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EXHIBIT 10.42
ROWECOM INC.
$9,000,000
FLOATING RATE SENIOR SECURED NOTES DUE DECEMBER 28, 2001
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NOTE PURCHASE AGREEMENT
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Dated as of January 31, 2001
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TABLE OF CONTENTS
SECTION PAGE
1. AUTHORIZATION OF NOTES................................................ 1
2. SALE AND PURCHASE OF NOTES............................................ 1
3. CLOSING............................................................... 1
4. CONDITIONS TO CLOSING................................................. 2
4.1. REPRESENTATIONS AND WARRANTIES............................... 2
4.2. PERFORMANCE; NO DEFAULT...................................... 2
4.3. COMPLIANCE CERTIFICATES...................................... 2
4.4. OPINIONS OF COUNSEL.......................................... 3
4.5. GOOD STANDING CERTIFICATES................................... 3
4.6. SALE OF OTHER NOTES.......................................... 3
4.7. PAYMENT OF VENDOR RECEIVABLES................................ 3
4.8. PAYMENT OF FEES AND EXPENSES................................. 3
4.9. FLEET CREDIT AGREEMENT....................................... 3
4.10. CHANGES IN CORPORATE STRUCTURE............................... 4
4.11. SUBSIDIARY GUARANTY.......................................... 4
4.12. EVIDENCE OF PERFECTION AND PRIORITY OF LIENS................. 4
4.13. NO LABOR DISPUTES............................................ 4
4.14. COMPLIANCE WITH LAWS AND OTHER AGREEMENTS.................... 4
4.15. NO MATERIAL ADVERSE CHANGE................................... 4
4.16. OTHER FINANCING DOCUMENTS.................................... 4
4.17. PROCEEDINGS SATISFACTORY..................................... 5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 5
5.1. ORGANIZATION; POWER AND AUTHORITY............................ 5
5.2. AUTHORIZATION, ETC........................................... 6
5.3. FULL DISCLOSURE.............................................. 6
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES......... 6
5.5. FINANCIAL STATEMENTS; DEBT; PROJECTIONS; FISCAL YEAR......... 6
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC................. 7
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC............................. 7
5.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS................ 8
5.9. TAXES........................................................ 8
5.10. TITLE TO PROPERTY; PRIORITY OF LIENS......................... 8
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5.11. CORPORATE NAMES.............................................. 8
5.12. BUSINESS LOCATIONS; AGENT FOR SERVICE OF PROCESS............. 9
5.13. SOLVENT FINANCIAL CONDITION.................................. 9
5.14. SURETY OBLIGATIONS........................................... 9
5.15. BROKERS...................................................... 9
5.16. INTELLECTUAL PROPERTY........................................ 9
5.17. GOVERNMENTAL APPROVALS....................................... 9
5.18. RESTRICTIONS................................................. 10
5.19. NO DEFAULTS.................................................. 10
5.20. LEASES....................................................... 10
5.21. PENSION PLANS................................................ 10
5.22. TRADE RELATIONS.............................................. 10
5.23. LABOR RELATIONS.............................................. 11
5.24. NOT A REGULATED ENTITY....................................... 11
5.25. MARGIN STOCK; APPLICATION OF PROCEEDS........................ 11
5.26. EQUIPMENT.................................................... 11
5.27. FLEET CREDIT DOCUMENTS....................................... 11
6. REPRESENTATIONS OF THE PURCHASER...................................... 11
7. GENERAL COVENANTS..................................................... 12
7.1. VISITS AND INSPECTIONS....................................... 12
7.2. NOTICES...................................................... 12
7.3. FINANCIAL AND OTHER INFORMATION.............................. 12
7.4. LANDLORD AND STORAGE AGREEMENTS.............................. 14
7.5. PROJECTIONS.................................................. 14
7.6. TAXES........................................................ 14
7.7. COMPLIANCE WITH LAWS......................................... 14
7.8. INSURANCE.................................................... 15
7.9. INTELLECTUAL PROPERTY........................................ 15
7.10. PLEDGED SHARES............................................... 15
7.11. PAYMENT OF NOTES AND MAINTENANCE OF OFFICE................... 15
7.12. INTENTIONALLY OMITTED........................................ 15
7.13. DOMESTIC SUBSIDIARY GUARANTIES............................... 15
7.14. ORDER PROCESSING............................................. 15
7.15. COMMITMENT LETTER............................................ 16
7.16. ▇▇▇▇▇ ASSIGNMENT OF CLAIMS................................... 16
7.17. FLEET'S RELEASE OF LIENS..................................... 16
iii
8. PAYMENTS.............................................................. 16
8.1. INTEREST PAYMENTS............................................ 16
8.2. PRINCIPAL PAYMENTS........................................... 16
8.3. PAYMENTS AMONG NOTEHOLDERS................................... 17
8.4. NOTATION OF NOTES ON PAYMENT................................. 17
8.5. NO OTHER PAYMENTS OF PRINCIPAL; ACQUISITION OF NOTES......... 17
9. NEGATIVE COVENANTS.................................................... 18
9.1. MERGERS; CONSOLIDATIONS; ACQUISITIONS........................ 18
9.2. LOANS........................................................ 18
9.3. DEBT......................................................... 18
9.4. AFFILIATE TRANSACTIONS....................................... 19
9.5. LIENS........................................................ 19
9.6. SUBORDINATED DEBT............................................ 20
9.7. DISTRIBUTIONS................................................ 20
9.8. CAPITAL EXPENDITURES......................................... 20
9.9. DISPOSITION OF ASSETS........................................ 20
9.10. LIMITATION ON ISSUANCE OF STOCK.............................. 21
9.11. ▇▇▇▇ AND HOLD SALES, ETC..................................... 21
9.12. RESTRICTED INVESTMENTS....................................... 21
9.13. LEASES....................................................... 21
9.14. TAX CONSOLIDATION............................................ 21
9.15. BANK ACCOUNTS................................................ 21
9.16. UPSTREAM PAYMENTS............................................ 22
9.17. ACCOUNTING CHANGES........................................... 22
9.18. ORGANIZATION DOCUMENTS....................................... 22
9.19. RESTRICTIVE AGREEMENTS....................................... 22
9.20. LIMITATION ON SIDE AGREEMENTS................................ 22
9.21. CONDUCT OF BUSINESS.......................................... 22
10. FINANCIAL COVENANTS................................................... 22
10.1. MINIMUM EBITDA OF THE COMPANY................................ 22
10.2. MINIMUM EBITDA OF ▇▇▇▇▇▇..................................... 23
10.3. MAXIMUM OPERATING EXPENSES................................... 23
11. EVENTS OF DEFAULT..................................................... 23
12. DEFAULT REMEDIES...................................................... 26
12.1. ACCELERATION OF MATURITY NOTES............................... 26
12.2. OTHER REMEDIES............................................... 27
12.3. NONWAIVER; REMEDIES CUMULATIVE............................... 27
12.4. ANNULMENT OF ACCELERATION OF NOTES........................... 27
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13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES......................... 27
13.1. REGISTRATION OF NOTES........................................ 27
13.2. EXCHANGE OF NOTES............................................ 28
13.3. REPLACEMENT OF NOTES......................................... 28
13.4. ISSUANCE TAXES............................................... 29
14. PAYMENTS ON NOTES..................................................... 29
14.1. PLACE OF PAYMENT............................................. 29
14.2. MANNER OF PAYMENT............................................ 29
15. EXPENSES, ETC......................................................... 30
15.1. TRANSACTION EXPENSES......................................... 30
15.2. SURVIVAL..................................................... 30
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.......... 30
17. AMENDMENT AND WAIVER.................................................. 30
17.1. REQUIREMENTS................................................. 30
17.2. SOLICITATION OF HOLDERS OF NOTES............................. 31
17.3. BINDING EFFECT, ETC.......................................... 31
17.4. NOTES HELD BY THE COMPANY, ETC............................... 31
18. NOTICES............................................................... 31
19. REPRODUCTION OF DOCUMENTS............................................. 32
20. CONFIDENTIAL INFORMATION.............................................. 32
21. INTENTIONALLY OMITTED................................................. 33
22. MISCELLANEOUS......................................................... 33
22.1. INDEMNIFICATION OF EACH HOLDER OF NOTES...................... 33
22.2. SUCCESSORS AND ASSIGNS....................................... 33
22.3. SEVERABILITY................................................. 34
22.4. CONSTRUCTION................................................. 34
22.5. COUNTERPARTS................................................. 34
22.6. GOVERNING LAW................................................ 34
22.7. INTERCREDITOR AGREEMENT...................................... 34
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SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 4.10 -- Changes in Corporate Structure
SCHEDULE 5.4 -- Subsidiaries of the Company and
Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.9 -- Tax Information
SCHEDULE 5.11 -- Corporate Names
SCHEDULE 5.12 -- Business Locations
SCHEDULE 5.14 -- Surety Obligations
SCHEDULE 5.15 -- Bank Accounts
SCHEDULE 5.16 -- Intellectual Property
SCHEDULE 5.18 -- Restrictive Agreements
SCHEDULE 5.20 -- Leases
SCHEDULE 5.21 -- Pension Plans
SCHEDULE 5.23 -- Labor Relations
SCHEDULE 5.25 -- Use of Proceeds
SCHEDULE 9.4 -- Affiliate Transactions
SCHEDULE 9.5 -- Liens
SCHEDULE 9.15 -- Bank Accounts
EXHIBIT 1 -- Form of Floating Rate Senior Note due
December 28, 2001
EXHIBIT 4.11 -- Form of Subsidiary Guaranty
EXHIBIT 7.18 -- Form of Federal Assignment of Claims
ANNEX 1 -- Address of the Company
Address of Agent
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ROWECOM INC.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Floating Rate Senior Secured Notes due December 28, 2001
As of January 31, 2001
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
RoweCom Inc., a Delaware corporation (the "COMPANY"), agrees
with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $9,000,000 aggregate
principal amount of its Floating Rate Senior Secured Notes due December 28, 2001
(the "NOTES", such term to include any such notes issued in substitution
therefor pursuant to Section 13 of this Agreement or the Other Agreements (as
hereinafter defined)). The Notes shall be substantially in the form set out in
Exhibit 1, with such changes therefrom, if any, as may be approved by you and
the Company. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "OTHER AGREEMENTS")
identical with this Agreement with each of the other purchasers named in
Schedule A (the "OTHER PURCHASERS"), providing for the sale at such Closing to
each of the Other Purchasers of Notes in the principal amount specified opposite
its name in Schedule A. Your obligation hereunder and the obligations of the
Other Purchasers under the Other Agreements are several and not joint
obligations and you shall have no obligation under any Other Agreement and no
liability to any Person for the performance or non-performance by any Other
Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ at 10:00 a.m., local time,
at a closing (the "CLOSING") on February 5, 2001 or on such other Business Day
thereafter on or prior to February 6, 2001 as may be agreed upon by the Company
and you and the Other Purchasers. At the Closing the Company will
deliver to you the Notes to be purchased by you in the form of a single Note (or
such greater number of Notes in denominations of at least $100,000 as you may
request) dated the date of funding applicable to you and registered in your name
(or in the name of your nominee), against delivery by you to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account on
behalf of the Company to account number RoweCom Escrow Account Acct # 54205-0;
Attn: ▇▇▇ ▇▇▇▇ at Wilmington Trust Company; ABA #▇▇▇▇▇▇▇▇▇. If at the Closing
the Company shall fail to tender such Notes to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights you
may have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at the
Closing is subject to the fulfillment to your satisfaction, prior to or at the
Closing, of the following conditions precedent, and the failure by the Company
to satisfy all such conditions on the Closing Date shall relieve you, at your
election, of all such obligations; PROVIDED, HOWEVER that the Company in all
cases shall remain liable in respect of its obligations under Section 15.
