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SENIOR SUBORDINATED
NOTE PURCHASE AGREEMENT
by and between
LIONBRIDGE TECHNOLOGIES HOLDINGS B.V.
and
CAPITAL RESOURCE LENDERS III, L.P.,
Dated as of February 26, 1999
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LIONBRIDGE TECHNOLOGIES HOLDINGS B.V.
Senior Subordinated Note Purchase Agreement
Dated as of February 26, 1999
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.................................................................................................... 1
1.01. Definitions................................................................ 1
ARTICLE II
PURCHASE, SALE AND TERMS OF NOTES; PAYMENTS.................................................................... 6
2.01. The Note................................................................... 6
2.02. Purchase and Sale of the Note.............................................. 6
2.03. Intentionally Omitted...................................................... 7
2.04. Use of Proceeds............................................................ 7
2.05. Payments and Endorsements.................................................. 7
2.06. Redemptions................................................................ 7
2.07. Default Rate of Interest................................................... 8
2.08. Maximum Legal Rate of Interest............................................. 8
2.09. Payment on Non-Business Days............................................... 8
2.10. Transfer and Exchange of Notes............................................. 8
2.11. Replacement of Notes....................................................... 9
2.12. Taxes...................................................................... 9
ARTICLE III
PRO RATA PARTICIPATION IN NEW SUBORDINATED DEBT................................................................ 9
3.01. Right to Purchase New Subordinated Debt.................................... 9
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATION........................................................................... 10
4.01. Representations and Warranties............................................. 10
4.02. Documentation at Closing................................................... 10
4.03 Closing of LTHI Financing.................................................. 11
4.04. No Default................................................................. 11
i
4.05. Waivers and Consents....................................................... 12
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................................................................ 12
5.01. Representations and Warranties of the Purchaser............................ 12
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................................. 13
6.01. Organization and Standing of the Company and Subsidiaries; Ownership....... 13
6.02. Corporate Action........................................................... 13
6.03. Governmental Approvals..................................................... 14
6.04. Litigation................................................................. 14
6.05. Compliance with Law........................................................ 14
6.06. Federal Reserve Regulations................................................ 14
6.07. Title to Assets, Patents................................................... 15
6.08. Financial Information...................................................... 15
6.09. Taxes...................................................................... 16
6.10. Intentionally Omitted...................................................... 16
6.11. Transactions with Affiliates............................................... 16
6.12. Assumptions or Guaranties of Indebtedness of Other Persons................. 16
6.13. Loans to Other Persons..................................................... 16
6.14. Securities Act............................................................. 16
6.15. Disclosure................................................................. 16
6.16. No Brokers or Finders...................................................... 17
6.17. Other Agreements of Officers............................................... 17
6.18. Capitalization of the Company; Status of Capital Stock..................... 17
6.19. Capital Stock of Subsidiaries.............................................. 17
6.20. Labor Relations............................................................ 18
6.21. Insurance.................................................................. 18
6.22. Books and Records.......................................................... 18
6.23. Hazardous and Toxic Materials.............................................. 18
6.24. Registration Rights........................................................ 18
6.25. Other Agreements........................................................... 18
6.26. Customers, Vendors and Suppliers........................................... 19
6.27. No Violations.............................................................. 19
ARTICLE VII
COVENANTS OF THE COMPANY....................................................................................... 20
7.01. Affirmative Covenants of the Company Other Than Reporting Requirements..... 20
7.02. Negative Covenants of the Company.......................................... 22
7.03. Reporting Requirements..................................................... 25
ARTICLE VIII
ii
EVENTS OF DEFAULT.............................................................................................. 26
8.01. Events of Default.......................................................... 26
8.02. Annulment of Defaults...................................................... 28
ARTICLE IX
MISCELLANEOUS.................................................................................................. 29
9.01. No Waiver; Cumulative Remedies............................................. 29
9.02. Amendments, Waivers and Consents........................................... 29
9.03. Addresses for Notices, Etc................................................. 29
9.04. Costs, Expenses and Taxes.................................................. 30
9.05. Binding Effect; Assignment................................................. 31
9.06. Payments in Respect of Notes............................................... 31
9.07. Intentionally Omitted...................................................... 31
9.08. Indemnification............................................................ 31
9.09. Survival of Representations and Warranties................................. 31
9.10. Intentionally Omitted...................................................... 31
9.11. Severability............................................................... 31
9.12. Governing Law.............................................................. 32
9.13. Waiver of Right to Jury Trial.............................................. 32
9.14. Headings................................................................... 32
9.15. Sealed Instrument.......................................................... 32
9.16. Counterparts............................................................... 32
9.17. Further Assurances......................................................... 32
9.18. Consent to Jurisdiction.................................................... 32
9.19. Effect of Judgment......................................................... 32
9.20. Service of Process......................................................... 32
9.21. No Limitation.............................................................. 33
9.22. Specific Performance....................................................... 33
9.23. Actions by Purchaser....................................................... 33
9.24. Judgment Currency.......................................................... 33
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EXHIBITS
2.01 Form of 12% Senior Subordinated Note
2.04 Use of Proceeds
4.02(b) LTBV Guaranty
4.02(c) LTF Guaranty
4.02(d) LT Ireland Guaranty
4.02(e) LJKK Guaranty
4.02(g) Opinion of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
4.02(m) Opinion of Loeff ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
4.02(n) Opinion of A&L Goodbody
6.01 Schedule of Subsidiaries
6.04 Schedule of Litigation
6.07 Schedule of Title Exceptions
6.08(a) Financial Statements
6.08(c) Liabilities; Guaranties; Etc.
6.08(d) Schedule of Indebtedness
6.09 Schedule of Taxes
6.11 Transactions with Affiliates
6.13 Investments in Other Persons
6.17 Schedule of Other Agreements of Officers and Key Employees
6.18 Schedule of Capital Stock, Options and Other Rights
6.19 Schedule of Capital Stock of Subsidiaries
6.21 Schedule of Insurance to be Obtained
6.23 Hazardous or Toxic Materials
6.25 Contracts, etc.
7.02(b) Indebtedness
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Lionbridge Technologies Holdings B.V.
The Sinus Building
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As of February 26, 1999
Capital Resource Lenders III, L.P.
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Re: FOUR MILLION DOLLAR 12% SENIOR SUBORDINATED NOTE DUE FEBRUARY 26, 2006
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Ladies and Gentlemen:
Whereas Lionbridge Technologies Holdings B.V., a company with limited
liability incorporated in The Netherlands (together with its successors and
assigns, the "Company") has requested Capital Resource Lenders III, L.P., a
Delaware limited partnership ("CRL") to purchase from the Company its Four
Million Dollar ($4,000,000) 12% Senior Subordinated Note due February 26, 2006.
The issuance of such Senior Subordinated Note is a part of a Ten Million Dollar
($10,000,000) financing of Lionbridge Technologies Holdings, Inc., a Delaware
corporation (together with its successors and assigns, "LTHI") and certain of
its subsidiaries, which financing also includes the issuance to CRL of LTHI's
First Amended and Restated 12% Subordinated Note due February 26, 2006 in the
original principal amount of Six Million Dollars ($6,000,000) pursuant to a
First Amended and Restated Senior Subordinated Note Purchase Agreement dated as
of the date hereof by and between LTHI and CRL (as from time to time amended and
in effect, the "LTHI Note Purchase Agreement").
ARTICLE I
DEFINITIONS
1.01. DEFINITIONS. As used herein, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"AFFILIATE" means, as to any specified Person, any other Person
controlling, controlled by or under common control with such specified Person.
"AGREEMENT" means this Senior Subordinated Note Purchase Agreement as from
time to time amended and in effect between the parties.
"APPLICABLE LAWS" shall have the meaning assigned to that term in Section
6.05.
"BANK" means and shall include Silicon Valley Bank, a California-chartered
bank, and its successors and assigns, or such other bank or institutional lender
which may from time to time be the primary lender to the Company and the
Subsidiaries.
"BUDGET" shall have the meaning assigned to that term in Section 7.03(b).
"BUSINESS DAY" means any day other than a Saturday, Sunday or public
holiday or the equivalent for banks under the laws of the Commonwealth of
Massachusetts, United States of America.
"CHANGE OF CONTROL" shall have the meaning assigned to that term in the
LTHI Note Purchase Agreement.
"CLOSING" shall have the meaning assigned to that term in Section 2.02.
"CLOSING DATE" shall have the meaning assigned to that term in Section
2.02.
"COMMISSION" means the United States Securities and Exchange Commission (or
any other federal agency at that time administering the Securities Act).
"COMPANY" shall have the meaning assigned to that term in the Preamble
hereof.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to (i)
any indebtedness, lease, dividend, letter of credit or other obligation of
another, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by
that Person, or in respect of which that Person is otherwise directly or
indirectly liable; (ii) any obligations with respect to undrawn letters of
credit issued for the account of that Person; and (iii) all obligations arising
under any interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; PROVIDED, HOWEVER, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business.
"CRL" shall have the meaning assigned to that term in the Preamble hereof.
"CURRENT LIABILITIES" means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of the Company and its Subsidiaries, as at such date,
plus, to the extent not already included therein, all outstanding advances made
under the Loan Agreement, including all Indebtedness that is payable upon demand
or within one year from the date of determination thereof unless such
Indebtedness is renewable or extendable at the option of the Company or any
Subsidiary to a date more than one year from the date of determination, but
excluding any Indebtedness incurred by the Company or any Subsidiary that is
subordinated to debt owing by the Company or any Subsidiary to the Bank on terms
acceptable to the Bank and is identified as such by the Bank.
"DISTRIBUTION" shall have the meaning assigned to that term in Section
7.02(g).
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"ENVIRONMENTAL LAWS" shall have the meaning assigned to that term in
Section 6.23.
"EVENTS OF DEFAULT" shall have the meaning assigned to that term in Section
8.01.
"FINANCIAL STATEMENTS" shall have the meaning assigned to that term in
Section 6.08.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time, provided, however, the Purchaser
acknowledges that with respect to the financial statements to be delivered to
Purchaser pursuant to Section 7.03(b), there may be inconsistencies with GAAP
which in the aggregate shall not be material. Unless otherwise specifically
stated herein, use of the term "GAAP" means that such principles are applied
and maintained on a consistent basis for the Company and its Subsidiaries
throughout the period indicated and consistent with the prior financial
practices of the Company and its Subsidiaries as reflected on the Financial
Statements so as to properly reflect the financial condition, and the results
of operations and cash flow of the Company and its Subsidiaries.
"GUARANTIES" means the LTBV Guaranty, the LTF Guaranty, the LT Ireland
Guaranty and the LJKK Guaranty.
"GUARANTORS" means LJKK and the Subsidiary Guarantors, including, without
limitation, LTBV, LTF, LT Ireland and LJKK.
"HAZARDOUS DISCHARGE" shall have the meaning assigned to that term in
Section 6.23.
