Exhibit 10.12
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STREAMLINE, INC.
SECURITIES PURCHASE AGREEMENT
777 UNITS
EACH CONSISTING OF
$10,000 AGGREGATE PRINCIPAL AMOUNT OF
SENIOR DISCOUNT NOTES
DUE APRIL 15, 2001
AND
1,093.95 WARRANTS TO PURCHASE COMMON STOCK,
PAR VALUE $.01 PER SHARE,
OF
STREAMLINE, INC.
DATED AS OF APRIL 15,1998
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS...............................................................1
1.1 Definitions............................................................................1
1.2 Accounting Terms......................................................................22
ARTICLE II PURCHASE AND SALE OF UNITS...................................................................22
2.1 Issuance of Units.....................................................................22
2.2 Sale and Purchase of Unit.............................................................23
2.3 Closing of Sale of Units..............................................................23
ARTICLE III CONDITIONS TO CLOSING.......................................................................24
3.1 Conditions Precedent to Obligations of the Purchasers on the Closing Date.............24
3.2 Conditions Precedent to Obligations of the Company on the Closing Date................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES, ETC..........................................................28
4.1 Organization and Qualification, Authority.............................................29
4.2 Subsidiaries..........................................................................29
4.3 Licenses..............................................................................29
4.4 Corporate and Governmental Authorization; Contravention...............................30
4.5 Validity and Binding Effect...........................................................30
4.6 Capitalization........................................................................31
4.7 Litigation; Defaults..................................................................31
4.8 Outstanding Debt......................................................................32
4.9 No Material Adverse Change............................................................32
4.10 Employee Programs.....................................................................33
4.11 Private Offering......................................................................35
4.12 Broker's or Finder's Commissions......................................................36
4.13 Disclosure............................................................................36
4.14 Foreign Assets Control Regulation, Etc................................................37
4.15 Federal Reserve Regulations and Other Matters.........................................37
4.16 Investment Company Act................................................................38
***4.17 Public Utility Holding Act............................................................38
4.18 Interstate Commerce Act...............................................................38
4.19 Environmental Regulation, Etc.........................................................38
4.20 Properties and Assets.................................................................39
4.21 Insurance.............................................................................40
4.22 Employment Practices..................................................................40
4.23 Financial Statements..................................................................41
4.24 Intellectual Property.................................................................41
4.25 Taxes.................................................................................43
(i)
4.26 Transactions with Affiliates..........................................................44
4.27 Limitation on Subsidiary Payment Restrictions.........................................44
4.28 No Other Business.....................................................................44
4.29 Party in Interest.....................................................................44
4.30 Agreements............................................................................45
4.31 Accounts Receivable and Inventory.....................................................46
ARTICLE V PURCHASE FOR INVESTMENT; SOURCE OF FUNDS......................................................46
5.1 Purchase for Investment...............................................................46
5.2 Authority.............................................................................47
ARTICLE VI REDEMPTIONS AND OFFERS TO PURCHASE...........................................................47
6.1 Notice of Redemption..................................................................47
6.2 Selection of Senior Discount Notes to be Redeemed or Purchased........................48
6.3 Effect of Notice of Redemption........................................................48
6.4 Payment of Redemption Price...........................................................48
6.5 Senior Discount Notes Redeemed in Part................................................49
6.6 Optional and Mandatory Redemption.....................................................49
6.7 Mandatory Offers......................................................................50
ARTICLE VII COVENANTS...................................................................................51
7.1 Payment of Senior Discount Notes......................................................51
7.2 Reports...............................................................................52
7.3 Compliance Certificate................................................................53
7.4 Stay, Extension and Usury Laws........................................................55
7.5 Limitation on Restricted Payments.....................................................55
7.6 Corporate Existence...................................................................55
7.7 Limitation on Indebtedness............................................................56
7.8 Limitation on Transactions with Affiliates............................................58
7.9 Limitation on Liens...................................................................58
7.10 Payment of Taxes and Other Claims.....................................................58
7.11 Restrictions Against Limitations on Upstream Payments.................................59
7.12 Change of Control.....................................................................59
7.13 Redemption from the Proceeds of Securities Sales and Mezzanine Debt Financing.........59