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Closing and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.25) no Default or Event of Default shall have
occurred and be continuing.
4.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to you an
Officer's Certificate, dated the Closing Date, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled;
(b) COMPANY SECRETARY OR ASSISTANT SECRETARY'S CERTIFICATE. The
Company shall have delivered to you a certificate, dated the Closing Date,
and executed by the Secretary or the Assistant Secretary of the Company who
shall certify that the following documents, which shall be attached
thereto, are true and correct: (a) resolutions and other corporate
proceedings relating to the authorization, execution and delivery of the
Notes, this Agreement and the other Financing Documents, (b) copy of its
articles of incorporation and all amendments thereto, (c) copy of its
by-laws and all amendments thereto, and (d) a good standing certificate
issued by the Secretary of State of the state of Delaware; and
(c) GUARANTOR SECRETARY'S CERTIFICATE. Each Subsidiary Guarantor shall
have delivered to you a certificate, dated the Closing Date, and executed
by the Assistant Secretary or Secretary of such Subsidiary Guarantor who
shall certify that the following documents, which shall be attached
thereto, are true and correct: (a) resolutions and other corporate
proceedings relating to the authorization, execution and delivery of the
Subsidiary Guaranty and the other Financing Documents to which it is a
party, (b) copy
of such Subsidiary Guarantor's articles of incorporation and all amendments
thereto, (c) copy of such Subsidiary Guarantor's by-laws and all amendments
thereto, and (d) a good standing certificate issued by the Secretary of
State of such Subsidiary Guarantor's state of formation.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory
to you, dated the Closing Date (a) from ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel
for the Company, the Subsidiary Guarantors and ▇▇▇▇▇▇▇ ▇▇▇▇ in a form and
substance satisfactory to you and the Other Purchasers (and the Company hereby
instructs its counsel to deliver such opinion to you), (b) from ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇, counsel to ▇▇▇▇▇▇▇▇ Subscription Service, Inc., a Subsidiary Guarantor,
(c) Blank, Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, counsel to CSS, and (d) copies of all
legal opinions issued to Fleet in connection with the Fleet Credit Agreement
(and the Company hereby instructs its counsel to deliver such opinions to you).
4.5. GOOD STANDING CERTIFICATES.
You shall have received good standing certificates for the Company and
each Subsidiary Guarantor, issued by the Secretary of State or other
appropriate official of such party's jurisdiction of organization and each
jurisdiction where the conduct of such party's business activities or ownership
of its Property necessitates qualification.
4.6. SALE OF OTHER NOTES.
Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.
4.7. PAYMENT OF VENDOR RECEIVABLES.
The Company or any Subsidiary Guarantor shall have paid on or before
the Closing Date all Vendor Receivables as indicated in pay-off letters
delivered by you and each of the Other Purchasers to the Company or any
Subsidiary Guarantor.
4.8. PAYMENT OF FEES AND EXPENSES.
The Company shall have paid on or before the Closing Date all fees and
disbursements required to be paid pursuant to Section 15 and pursuant
to the separate commitment letters between you, the Other Purchasers and the
Company.
4.9. FLEET CREDIT AGREEMENT.
(a) FLEET CREDIT AGREEMENT. ▇▇▇▇▇▇ and the other parties thereto shall
have entered into the Fleet Credit Agreement, which agreement, and all
documents and instruments executed and delivered in connection therewith,
shall be in form and substance satisfactory to you. The Company shall
deliver to you a copy of a fully executed counterpart of the Fleet Credit
Agreement, certified as true and correct by an officer of ▇▇▇▇▇▇. Pursuant
to the Fleet Credit Agreement, the Company and the Subsidiary Guarantors
shall have received proceeds in an amount which is sufficient, together
with the proceeds of the Notes, to repay the Vendor Receivables and make
the other payments to be made at the Closing, from borrowings under the
Fleet Credit Agreement.
(b) NO DEFAULTS; SATISFACTION OF CONDITIONS PRECEDENT. No event shall
have occurred and no condition shall exist that shall prohibit the Company
and the Subsidiary Guarantors from borrowing under the Fleet Credit
Agreement and all conditions precedent to closing specified in the Fleet
Credit Agreement shall have been satisfied on or prior to the Closing Date
and you shall have received such evidence of the satisfaction of such
conditions precedent as you shall deem appropriate.
4.10. CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.10, neither the Company nor
any Subsidiary shall have changed its jurisdiction of incorporation or been a
party to any merger or consolidation and shall not have succeeded to all or any
substantial part of the liabilities of any other entity, at any time following
the date of the most recent financial statements referred to in Schedule 5.5.
4.11. SUBSIDIARY GUARANTY.
▇▇▇▇▇▇ and all other Domestic Subsidiaries shall have executed
and delivered to you and the Other Purchasers a guaranty (as amended from time
to time, each a "SUBSIDIARY GUARANTY," and collectively, the "SUBSIDIARY
GUARANTIES"), substantially in the form of Exhibit 4.11, guarantying the
obligations and indebtedness of the Company under this Agreement, the Notes and
the other Financing Documents. 4.12. EVIDENCE OF PERFECTION AND PRIORITY OF
LIENS.
You or the Agent on your behalf shall have received for filing
any filing or recordation necessary to perfect the Liens of Agent in the
Collateral and evidence in form satisfactory to you that such Liens constitute
valid and perfected security interests and Liens, and that there are no other
Liens upon any Collateral except for Permitted Liens.
4.13. NO LABOR DISPUTES.
You shall have received assurances satisfactory to you that
there are no threats of strikes or work stoppages by any employees, or
organization of employees, of the Company or any Subsidiary which you reasonably
determine may have a Material Adverse Effect.
4.14. COMPLIANCE WITH LAWS AND OTHER AGREEMENTS.
You shall have determined or received assurances satisfactory
to you that none of the Financing Documents or any of the transactions
contemplated thereby violate any Applicable Law, court order or agreement
binding upon any Obligor.
4.15. NO MATERIAL ADVERSE CHANGE.
No material adverse change in the financial condition of any Obligor
or in the quality, quantity or value of any Collateral shall have occurred
since September 30, 2000.
4.16. OTHER FINANCING DOCUMENTS.
(a) ▇▇▇▇▇▇▇ ▇▇▇▇ PLEDGE AGREEMENT. ▇▇▇▇▇▇▇ ▇▇▇▇ shall have executed
and delivered to the Agent with copies to you and the Other Purchasers the
▇▇▇▇▇▇▇ ▇▇▇▇ Pledge Agreement pledging all shares of stock and warrants
legally or beneficially owned by him in RoweCom Inc. together with
Irrevocable Stock Powers and Irrevocable Warrant Powers fully executed in
blank.
(b) PLEDGE AGREEMENTS. The Company shall have delivered to the Agent
with copies to you and the Other Purchasers executed copies of the Pledge
Agreements.
(c) SECURITY AGREEMENTS. The Company shall have delivered to the Agent
with copies to you and the Other Purchasers executed copies of (i) a
Security Agreement dated the date hereof between the Company and the Agent,
and (ii) a Security Agreement dated the date hereof among the Subsidiary
Guarantors and the Agent.
(d) INTELLECTUAL PROPERTY SECURITY AGREEMENT. The Company shall have
executed and delivered to the Agent with copies to you and the Other
Purchasers the Intellectual Property Security Agreement dated the date
hereof by and among the Company, the Subsidiary Guarantors and the Agent.
(e) COLLATERAL AGENCY AGREEMENT. The Company shall have executed and
delivered to the Agent with copies to you and the Other Purchasers a
Collateral Agency Agreement dated the date hereof among the Company, the
Subsidiary Guarantors, the Agent, you and the Other Purchasers.
(f) SUBORDINATION AGREEMENTS. The Company shall have executed and
delivered to you and the Other Purchasers the Subordination Agreements.
(g) GUARANTOR SECURITY DOCUMENTS. The Subsidiary Guarantors shall have
executed and delivered to you and the Other Purchasers the Guarantor
Security Documents.
(h) . The Company shall have executed and delivered to you and the
Other Purchasers a fully executed Intercreditor Agreement.
4.17. PROCEEDINGS SATISFACTORY.
All proceedings taken in connection with the issuance and sale
of the Notes and all documents and papers relating thereto shall be satisfactory
to you and your special counsel. You and your special counsel shall have
received copies of such documents and papers as you or they may reasonably
request in connection therewith or in connection with your special counsel's
closing opinion, all in form and substance satisfactory to you and your special
counsel.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
Each of the Company and the Subsidiary Guarantors is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each of the
Company and the Subsidiary Guarantors has the corporate power and authority to
own or hold under lease the Properties it purports to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Other Agreements and the Notes and to perform the
provisions hereof and thereof.