"HAZARDOUS MATERIALS" shall have the meaning assigned to that term in
Section 6.23.
"INDEBTEDNESS" means all (i) indebtedness for borrowed money or the
deferred purchase price of property or services, including, without limitation,
reimbursement and other obligations with respect to surety bonds, letters of
credit and similar instruments, (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all capital lease obligations, and (iv)
Contingent Obligations.
"JLSI" means Japanese Language Services, Inc., a Massachusetts corporation,
and its successors and assigns.
"JUDGMENT CURRENCY" shall have the meaning assigned to that term in Section
9.24.
"JUDGMENT CURRENCY CONVERSION DATE" shall have the meaning assigned to that
term in Section 9.24.
"JUNIOR SUBORDINATED DEBT" means all Indebtedness of the Company and its
Subsidiaries, whether outstanding on the date hereof or hereafter created or
incurred, which is by its terms subordinate and junior to the Notes on terms
acceptable to the holders of the Notes and which is permitted by this Agreement
at the time it is created or incurred, and shall include all Indebtedness
between the Company or any Subsidiary and any other Subsidiary.
"LJKK" means Lionbridge Japan K.K., a Japanese corporation, and its
successors and assigns.
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"LJKK GUARANTY" shall have the meaning assigned to that term in Section
4.02(e).
"LOAN AGREEMENT" means that certain Loan Agreement, dated September 26,
1997, by and among the LTHBV, LTBV and the Bank, as amended by Amendment No.1,
dated as of May 28, 1998, as it may be further amended from time to time.
"LTBV" means Lionbridge Technologies B.V., a company with limited liability
incorporated in the Netherlands, and its successors and assigns.
"LTBV GUARANTY" shall have the meaning assigned to that term in Section
4.02(b).
"LTCI" means Lionbridge Technologies California, Inc., a Delaware
corporation, and its successors and assigns.
"LTF" means Lionbridge Technologies (France), a French company, and its
successors and assigns.
"LTF GUARANTY" shall have the meaning assigned to that term in Section
4.02(c).
"LTHI" shall have the meaning assigned to that term in the Preamble hereof.
"LTHI FINANCING" means the issuance and sale to CRL of the LTHI Note and
the Warrants (as such term is defined in the LTHI Note Purchase Agreement)
pursuant to the LTHI Note Purchase Agreement.
"LTHI NOTE" means the First Amended and Restated 12% Senior Subordinated
Note due February __, 2006 in the original principal amount of Six Million
Dollars ($6,000,000) issued by LTHI to CRL pursuant to the LTHI Note Purchase
Agreement, as from time to time amended and in effect.
"LTHI NOTES" means collectively the LTHI Note and any note or notes
delivered in substitution, replacement or exchange therefor, as such notes from
time to time are amended and in effect.
"LTHI NOTE PURCHASE AGREEMENT" shall have the meaning assigned to that term
in the Preamble hereof.
"LTHI SUBSIDIARY" shall mean any Person that is a Subsidiary (as such term
is defined in the LTHI Note Purchase Agreement).
"LTI" means Lionbridge Technologies, Inc., a Delaware corporation, and its
successors and assigns.
"LT IRELAND" means Lionbridge Technologies Ireland, an unlimited liability
company duly incorporated under the laws of Ireland, and its successors and
assigns.
"LT IRELAND GUARANTY" shall have the meaning assigned to that term in
Section 4.02(d).
4
"MATERIAL ADVERSE EFFECT" shall have the meaning assigned to that term in
Section 6.01.
"NEW SENIOR DEBT GUARANTEE" shall have the meaning assigned to that term in
Section 7.01(o).
"NOTE" or "NOTES" shall have the meanings assigned to such terms in Section
2.01.
"OBLIGATION CURRENCY" shall have the meaning assigned to that term in
Section 9.24.
"OPERATIVE DOCUMENTS" shall mean each of this Agreement, the Notes and the
Guaranties.
"PERMITTED LIENS" shall have the meaning assigned to that term in Section
7.02(a).
"PERSON" means and includes an individual, a corporation, a partnership, a
joint venture, a trust, an unincorporated organization, or a government or any
agency or political subdivision thereof.
"PURCHASER" shall mean CRL and any other holder or holders from time to
time of any of the Notes.
"QUALIFYING LIQUIDITY EVENT" shall have the meaning assigned to that term
in the LTHI Note Purchase Agreement.
"SECURITIES" means the Notes.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SENIOR DEBT" means (i) all Indebtedness of the Company and any of its
Subsidiaries for money borrowed from the Bank (including, without limitation,
money borrowed from the Bank pursuant to the Loan Agreement) or from other banks
or institutional lenders, including any extensions or renewals thereof, whether
outstanding on the date hereof or hereafter created or incurred, which is not by
its terms subordinate and junior to the Notes and which is disclosed on the
Financial Statements or is permitted by this Agreement at the time it is created
or incurred, (ii) all Indebtedness of the Company and any of its Subsidiaries
incurred to refinance any of the Indebtedness referred to in item (i) above,
where the security securing such Indebtedness is substantially the same security
as that securing the Indebtedness being refinanced, (iii) all capitalized lease
obligations of the Company and any of its Subsidiaries which are permitted by
this Agreement at the time they are incurred and (iv) all guarantees by the
Company and any of its Subsidiaries which are not by their terms subordinate and
junior to the Notes and which are permitted hereby at the time they are made of
Indebtedness of any Subsidiary if such Indebtedness would have been Senior Debt
pursuant to the provisions of clause (i), (ii) or (iii) of this sentence had it
been indebtedness of the Company.
"SUBORDINATED DEBT" means any or all Indebtedness of the Company and any of
its Subsidiaries that is subordinated to Senior Debt, whether structurally or
contractually.
"SUBORDINATION AGREEMENT" shall mean the Subordination and Intercreditor
Agreement, dated as of the date hereof, by and among CRL, the Bank and the
Company.
5
"SUBSIDIARY" or "SUBSIDIARIES" means (i) any corporation more than fifty
percent (50%) of whose stock or equity interests of any class or classes having
by the terms thereof ordinary voting power to elect a majority of the directors
of such corporation (irrespective of whether or not at the time stock of any
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned directly or
indirectly by the Company and/or any one or more of its Subsidiaries, and (ii)
any partnership, association, joint venture, limited liability company or other
entity in which the Company and/or one or more of its Subsidiaries has more than
a fifty percent (50%) equity interest at the time.
"SUBSIDIARY GUARANTORS" means collectively (i) each Subsidiary which has
executed and delivered to the Purchaser a guarantee in form and substance
satisfactory to the Purchaser pursuant to which such Subsidiary guarantees all
of the obligations of the Company to the Purchaser, including, without
limitation, the obligations of the Company hereunder and under the Notes, and
(ii) any LTHI Subsidiary that is a not a Subsidiary hereunder which has executed
and delivered a guarantee to the Purchaser pursuant to Section 7.01(p) of the
LTHI Note Purchase Agreement.
"TAXES" shall have the meaning assigned to that term in Section 2.12.
"TRANSFEREE" shall have the meaning assigned to that term in Section 2.12.
"US GUARANTIES" means the those certain guaranties executed by JLSI, LTCI,
LTI and VTI in favor of CRL in connection with the LTHI Financing.
"VTI" means VeriTest, Inc., a California corporation, together with its
successors and assigns.
1.02. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, and all financial data
submitted pursuant to this Agreement and all financial tests to be calculated in
accordance with this Agreement shall be prepared and calculated in accordance
with GAAP.
ARTICLE II
PURCHASE, SALE AND TERMS OF NOTES; PAYMENTS
2.01. THE NOTE. The Company has authorized the issuance and sale to the
Purchaser of the Company's 12% Senior Subordinated Note, due February 26, 2006,
in the original aggregate principal amount of Four Million Dollars
($4,000,000.00). The 12% Senior Subordinated Note shall be substantially in the
form set forth as EXHIBIT 2.01 attached hereto and is herein referred to
individually as a "Note," and, together with any note or notes delivered in
substitution, replacement or exchange therefor, collectively as the "Notes." The
Notes shall (a) be payable on February 26, 2006 (subject to the redemption
thereof required pursuant to Section 2.06) and (b) bear interest (based on a
360-day year counting actual days elapsed) on the unpaid principal amount
thereof until paid in full at the rate of twelve percent (12%) per annum, which
interest shall be payable quarterly in arrears on the last Business Day of
March, June, September and December in each year commencing on March 31, 1999.
6
2.02. PURCHASE AND SALE OF THE NOTE. The Company agrees to issue and sell
to the Purchaser, and, subject to and in reliance upon the representations,
warranties, terms and conditions of this Agreement, the Purchaser agrees to
purchase, the Note. Such purchase and sale shall take place at a closing (the
"Closing") to be held at the offices of Sherburne, Powers, Holland & Knight, at
10:00 a.m. local time, on the date on which this Agreement is executed and
delivered (the "Closing Date"). At the Closing, the Company will issue the Note
to the Purchaser, dated the Closing Date and payable to the order of Purchaser,
against receipt of funds by wire transfer to an account or accounts designated
by the Company prior to the Closing in the amount of Four Million Dollars
($4,000,000.00). The parties hereto hereby acknowledge and agree that the
purchase and sale of the Note hereunder and is part of an overall financing
provided by CRL to LTHI and its subsidiaries, which financing also includes,
among other things, the issuance by LTHI of the LTHI Note, the delivery of the
US Guaranties and the execution and delivery of the LTHI Note Purchase
Agreement.
2.03. INTENTIONALLY OMITTED.
2.04. USE OF PROCEEDS. The Company agrees to use the full proceeds from the
sale of the Note for the purposes and as set forth on EXHIBIT 2.04 attached
hereto.
2.05. PAYMENTS AND ENDORSEMENTS. Payments of principal, interest and
premium, if any, on the Note (and all payments hereunder and under any other
Operative Document) shall be made in United States Dollars without setoff or
counterclaim directly by check duly mailed or delivered to the Purchaser at its
address referred to in Section 9.03 hereof, without any presentment or notation
of payment, except that prior to any transfer of any Note, the holder thereof
shall endorse on such Note a record of the date to which interest has been paid
and all payments made on account of principal of such Note. All payments and
prepayments of principal of and interest on the Notes shall be applied (to the
extent thereof) to all of the Notes PRO RATA based on the principal amount
outstanding and held by each holder thereof.
2.06. REDEMPTIONS
(a) REQUIRED PERIODIC REDEMPTION. On the last Business Day of March,
June, September and December of each year beginning on March 31, 2003 through
and including December 31, 2005, the Company agrees to redeem, without premium
or penalty, Three Hundred Thirty-Three Thousand Dollars ($333,333.33) in
aggregate principal amount of the Notes, or such lesser amount as may then be
outstanding, together with all accrued and unpaid interest and penalties, if
any, then due on the amount so redeemed. On the stated or accelerated maturity
of the Notes, the Company agrees to pay the principal amounts of the Notes then
outstanding together with all accrued and unpaid interest and penalties, if any,
then due thereon. Except as set forth in Section 2.06(b), no optional redemption
of less than all of the Notes shall affect the obligation of the Company to make
the redemptions required by this subsection.