7.14 Maintenance of Properties.............................................................60
7.15 Maintenance of Insurance..............................................................60
7.16 Compliance with Laws and Obligations..................................................61
7.17 Limitation on Issuances and Dispositions of Capital Stock of Subsidiaries an
Acquisitions and Sales................................................................61
7.18 Limitation on Sale of Assets..........................................................61
7.19 Limitations on Mergers and Acquisitions...............................................62
7.20 Limitations on Expenditures and other Activities......................................62
(ii)
7.21 Books and Records.....................................................................63
7.22 Compliance with Agreements............................................................63
7.23 Current Public Information............................................................63
7.24 Required Securities Sales.............................................................63
7.25 Termination...........................................................................64
ARTICLE VIII [INTENTIONALLY DELETED]....................................................................64
ARTICLE IX DEFAULTS AND REMEDIES........................................................................64
9.1 Events of Default.....................................................................64
9.2 Acceleration..........................................................................65
9.3 Other Remedies........................................................................66
9.4 Waiver of Past Defaults...............................................................66
9.5 Control by a Majority.................................................................66
9.6 Rights of Holders to Receive Payment..................................................66
9.7 Holders May File Proofs of Claim......................................................67
9.8 Undertaking for Costs.................................................................67
ARTICLE X AMENDMENTS....................................................................................67
10.1 Amendments and Supplements Permitted Without Consent of Holders.......................67
10.2 Amendments and Supplements Requiring Consent of Holders: Other Consents...............67
10.3 Revocation and Effect of Consents.....................................................68
10.4 Notation on or Exchange of Senior Discount Notes......................................69
10.5 Board Approval........................................................................69
ARTICLE XI THE SENIOR DISCOUNT NOTES....................................................................70
11.1 Form and Dating.......................................................................70
11.2 Execution and Authentication..........................................................70
11.3 Transfer and Exchange.................................................................70
11.4 Replacement Senior Discount Notes.....................................................71
11.5 Outstanding Senior Discount Notes.....................................................71
11.6 Treasury Senior Discount Notes........................................................72
11.7 Temporary Senior Discount Notes.......................................................72
11.8 Cancellation..........................................................................72
11.9 Defaulted Interest....................................................................72
11.10 Record Date...........................................................................73
11.11 Restrictive Legends...................................................................73
11.12 Notice of Transfer; Opinions of Counsel...............................................74
ARTICLE XII INDEMNIFICATION.............................................................................75
12.1 Indemnification: Expenses, Etc........................................................75
ARTICLE XIII MISCELLANEOUS..............................................................................77
(iii)
13.1 Survival of Representations and Warranties; Severability..............................77
13.2 Notices,. Etc.........................................................................78
13.3 Successors and Assigns................................................................79
13.4 Descriptive Headings..................................................................79
13.5 Satisfaction Requirement..............................................................79
13.6 Governing Law.........................................................................80
13.7 Service of Process....................................................................80
13.8 Counterparts..........................................................................81
13.9 Disclosure to Other Persons...........................................................81
13.10 No Adverse Interpretation of Other Agreements.........................................82
13.11 Waiver of Jury Trial..................................................................82
13.12 Merger................................................................................82
13.13 Expenses..............................................................................82
SCHEDULES
Schedule 1.1 Definitions
Schedule 1.2 Accounting Terms
Schedule 2.1 Issuance of Units
Schedule 2.2 Sale and Purchase of Unit
Schedule 2.3 Closing of Sale of Units
Schedule 3.1 Conditions Precedent to Obligations of the Purchasers
on the Closing Date
Schedule 3.2 Conditions Precedent to Obligations of the Company
on the Closing Date
Schedule 4.1 - Organization and Qualification, Authority
Schedule 4.2 - Subsidiaries
Schedule 4.3 Licenses
Schedule 4.4 - Corporate and Governmental Authorization:
Contravention
Schedule 4.5 Validity and Binding Effect
Schedule 4.6 - Capitalization
Schedule 4.7 - Litigation; Defaults
Schedule 4.8 - Outstanding Debt
Schedule 4.9 - No Material Adverse Change
Schedule 4.10 - Employee Programs
Schedule 4.11 Private Offering
Schedule 4.12 Broker's or Finder's Commissions
Schedule 4.13 Disclosure
Schedule 4.14 Foreign Assets Control Regulation, Etc.
Schedule 4.15 Federal Reserve Regulations and Other Matters
(iv)
Schedule 4.16 Investment Company Act
Schedule 4.17 Public Utility Holding Company Act
Schedule 4.18 Interstate Commerce Act
Schedule 4.19 - Environmental Regulations, Etc.