5.2. AUTHORIZATION, ETC.
This Agreement, the Other Agreements, the Notes and each of
the other Financing Documents have been duly authorized by all necessary
corporate action on the part of the Company and the Subsidiary Guarantors party
thereto, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, and each of the
other Financing Documents when delivered will be a legal, valid and binding
obligation of each of the Company and its Subsidiary Guarantors thereto
enforceable against them in accordance with the respective terms of such
Financing Documents except as such enforceability may be limited by (I)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (II) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law); and each of the other Financing Documents
when delivered will be a legal, valid and binding obligation of each of the
Company and its Subsidiary Guarantors thereto enforceable against them in
accordance with the respective terms of such Financing Documents.
5.3. FULL DISCLOSURE.
The financial statements referred to in Section 5.5 hereof do
not contain any untrue statement of a material fact and neither this Agreement
nor any other written statement contains or omits any material fact necessary to
make the statements contained herein or therein not materially misleading. There
is no fact or circumstances in existence on the Closing Date which the Company
has failed to disclose to you and the Other Purchasers in writing that may
reasonably be expected to have a Material Adverse Effect. The Collateral
Certificates and the information contained therein are true and correct as of
the Closing Date.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.
(a) Schedule 5.4 is (except as noted therein) a complete and correct
list of the Company's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and
clear of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly qualified
as a foreign corporation or other legal entity and is in good standing in
each jurisdiction in which such qualification is required by law, other
than those jurisdictions as to which the failure to be so qualified or in
good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the
Properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
5.5. FINANCIAL STATEMENTS; DEBT; PROJECTIONS; FISCAL YEAR.
(a) FINANCIAL STATEMENTS. The Company has delivered to you copies of
the financial statements of the Company and its Subsidiaries listed on
Schedule 5.5(a). All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects
the consolidated financial position of the Company and its
Subsidiaries as of the respective dates specified in such Schedule and the
consolidated results of their operations and cash flows for the respective
periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in
the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
(b) DEBT. Schedule 5.5(b) lists all Debt for Money Borrowed of the
Company and the Subsidiary Guarantors as of the Closing Date, after giving
effect to the transactions contemplated by the Financing Documents and the
Fleet Credit Agreement, and provides the following information with respect
to each item of such Debt: the obligor, each guarantor thereof and each
other Person similarly liable in respect thereof, the holder thereof, the
outstanding amount, the current portion of the outstanding amount, the
final maturity, required sinking fund payments, and a description of the
collateral securing such Debt.
(c) PROJECTIONS. The Company has delivered to you projected financial
statements of the Company and its Subsidiaries described on Schedule 5.5(c)
(collectively, the "PROJECTIONS"). The assumptions used in preparation of
the Projections were reasonable when made and continue to be reasonable.
Such Projections have been prepared by the executive and financial
personnel of the Company in light of the business of the Company. Such
Projections have been prepared in good faith, have a reasonable basis and
represent the good faith opinion of the Company as to the projected results
of the operations of the Company and its Subsidiaries. No material facts
have occurred since the preparation of the Projections that would cause the
Projections, taken as a whole, not to be reasonably attainable, (it being
acknowledged the Projections are not a guaranty of future performance) and
the Company and its Subsidiaries do not have, on the Closing Date, any
material obligations (whether accrued, matured, absolute, actual,
contingent or otherwise) that are not reflected in the Projections.
(d) FISCAL YEAR. The fiscal year of the Company ends on the last day
of December in each year.
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Obligors of
this Agreement, the Financing Documents and the Notes will not (a) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any Property of the Company or any Subsidiary
under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other Material agreement
or instrument to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective Properties may be bound or
affected unless permitted by the Financing Documents, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (c) violate any provision of any
Applicable Law and the Company and each Subsidiary has established and maintains
an adequate monitoring system to insure that it remains in compliance in all
material respects with all federal, state and local laws, rules and regulations
applicable to it. No Inventory of the Company or any Subsidiary has been
produced in violation of the Fair Labor Standards Act (29 U.S.C. 201 et M.), as
amended.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company and the Subsidiary
Guarantors of this Agreement, the Notes or any of the Financing Documents.
5.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Obligors or any of the Company's Subsidiaries or
any Property of the Obligors or the Company's Subsidiaries in any court or
before any arbitrator of any kind or before or by any Governmental
Authority that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
(b) None of the Obligors or any of the Company's Subsidiaries are in
default under any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable
law, ordinance, rule or regulation (including without limitation
Environmental Laws) of any Governmental Authority, WHICH default or
violation, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.
5.9. TAXES.
The FEIN of each of the Company and the Subsidiary Guarantors
is as shown on Schedule 5.9 hereto. Each Obligor and the Company's Subsidiaries
has filed all federal, state and local tax returns and other reports it is
required by law to file and has paid, or made provision for the payment of, all
Taxes upon it, its income and Properties as and when such Taxes are due and
payable, except to the extent being Properly Contested. The provision for Taxes
on the books of the Company and each Subsidiary are adequate for all years not
closed by applicable statutes, and for its current Fiscal Year.
5.10. TITLE TO PROPERTY; PRIORITY OF LIENS.
The Company and each Subsidiary has good, indefeasible and
marketable title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of its real Property, and good title to all of its
personal Property, including all Property reflected in the financial statements
referred to in Section 5.5, in each case free and clear of all Liens except
Permitted Liens. The Company has paid or discharged, and has caused each
Subsidiary to pay and discharge, all lawful claims which, if unpaid, might
become a Lien against any Properties of the Company or such Subsidiary that is
not a Permitted Lien. The Liens granted to Agent pursuant to this Agreement and
the other Financing Documents are Liens with priority only subject to those
granted in favor of the holders of Fleet Debt in the manner described in the
Intercreditor Agreement and subject only to those other Permitted Liens which
are expressly permitted by the terms of this Agreement or the Intercreditor
Agreement to have priority over the Liens of Agent.
5.11. CORPORATE NAMES.
Neither the Company nor any Subsidiary has been known as or
used any corporate, fictitious or trade names except those listed on Schedule
5.11 hereto. Except as set forth on Schedule 5.11, neither the Company nor any
Subsidiary has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.
5.12. BUSINESS LOCATIONS; AGENT FOR SERVICE OF PROCESS.
As of the Closing Date, the chief executive office and other
places of business of the Company and each Subsidiary Guarantor are as listed on
Schedule 5.12 hereto. During the one-year period preceding the Closing Date,
neither the Company nor any Subsidiary Guarantor has had an office, place of
business or agent for service of process other than as listed on
Schedule 5.12. Except as shown on Schedule 5.12, on the Closing Date, no
Inventory of the Company or any Subsidiary Guarantor is stored with a bailee,
warehouseman or similar Person, nor is any Inventory of the Company or any
Subsidiary Guarantor consigned to any Person. As of the Closing Date, the
Persons listed on Schedule 5.12 have consigned Inventory to the Company in the
amounts referenced therein and at Agent's request, the Company shall certify to
the Agent from time to time on the next Compliance Certificate that is to be
delivered to the Agent by the Company under this Agreement after any such
request, the amount, type and name of the owner of any consigned Inventory.
5.13. SOLVENT FINANCIAL CONDITION.
Each of the Company and its Subsidiaries, after giving effect to the
issuance of the Notes and the consummation of the other transactions described
in the Financing Documents, is Solvent.
5.14. SURETY OBLIGATIONS.
Except as set forth on Schedule 5.12 hereto, on the Closing
Date, neither the Company nor any of its Subsidiaries is obligated as surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person.
5.15. BROKERS.
To the best of the Company's knowledge, there are no claims
against it for brokerage commissions, finder's fees or investment banking fees
in connection with the transactions contemplated by this Agreement or any of the
other Financing Documents.
5.16. INTELLECTUAL PROPERTY.
The Company and its Subsidiaries each owns or has the lawful
right to use all Intellectual Property necessary for the present and planned
future conduct of its business without any conflict with the rights of others;
there is no objection to, or pending (or, to the Company's knowledge,
threatened) Intellectual Property Claim which could reasonably be expected to
have a Material Adverse Effect, and the Company is not aware of any grounds for
challenge or objection thereto; and, except as may be disclosed on Schedule
5.16, neither the Company nor any Subsidiary pays any royalty or other
compensation to any Person for the right to use any Intellectual Property. All
such patents, trademarks, service marks, tradenames, copyrights, licenses and
other similar rights are listed on Schedule 5.16, to the extent they are
registered under any Applicable Law or are otherwise material to the Company's
or any Subsidiary's business.
5.17. GOVERNMENTAL APPROVALS.
Each of the Company and its Subsidiaries has, and is in good
standing with respect to, Governmental Approval necessary to continue to conduct
its business as heretofore or proposed to be conducted by it and to own or lease
and operate its Properties as now owned or leased by it.
5.18. RESTRICTIONS.
Neither the Company nor any Subsidiary is a party or subject
to any contract, agreement, or charter or other corporate restriction, which has
or could be reasonably expected to have a Material Adverse Effect. Neither the
Company nor any Subsidiary is a party or subject to any Restrictive Agreements
(including, without limitation, any agreement or contract that restricts
its right or ability to issue capital stock or rights with respect thereto),
except as set forth on Schedule 5.18, none of which prohibit the execution or
delivery of any of the Financing Documents by any Obligor or the performance by
any Obligor of its obligations under any of the Financing Documents to which it
is a party, in accordance with the terms of such Financing Documents.
5.19. NO DEFAULTS.
No event has occurred and no condition exists which would,
upon or after the execution and delivery of the Financing Document or the
Obligors' performance hereunder, constitute a Default or an Event of Default.
Neither the Company nor any Subsidiary is in default, and no event has occurred
and no condition exists which constitutes or which with the passage of time or
the giving of notice or both would constitute a default, under any Material
Contract or in the payment of any Debt to any Person for Money Borrowed.
5.20. LEASES.
Schedule 5.20 is a complete listing of (a) all Material
capitalized leases of the Company and its Subsidiaries and (b) all material
operating leases of the Company and the Subsidiary Guarantors on the Closing
Date. Each of the Company and its Subsidiaries is in substantial compliance with
all of the terms of each of its respective capitalized and operating leases and
there is no basis upon which the lessors under any such leases could terminate
same or declare the Company or any of the Subsidiaries in default thereunder.
5.21. PENSION PLANS.
Except as disclosed on Schedule 5.21, neither the Company nor
any Subsidiary has any Plan on the Closing Date. The Company and each of the
Subsidiaries is in substantial compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that is reasonably likely to result in a material adverse change in
the financial condition of the Company or any Subsidiary exists in connection
with any Plan. Except as disclosed on Schedule 5.21, neither the Company nor any
of the Subsidiaries has any withdrawal liability in connection with a
Multiemployer Plan.