(b) REQUIRED REDEMPTIONS IN THE EVENT OF A QUALIFYING LIQUIDITY EVENT.
In the event and upon the closing of a Qualifying Liquidity Event, the Company
agrees to redeem, without premium, all of the outstanding Notes, together with
all accrued and unpaid interest and penalties, if any, then due thereon.
7
(c) OPTIONAL REDEMPTIONS. In addition to the redemptions of the Notes
required under Sections 2.06(a) and (b), the Company may, at any time and from
time to time, redeem, without premium or penalty, the Notes, in whole or in part
(in integral multiples of $1,000), together with interest due on the amount so
redeemed through the date of redemption. Partial redemptions made as provided in
this Section 2.06(c) shall, to the extent thereof, be applied first to reduce
the principal due at maturity of the Notes and next to reduce the payments
required by Section 2.06(a) in inverse order of maturity thereof.
(d) NOTICE OF REDEMPTIONS; PRO RATA REDEMPTIONS. Notice of any
required redemption pursuant to Section 2.06(a) or (b) or of any optional
redemption pursuant to Section 2.06(c) shall be given to all registered holders
of the Notes at least ten (10) Business Days prior to the date of such
redemption. Each redemption of Notes pursuant to Section 2.06(a), (b) or (c)
shall be made so that the Notes then held by each holder shall be redeemed in a
principal amount which shall bear the same ratio to the total unpaid principal
amount being redeemed on all Notes as the unpaid principal amount of Notes then
held by such holder bears to the aggregate unpaid principal amount of all of the
Notes then outstanding.
2.07. DEFAULT RATE OF INTEREST. If an Event of Default has occurred and is
continuing, from and after the date thirty (30) days after the date such Event
of Default occurred, the entire outstanding unpaid principal balance of the
Notes and any matured but unpaid interest from time to time due thereon shall
bear interest, payable on demand, at the rate of fifteen percent (15%) per
annum, or such lower rate as then may be the maximum rate permitted by
applicable law; PROVIDED, HOWEVER, that upon the cessation or cure of such Event
of Default, if no other Event of Default is then continuing, the Notes shall
again bear interest at the rates set forth in Section 2.01.
2.08. MAXIMUM LEGAL RATE OF INTEREST. Nothing in this Agreement or in the
Notes shall require the Company to pay interest at a rate in excess of the
maximum rate permitted by applicable law.
2.09. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made shall
be due on a day which is not a Business Day, such payment may be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest due.
2.10. TRANSFER AND EXCHANGE OF NOTES. The holder of any Note or Notes may,
prior to maturity or prepayment thereof, surrender such Note or Notes at the
principal office of the Company for transfer or exchange to any Affiliate of
such holder. Any holder desiring to transfer or exchange any Note shall first
notify the Company in writing at least five (5) days in advance of such transfer
or exchange. Within a reasonable time after such notice to the Company from a
holder of its intention to make such exchange and without expense (other than
transfer taxes, if any) to such holder, the Company shall issue in exchange
therefor another Note or Notes, in such denominations as requested by the
holder, for the same aggregate principal amount, as of the date of such
issuance, as the unpaid principal amount of the Note or Notes so surrendered and
having the same maturity and rate of interest, containing the same provisions
and subject to the same terms and conditions as the Note or Notes so
surrendered. Each new Note shall be made payable to such Affiliate or Affiliates
of the holder, Person or Persons, or assigns, as the holder of such surrendered
Note or Notes may designate (subject to Section 9.05), and such transfer or
exchange shall be made in such a manner that no gain or loss of principal or
interest shall result therefrom.
8
2.11. REPLACEMENT OF NOTES. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Note and, if
requested in the case of any such loss, theft or destruction, upon delivery of
an indemnity bond or other agreement or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of such Note, the Company will issue a new Note, of like tenor and amount and
dated the date to which interest has been paid, in lieu of such lost, stolen,
destroyed or mutilated Note; PROVIDED, HOWEVER, if any Note of which a
Purchaser, its nominee, or any of its partners is the holder is lost, stolen or
destroyed, the affidavit of an authorized partner or officer of the holder
setting forth the circumstances with respect to such loss, theft or destruction
shall be accepted as satisfactory evidence thereof, and no indemnification bond
or other security shall be required as a condition to the execution and delivery
by the Company of a new Note in replacement of such lost, stolen or destroyed
Note other than the holder's written agreement to indemnify the Company.
2.12. TAXES. Any and all payments by the Company hereunder and under any
other Operative Document shall be made free and clear of, and without deduction
for any and all past, current or future taxes, levies, imposts, deductions,
charges, penalties, costs or withholdings, and all liabilities with respect
thereto, EXCLUDING income or franchise taxes imposed on the net income of CRL
(or any transferee or assignee thereof permitted under Section 9.05 (any such
entity a "Transferee")) by the jurisdiction in which CRL (or any Transferee) is
organized or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, penalties, costs, withholdings and
liabilities, collectively or individually, being called "Taxes"). If the Company
shall be required to deduct any Taxes from or in respect of any sum payable
hereunder or under any other Operative Document to CRL (or any Transferee), (i)
the sum payable shall be increased by the amount (an "additional amount")
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.12) CRL (or any
Transferee), as the case may be, shall receive an amount equal to the sum it
would have received had no such deductions for Taxes been made, (ii) the Company
shall make such deductions and (iii) the Company shall pay the full amount
deducted to the relevant governmental authority in accordance with applicable
law. In addition, the Company agrees to pay to the relevant governmental
authority in accordance with applicable law any past, current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies (including, without limitation, mortgage recording taxes and similar
fees) that arise from any payment made hereunder or under any other Operative
Document or from the execution, delivery, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Operative Document.
9
ARTICLE III
PRO RATA PARTICIPATION IN NEW SUBORDINATED DEBT
3.01. RIGHT TO PURCHASE NEW SUBORDINATED DEBT. Prior to issuing any
Subordinated Debt of the Company or any of its Subsidiaries to any Person after
the date hereof (other than any such Subordinated Debt issued to a seller in
connection with an acquisition by the Company or any of its Subsidiaries
involving such seller), the Company will first give, or cause such Subsidiary to
give, to each holder of any Note or Notes the right to purchase, on the same
terms and subject to the same conditions, the same proportion of the
Subordinated Debt proposed to be sold by the Company or such Subsidiary as the
original principal amount of the Notes held by each such holder bears to the
aggregate principal amount of Subordinated Debt outstanding at that time. Any
such right of purchase shall be exercisable for a period of thirty (30) days
after all of the holders have received written notice of a proposed issuance of
Subordinated Debt (and any such notice by the Company or any Subsidiary shall be
given not less than thirty (30) nor more than ninety (90) days prior to any such
issuance). The Company shall be entitled to sell to any Person any Subordinated
Debt not purchased by the holders of the Notes pursuant to this Section 3.08:
(i) during the period ending six (6) months after the date of the Company's or
its Subsidiary's notice to such holders and (ii) at not less than the same price
and upon terms not materially less favorable to the Company or its Subsidiary
than those offered to the holders of the Notes, but may not otherwise sell such
Subordinated Debt without renewed compliance with this Section 3.01.
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATION
The obligation of the Purchaser to purchase and pay for the Note at the
Closing is subject to the following conditions, all or any of which may be
waived in writing by the Purchaser:
4.01. REPRESENTATIONS AND WARRANTIES. Each of the representations of the
Company set forth in Article VI hereof shall be true and correct in all respects
at the time of, and immediately after giving effect to, the sale of the Note.
4.02. DOCUMENTATION AT CLOSING. The Purchaser shall have received prior to
or at the Closing all of the following, each in form and substance satisfactory
to the Purchaser and its counsel:
(a) The Note duly executed and delivered by the Company.
(b) A guaranty from LTBV in substantially the form attached hereto as
EXHIBIT 4.02(b) (the "LTBV Guaranty").
(c) A guaranty from LTF in substantially the form attached hereto as
EXHIBIT 4.02(c) (the "LTF Guaranty").
(d) A guaranty from LT Ireland in substantially the form attached
hereto as EXHIBIT 4.02(d) (the "LT Ireland Guaranty").
10
(e) A guaranty from LJKK in substantially the form attached hereto as
EXHIBIT 4.02(e) (the "LJKK Guaranty").
(f) A certified copy of all charter documents of the Company and each
of the Guarantors; a certified copy of the resolutions of the Board of Directors
and, to the extent required, the stockholders of the Company and each of the
Guarantors evidencing approval, as applicable, of this Agreement, the Operative
Documents and all other matters contemplated hereby and thereby; a certified
copy of all documents evidencing other necessary corporate or other action and
governmental approvals, if any, with respect to this Agreement, the Operative
Documents and all other matters contemplated hereby or thereby.
(g) A favorable opinion of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel
for the Company and Guarantors, in substantially the form attached hereto as
EXHIBIT 4.02(g).
(h) Certificates from duly authorized representatives of the Company
and each of the Guarantors acceptable to CRL which shall certify the names and
titles of the persons authorized to sign this Agreement, the Operative Documents
and any other documents or certificates to be delivered pursuant hereto or
thereto by the Company and each of the Guarantors, together with the true
signatures thereof. The Purchaser may conclusively rely on such certificate
until it shall receive a further certificate from a duly authorized
representative of the Company and each of the Guarantors canceling or amending
the prior certificate and submitting the signatures of the persons and their
respective titles named in such further certificate.
(i) A certificate from a duly authorized officer of the Company
stating that the representations and warranties contained in Article VI hereof
and otherwise made by the Company in writing in connection with the transactions
contemplated hereby are true and correct and that no condition or event has
occurred or is continuing or will result from the execution and delivery of this
Agreement or the Operative Documents which constitutes an Event of Default or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
(j) An executed Subordination Agreement, which shall be in form and
substance satisfactory to the Purchaser and its counsel.
(k) Payment for the costs, expenses, taxes and filing fees identified
in Section 9.04 as to which the Purchaser gives the Company notice prior to the
Closing.
(l) A certificate from a duly authorized officer of the Company
stating that all the conditions set forth in this Article IV have been
satisfied, other than those, if any, waived by the Purchaser in writing.
(m) A favorable opinion of Loeff ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, counsel to CRL, in
substantially the form attached hereto as EXHIBIT 4.02(m).
(n) A favorable opinion of A&L Goodbody, counsel to CRL, in
substantially the form attached hereto as EXHIBIT 4.02(n).
11
(o) Such other documents referenced in any Exhibit hereto or relating
to the transactions contemplated by this Agreement as the Purchaser or its
counsel may reasonably request.
