trust Marketing, Inc. (Florida)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 10-KSB AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 231,313
<SECURITIES> 0
<RECEIVABLES> 2,336,021
<ALLOWANCES> 229,000
<INVENTORY> 1,004,352
<CURRENT-ASSETS> 4,361,943
<PP&E> 3,902,324
<DEPRECIATION> 1,348,581
<TOTAL-ASSETS> 9,475,797
<CURRENT-LIABILITIES> 2,424,490
<BONDS> 2,141,620
0
0
<COMMON> 3,311
<OTHER-SE> 4,820,692
<TOTAL-LIABILITY-AND-EQUITY> 9,475,797
<SALES> 15,945,627
<TOTAL-REVENUES> 15,945,627
<CGS> 8,123,075
<TOTAL-COSTS> 6,790,925
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 233,140
<INCOME-PRETAX> 1,189,402
<INCOME-TAX> (229,000)
<INCOME-CONTINUING> 1,418,402
<DISCONTINUED> (652,943)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 765,459
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.23
</TABLE>