5.22. TRADE RELATIONS.
There exists no actual or threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship
between the Company or any of its Subsidiaries and, to the best of their
knowledge, any customer or any group of customers, whose purchases individually
or in the aggregate are material to the business of the Company or such
Subsidiary, or with any material supplier, and there exists no present condition
or state of facts or circumstances which would materially affect adversely the
Company or any Subsidiary or prevent the Company or any Subsidiary from
conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.
5.23. LABOR RELATIONS.
Except as described on Schedule 5.23, neither the Company nor
any of its Subsidiaries is a party to any collective bargaining agreement. There
are no Material grievances, disputes or controversies with any union or any
other organization of the Company's or any Subsidiary's employees, or, to the
Company's knowledge, any threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
5.24. NOT A REGULATED ENTITY.
Neither the Company nor any Subsidiary Guarantor is (a) an
"investment company" or a "person directly or indirectly controlled by or acting
on behalf of an investment company" within the meaning of the Investment Company
Act of 1940; (b) a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935; or (iii) subject to regulation under the Federal Power Act, the
Interstate Commerce Act, any public utilities code or any other Applicable Law
regarding its authority to incur Debt.
5.25. MARGIN STOCK; APPLICATION OF PROCEEDS.
Neither the Company nor any Subsidiary Guarantor is engaged,
principally or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. The Company
and its Subsidiaries shall apply the proceeds from the sale of the Notes as
specified on Schedule 5.25.
5.26. EQUIPMENT.
The Equipment of the Company and the Subsidiary Guarantors is
in good operating condition and repair, and all necessary replacements of and
repairs thereto shall be made so that the value and operating efficiency of the
Equipment of the Company and the Subsidiary Guarantors shall be maintained and
preserved, reasonable wear and tear excepted. Neither the Company nor any
Subsidiary Guarantor will permit any of its Equipment to become affixed to any
real Property leased to such Subsidiary Guarantor so that an interest arises
therein under the real estate laws of the applicable jurisdiction unless the
landlord of such real Property has executed a landlord waiver or leasehold
mortgage in favor of and in form acceptable to Agent, and no such Subsidiary
Guarantor will permit any of its Equipment to become an accession to any
personal Property other than Equipment that is subject to Liens in favor of you
and the other Purchasers and other Permitted Liens.
5.27. FLEET CREDIT DOCUMENTS.
The Company has provided to you true, correct and complete
copies of the Fleet Credit Agreement and each of the other agreements and
instruments executed in connection therewith (collectively, the "FLEET CREDIT
DOCUMENTS"), and there is no agreement or understanding between or among the
Company and the other parties to the Fleet Credit Documents except as set forth
in the Fleet Credit Documents.
6. REPRESENTATIONS OF THE PURCHASER.
You represent to the Company that you are purchasing the Notes for
your own account or for an account of one or more Affiliate or for one or more
separate accounts maintained by you or for the account of one or more pension or
trust funds and not with a view to the distribution thereof, PROVIDED that the
disposition of such Property shall at all times be within your control. You
understand that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.
7. GENERAL COVENANTS
Each of the Company and the Subsidiary Guarantors covenant that on and
after the Closing Date and so long as any of the Obligations shall be
outstanding:
7.1. VISITS AND INSPECTIONS.
The Company shall permit your representatives and representatives of
the Other Purchasers, from time to time, as often as may be reasonably
requested, to (a) visit and inspect the Properties of the Company and its
Subsidiaries, (b) inspect, audit and make extracts from its or their books and
records, (c) discuss on a monthly basis or more frequently as herein described,
with its or their officers, employees and independent accountants, the Company
and its Subsidiaries' business, assets, liabilities, financial condition,
business prospects and results of operations, (d) conduct field audits and (e)
conduct weekly inspections of the Company and its Subsidiaries to verify the
amount and proper application of proceeds from accounts receivable, the status
of all accounts payable, the amount of cash or other liquidity available to the
Company and the conformity of findings to the Company and its Subsidiaries'
Projections. Expenses incurred by the holders of the Notes in connection with
this Section shall be paid by the Company in accordance with Section 15.1.
7.2. NOTICES.
The Company shall promptly notify each holder of Notes in
writing of the occurrence of any event or the existence of any fact which
renders any representation or warranty in this Agreement or any of the other
Financing Documents inaccurate, incomplete or misleading.
7.3. FINANCIAL AND OTHER INFORMATION.
The Company shall:
(a) keep, and cause each Subsidiary to keep, adequate records and
books of account with respect to its business activities in which proper
entries are made in accordance with GAAP reflecting all its financial
transactions; and cause to be prepared and furnished to each holder of
Notes the following (all to be prepared in accordance with GAAP applied on
a consistent basis, unless the Company's certified public accountants
concur in any change therein and such change is disclosed to each holder of
Notes and is consistent with GAAP);
(b) deliver not later than ninety (90) days after the close of each
Fiscal Year (beginning with Fiscal Year ended December 31, 2000),
unqualified audited financial statements of the Company and its
Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by a firm of independent certified public
accountants of recognized standing selected by the Company but acceptable
to Required Holders (except for a qualification for a change in accounting
principles with which the accountant concurs and a going concern
qualification as to the Company);
(c) deliver not later than forty-five (45) days after the end of each
Fiscal Quarterly accounting period, including the last quarter of the
Company's Fiscal Year and beginning with the Company's Fiscal Quarter ended
December 31, 2000, unaudited interim financial statements of the Company
and its Subsidiaries as of the end of such quarter and of the portion of
the Company's financial year then elapsed, on a Consolidated and
consolidating basis, certified by the Chief Financial Officer of the
Company as prepared in accordance with GAAP and fairly presenting the
financial position and results of operations of the Company and its
Subsidiaries for such quarter and period subject only to changes from audit
and year-end adjustments and except that such statements need not contain
notes;
(d) deliver not later than twenty (20) days after the end of each
month hereafter, including the last month of the Company's Fiscal Year and
beginning with the Company's fiscal month ended January 31, 2001, unaudited
interim financial statements
and cash budgets in form satisfactory to the Required Holders, of each of
the Company and its Subsidiaries as of the end of such month and of the
portion of the Company's financial year then elapsed, on a Consolidated and
consolidating basis, certified by the principal financial officer of the
Company as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of the Company
and its Subsidiaries for such month and period subject only to changes from
audit and year-end adjustments and except that such statements need not
contain notes;
(e) deliver promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports
which the Company or ▇▇▇▇▇▇ has made available to its shareholders and
copies of any regular, periodic and special reports or registration
statements which the Company and its Subsidiaries files with the SEC or any
Governmental Authority which may be substituted therefor, or any national
securities exchange;
(f) promptly after the filing thereof, deliver copies of any annual
report to be filed with ERISA in connection with each Plan;
(g) promptly after the sending to any holder of Notes, deliver any
statement, report or certificate of the Company or any Subsidiary,
including without limitation any previously furnished to any holder of
Debt, copies of such statement, report or certificate to the extent that
the information contained in such statement, report or certificate has not
already been delivered to each holder of Notes;
(h) promptly after the execution thereof, deliver copies of all
amendments, waivers and modifications to the Fleet Credit Agreement or any
Acceptable Credit Facility;
(i) on or before the 10th day of each calendar month, the Company
shall provide a report to each holder of Notes with respect to its efforts
to raise additional equity or Debt financing;
(j) promptly after (and in any event within 3 Business Days of)
becoming aware (A) of the existence of any condition or event which
constitutes a Default or an Event of Default, or (B) that the holder of any
Note, or of any Debt, shall have given notice or taken any other action
with respect to a claimed Default, Event of Default, or default or event of
default, a notice specifying the nature of the claimed Default, Event of
Default, or default or event of default and the notice given or action
taken (if any) by such holder and what action the Company is taking or
proposes to take with respect thereto; and
(k) deliver such other data and information (financial and otherwise)
as any holder of Notes, from time to time, may reasonably request, bearing
upon or related to the Collateral or the Company, Subsidiary Guarantors and
each of their Subsidiaries' financial condition or results of operations;
Concurrently with the delivery of the financial statements described
in this Section 7.3(b), the Company and Subsidiary Guarantors shall forward to
each holder of Notes a copy of the accountants' letter to the Company's
management that is prepared in connection with such financial statements and
also shall cause to be prepared and shall furnish to each holder of Notes a
certificate of the aforesaid certified public accountants certifying to each
such holder of Notes that based upon their examination of the financial
statements of the Company and its Subsidiaries performed in connection with
their examination of said financial statements, they are not aware of any
Default or Event of Default, or, if they are aware of such Default or Event of
Default, specifying the nature thereof, and acknowledging, in a manner
satisfactory to each holder of
Notes, that they are aware that each such holder of Notes is relying on such
financial statements in making its decisions with respect to the Notes.
Concurrently with the delivery of the financial statements described in clauses
(b), (c) and (d) of this Section 7.3, or more frequently if requested by any
holder of Notes, the Company shall cause to be prepared and furnished to each
holder of Notes a Compliance Certificate executed by the Chief Financial Officer
of the Company.
7.4. LANDLORD AND STORAGE AGREEMENTS.
The Company shall provide each holder of Notes with copies of
all agreements between the Company or any of its Subsidiary Guarantors and any
landlord or warehouseman which owns any premises at which any Inventory of the
Company or any Subsidiary Guarantor may, from time to time, be kept. 7.5.
PROJECTIONS.
The Company shall, (a) no later than 30 days prior to the end of each
Fiscal Year of the Company, deliver to each holder of Notes the Projections of
the Company and its Subsidiaries for the forthcoming Fiscal Year, and (b)
deliver to each holder of Notes on or before the 15th day of each month, the
updated Projections of the Company for the current Fiscal Year which take
account of the results of the preceding month and senior management's current
view of the prospects of the Company.
7.6. TAXES.
The Company shall pay and discharge all Taxes prior to the date on
which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.