4.03. CLOSING OF LTHI FINANCING. All documents in connection with the LTHI
Financing, including, without limitation the LTHI Note Purchase Agreement, the
LTHI Note, the Warrant (as such term is defined in the LTHI Purchase Agreement),
the US Guaranties and such other documents referenced in any exhibit thereto or
otherwise relating to the transactions contemplated by the LTHI Note Purchase
Agreement shall have been executed and delivered to the Purchaser.
4.04. NO DEFAULT. At the time of and immediately after giving effect to the
sale of the Notes there shall exist no Event of Default and no condition, event
or act that, with the giving of notice or lapse of time, or both, would
constitute such an Event of Default.
4.05. WAIVERS AND CONSENTS. The Company shall have obtained any waivers or
consents that may be required under the Loan Agreement and any other agreement
to which the Company or any of its Subsidiaries is a party in order to enter
into this Agreement and the Operative Documents and to consummate the
transactions contemplated hereby and thereby and such waiver or consents shall
have been delivered to the Purchaser.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.01. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants as follows:
(a) The Purchaser has duly authorized, executed and delivered this
Agreement and such of the Operative Documents as require execution by the
Purchaser.
(b) It is the Purchaser's present intention to acquire the Securities
for its own account.
(c) The Securities are being and will be acquired for the purpose of
investment and not with a view to distribution or resale thereof; subject,
nevertheless, to the condition that, except as otherwise provided herein, the
disposition of the property of the Purchaser shall at all times be within its
control.
(d) The Purchaser acknowledges that it has reviewed and discussed the
Company's business, affairs and current prospects with such officers of the
Company and others as it has deemed appropriate or desirable in connection with
the transactions contemplated by this Agreement. The Purchaser further
acknowledges that it has requested, received and reviewed such information,
undertaken such investigation and made such further inquiries of officers of the
Company and others as it has deemed appropriate or desirable in connection with
such transactions, PROVIDED, HOWEVER, no investigation made heretofore or
hereafter by or on behalf of the Purchaser shall have any effect
12
whatsoever on the representations and warranties of the Company hereunder, each
of which will survive any such investigation.
(e) The Purchaser understands that it must bear the economic risk of
its investment in the Securities for an indefinite period of time because the
Securities are not, and will not be, registered under the Securities Act or any
applicable state securities laws, except as may be provided in this Agreement,
and may not be resold unless subsequently registered under the Securities Act
and such other laws or unless an exemption from such registration is available.
The Purchaser also understands that it is not contemplated that any registration
will be made under the Securities Act or any state securities laws, or that the
Company will take steps which will make the provisions of Rule 144 under the
Securities Act available to permit resale of the Securities.
(f) The Purchaser represents that it has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of its investment in the Securities. The Purchaser further represents
that it is an "accredited investor" as such term is defined in Rule 501 of
Regulation D of the Commission under the Securities Act with respect to the
purchase of the Notes.
(g) No Person has or will have, as a result of the transactions
contemplated by this Agreement, any rights, interest or valid claim against or
upon the Company or any of its Subsidiaries for any commission, fee or other
compensation as a finder or broker because of any act or omission by such
Purchaser or any agent of such Purchaser.
(h) The Purchaser hereby acknowledges that the Note shall bear a
legend substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT
BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES
LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
13
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
6.01. ORGANIZATION AND STANDING OF THE COMPANY AND SUBSIDIARIES; OWNERSHIP.
The Company and each of its Subsidiaries is a corporation duly organized (to the
extent applicable), duly incorporated (to the extent applicable), validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its organization or incorporation and has all requisite
corporate power and authority for the ownership and operation of its properties
and for the carrying on of its business as now conducted and as now proposed to
be conducted. The Company and each of its Subsidiaries is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in all jurisdictions wherein the character of the property owned or
leased, or the nature of the activities conducted by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified, either individually or in the aggregate, would not have a material
adverse effect on the business, assets, liabilities, financial condition, or on
the results of operations of the Company and its Subsidiaries taken as a whole
(a "Material Adverse Effect"). Except as set forth on EXHIBIT 6.01 attached
hereto, neither the Company nor any of its Subsidiaries owns, directly or
indirectly, any capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, joint venture or
other entity.
6.02. CORPORATE ACTION. The Company and each of the Guarantors has all
necessary corporate power and has taken all corporate, stockholder and other
action required to make, as applicable, all the provisions of this Agreement,
the Operative Documents and any other agreements and instruments executed in
connection herewith and therewith the valid and enforceable obligations they
purport to be. The Company and each of the Guarantors has duly executed and
delivered, as applicable, this Agreement, each of the Operative Documents and
each other agreement and instrument executed by it in connection herewith and
therewith and each is a legal, valid and binding obligation of the Company and
the Guarantors as applicable, enforceable against the Company and the Guarantors
as applicable, in accordance with its terms, except as enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally and by general
principles of equity.
6.03. GOVERNMENTAL APPROVALS. No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the offer,
issuance, sale, execution or delivery by the Company or any of the Subsidiaries
of, or for the performance by the Company or any of the Subsidiaries of their
respective obligations under, this Agreement or any of the Operative Documents.
6.04. LITIGATION. Except as set forth on EXHIBIT 6.04 attached hereto,
there is no litigation, action or governmental proceeding or investigation
pending or, to the best knowledge of the Company, threatened against the Company
or any of its Subsidiaries, affecting any of their respective properties or
assets, or against any officer, key employee or principal stockholder of the
Company or any of its
14
Subsidiaries where such litigation, proceeding or investigation (i) either
individually or in the aggregate would have a Material Adverse Effect, (ii)
might call into question the validity of this Agreement, any Operative Document
or any action taken by the Company or any of its Subsidiaries or to be taken
pursuant hereto or thereto or (iii) seeks to prevent the consummation by the
Company or any of its Subsidiaries of the transactions contemplated by this
Agreement, nor, to the best knowledge of the Company, has there occurred any
event on the basis of which any litigation, proceeding or investigation meeting
the criteria of (i), (ii) or (iii) above might properly be instituted. Except as
set forth on EXHIBIT 6.04, neither the Company nor any of its Subsidiaries nor,
to the best knowledge of the Company, any of their respective officers, key
employees or principal stockholders (in their capacities as such), is in default
with respect to any order, writ, injunction, decree, ruling or decision of any
court, commission, board or other government agency affecting the Company or any
of its Subsidiaries.
6.05. COMPLIANCE WITH LAW. The Company and each of its Subsidiaries is in
compliance in all respects with the terms and provisions of this Agreement and
of its charter documents and by-laws and in all material respects with the terms
and provisions of all judgments, decrees, governmental orders, statutes, rules
and regulations to which it and its properties and assets are subject
(collectively, the "Applicable Laws"). Neither the execution and delivery of
this Agreement and the Operative Documents, nor the consummation of any
transactions contemplated hereby or thereby, has constituted or resulted in, or
will constitute or result in, a violation of any provision of any Applicable
Law.
6.06. FEDERAL RESERVE REGULATIONS. Neither the Company nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of the Notes will be used to purchase or carry any margin security or to extend
credit to others for the purpose of purchasing or carrying any margin security
or in any other manner which would involve a violation of any of the regulations
of the Board of Governors of the Federal Reserve System.
6.07. TITLE TO ASSETS, PATENTS. Except as set forth on EXHIBIT 6.07
attached hereto, the Company and each of its Subsidiaries has good and
marketable title in fee to such of its fixed assets as are real property, and
good and merchantable title to all of its other assets, now carried on its books
including those reflected in the most recent balance sheet of the Company
[PLEASE VERIFY] included in the Financial Statements, or acquired since the date
of such balance sheet (except personal property disposed of since said date in
the ordinary course of business), free of any mortgages, pledges, charges,
liens, security interests or other encumbrances. Except as set forth on EXHIBIT
6.07, the Company and each of its Subsidiaries enjoys peaceful and undisturbed
possession under all leases under which it is operating, and all of said leases
are valid and subsisting and in full force and effect. Except as set forth on
EXHIBIT 6.07, the Company and each of its Subsidiaries owns or has a valid right
to use the patents, patent rights, licenses, permits, trade secrets, trademarks,
trademark rights, trade names or trade name rights or franchises, copyrights,
inventions and intellectual property rights being used to conduct its business
as now operated and as now proposed to be operated; and the conduct of its
business as now operated and as now proposed to be operated does not and will
not conflict with valid patents, patent rights, licenses, permits, trade
secrets, trademarks, trademark rights, trade names or trade name rights or
franchises, copyrights, inventions and intellectual property rights of others.
Except as set forth on EXHIBIT 6.07, neither the Company nor any of its
Subsidiaries has any obligation to compensate any Person for the use of any such
intellectual property rights nor has the Company or any of its Subsidiaries
15
granted to any Person any license or other rights to use in any manner any of
such intellectual property rights.
6.08. FINANCIAL INFORMATION. (a) Attached hereto as EXHIBIT 6.08(a) are
true, correct and complete copies of (i) the audited balance sheet of LTHI and
its subsidiaries as of December 31, 1997 and the related statements of income
and retained earnings and of cash flows for the fiscal year then ended,
certified by PricewaterhouseCoopers, LTHI's independent public accountants
(including the notes thereto) and (ii) the unaudited balance sheet of LTHI and
its subsidiaries as of December 31, 1998, and the related statements of income
and retained earnings for the 12-month period then ended ((i) and (ii)
collectively the "Financial Statements"). All Financial Statements have been
prepared in accordance with GAAP, subject to normal year-end audit adjustments,
and consistent with prudent business management practices, are complete in all
material respects and fairly present the financial position of LTHI and its
subsidiaries as of the respective dates thereof and results of operations and
changes in financial position of LTHI and its subsidiaries for each of the
periods then ended.
(b) Since December 31, 1998, there has been no material adverse change
in the business, assets, liabilities, condition (financial or other), or in the
results of operations or prospects of the Company and its Subsidiaries taken as
a whole.
(c) Except as disclosed on EXHIBIT 6.08(c) attached hereto, neither
the Company nor any of its Subsidiaries has any liability, contingent or
otherwise, not disclosed in the Financial Statements or in the notes thereto
that could, together with all such other liabilities, have a Material Adverse
Effect, nor does the Company have any reasonable grounds to know of any such
liability.
(d) A schedule of Indebtedness of the Company and its Subsidiaries as
of December 31, 1998 (including lease obligations required to be capitalized in
accordance with GAAP) is attached hereto as EXHIBIT 6.08(d).
6.09. TAXES. Except as described on EXHIBIT 6.09 attached hereto, the
Company and each of its Subsidiaries has accurately prepared and timely filed
all federal, state and other tax returns required by law to be filed by it, and
all taxes shown to be due and all additional assessments have been paid or
provision made therefor. The Company does not know of any material additional
assessments or adjustments pending or threatened against the Company or any of
its Subsidiaries for any period, nor of any basis for any such assessment or
adjustment. The charges, accruals and reserves on the books of the Company and
its Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Company, adequate.