7.7. COMPLIANCE WITH LAWS.
The Company shall comply with all Applicable Law, including ERISA, all
Environmental Laws, OSHA, FLSA and all laws, statutes, regulations and
ordinances regarding the collection, payment and deposit of Taxes, and obtain
and keep in force any and all Governmental Approvals necessary to the ownership
of its Properties or to the conduct of its business, to the extent that any such
failure to comply, obtain or keep in force could be reasonably expected to have
a Material Adverse Effect. Without limiting the generality of the foregoing, if
any Environmental Release shall occur at or on any of the Properties of the
Company or any Subsidiary Guarantor, the Company shall, or shall cause the
applicable Subsidiary Guarantor to, act promptly and diligently to investigate
and report to each holder of Notes and all appropriate Governmental Authorities
the extent of, and to make appropriate remedial action to eliminate, such
Environmental Release all in accordance with applicable Environmental Laws.
7.8. INSURANCE.
In addition to the insurance required pursuant to the Financing
Documents with respect to the Collateral, each of the Company and Subsidiary
Guarantors shall maintain with financially sound and reputable insurers, (a)
insurance with respect to its Properties and business against such casualties
and contingencies of such type (including product liability, workers'
compensation, larceny, embezzlement, or other criminal misappropriation
insurance) and in such amounts as is customary in the business of the Company or
any Subsidiary Guarantor, as the case may be and (b) business interruption
insurance in an amount not less than $13,860,886.
7.9. INTELLECTUAL PROPERTY.
The Company shall, promptly after applying for or otherwise acquiring
any Intellectual Property, deliver to each holder of Notes (or the Agent for
their benefit), in form and substance acceptable to the Required Holders and in
recordable form, all documents necessary for the holders of Notes to perfect
their Lien on such Intellectual Property.
7.10. PLEDGED SHARES.
The Company shall pledge to the Agent, for the benefit of itself and
each holder of Notes from time to time, a security interest in 100% of the
Equity Interests of each Subsidiary Guarantor.
7.11. PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.
The Company will punctually pay, or cause to be paid, the principal
of, and interest on, the Notes, as and when the same shall become due according
to the terms hereof and of the Notes, and will maintain an office at the address
of the Company as provided on Annex 1 hereto where notices, presentations and
demands in respect hereof or the Notes may be made upon it. Such office will be
maintained at such address until such time as the Company notifies the holders
of the Notes of any change of location of such office, which will in any event
be located within the United States of America.
7.12. INTENTIONALLY OMITTED.
7.13. DOMESTIC SUBSIDIARY GUARANTIES.
The Company will cause each Person that becomes a Domestic Subsidiary
at any time after the Closing Date to execute and deliver to the holders of
Notes, within 15 days of such Person becoming a Domestic Subsidiary, a
Subsidiary Guaranty in respect of the Notes, substantially in the form of
Exhibit 4.11 to this Agreement. At the time each such Domestic Subsidiary
executes such Subsidiary Guaranty, the Company shall cause such Domestic
Subsidiary to deliver to each holder of Notes a certificate of the secretary or
assistant secretary of such Domestic Subsidiary attaching and certifying as
true, complete and accurate copies of the constitutive documents of such
Domestic Subsidiary and corporate resolutions (or equivalent) authorizing such
transaction, in each case certified as true and correct by an appropriate
officer of such Domestic Subsidiary.
7.14. ORDER PROCESSING.
(a) Within 5 Business Days of the Closing Date, the Company and the
Subsidiary Guarantors shall process all orders with you and the Other
Purchasers that the Company and the Subsidiary Guarantors have received
from its customers through the Closing Date with respect to products sold
by you and the Other Purchasers.
(b) The Company will, and will cause each Subsidiary to, place and
process orders with you and the Other Purchasers immediately upon, and in
no case later than 5 Business Days of, receipt of orders or order requests
from the Company's or its Subsidiary's customers to the Company or any
Subsidiary for products sold by you and the Other Purchasers.
7.15. COMMITMENT LETTER.
On or before August 31, 2001, the Company shall deliver to each holder
of Notes a copy of a fully executed commitment letter evidencing the commitment
by a financing institution or investors to commit not less than $9,000,000 in
borrowings or as an investment, as
the case may be, in the Company on or before September 15, 2001, such commitment
letter to be on terms and conditions and from investors reasonably acceptable to
the Required Holders.
7.16. ▇▇▇▇▇ ASSIGNMENT OF CLAIMS.
The Company shall cause The ▇▇▇▇▇ Company, Inc. to deliver a Federal
Assignment of Claims in the form attached hereto as Exhibit 7.18 executed by The
▇▇▇▇▇ Company, Inc.
7.17. FLEET'S RELEASE OF LIENS.
Upon the satisfaction in full of the senior obligations under
the Fleet Credit Agreement, the Company will, and will cause each of its direct
and indirect Subsidiaries to, promptly obtain from the holders of Fleet Debt who
have a security interest in any Collateral (a) releases and termination
statements affecting such Collateral and (b) any stock certificates evidencing
equity interests in such Subsidiaries being held by the holders of Fleet Debt
which shall then be promptly turned over to the Agent.
8. PAYMENTS
8.1. INTEREST PAYMENTS.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months and shall accrue on the unpaid principal balance of
each of the Notes from time to time outstanding from and including the date
of such Note at a rate per annum equal to the Floating Rate, payable on the
Maturity Date and, to the extent permitted by law in respect of any Note,
on any overdue payment of principal and any overdue payment of interest,
payable on demand, at a rate per annum equal to the lesser of:
(a) the Maximum Legal Rate of Interest; and
(b) the Floating Rate plus two percent (2%) per annum (the "DEFAULT
RATE").
All overdue payments shall compound interest on a monthly basis at the rate
set forth above.
8.2. PRINCIPAL PAYMENTS.
(a) OPTIONAL PRINCIPAL PAYMENTS. The Company may pay the principal
amount of the Notes in whole or in part, at any time without premium or
penalty, in a minimum aggregate principal amount of $50,000 (or, if the
aggregate outstanding principal amount of the Notes is less than $50,000 at
such time, then such principal amount) and in multiples of $10,000,
together with interest on such principal amount then being paid accrued to
the payment date.
(b) REQUIRED PRINCIPAL PAYMENTS. The Company shall be required to
prepay the principal amount of Notes in the amounts and in the manner as
described pursuant to Section 9.3(j), Section 9.3(k), Section 9.9(d) and
Section 9.10 together with interest on such principal amount then being
paid accrued to the payment date.
(c) NOTICE OF PAYMENT. The Company will give notice of any payment of
the Notes pursuant to this Section 8.2 to each holder of Notes not less
than five (5) days nor more than twenty (20) days before the specified
payment date, stating:
(i) the specified payment date;
(ii) that such payment is to be made pursuant to this Section 8.2
and the explanation of which clause (a) or (b) is relevant;
(iii) the principal amount of each Note to be paid on such date;
and
(iv) the interest to be paid on each such Note, accrued to the
specified payment date.
Notice of payment having been so given to each holder of Notes, the
aggregate principal amount of the Notes to be paid stated in such notice, and
interest thereon accrued to the specified payment date, shall become due and
payable on the specified payment date.
8.3. PAYMENTS AMONG NOTEHOLDERS.
If at the time any payment of the principal of the Notes made
pursuant to Section 8.2 is made and there is more than one Note outstanding, the
aggregate principal amount of each such required or optional partial payment of
the Notes shall be allocated among the Notes at the time outstanding pro rata in
proportion to the respective unpaid principal amounts of all such outstanding
Notes.
8.4. NOTATION OF NOTES ON PAYMENT.
Upon any partial payment of a Note, the holder of such Note may (but
shall not be required to), at its option:
(a) surrender such Note to the Company pursuant to Section 13.2 in
exchange for a new Note in a principal amount equal to the principal amount
remaining unpaid on the surrendered Note;
(b) make such Note available to the Company for notation thereon of
the portion of the principal so paid; or
(c) ▇▇▇▇ such Note with a notation thereon of the portion of the
principal so paid.
In case the entire principal amount of any Note is paid, such Note
shall be surrendered to the Company for cancellation and shall not be reissued,
and no Note shall be issued in lieu of the paid principal amount of any Note.
8.5. NO OTHER PAYMENTS OF PRINCIPAL; ACQUISITION OF NOTES.
Except for payments of principal made in accordance with this
Section 8, the Company may not make any payment of principal in respect of the
Notes. The Company will not, and will not permit any Subsidiary or any Affiliate
to, directly or indirectly, acquire or make any offer to acquire any Notes.
9. NEGATIVE COVENANTS
The Company covenants that on and after the Closing Date and so long
as any of the Obligations shall be outstanding:
9.1. MERGERS; CONSOLIDATIONS; ACQUISITIONS.
The Company shall not, and shall not permit any Subsidiary to,
merge or consolidate with any Person; nor acquire, nor permit any of the
Company's Subsidiaries to acquire, all or any substantial part of the Properties
of any Person.
9.2. LOANS.
The Company shall not, and shall not permit any Subsidiary to, make
any loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person.
9.3. DEBT.
The Company shall not, and shall not permit any Subsidiary to, create,
incur, assume, guarantee or suffer to exist any Debt, except:
(a) the Notes;
(b) Fleet Debt existing on the Closing Date and Fleet Debt existing
pursuant to an Acceptable Credit Facility;
(c) Permitted Subordinated Debt;
(d) Accounts payable to trade creditors and current operating expenses
(other than for Money Borrowed or Accounts payable to you and the Other
Purchasers) which are not aged more than 120 days from billing date or more
than 30 days from the due date, in each case incurred in the ordinary
course of business and paid within such time period, unless the same are
being Properly Contested; and the Company or such Subsidiary shall have set
aside such reserves, if any, with respect thereto as are required by GAAP
and deemed adequate by the Company or such Subsidiary and its independent
accountants;
(e) Obligations to pay Rentals permitted by Section 9.13;
(f) Permitted Purchase Money Debt;
(g) contingent liabilities arising out of endorsements of checks and
other negotiable instruments for deposit or collection in the ordinary
course of business;
(h) Debt that is not included in any of the preceding paragraphs of
this Section 9.3, is not secured by a Lien (unless such Lien is a Permitted
Lien) and does not exceed at any time, in the aggregate, the sum of
$100,000 as to the Company and all of the Subsidiary Guarantors;
(i) Loans permitted by Section 9.2;
(j) Debt incurred, the net cash proceeds of which are used to pay the
Montrose Debenture so long as any excess net cash proceeds are applied as
provided in clause (k) of this Section 9.3;
(k) Additional unsecured Debt, so long as (i) no Default or Event of
Default has occurred and is continuing at the time of the incurrence
thereof, and (ii) (A) if such Debt is incurred prior to the full
indefeasible payment of the Fleet Debt, but in no event later than May 31,
2001, such Debt is subordinated to the Obligations on terms reasonably
satisfactory to the Required Holders and the aggregate amount of all cash
proceeds generated from any and all such incurrences of additional Debt
shall be, in any
event, applied as a Debt Prepayment Application on May 31, 2001, or (B) if
such Debt is incurred after the full indefeasible payment of the Fleet
Debt, the amount of all cash proceeds generated from the incurrence of such
additional Debt is applied contemporaneously to a Debt Prepayment
Application; and
(l) (i) Debt of a Foreign Subsidiary existing on the Closing Date or
incurred pursuant to a credit facility existing on the Closing Date (in the
case of any such credit facility, as such facility is in effect on the
Closing Date and without giving effect to any amendment thereto unless such
amended facility, if treated as a refinancing or replacement of the
pre-amendment facility, would be permitted by the following clause (ii),
and (ii) refinancings or replacements of any such Debt or credit facility,
PROVIDED, with respect to each such refinancing or replacement, that the
maximum aggregate principal amount thereof does not exceed the maximum
principal amount of the refinanced or replaced Debt or facility, is used
for similar business purposes, and is not subject to restrictions on
Upstream Payments that are materially more restrictive than those to which
the refinanced or replaced Debt or facility was subject.
9.4. AFFILIATE TRANSACTIONS.
Except as set forth on Schedule 9.4 or as permitted by Section
9.9, the Company shall not, and shall not permit any Subsidiary to, enter into,
or be a party to, any transaction with any Affiliate of the Company or any of
its Subsidiaries or stockholder, except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Subsidiary's business
and upon fair and reasonable terms which are fully disclosed to each holder of
Notes and are no less favorable to the Company or such Subsidiary than would
obtain in a comparable arm's length transaction with a Person not an Affiliate
or stockholder of the Company or such Subsidiary.
9.5. LIENS.
The Company shall not, and shall not permit any Subsidiary Guarantor
to, create or suffer to exist any Lien upon any of its Property, income or
profits, whether now owned or hereafter acquired, except the following
(collectively, "PERMITTED LIENS"):
(a) Liens at any time granted in favor of Agent;
(b) Liens for Taxes (excluding any Lien imposed pursuant to any of the
provisions of ERISA) not yet due or being Properly Contested, but only if
permitted (i) pursuant to the Fleet Credit Agreement, or (ii) after the
Fleet Debt is paid, in the Required Holders' judgment such Lien does not
adversely affect the rights or the priority of the holders of Notes in the
Collateral;
(c) Liens arising in the ordinary course of the Company's or
Subsidiary Guarantor's business by operation of law or regulation, but only
if payment in respect of any such Lien is not at the time required and such
Liens do not, in the aggregate, materially detract from the value of the
Property of the Company or such Subsidiary Guarantor or materially impair
the use thereof in the operation of the Company's or such Subsidiary
Guarantor's business;
(d) Purchase Money Liens securing Permitted Purchase Money Debt;
(e) Liens arising from the incurrence of additional Debt permitted by
Section 9.3(j) so long as such Liens are junior in right to the Liens
granted to the Agent pursuant to the Financing Documents;
(f) such other Liens as appear on Schedule 9.5 hereto;
(g) Liens in favor of the holders of Fleet Debt as provided for under
the Fleet Credit Documents; and
(h) such other Liens as the Required Holders in their sole discretion
may hereafter approve in writing.
9.6. SUBORDINATED DEBT.
The Company shall not, and shall not permit any Subsidiary to,
make any payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except as provided in the Subordination Agreement relative to the Montrose
Debenture.
9.7. DISTRIBUTIONS.
The Company shall not, and shall not permit any Subsidiary to, declare
or make any Distributions, except for Upstream Payments.
9.8. CAPITAL EXPENDITURES.
The Company shall not, and shall not permit any Subsidiary to,
make Capital Expenditures (including expenditures by way of Capital Leases)
which in the aggregate, as to the Company and Subsidiary, exceed $100,000 during
the period from the Closing Date through the Maturity Date.
9.9. DISPOSITION OF ASSETS.
The Company shall not, and shall not permit any Subsidiary to,
sell, Transfer, lease or otherwise dispose of any of its or their respective
Properties, including any disposition of Property as part of a
Sale-and-Leaseback Transaction, to or in favor of any Person, except:
(a) sales of Inventory of the Company or any Subsidiary in the
ordinary course of business so long as no Event of Default exists
hereunder;
(b) a Transfer of Property to the Company by a Subsidiary;
(c) a Transfer of Property from a Foreign Subsidiary to another
Foreign Subsidiary; and
(d) sales, Transfers, leases or other disposition of Property for
which cash proceeds are generated so long as after giving effect to such
sale, Transfer, lease or other disposition, (i) no Default or Event of
Default shall exist and (ii) the entire Net Proceeds Amount above $500,000
received is applied promptly, and in any event within 10 Business Days of
receipt of such Net Proceeds Amount, (A) if such Net Proceeds Amount is
received prior to the full indefeasible payment of the Fleet Debt, but in
no event later than May 31, 2001, to prepayment of the Fleet Debt, provided
however, that an amount equal to the total of all Net Proceeds Amounts
received prior to May 31, 2001 shall be, in any event, applied as a Debt
Prepayment Application on May 31, 2001, or (B) if such Net Proceeds Amount
is received after the full indefeasible payment of the Fleet Debt, to a
Debt Prepayment Application.
9.10. LIMITATION ON ISSUANCE OF STOCK.
The Company will not permit any of the Company's Subsidiaries,
directly or indirectly, to issue any shares of its Capital Stock, Equity
Interests or other securities (or warrants, rights or options to acquire shares
or other equity securities); provided, that so long as no Default or Event of
Default shall exist, the Company or any Subsidiary may issue shares of its
Capital Stock or other Equity Interests (a) upon exercise of the Company's
currently outstanding Class A Common Stock Purchase Warrants so long as the Net
Proceeds Amount is used to pay the remaining balance under the Montrose
Debenture and any remaining Net Proceeds Amount thereof is used as provided in
clause (b) of this Section 9.10; and (b) so long as the Net Proceeds Amount
received in connection with such issuance is applied contemporaneously, (i) if
such Net Proceeds Amount is received prior to the full indefeasible payment of
the Fleet Debt but in no event later than May 31, 2001, to prepayment of the
Fleet Debt, provided however, that an amount equal to the total of all Net
Proceeds Amounts received prior to May 31, 2001 shall be, in any event, applied
as a Debt Prepayment Application on May 31, 2001, or (ii) if such Net Proceeds
Amount is received after the full indefeasible payment of the Fleet Debt, as a
Debt Prepayment Application.
9.11. ▇▇▇▇ AND HOLD SALES, ETC.
The Company shall not, and shall not permit any Subsidiary Guarantor
to, on or after the Closing Date, make any sale to any customer on a ▇▇▇▇ and
hold, guaranteed sale, sale and return, sale on approval or consignment basis,
or any sale on a repurchase or return basis.
9.12. RESTRICTED INVESTMENTS.
The Company shall not, and shall not permit any Subsidiary Guarantor
to, make or have any Restricted Investment.
9.13. LEASES.
The Company shall not, and shall not permit any Subsidiary to,
become a lessee under any operating lease (other than a lease under which the
Company or any Subsidiary is lessor) of Property if the aggregate Rentals
payable during any current or future period of 12 consecutive months under the
lease in question and all other leases under which the Company or any Subsidiary
is then lessee would exceed $50,000. 9.14. TAX CONSOLIDATION.
The Company shall not, and shall not permit any Subsidiary Guarantor
to, file or consent to the filing of any consolidated income tax return with any
Person other than the Company or a Subsidiary.
9.15. BANK ACCOUNTS.
The Company shall not permit any Subsidiary to create or maintain an
account for collecting or holding cash or cash equivalents with any Person,
unless such account (a) is permitted by the Required Holders or (b) owned by CSS
and at all times has cash or cash equivalents of a value less than $250,000. All
such accounts of the Company's Subsidiaries are listed on Schedule 9.15 hereto
and are hereby permitted.
9.16. UPSTREAM PAYMENTS.
The Company shall not, and shall not permit any Subsidiary to,
create or suffer to exist any encumbrance or restriction on the ability of a
Subsidiary to make any Upstream Payment, except for encumbrances or restrictions
(a) pursuant to the Financing Documents and
the Fleet Credit Documents; (b) existing under Applicable Law; or (c) existing
pursuant to documents relating to Debt permitted by Section 9.3(l) hereof.
9.17. ACCOUNTING CHANGES.
The Company shall not, and shall not permit any Subsidiary Guarantor
to, make any significant change in accounting treatment or reporting practices,
except as may be required by GAAP, or establish a fiscal year different from the
Fiscal Year.
9.18. ORGANIZATION DOCUMENTS.
The Company shall not, and shall not permit any Subsidiary Guarantor
to, amend, modify or otherwise change any of the terms or provisions in any of
its Organization Documents as in effect on the Closing Date, except for changes
that do not affect in any way the Company's or such Subsidiary Guarantor's
rights and obligations to enter into and perform the Financing Documents to
which it is a party and to pay all of the Obligations and that do not otherwise
have a Material Adverse Effect. 9.19. RESTRICTIVE AGREEMENTS.
The Company shall not, and shall not permit any Subsidiary Guarantor
to, enter into or become party to any Restrictive Agreement other than those
disclosed in Schedule 5.18 hereto or permitted by the Fleet Credit Documents,
provided that none of such disclosed agreements shall be amended without prior
notice to and the consent of the Required Holders.
9.20. LIMITATION ON SIDE AGREEMENTS.
The Company shall not, and shall not permit any Subsidiary Guarantor
to, enter into any amendments, waivers or other agreements with you and the
Other Purchasers relating to the subject matter of the Financing Documents
(other than as provided in Section 17 of this Agreement).
9.21. CONDUCT OF BUSINESS.
The Company shall not, and shall not permit any Subsidiary Guarantor
to, engage in any business other than the business engaged in by it on the
Closing Date and any business or activities which are substantially similar,
related or incidental thereto.