6.10. INTENTIONALLY OMITTED
6.11. TRANSACTIONS WITH AFFILIATES. Except as set forth on EXHIBIT 6.11
attached hereto, there are no loans, leases, royalty agreements or other
continuing transactions between the Company or any of its Subsidiaries, on the
one hand, and any Person owning, or who did own at any time within the two-year
period preceding the date of this Agreement, five percent (5%) or more of any
class of capital stock of the Company or other entity controlled by such
stockholder or a member of such stockholder's family, on the other hand.
16
6.12. ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER PERSONS. Except as
disclosed on EXHIBIT 6.08(c) hereto, neither the Company nor any of its
Subsidiaries has assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss) any Indebtedness of any other Person.
6.13. LOANS TO OTHER PERSONS. Except as set forth on EXHIBIT 6.13 attached
hereto, neither the Company nor any of its Subsidiaries has made any loan or
advance to any Person which is outstanding on the date of this Agreement, nor is
the Company or any of its Subsidiaries obligated or committed to make any such
loan or advance.
6.14. SECURITIES ACT. Neither the Company nor anyone acting on its behalf
has offered any of the Notes or similar securities, or solicited any offers to
purchase or made any attempt by preliminary conversation or negotiations to
dispose of the Notes or similar securities, within the meaning of all applicable
federal and state securities laws, to any Person other than (i) the Purchaser,
and (ii) no more than twenty-five (25) other Persons, each of which is an
"accredited investor" (as such term is defined in Rule 501 of Regulation D
promulgated pursuant to the Securities Act), and no Person other than the
Purchaser will purchase any Notes or similar securities. Neither the Company nor
anyone acting on its behalf has offered or will offer to sell the Notes or
similar securities to, or solicit offers with respect thereto from, or enter
into any preliminary conversations or negotiations relating thereto with, any
Person, so as to bring the issuance and sale of the Note under the registration
provisions of the Securities Act.
6.15. DISCLOSURE. Neither this Agreement, the Financial Statements, the
Operative Documents, nor any other agreement, document, certificate or written
statement furnished to the Purchaser or the Purchaser's counsel by or on behalf
of the Company or any of its Subsidiaries in connection with the transactions
contemplated hereby or thereby contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. There is no fact within the knowledge of the Company or
any of its executive officers which has not been disclosed herein or otherwise
by them to the Purchaser and which has a Material Adverse Effect, or in the
future in their opinion could reasonably be expected to have a Material Adverse
Effect. Without limiting the foregoing, the Company has no knowledge of any
specific existing, pending or planned patent, invention or device which would
have a Material Adverse Effect.
6.16. NO BROKERS OR FINDERS. As of the Closing, no Person had, has or will
have, as a result of the transactions contemplated by this Agreement, any right,
interest or valid claim against or upon the Purchaser for any commission, fee or
other compensation as a finder or broker because of any act or omission by the
Company, any of its Subsidiaries or any or its or their agents.
6.17. OTHER AGREEMENTS OF OFFICERS. Except as set forth on EXHIBIT 6.17
attached hereto, no officer or key employee of the Company or any of its
Subsidiaries is a party to or bound by any agreement, contract or commitment, or
subject to any restrictions, particularly but without limitation in connection
with any previous employment of any such person, which has a Material Adverse
Effect, or in the future may (so far as the Company can reasonably foresee) have
a Material Adverse Effect. To the
17
best knowledge of the Company, no officer or key employee of the Company or any
of its Subsidiaries has any present intention of terminating his employment with
the Company or any of its Subsidiaries and neither the Company nor any of its
Subsidiaries has any present intention of terminating any such employment.
6.18. CAPITALIZATION OF THE COMPANY; STATUS OF CAPITAL STOCK. The Company
has a total authorized capitalization consisting of 1,750 shares of capital
stock, NLG 100 par value per share. A complete list of the outstanding capital
stock of the Company and the names in which such capital stock of the Company is
registered is set forth on EXHIBIT 6.18 attached hereto. All the outstanding
shares of capital stock of the Company have been duly authorized, are validly
issued and are fully paid and nonassessable. Except as otherwise set forth on
EXHIBIT 6.18, there are no options, warrants or rights to purchase shares of
capital stock or other securities of the Company authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares of
its capital stock or other securities. Except as otherwise set forth on EXHIBIT
6.18, there are no restrictions on the transfer of shares of capital stock of
the Company other than those imposed by relevant state and federal securities
laws. Except as set forth in this Agreement or as otherwise set forth on EXHIBIT
6.18, no holder of any security of the Company is entitled to preemptive or
similar statutory or contractual rights, either arising pursuant to any
agreement or instrument to which the Company is a party, or which are otherwise
binding upon the Company. The issuance of the Notes will not trigger any
preemptive or similar right on the part of any party.
6.19. CAPITAL STOCK OF SUBSIDIARIES. Except as set forth on EXHIBIT 6.19
attached hereto, the Company owns all of the outstanding capital stock of each
of the Subsidiaries, beneficially and of record, free and clear of all liens,
encumbrances, restrictions and claims of every kind. All the outstanding shares
of capital stock of each of the Subsidiaries have been duly authorized, are
validly issued and are fully paid and nonassessable. There are no options,
warrants or rights to purchase shares of capital stock or other securities of
any of the Subsidiaries authorized, issued or outstanding, nor is any Subsidiary
obligated in any other manner to issue shares of its capital stock or other
securities.
6.20. LABOR RELATIONS. To the best knowledge of the Company, no labor union
or any representative thereof has made any attempt to organize or represent
employees of the Company or any of its Subsidiaries. There are no unfair labor
practice charges, pending trials with respect to unfair labor practice charges,
pending material grievance proceedings or adverse decisions of a Trial Examiner
of the National Labor Relations Board or similar board against the Company or
any of its Subsidiaries. Furthermore, to the best knowledge of the Company,
relations with employees of the Company and its Subsidiaries are good and there
is no reason to believe that any material labor difficulties will arise in the
foreseeable future.
6.21. INSURANCE. Except as set forth on EXHIBIT 6.21 attached hereto, the
Company and each of its Subsidiaries has insurance covering its properties and
business adequate and customary for the type and scope of its properties and
business.
6.22. BOOKS AND RECORDS. The books of account, ledgers, order books,
records and documents of the Company and its Subsidiaries accurately and
completely reflect all material information relating to the business of the
Company and its Subsidiaries, the nature, acquisition, maintenance, location and
18
collection of the assets of the Company and its Subsidiaries, and the nature of
all transactions giving rise to the obligations or accounts receivable of the
Company and its Subsidiaries.
6.23. HAZARDOUS AND TOXIC MATERIALS. Except as set forth in EXHIBIT 6.23
attached hereto, (a) to the best knowledge of the Company and each of its
Subsidiaries, no hazardous or toxic waste or substance or any other contaminant
or pollutant including without limitation any oil or pesticide ("Hazardous
Materials") have been generated, used, treated or stored on, or transported to
or from, any of the property owned, leased or operated by the Company or any of
its Subsidiaries except in compliance with all applicable Environmental Laws,
(b) to the best knowledge of the Company and its Subsidiaries, there have been
no spills, discharges, releases or cleanups of any Hazardous Materials
("Hazardous Discharges") on any of the property owned, leased or operated by the
Company or any of its Subsidiaries, except such Hazardous Discharges which do
not violate any federal, state or local laws, ordinances, rules, regulations, or
policies existing or enacted relating to the environment, health and safety, any
Hazardous Discharges or to industrial hygiene or environmental conditions
(collectively "Environmental Laws"), (c) the Company and its Subsidiaries are in
compliance in all material respects with all applicable Environmental Laws and
the requirements of any permits issued under such Environmental Laws with
respect to any property owned, leased or operated by the Company or any of its
Subsidiaries, and (d) there are no pending or, to the best knowledge of the
Company and its Subsidiaries, threatened claims relating to the foregoing
against the Company, any of its Subsidiaries or the property owned, leased or
operated by the Company or its Subsidiaries.
6.24. REGISTRATION RIGHTS. No Person has demand or other rights to cause
the Company to file any registration statement under the Securities Act or any
other statute or law relating to any securities of the Company or any right to
participate in any such registration statement.
6.25. OTHER AGREEMENTS. Except as explicitly disclosed and described in the
Financial Statements or as set forth on EXHIBIT 6.25 attached hereto, neither
the Company nor any of its Subsidiaries is a party to any written or oral
contract or instrument or other corporate restriction the due performance of
which individually or in the aggregate could have a Material Adverse Effect.
Except as specifically contemplated by this Agreement or as set forth on said
EXHIBIT 6.25, neither the Company nor any of its Subsidiaries is a party to any
written or oral:
(a) contract for the future purchase of fixed assets or for the future
purchase of materials, supplies or equipment in excess of its normal operating
requirements;
(b) agreement or indenture relating to the borrowing of money or to
the mortgaging or pledging of, or otherwise placing a lien or security interest
on, any asset of the Company or any of its Subsidiaries;
(c) guaranty of any obligation for borrowed money or otherwise;
(d) voting trust, stockholders agreement, pledge agreement or buy-sell
agreement relating to any securities of the Company which shall be in effect
after the Closing except to the extent contemplated hereunder; or
19
(e) agreement or obligation (contingent or otherwise) to issue or sell
or to repurchase or otherwise acquire or retire any share of its capital stock
or any of its other equity securities.
The Company, each Subsidiary, and, to the best knowledge of the Company, each
other party thereto have in all material respects performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in material default under, any lease, agreement or contract now in
effect to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries or its property may be bound. The Company
and the Subsidiaries currently have no expectation or intention of not fully
performing all their obligations under each such lease, contract or other
agreement, and the Company has no knowledge of any material breach or
anticipated material breach by the other party to any contract or commitment to
which the Company or any of its Subsidiaries is a party.
6.26. CUSTOMERS, VENDORS AND SUPPLIERS. None of the customers of the
Company and the Subsidiaries or vendors or suppliers of merchandise or supplies
to the Company and the Subsidiaries has canceled or otherwise terminated or made
any threat to cancel or otherwise terminate its relationship with the Company or
any Subsidiary, nor has any such customer, vendor or supplier indicated an
intent or desire to materially decrease its sales volume or purchase volume, as
the case may be, with the Company or any Subsidiary, except where any such
cancellation, termination, threat to cancel or terminate or intent or desire to
decrease its sales volume or purchase volume would not have a Material Adverse
Effect.