10. FINANCIAL COVENANTS.
The Company covenants that on and after the Closing Date and so long
as any of the Obligations shall be outstanding:
10.1. MINIMUM EBITDA OF THE COMPANY.
The Company will not permit EBITDA of the Company and CSS,
collectively, to be less than (or greater than in the case of a loss) the
amounts specified below during the following periods:
(a) $(1,200,000) for the month ending January 31, 2001;
(b) $(2,489,000) for the two-month period ending February 28, 2001;
(c) $(3,689,000) for the three-month period ending March 31, 2001;
(d) $(4,934,000) for the four-month period ending April 30, 2001; and
(e) $(6,134,000) for the five-month period ending May 31, 2001.
10.2. MINIMUM EBITDA OF ▇▇▇▇▇▇.
The Company will not permit EBITDA of ▇▇▇▇▇▇ and its Subsidiaries to
be less than (or greater than in the case of a loss) the amounts specified below
during the following periods:
(a) $3,366,000 for the month ending January 31, 2001;
(b) $(2,638,000) for the two-month period ending February 28, 2001;
(c) $(2,283,000) for the three-month period ending March 31, 2001;
(d) $(1,646,000) for the four-month period ending April 30, 2001; and
(e) $(841,000) for the five-month period ending May 31, 2001.
10.3. MAXIMUM OPERATING EXPENSES.
The Company and its Subsidiaries will not permit the Consolidated
operating expenses of the Company and its Subsidiaries (as determined in
accordance with GAAP) for any period of three (3) consecutive calendar months
ending on any date described in the table set forth below to exceed the amount
set forth opposite such period in such table:
PERIOD AMOUNT
June 30, 2001 $11,000,000
July 31, 2001 Maximum Operating
Expense Amount
August 31, 2001 Maximum Operating
Expense ▇▇▇▇▇▇
▇▇. EVENTS OF DEFAULT
An "EVENT OF DEFAULT" exists at any time if any of the following
occurs and is continuing thereafter for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):
(a) PAYMENTS ON NOTES. The Company fails to make any payment of
principal, interest or any other amount on any Note on or before the date
such payment is due (whether due at stated maturity, on demand, upon
acceleration or otherwise); or
(b) PAYMENT OF OBLIGATIONS. Any Obligor fails to make any payment of
any Obligation on the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise); or
(c) OTHER DEFAULTS.
(i) COVENANT DEFAULTS - the Company or any Subsidiary Guarantor
fails to comply with any provision of Section 7, Section 9 or Section
10; or
(ii) OTHER DEFAULTS - any Obligor fails to comply with any other
provision hereof or of any other Financing Document, and such failure
continues for more than 15 days after the sooner to occur of Obligor's
receipt of notice of such breach from Required Holders or the date on
which such failure or neglect first became known to any officer of the
Company or such Subsidiary Guarantor or ▇▇▇▇▇▇▇ ▇▇▇▇, as the case may
be; or
(d) WARRANTIES OR REPRESENTATIONS. Any warranty, representation or
other written statement by or on behalf of any Obligor contained in any
Financing Document, in any written amendment, supplement, modification or
waiver with respect to any Financing Document or in any instrument
furnished in compliance herewith or in reference hereto, shall have been
false or misleading in any material respect when made; or
(e) DEFAULT IN RESPECT OF OTHER DEBT. There shall occur any default or
event of default on the part of the Company and its Subsidiaries under any
agreement, document or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any Subsidiary or any of
its Property is bound, creating or relating to any Debt (other than the
Obligations) if the payment or maturity of such Debt is accelerated in
consequence of such event of default or demand for payment of such Debt is
made; or
(f) INSOLVENCY.
(i) INVOLUNTARY BANKRUPTCY PROCEEDINGS:
(A) a receiver, liquidator, custodian or trustee of any
Obligor, or of all or any substantial part of the Property of any
of them, is appointed by court order; or an order for relief is
entered with respect any Obligor, or any Obligor is adjudicated
bankrupt or insolvent;
(B) all or any substantial part of the Property of any
Obligor is sequestered by court order; or
(C) a petition is filed against any Obligor under any
bankruptcy, reorganization, winding-up, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, and is not
dismissed within thirty (30) days after such filing;
(ii) VOLUNTARY PETITIONS. any Obligor files a petition in
voluntary bankruptcy or seeks relief under any provision of any
bankruptcy, reorganization, winding-up, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the
filing of any petition against it under any such law; or
(iii) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. any Obligor makes
an assignment for the benefit of its creditors, or admits in writing
its inability, or fails, to pay its debts generally as they become
due, or consents to the appointment of a receiver, liquidator or
trustee of the any Obligor or of all or a substantial part of its
Property; or
(g) UNDISCHARGED FINAL JUDGMENTS. A final judgment or final, judgments
for the payment of money aggregating in excess of $50,000 is or are
outstanding against one
or more of the Obligors or any Subsidiary of the Company and any one of
such judgments shall have been outstanding for more than 60 days from the
date of its entry and shall not have been discharged in full or stayed; or
(h) FINANCING DOCUMENTS. Any Financing Document shall cease to be in
full force and effect or shall be declared by a court or other Governmental
Authority of competent jurisdiction to be void, voidable or unenforceable
against any Obligor or any Affiliate; the validity or enforceability of any
Financing Document against any Obligor or any Affiliate shall be contested
by any Obligor or Affiliate; or any Obligor or Affiliate shall deny that
any Obligor has any further liability or obligation under any Financing
Document or any provision thereof; or
(i) UNINSURED LOSSES. Any material loss, theft, damage or destruction
of any of the Collateral not fully covered by insurance; or
(j) MATERIAL ADVERSE EFFECT. There shall occur any event or condition
that has a Material Adverse Effect or there shall have occurred any event
or occurrence which shall have a material adverse effect on the Company or
any Subsidiary Guarantor or their ability to pay the Obligations in full;
or
(k) BUSINESS DISRUPTION; CONDEMNATION. There shall occur a cessation
of a substantial part of the business of the Company, or any of its
Subsidiaries (other than as a result of a transaction permitted by Section
9.1 hereof) for a period which significantly affects such Obligor's
capacity to continue its business, consistent with its financial position
as of the Closing Date, on a profitable basis; or any Obligor shall suffer
the loss or revocation of any license or permit now held or hereafter
acquired by such Obligor which is necessary to the continued or lawful
operation of its business; or any Obligor 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 any Obligor leases or
occupies any premises on which any Collateral is located shall be canceled
or terminated prior to the expiration of its stated term; or any material
part of the Collateral with a value individually or in the aggregate in
excess of $50,000 shall be taken through condemnation or the value of such
Property shall be impaired through condemnation; or
(l) ERISA. A Reportable Event shall occur which could reasonably be
expected to constitute grounds for the termination by the PBGC of any Plan
or for the appointment by the appropriate United States district court of a
trustee for any Plan, or if any Plan shall be terminated or any such
trustee shall be requested or appointed, or if the any Obligor is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan resulting from such Obligor's complete or
partial withdrawal from such Plan; or
(m) CHALLENGE TO FINANCING DOCUMENTS. Any Obligor or any of its
Affiliates shall challenge or contest in any action, suit or proceeding the
validity or enforceability of any of the Financing Documents, the legality
or enforceability of any of the Obligations or the perfection or priority
of any Lien granted to Agent or any of the holders of Notes, or any of the
Financing Documents ceases to be in full force or effect for any reason
other than a full or partial waiver or release by Agent and the holders of
the Notes in accordance with the terms thereof; or
(n) REPUDIATION OF OR DEFAULT UNDER SUBSIDIARY GUARANTY. Any
Subsidiary Guarantor shall revoke or attempt to revoke the Subsidiary
Guaranty signed by such Subsidiary Guarantor, shall repudiate such
Subsidiary Guarantor's liability thereunder, or shall be in default under
the terms thereof; or
(o) CHANGE IN CONTROL. A Change in Control occurs; or
(p) CRIMINAL FORFEITURE. Any Obligor or any Subsidiary of the Company
or the Subsidiary Guarantor shall be convicted under any criminal law that
could lead to a forfeiture of any Property of such Obligor; or
(q) CAPITAL INFUSION. The Company and its Subsidiaries shall have
failed to obtain at least US$9,000,000 (or its equivalent) in additional
Debt or cash equity investments on or before September 15, 2001.
12. DEFAULT REMEDIES
12.1. ACCELERATION OF MATURITY NOTES.
(a) ACCELERATION ON EVENT OF DEFAULT.
(i) AUTOMATIC. If any Event of Default specified in Section 11(f)
shall exist, all of the Notes at the time outstanding shall
automatically become immediately due and payable together with
interest accrued thereon, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived.
(ii) BY ACTION OF HOLDERS. If any Event of Default (other than an
Event of Default specified in Section 11(f)) shall exist, the Required
Holders may exercise any right, power or remedy permitted to such
holder or holders by law, and shall have, in particular, without
limiting the generality of the foregoing, the right to declare, the
entire principal of, and all interest accrued on, all the Notes then
outstanding to be due and payable, and such Notes shall thereupon
become forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby expressly
waived, and the Company shall forthwith pay to the holder or holders
of all the Notes then outstanding the entire principal of, and
interest accrued on, the Notes.
(b) ACCELERATION ON PAYMENT DEFAULT. During the existence of an Event
of Default described in Section 11(a), and irrespective of whether the
Notes then outstanding shall have become due and payable pursuant to
Section 12.1(a)(ii), any holder of Notes who or which shall have not
consented to any waiver with respect to such Event of Default may, at his
or its option, by notice in writing to the Company, declare the Notes then
held by such holder to be, and such Notes shall thereupon become, forthwith
due and payable together with all interest accrued thereon, without any
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, and the Company shall forthwith pay to such holder
the entire principal of and interest accrued on such Notes.
12.2. OTHER REMEDIES.
During the existence of an Event of Default, irrespective of
whether the Notes then outstanding shall become due and payable pursuant to
Section 12.1, and irrespective of whether any holder of Notes then outstanding
shall otherwise have pursued or be pursuing any other rights or remedies, any
holder of Notes may proceed to protect and enforce its rights hereunder and
under such Notes by exercising such remedies as are available to such holder in
respect thereof under applicable law, either by suit in equity or by action at
law, or both, whether for specific performance of any agreement contained herein
or in aid of the exercise of any power granted herein; PROVIDED, HOWEVER, that
the maturity of such holder's Notes may be accelerated only in accordance with
Section 12.1.
12.3. NONWAIVER; REMEDIES CUMULATIVE.
No course of dealing on the part of any holder of Notes nor
any delay or failure on the part of any holder of Notes to exercise any right
shall operate as a waiver of such right or otherwise prejudice such holder's
rights, powers and remedies. All rights and remedies of each holder of Notes
hereunder and under applicable law are cumulative to, and not exclusive of, any
other rights or remedies any such holder of Notes would otherwise have.
12.4. ANNULMENT OF ACCELERATION OF NOTES.
If a declaration is made pursuant to Section 12.1, then and in
every such case, the Required Holders may, by written instrument filed with the
Company, rescind and annul such declaration, and the consequences thereof;
PROVIDED, HOWEVER, that at the time such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for the payment of
any moneys due on or pursuant hereto or the Notes;
(b) all arrears of interest upon all of the Notes and all of the other
sums payable hereunder and under the Notes (except any principal of, or
interest on, the Notes which shall have become due and payable by reason of
such declaration under Section 12.1 shall have been duly paid; and
(c) each and every other Default and Event of Default shall have been
waived pursuant to Section 17 or otherwise made good or cured;
and PROVIDED FURTHER that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
13.1. REGISTRATION OF NOTES.
The Company shall keep a register for the registration and
registration of transfers of Notes. The name and address of each holder of one
or more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary. The Company shall give to any holder of a Note that
is an accredited investor, promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of Notes.
13.2. EXCHANGE OF NOTES.
(a) EXCHANGE OF NOTES. Upon surrender of any Note to the Company for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note
or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Company
shall execute and deliver, at the Company's expense (except as provided
below), one or more new Notes (as requested by the holder thereof) in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be
substantially in the form of the Note set forth in Exhibit 1. Each such new
Note shall be dated and bear interest from the date to which interest shall
have been paid on the surrendered Note or dated the date of the surrendered
Note if no interest shall have been paid thereon. The Company may require
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed in respect of any such transfer of Notes. The Notes shall not be
transferred in denominations of less than US$100,000, PROVIDED that a
holder of Notes may transfer its entire holding of Notes regardless of the
principal amount of such holder's Notes.
(b) COSTS. The Company will pay the cost of delivering to or from such
holder's home office or custodian bank from or to the Company, insured to
the reasonable satisfaction of such holder, the surrendered Note and any
Note issued in substitution or replacement for the surrendered Note. The
Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes.
13.3. REPLACEMENT OF NOTES.
Upon receipt by the Company from the registered holder of a
Note of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of a
Purchaser, notice from such Purchaser of such loss, theft, destruction or
mutilation), and:
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to the Company; provided, HOWEVER, that if the holder of such
Note is a Purchaser, the unsecured agreement of indemnity of such Person
shall be deemed to be satisfactory; or
(b) in the case of mutilation, upon surrender and cancellation
thereof;
the Company at its own expense will execute and deliver, in lieu thereof, a
replacement Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
13.4. ISSUANCE TAXES.
The Company will pay all Taxes (if any) due in connection with
and as the result of the initial issuance and sale of the Notes and in
connection with any modification, waiver or amendment of this Agreement or the
Notes and shall save each holder of Notes harmless without limitation as to time
against any and all liabilities with respect to all such Taxes.
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal and interest
becoming due and payable on the Notes shall be made as set forth in Schedule A.
The Company may at any time, by notice to each holder of a Note, change the
place of payment of the Notes so long as such place of payment shall be either
the principal office of the Company in such jurisdiction or the principal office
of a bank or trust company in such jurisdiction. 14.2. MANNER OF PAYMENT.
(a) MANNER OF PAYMENT. So long as you or your nominee shall be the
holder of any Note, and notwithstanding anything contained in Section 14.1
or in such Note to the contrary, the Company will pay all sums becoming due
on such Note for principal and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently
with or reasonably promptly after payment or prepayment in full of any
Note, you shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office or
at the place of payment most recently designated by the Company pursuant to
Section 14.1. In the absence of such written direction, all amounts payable
with respect to each Note shall be paid by check mailed and addressed to
the registered holder of such Note at the address shown in the register
maintained by the Company
pursuant to Section 13.1. Prior to any sale or other disposition of any
Note held by you or your nominee you will, at your election, either endorse
thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in
exchange for a new Note or Notes pursuant to Section 13.2. The Company will
afford the benefits of this Section 14.2 to any Person that is the direct
or indirect transferee of any Note purchased by you under this Agreement
and that has made the same agreement relating to such Note as you have made
in this Section 14.2.
(b) PAYMENTS DUE ON HOLIDAYS. If any payment due on, or with respect
to, any Note shall fall due on a day other than a Business Day, then such
payment shall be made on the first Business Day following the day on which
such payment shall have so fallen due; provided that if all or any portion
of such payment shall consist of a payment of interest, for purposes of
calculating such interest, such payment shall be deemed to have been
originally due on such first following Business Day, such interest shall
accrue and be payable to (but not including) the actual date of payment,
and the amount of the next succeeding interest payment shall be adjusted
accordingly.
(c) PAYMENTS, WHEN RECEIVED. Any payment to be made to the holders of
Notes hereunder or under the Notes shall be deemed to have been made on the
Business Day such payment actually becomes available at such holder's bank
prior to the close of business of such bank, provided that interest for one
day at the non-default interest rate of the Notes shall be due on the
amount of any such payment that actually becomes available to such holder
at such holder's bank after 12:00 noon (local time of such bank).
(d) PAYMENTS IN UNITED STATES DOLLARS. All payments under this
Agreement and the Notes shall be made in United States Dollars.
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement or the
Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, (B) the costs and expenses of the
Agent, and (C) the costs and expenses, including financial advisors' fees and
their attorneys' fees, incurred in connection with the insolvency or bankruptcy
of the Company or any Subsidiary or in connection with any work-out or
restructuring of the transactions contemplated hereby and by the Notes. The
Company will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).
15.2. SURVIVAL.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement, the Other Agreements and the Notes may be amended, and
the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (I) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest on, the
Notes, (II) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or
(III) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20, or any defined term
as used in such Sections.
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision
with respect to any proposed amendment, waiver or consent in respect of any
of the provisions hereof or of the Notes. The Company will deliver executed
or true and correct copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 17 to each holder of outstanding
Notes promptly following the date on which it is executed and delivered by,
or receives the consent or approval of, the requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes
as consideration for or as an inducement to the entering into by any holder
of Notes or any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes
then outstanding even if such holder did not consent to such waiver or
amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4. NOTES HELD BY THE COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of
its Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder or under
the Notes shall be in writing and shall be delivered (A) by facsimile
transmission if the sender on the same day sends a confirming copy of such
notice by a recognized overnight delivery service (charges prepaid), or (B) by
registered or certified mail with return receipt requested (postage prepaid), or
(C) by a recognized overnight delivery service (with charges prepaid). Any such
notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing,
(iii) if to the Agent, to the address set forth in Annex 1; or
(iv) if to the Company, to the Company at its address set forth in
Annex 1, or at such other address as the Company shall have specified
to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (A) consents, waivers and modifications that may hereafter
be executed, (B) documents received by you at the Closing (except the Notes
themselves), and (C) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Subsidiary
Guarantor in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature, and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or its Subsidiaries, PROVIDED that
such term does not include information that (A) was publicly known or otherwise
known to you prior to the time of such disclosure, (B) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (C) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary Guarantor or (D) constitutes financial statements
delivered to you
under Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, PROVIDED that you may deliver or disclose Confidential
Information to (I) your directors, officers, employees, agents, attorneys and
affiliates, (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (II) your financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 20, (III) any other holder of any Note, (IV) any Person to which you
sell or offer to sell such Note or any part thereof or any participation therein
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (V) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (VI) any federal or state
regulatory authority having jurisdiction over you, (VII) any nationally
recognized rating agency that requires access to information about your
investment portfolio, or (VIII) any other Person to which such delivery or
disclosure may be necessary or appropriate (W) to effect compliance with any
law, rule, regulation or order applicable to you, (X) in response to any
subpoena or other legal process, (Y) in connection with any litigation to which
you are a party or (Z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.
21. INTENTIONALLY OMITTED.
22. MISCELLANEOUS.
22.1. INDEMNIFICATION OF EACH HOLDER OF NOTES.
From and at all times after the Closing Date, and in addition
to all other rights and remedies of each holder of Notes against the Company,
the Company agrees to indemnify and hold harmless each holder of Notes and each
director, trustee, officer, employee, agent, investment advisor and affiliate of
each such holder (each, an "INDEMNIFIED PARTY") against any and all claims
(whether valid or not), losses, damages, liabilities, costs and expenses of any
kind or nature whatsoever (including, without limitation, reasonable attorneys'
fees, costs and expenses), incurred by or asserted against any Indemnified
Party, from and after the Closing Date, whether direct, indirect or
consequential, as a result of or arising from or in any way relating to any
suit, action or proceeding (including any inquiry or investigation) by any
Person, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any Person under any statute or regulation, including,
but not limited to, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution, performance or enforcement of this
Agreement, the Notes or the other Financing Documents or any transactions
contemplated herein or therein, or any of the transactions contemplated
hereunder or thereunder, whether or not such Indemnified Party is a party to any
such action, proceeding, suit or the target of any such inquiry or
investigation; PROVIDED, HOWEVER, that no Indemnified Party shall have the right
to be indemnified hereunder for any liability resulting from the willful
misconduct or gross negligence of such Indemnified Party or breach by such
Indemnified Party of its own obligations under this Agreement. All of the
foregoing losses, damages, costs and expenses of any Indemnified Party shall be
payable as and when incurred upon demand by such Indemnified Party and shall be
additional obligations hereunder. The rights of the Indemnified Parties under
this Section 22.1 shall survive the termination of this Agreement.
22.2. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement
and in the Intercreditor Agreement by or on behalf of any of the parties hereto
bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not. You may not assign your rights under this Agreement unless the
successor or assignee first agrees to be bound by the terms and provisions of
the Intercreditor Agreement and such successor or assignee agrees to sign a
joinder to the Intercreditor Agreement.
22.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one 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.
22.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the
Commonwealth of Massachusetts excluding choice-of-law principles of the law of
such State that would require the application of the laws of a jurisdiction
other than such State.
22.7. INTERCREDITOR AGREEMENT.
This Agreement, the Other Agreements and the other Financing Documents
are subject to the terms of the Intercreditor Agreement.