6.27. NO VIOLATIONS. Neither the execution and delivery of this Agreement
and the Operative Documents, nor the consummation of any of the transactions
contemplated hereby or thereby, by the Company, will (a) violate, conflict with,
or result in a breach or default under any provision of the charter documents of
the Company, (b) violate any provision of any Applicable Laws, or (c) result in
a violation or breach by the Company of, conflict with, constitute (with or
without due notice or lapse of time or both) a default by the Company (or give
rise to any right of termination, cancellation, payment or acceleration) under,
or result in the creation of any Lien upon any of the properties or assets of
the Company under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, lease, franchise
agreement or other instrument or obligation to which the Company is a party, or
by which it or any of its properties or assets may be bound.
ARTICLE VII
COVENANTS OF THE COMPANY
7.01. AFFIRMATIVE COVENANTS OF THE COMPANY OTHER THAN REPORTING
REQUIREMENTS. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that, until the later of the repayment in full of
(i) the aggregate outstanding principal balance of the Notes, together with all
interest and penalties, if any, due thereon, or (ii) the aggregate outstanding
principal balance of the LTHI Notes, together with all interest and penalties,
if any due thereon, it will perform and observe the following covenants and
provisions and will cause each Subsidiary to perform and observe such of the
following covenants and provisions as are applicable to such Subsidiary:
(a) PUNCTUAL PAYMENT. Pay the principal of, premium, if any, and
interest on each of the Notes at the times and place and in the manner provided
in the Notes and herein.
20
(b) PAYMENT OF TAXES AND TRADE DEBT. Pay and discharge, and cause each
Subsidiary to pay and discharge, all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or business, or upon any
properties belonging to it, prior to the date on which penalties attach thereto,
and all lawful claims which, if unpaid, might become a lien or charge upon any
properties of the Company or any Subsidiary, provided that neither the Company
nor any Subsidiary shall be required to pay any such tax, assessment, charge,
levy or claim which is being contested in good faith and by appropriate
proceedings if the Company or the Subsidiary concerned shall have set aside on
its books adequate reserves with respect thereto. Pay and cause each Subsidiary
to pay, when due, or in conformity with customary trade terms, all material
lease obligations, all trade debt, and all other Indebtedness incident to the
operations of the Company or the Subsidiaries, except such as are being
contested in good faith and by appropriate proceedings if the Company or the
Subsidiary concerned shall have set aside on its books adequate reserves with
respect thereto.
(c) MAINTENANCE OF INSURANCE. Maintain, and cause each Subsidiary to
maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company or such Subsidiary operates.
(d) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain, and
cause each Subsidiary to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified, and cause each Subsidiary to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
of its properties, except where the failure to remain so qualified would not,
either individually or in the aggregate, have a Material Adverse Effect;
provided, however, that nothing herein contained shall prevent any merger,
consolidation or transfer of assets permitted by subsection 7.02(e). Preserve
and maintain, and cause each Subsidiary to preserve and maintain, all licenses
and other rights to use patents, processes, licenses, trademarks, trade names,
inventions, intellectual property rights or copyrights owned or possessed by it
and necessary to the conduct of its business, except such licenses, other rights
and copyrights which are part of a transfer of assets permitted by Section
7.02(e).
(e) COMPLIANCE WITH LAWS. Comply, and cause each Subsidiary to comply,
with all applicable laws, rules, regulations and orders of any governmental
authority, noncompliance with which could have a Material Adverse Effect.
(f) INSPECTION RIGHTS. At any reasonable time and from time to time,
but not more frequently than twice in any 12-month period unless an Event of
Default shall have occurred and is continuing, permit the Purchaser or any of
its agents or representatives, to examine and make copies of and extracts from
the records and books of account of, and visit and inspect the properties of,
the Company and any Subsidiary, and to discuss the affairs, finances and
accounts of the Company and any Subsidiary with any of their officers or
directors and independent accountants. All reasonable out-of-pocket expenses of
the Purchaser (or its agents or representatives), the Company or any Subsidiary
incurred in connection with such inspection rights shall be borne by the
Company, such amount not to exceed $10,000 (or its equivalent in any other
currency) per annum.
21
(g) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep, and cause each
Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with the generally accepted accounting
principles recognized in the country in which the Company and each Subsidiary
was organized or incorporated, respectively.
(h) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause
each Subsidiary to maintain and preserve, all of its properties, necessary or
useful in the proper conduct of its business, in good repair, working order and
condition, ordinary wear and tear excepted, except such properties which are
part of a transfer of assets permitted by Section 7.02(e).
(i) INTENTIONALLY OMITTED.
(j) INTENTIONALLY OMITTED.
(k) INTENTIONALLY OMITTED.
(l) NOTICE OF DEFAULT OF SENIOR DEBT. The Company shall provide the
holders of the Notes with written notice promptly upon an event of default under
the Senior Debt or upon the occurrence of an event which, with the giving of
notice or passage of time or both, would result in an event of default under the
Senior Debt.
(m) INTENTIONALLY OMITTED.
(n) INTENTIONALLY OMITTED.
(o) SUBSIDIARY GUARANTORS. Within five (5) Business Days after any
Subsidiary which is not a Subsidiary Guarantor on the date hereof guarantees any
Senior Debt (each a "New Senior Debt Guarantee"), the Company shall cause such
Subsidiary to execute and deliver to the Purchaser a guarantee in form and
substance satisfactory to the Purchaser pursuant to which such Subsidiary
guarantees all of the obligations of the Company to the Purchaser, including,
without limitation, the obligations of the Company hereunder and under the
Notes, together with any other documents as the Purchaser may reasonably
request.
7.02. NEGATIVE COVENANTS OF THE COMPANY. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that, until
the later of the repayment in full of (i) the aggregate outstanding principal
balance of the Notes, together with all interest and penalties, if any, due
thereon, or (ii) the aggregate outstanding principal balance of the LTHI Notes,
together with all interest and penalties, if any due, thereon, it will comply
with and observe the following covenants and provisions, and will cause each
Subsidiary to comply with and observe such of the following covenants and
provisions as are applicable to such Subsidiary, and will not:
(a) LIENS. Create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance (including
the lien or retained security title of a conditional vendor) of any nature, upon
or with respect to any of its properties, now owned or hereafter acquired, or
assign or otherwise convey any right to receive income, except that the
foregoing restrictions shall not apply to mortgages,
22
deeds of trust, pledges, liens, security interests or other charges or
encumbrances (collectively, "Permitted Liens"):
(i) for taxes, assessments or governmental charges or levies on
property of the Company or any Subsidiary if the same shall not at the time
be delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings;
(ii) imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business;
(iii) arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;
(iv) securing the performance of bids, tenders, contracts (other
than for the repayment of borrowed money), statutory obligations and surety
bonds;
(v) in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of real property which do not materially
detract from its value or impair its use;
(vi) arising by operation of law in favor of the owner or
sublessor of leased premises and confined to the property rented;
(vii) arising from any litigation or proceeding which is being
contested in good faith by appropriate proceedings, provided, however, that
no execution or levy has been made;
(viii) described on EXHIBIT 6.07 which secure the Indebtedness
set forth on EXHIBIT 6.08(d), provided that no such lien is extended to
cover other or different property of the Company or any Subsidiary;
(ix) liens which secure Indebtedness permitted by Section
7.02(b); and
(x) other liens or encumbrances arising in the ordinary course of
business not incurred in connection with the borrowing of money which do
not interfere in any material respect with the conduct of the business of
the Company and its Subsidiaries.
(b) INDEBTEDNESS. Without the prior written consent of the Purchaser,
create, incur, assume or suffer to exist, or permit any Subsidiary to create,
incur, assume or suffer to exist, any Indebtedness other than (1) Senior Debt,
provided that the provisions of Section 7.02(b) of the LTHI Note Purchase
Agreement are not violated; (2) Indebtedness of the Company in favor of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Venture Capital Fund II Annex, L.P. or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Venture Investors
Annex, L.P., provided that the provisions of Section 7.02(b) of the LTHI Note
Purchase Agreement are not violated; (3) an unlimited amount of Junior
Subordinated Debt outstanding at any time on a consolidated basis, PROVIDED that
the
23
incurrence and maintenance of all such Indebtedness will not result in the
Company's or any Subsidiary's failure to comply with any of the provisions of
Article VII hereof; (4) Indebtedness described in EXHIBIT 7.02(b), PROVIDED,
HOWEVER, that neither the Company, nor any Subsidiary shall make an intercompany
loan to a Subsidiary that is not a Subsidiary Guarantor (as such term is defined
under this Agreement and as such term is defined under the LTHI Note Purchase
Agreement).
(c) INTENTIONALLY OMITTED.
(d) ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER PERSONS.
Assume, guarantee, endorse or otherwise become directly or contingently liable
on, or permit any Subsidiary to assume, guarantee, endorse or otherwise become
directly or contingently liable on (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss) any Indebtedness of any other Person, except
for guarantees by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business and except by the Company or any
Subsidiary with respect to any Indebtedness of the Company or any Subsidiary
which is permitted by this Agreement.
(e) INTENTIONALLY OMITTED.
(f) INVESTMENTS IN OTHER PERSONS. Without the prior written consent of
the Purchaser, make or permit any Subsidiary to make, any loan or advance to any
Person, or purchase, otherwise acquire, or permit any Subsidiary to purchase or
otherwise acquire, any capital stock, assets or other property of, obligations
of, or any interest in, any Person, except:
(i) investments by the Company or any Subsidiary in evidences of
indebtedness issued or fully guaranteed by the United States of America or
any U.S. government agency having a maturity of not more than one year from
the date of acquisition;
(ii) investments by the Company or any Subsidiary in certificates
of deposit, money market accounts, notes, acceptances and repurchase
agreements having a maturity of not more than one year from the date of
acquisition issued by a bank organized in the United States having capital,
surplus and undivided profits of at least $100,000,000 and whose parent
holding company has long-term debt rated Aal or higher, and whose
commercial paper (if rated) is rated Prime 1 by ▇▇▇▇▇'▇ Investors Service,
Inc.;
(iii) loans from a Subsidiary to the Company or another
Subsidiary or from the Company to a Subsidiary;
(iv) investments by the Company or any Subsidiary in the
highest-rated commercial paper having a maturity of not more than one year
from the date of acquisition;
(v) reasonable advances to employees for travel, relocation or
other business expenses in accordance with the ordinary course of business;
and
24
(vi) loans or advances to employees to enable employees to
exercise vested stock options.
(g) DISTRIBUTIONS. Without the prior written consent of the Purchaser,
declare or pay any dividends, purchase, redeem, retire, or otherwise acquire for
value any of its capital stock (or rights, options or warrants to purchase such
shares) now or hereafter outstanding, return any capital to its stockholders as
such, or make any distribution of assets to its stockholders as such, or permit
any Subsidiary to do any of the foregoing (such transactions being hereinafter
referred to as "Distributions"); provided, however, that nothing herein
contained shall prevent:
(i) the Company from effecting a stock split or declaring or
paying any dividend consisting of shares of any class of Common Stock to
the holders of shares of such class of Common Stock, provided that such
stock split or dividend is effected equally across all classes of Common
Stock;
(ii) any Subsidiary from declaring or making payment of cash or
stock dividends, returns of capital or distributions of assets to the
Company or another Subsidiary; or
(iii) the repurchase of shares of Common Stock held by any
employee or consultant of the Company at cost upon the termination of such
employee's or consultant's services to the Company;
if in the case of any such transaction the Distribution can be made in
compliance with the other terms of this Agreement.
(h) DEALINGS WITH AFFILIATES. Without the prior written consent of the
Purchaser, enter or permit any Subsidiary to enter into any transaction with any
holder of five percent (5%) or more of any class of capital stock of LTHI, or
any member of their families or any corporation or other entity in which any one
or more of such stockholders or members of their immediate families directly or
indirectly holds five percent (5%) or more of any class of capital stock, except
on an arms-length basis on terms no less favorable to the Company or Subsidiary
as it could obtain from an unrelated party.
(i) MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES. Sell or otherwise
dispose of any shares of capital stock of any Subsidiary, except to the Company
or another Subsidiary, or permit any Subsidiary to issue, sell or otherwise
dispose of any shares of its capital stock or the capital stock of any
Subsidiary, except (i) to the Company or another Subsidiary, or (ii) to any
director of a Subsidiary to the extent the issuance to any such director of any
such capital stock is required under applicable law; PROVIDED, HOWEVER, that
nothing herein contained shall prevent any merger, consolidation or transfer of
assets permitted by Section 7.02(e).
(j) CHANGE IN NATURE OF BUSINESS. Without the prior written consent of
the Purchaser, make, or permit any Subsidiary to make, any material change in
the nature of its business as carried on at the date hereof.
25
(k) NO AMENDMENT OF CHARTER DOCUMENTS OR BYLAWS. Without the prior
written consent of the Purchaser, amend or alter its charter documents or bylaws
in any manner which would have an adverse impact upon the interests of the
Purchaser. Prior to making any amendment or alteration to its charter documents
or bylaws, the Company shall give the Purchaser five (5) days prior written
notice thereof. In the event the Purchaser reasonably believes that such
amendment or alteration would have an adverse effect upon its interests and the
Purchaser so notifies the Company prior to the expiration of such five (5) day
period, the Company shall not so amend or alter its charter documents or bylaws.
(l) INTENTIONALLY OMITTED.
7.03. REPORTING REQUIREMENTS. The Company will furnish to the holders of
the Notes:
(a) as soon as possible and in any event within five (5) days after
the occurrence of each Event of Default or each event which, with the giving of
notice or lapse of time or both, would constitute an Event of Default, the
statement of the chief financial officer of the Company setting forth details of
such Event of Default or event and the action which the Company proposes to take
with respect thereto;
(b) as soon as available and in any event within thirty (30) days
after the end of each month, consolidated and consolidating balance sheets of
LTHI and its subsidiaries as of the end of such month and consolidated and
consolidating statements of income and retained earnings and of cash flows of
LTHI and its subsidiaries for such month and for the periods commencing at the
end of the previous fiscal year and ending with the end of such month, and with
respect to each quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year
and the operating Budget for the current year (the "Budget"), all in reasonable
detail, in a format reasonably satisfactory to the Purchaser, and duly certified
(subject to normal year-end adjustments) by the chief financial officer of the
Company as having been prepared in accordance with GAAP, subject to normal
year-end audit adjustments, and including a discussion by the Company's
management of any variance from the Budget;
(c) at the time of delivery of each monthly statement, a certificate,
executed by the chief financial officer of the Company, stating that such
officer has caused this Agreement and the Notes to be reviewed and has no
knowledge of any Event of Default or default by the Company or any Subsidiary in
the performance or observance of any of the provisions of this Agreement or the
Notes or, if such officer has such knowledge, specifying such Event of Default
or default and the nature thereof, and setting forth computations in reasonable
detail demonstrating compliance with the provisions of subsections 7.02(b) and
(d);
(d) promptly after the commencement thereof, notice of all actions,
suits and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting the
Company or any Subsidiary of the type described in Section 6.04;
(e) simultaneously as they are sent to the Bank, copies of all
financial statements, and upon written request, reports and other information
delivered by the Company to the Bank;
26
(f) promptly after sending, making available, or filing the same, such
reports and financial statements as the Company or any Subsidiary shall send or
make available to the stockholders of the Company or the Commission;
(g) such other information respecting the business, assets,
liabilities, financial condition, results of operations or prospects of the
Company or any of its Subsidiaries as the Purchaser may from time to time
reasonably request, and to make available to the Purchaser and its
representatives, members of management and employees with significant
responsibilities for the purposes of updating the Purchaser as to the condition
of the Company and its Subsidiaries; and
(h) simultaneously with any Subsidiary entering into a New Senior Debt
Guarantee, a copy of such guarantee, together with all other documents executed
in connection therewith.
ARTICLE VIII
EVENTS OF DEFAULT
8.01. EVENTS OF DEFAULT. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Company or LTHI shall fail to pay any installment of principal
of any of the Notes or any of the LTHI Notes, respectively, when due; or
(b) The Company or LTHI shall fail to pay any interest or premium, if
any, on any of the Notes or any of the LTHI Notes, respectively, when due and
such failure shall continue for five (5) days; or
(c) The Company shall default in the performance of any covenant
contained in Section 7.02 which default shall remain uncured for twenty (20)
days or more; or
(d) There shall be an Event of Default under the LTHI Loan Agreement
or any documents or agreements executed in connection therewith;
(e) Any representation or warranty made by the Company in this
Agreement or by the Company (or any of its officers) in any certificate,
instrument or written statement contemplated by or made or delivered pursuant to
or in connection with this Agreement, shall prove to have been incorrect when
made in any material respect; or
(f) The Company or any Subsidiary shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement or the Notes on
its part to be performed or observed and any such failure remains unremedied for
twenty (20) days after written notice thereof shall have been given to the
Company by any registered holder of the Notes; or
(g) The Company or any Subsidiary shall fail to pay any Indebtedness
for borrowed money exceeding $1,000,000 (or its equivalent in any other
currency) owing by the Company or such Subsidiary (as the case may be), or any
interest or premium thereon, when due (or, if permitted by the
27
terms of the relevant document, within any applicable grace period), whether
such Indebtedness shall become due by scheduled maturity, by required
prepayment, by acceleration, by demand or otherwise, or shall fail to perform
any term, covenant or agreement on its part to be performed under any agreement
or instrument (other than this Agreement or the Notes) evidencing or securing or
relating to any Indebtedness owing by the Company or any Subsidiary, as the case
may be, when required to be performed (or, if permitted by the terms of the
relevant document, within any applicable grace period), if the effect of such
failure to pay or perform is to accelerate, or to permit the holder or holders
of such Indebtedness, or the trustee or trustees under any such agreement or
instrument to accelerate the maturity of such Indebtedness, unless such failure
to pay or perform shall be waived by the holder or holders of such Indebtedness
or such trustee or trustees; or
(h) The occurrence of an event of default or default under any
document, instrument, note or agreement evidencing or relating to any Senior
Debt, including, without limitation, Indebtedness of the Company and any of its
Subsidiaries for money borrowed from the Bank pursuant to the Loan Agreement.
(i) The Company, any of the Guarantors or LTHI shall be involved in
financial difficulties evidenced (i) by its admitting in writing its inability
to pay its debts generally as they become due; (ii) by its commencement of a
voluntary proceeding under Title 11 of the United States Code as from time to
time in effect, or foreign bankruptcy, insolvency, receivership, examination or
similar law, or by its authorizing, by appropriate proceedings of its board of
directors or other governing body, the commencement of such a voluntary
proceeding; (iii) by its filing an answer or other pleading admitting or failing
to deny the material allegations of a petition filed against it commencing an
involuntary proceeding under said Title 11, or foreign bankruptcy, insolvency,
receivership or similar law, or seeking, consenting to or acquiescing in the
relief therein provided, or by its failing to timely controvert any such
proceeding or the material allegations of any such petition; (iv) by the entry
of an order for relief in any involuntary proceeding commenced under said Title
11, or foreign bankruptcy, insolvency, receivership, examination or similar law;
(v) by its seeking relief as a debtor under any applicable law, other than said
Title 11, or similar bankruptcy, insolvency, receivership, examination or
similar law, of any jurisdiction relating to the liquidation or reorganization
of debtors or to the modification or alteration of the rights of creditors, or
by its consenting to or acquiescing in such relief; (vi) by the entry of an
order by a court of competent jurisdiction (a) finding it to be bankrupt or
insolvent, (b) ordering or approving its liquidation, reorganization or any
modification or alteration of the rights of its creditors, or (c) assuming
custody of, or appointing a receiver, examiner, trustee, custodian, sequestrator
or similar official for, all or a substantial part of its property; or (vii) by
its making an assignment for the benefit of, or entering into a composition
with, its creditors, or appointing or consenting to the appointment of a
receiver, examiner, trustee, custodian, sequestrator or similar official for all
or a substantial part of its property;
(j) A Change of Control occurs with respect to the Company or any of
its material direct or indirect subsidiaries which is not consented to by the
holders of at least a majority of the principal amount of the Notes then
outstanding; or
(k) Any judgment, writ, warrant of attachment or execution or similar
process shall be issued or levied against a substantial part of the property of
the Company or any Subsidiary and such judgment, writ, or similar process shall
not be released, vacated or fully bonded within sixty (60) days after its issue
or levy;
28
then, and in any such event listed in Section 8.01(a) through (k),
(1) the Purchaser may, by notice to the Company, declare the entire unpaid
principal amount of the Notes, all interest accrued and unpaid thereon and all
other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Notes, all such accrued interest and all such amounts shall become
and be forthwith due and payable (unless there shall have occurred an Event of
Default under subsections 8.01(i) in which case all such amounts shall
automatically become due and payable), without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Company, and
(2) the holders of the Notes may proceed to protect and enforce their
respective rights against the Company in such manner as they may elect,
including without limitation, proceeding to protect and enforce their respective
rights by suit in equity (including without limitation a suit for rescission),
action at law and/or other appropriate proceeding either for specific
performance of any covenant, provision or condition contained or incorporated by
reference in this Agreement.
8.02. ANNULMENT OF DEFAULTS. Section 8.01 is subject to the condition that,
if at any time after the principal of any of the Notes shall have become due and
payable, and before any judgment or decree for the payment of the moneys so due,
or any thereof, shall have been entered, then and in every such case the holders
of at least a majority of the principal amount of all Notes then outstanding
may, by written instrument filed with the Company, rescind and annul such
declaration and its consequences; but no such rescission or annulment shall
extend to or affect any subsequent default or Event of Default or impair any
right consequent thereon.
ARTICLE IX
MISCELLANEOUS
9.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of
any holder of any Notes in exercising any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
9.02. AMENDMENTS, WAIVERS AND CONSENTS. Any provision in this Agreement,
the Notes or the other Operative Documents to the contrary notwithstanding,
changes in or additions to this Agreement may be made, and compliance with any
covenant or provision herein set forth may be omitted or waived, if the Company
(x) shall obtain consent thereto in writing from the holder or holders of at
least a majority in principal amount of all Notes then outstanding, and (y)
shall deliver copies of such consent in writing to any holders who did not
execute the same; PROVIDED that no such consent shall be effective to reduce the
principal or interest payable on any Note or extend the maturity of the Notes
without the consent of the holder thereof or to reduce the percentage of the
Notes the consent of the holders of which is required under this Section 9.02.
Any waiver or consent may be given subject to satisfaction of conditions stated
therein and any waiver or consent shall be effective only in the specific
instance and for the specific
29
purpose for which given. Written notice of any waiver or consent effected under
this subsection shall promptly be delivered by the Company to any holders who
did not execute the same.
9.03. ADDRESSES FOR NOTICES, ETC. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed (by first
class registered or certified mail, postage prepaid), telegraphed, sent by
express overnight courier service or electronic facsimile transmission with a
copy by mail, or delivered to the applicable party at the addresses indicated
below:
IF TO THE COMPANY:
c/o Lionbridge Technologies Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO CRL:
Capital Resource Lenders III, L.P.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
Holland & Knight LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO ANY OTHER HOLDER OF THE NOTES:
at such holder's address for notice as set
forth in the transfer records of the
Company
30
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall, when mailed, telegraphed or sent, respectively, be
effective (i) two days after being deposited in the mails or (ii) one day after
being delivered to the telegraph company, deposited with the express overnight
courier service or sent by electronic facsimile transmission (with receipt
confirmed), respectively, addressed as aforesaid.
9.04. COSTS, EXPENSES AND TAXES. The Company agrees to pay on demand all
reasonable costs and expenses of the Purchaser in connection with the
preparation, execution and delivery of this Agreement, the Notes, the other
Operative Documents and other instruments and documents to be delivered
hereunder, and in connection with the consummation of the transactions
contemplated hereby and thereby, as well as all costs and expenses of the
Purchaser in connection with the amendment, waiver (whether or not such
amendment or waiver becomes effective) or enforcement of this Agreement, the
Notes, the other Operative Documents, and other instruments and documents to be
delivered hereunder and thereunder. Notwithstanding the preceding sentence, and
in addition to the provisions of such sentence, the Company agrees to pay on
demand all reasonable fees and out-of-pocket expenses of Holland & Knight LLP,
counsel to the Purchaser, in connection with the transactions contemplated by
this Agreement, including any amendment, waiver (whether or not such amendment
or waiver becomes effective) or enforcement of this Agreement, the Notes, the
Operative Documents, and other instruments and documents to be delivered
hereunder and thereunder. In addition, the Company agrees to pay any and all
stamp and other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Notes, the other Operative
Documents, and the other instruments and documents to be delivered hereunder or
thereunder and the Company agrees to save each Purchaser harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and filing fees.
9.05. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Company and the Purchaser and their respective
successors and assigns, except that (i) the Company shall not have the right to
assign its rights hereunder or any interest therein without the prior written
consent of the Purchaser and (ii) the Purchaser shall not have the right to
assign its rights under this Agreement, the Notes or any interest therein to any
Person not an Affiliate of the Purchaser without the prior written consent of
the Company. The Purchaser shall notify the Company of any assignment that it
makes of its rights hereunder, at such time as it makes such assignment. Except
as expressly set forth herein, nothing in this Agreement shall confer any claim,
right, interest or remedy on any third party or inure to the benefit of any
third party.
9.06. PAYMENTS IN RESPECT OF NOTES. The Purchaser and any successor holder
of the Notes, by their acceptance thereof, agree that, with respect to all sums
received by them applicable to the payment of principal of or interest on the
Notes, equitable adjustment will be made among them so that, in effect, all such
sums shall be shared ratably by all of the holders of the Notes whether received
by voluntary payment, by realization upon security, by the exercise of the right
of setoff, by counterclaim or cross-action or by the enforcement of any or all
of the Notes. If any holder of the Notes receives any payment on its Notes in
excess of its pro rata portion, then such holder receiving such excess payment
shall purchase for cash from the other holders an interest in their Notes in
such amounts as shall result in a ratable participation by all of the holders in
the aggregate unpaid amount of Notes then outstanding.
31
9.07. INTENTIONALLY OMITTED
9.08. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
the Purchaser, its subsidiaries, directors, officers, partners, counsel and
employees, from and against any and all liability (including, without
limitation, reasonable legal fees incurred in defending against any such
liability) under, arising out of or relating to this Agreement, the Notes, the
transactions contemplated hereby or thereby or in connection herewith or
therewith, including (to the maximum extent permitted by law) any liability
arising under federal or state securities laws, except to the extent such
liability shall result from any act or omission on the part of the Purchaser or
its employees, agents, brokers or other representatives. The obligations of the
Company under this Section 9.08 shall survive and continue to be in full force
and effect notwithstanding (a) the repayment of the Notes and (b) the
termination of this Agreement.
9.09. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Agreement, the Notes, the Operative Documents or any
other instrument or document delivered in connection herewith or therewith,
shall survive the execution and delivery hereof and thereof, regardless of any
investigation made by the Purchaser or on behalf of the Purchaser.
9.10. INTENTIONALLY OMITTED
9.11. SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
9.12. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the Commonwealth of Massachusetts.
9.13. WAIVER OF RIGHT TO JURY TRIAL. The parties hereby waive all rights to
a trial by jury for all legal proceedings concerning this Agreement or the
Notes.
9.14. HEADINGS. Article, Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
9.15. SEALED INSTRUMENT. This Agreement is executed as an instrument under
seal.
9.16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and each of the parties hereto may execute this Agreement by signing
any such counterpart.
9.17. FURTHER ASSURANCES. From and after the date of this Agreement, upon
the request of the Purchaser, the Company and each Subsidiary shall execute and
deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement, the Notes and the Warrants.
9.18. CONSENT TO JURISDICTION. The Company irrevocably submits to the
non-exclusive jurisdiction of any state or federal court sitting in the
Commonwealth of Massachusetts, United States of
32
America, over any suit, action or proceeding arising out of or relating to this
Agreement or any of the Notes. To the fullest extent it may effectively do so
under applicable law, the Company irrevocably waives and agrees not to assert,
by way of motion, as a defense or otherwise, any claim that it is not subject to
the jurisdiction of any such court, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.
9.19. EFFECT OF JUDGMENT. The Company agrees, to the fullest extent it may
effectively do so under applicable law, that a judgment in any suit, action or
proceeding of the nature referred to in Section 9.18 brought in any such court
shall, subject to such rights of appeal on issues other than jurisdiction as may
be available to the Company, be conclusive and binding upon the Company and may
be enforced in the courts of the United States of America or the Commonwealth of
Massachusetts (or any other courts to the jurisdiction of which the Company is
or may be subject) by a suit upon such judgment.
9.20. SERVICE OF PROCESS. The Company consents to service of process in any
suit, action or proceeding of the nature referred to in Section 9.18 by actual
receipt of a copy thereof by registered or certified mail, postage prepaid,
return receipt requested, to the address of the Company specified in or
designated pursuant to Section 9.03. The Company agrees that such service (i)
shall be deemed in every respect effective service of process upon the Company
in any such suit, action or proceeding and (ii) shall, to the fullest extent
permitted by law, be taken and held to be valid personal service upon and
personal delivery to the Company.
9.21. NO LIMITATION. Nothing in Sections 9.18, 9.19, 9.20 or 9.22 shall
affect the right of the Purchaser to serve process in any manner permitted by
law, or limit any right that the Purchaser may have to bring proceedings against
the Company in the courts of any jurisdiction or to enforce in any lawful manner
a judgment obtained in one jurisdiction in any other jurisdiction.
9.22. SPECIFIC PERFORMANCE. Upon breach or default by the Company with
respect to any obligation hereunder or under the Notes, the holders of the Notes
shall be entitled to protect and enforce their rights at law, or in equity or by
other appropriate proceedings for specific performance of such obligation, or
for an injunction against such breach or default, or in aid of the exercise of
any power or remedy granted hereby or thereby or by law.
9.23. ACTIONS BY PURCHASER. Wherever in this Agreement action is required
or permitted to be taken by, or consent is required of, or a matter requires the
satisfaction of, the Purchaser, unless the context otherwise requires, such
action may be taken by, and/or such consent may be obtained from, and/or such
satisfaction may be expressed by, the holders of at least a majority of the
principal amount of all Notes then outstanding; PROVIDED, HOWEVER, that the
provisions of this Section 9.23 shall not limit in any manner any action which
may be taken by the Purchaser pursuant to the provisions of Section 8.01 hereof.
9.24. JUDGMENT CURRENCY
(a) The obligations of the Company hereunder and under the other
Operative Documents to make payments in United States Dollars (the "Obligation
Currency") shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into
33
any currency other than the Obligation Currency, except to the extent that such
tender or recovery results in the effective receipt by the holders of the Notes
of the full amount of the Obligation Currency expressed to be payable to such
holders under this Agreement or the other Operative Documents. If, for the
purpose of obtaining or enforcing judgment against the Company or in any court
or in any jurisdiction, it becomes necessary to convert into or from any
currency other than the Obligation Currency (such other currency being
hereinafter referred to as the "Judgment Currency") an amount due in the
Obligation Currency, the conversion shall be made at the rate of exchange (as
quoted by a known dealer in such currency designated by the holders of the
Notes) determined, in each case, as of the date immediately preceding the day on
which the judgment is given (such Business Day being hereinafter referred to as
the "Judgment Currency Conversion Date").
(b) If there is a change in the rate of exchange prevailing between
the Judgment Currency Conversion Date and the date of actual payment of the
amount due, the Company covenants and agrees to pay, or cause to be paid, as a
separate obligation and notwithstanding any judgment, such additional amounts,
if any (but in any event not a lesser amount) as may be necessary to ensure that
the amount paid in the Judgment Currency, when converted at the rate of exchange
prevailing on the date of payment, will produce the amount of the Obligation
Currency which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial award at the rate of exchange prevailing
on the Judgment Currency Conversion Date.
(c) For purposes of determining the rate of exchange for this Section
9.24, such amounts shall include any premium and costs payable in connection
with the purchase of the Obligation Currency.
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34
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of
the date first above written.
COMPANY: LIONBRIDGE TECHNOLOGIES HOLDINGS, B.V.
By: ___________________________________
Name:
Title:
PURCHASER: CAPITAL RESOURCE LENDERS III, L.P.
By: Capital Resource Partners III, L.L.C.
Its: General Partner
By: ___________________________________
Member