Schedule 4.20 - Properties and Assets
Schedule 4.21 - Insurance
Schedule 4.22 - Employment Practices
Schedule 4.23 - Financial Statements
Schedule 4.24 - Intellectual Property
Schedule 4.25 - Taxes
Schedule 4.26 - Transactions with Affiliates
Schedule 4.27 - Limitation on Subsidiary Payment Restrictions
Schedule 4.28 No Other Business
Schedule 4.29 Party in Interest
Schedule 4.30 - Agreements
Schedule 4.31 Accounts Receivable and Inventory
Schedule 5.1 Purchase for Investment
Schedule 5.2 Authority
Schedule 6.1 Notice of Redemption
Schedule 6.2 Selection of Senior Discount Notes to be Redeemed or
Purchased
Schedule 6.3 Effect of Notice of Redemption
Schedule 6.4 Payment of Redemption Price
Schedule 6.5 Senior Discount Notes Redeemed in Part
Schedule 6.6 Optional and Mandatory Redemption
Schedule 6.7 Mandatory Offers
Schedule 7.1 Payment of Senior Discount Notes
Schedule 7.2 Reports
Schedule 7.3 Compliance Certificate
Schedule 7.4 Stay, Extension and Usury Laws
Schedule 7.5 Limitation on Restricted Payments
Schedule 7.6 Corporate Existence
Schedule 7.7 Limitation on Indebtedness
Schedule 7.8 Limitation on Transactions with Affiliates
Schedule 7.9 Limitation on Liens
Schedule 7.10 Payment of Taxes and Other Claims
Schedule 7.11 Restrictions Against Limitations on Upstream
Payments
Schedule 7.12 Change of Control
Schedule 7.13 Redemption from the Proceeds of Securities Sales and
Mezzanine Debt Financing
Schedule 7.14 Maintenance of Properties
Schedule 7.15 Maintenance of Insurance
Schedule 7.16 Compliance with Laws and Obligations
(v)
Schedule 7.17 Limitation on Issuances and Dispositions of Capital
Stock of Subsidiaries and Acquisitions and Sales
Schedule 7.18 Limitation on Sale of Assets
Schedule 7.19 Limitations on Mergers and Acquisitions
Schedule 7.20 Limitations on Expenditures and Other Activities
Schedule 7.21 Books and Records
Schedule 7.22 Compliance with Agreements
Schedule 7.23 Current Public Information
Schedule 7.24 Required Securities Sales
Schedule 7.25 Termination
Schedule 9.1 Events of Default
Schedule 9.2 Acceleration
Schedule 9.3 Other Remedies
Schedule 9.4 Waiver of Past Defaults
Schedule 9.5 Control by a Majority
Schedule 9.6 Rights of Holders to Receive Payment
Schedule 9.7 Holders May File Proofs of Claim
Schedule 9.10 Undertaking for Costs
Schedule 10.1 Amendments and Supplements Permitted Without
Consent of Holders
Schedule 10.2 Amendments and Supplements Requiring Consent of
Holders: Other Consents
Schedule 10.3 Revocation and Effect of Consents
Schedule 10.4 Notation on or Exchange of Senior Discount Notes
Schedule 10.5 Board Approval
Schedule 11.1 Form and Dating
Schedule 11.2 Execution and Authentication
Schedule 11.3 Transfer and Exchange
Schedule 11.4 Replacement Senior Discount Notes
Schedule 11.5 Outstanding Senior Discount Notes
Schedule 11.6 Treasury Senior Discount Notes
Schedule 11.7 Temporary Senior discount Notes
Schedule 11.8 Cancellation
Schedule 11.9 Defaulted Interest
Schedule 11.10 Record Date
Schedule 11.11 Restrictive Legends
Schedule 11.12 Notice of Transfer; Opinions of Counsel
Schedule 12.1 Indemnification; Expenses, Etc.
Schedule 13.1 Survival of Representations and Warranties;
Severability
Schedule 13.2 Notices
Schedule 13.3 Successors and Assigns
Schedule 13.4 Descriptive Headings
Schedule 13.5 Satisfaction Requirement
(vi)
Schedule 13.6 Governing Law
Schedule 13.7 Service of Process
Schedule 13.8 Counterparts
Schedule 13.9 Disclosure to Other Persons
Schedule 13.10 No Adverse Interpretation of Other Agreements
Schedule 13.11 Waiver of Jury Trial
Schedule 13.12 Merger
Schedule 13.13 Expenses
EXHIBITS
Exhibit A - Form of Senior Discount Note
Exhibit B - Form of Opinion of Xxxxxxx Xxxx
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Warrant Agreement
Exhibit E - List of Purchasers and Amounts
(vii)
STREAMLINE, INC.
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of April
15, 1998, is entered into by and between Streamline, Inc., a Delaware
corporation (the "Company"), and the purchasers listed on the signature page
hereto (the "Purchasers"). Unless otherwise defined, capitalized terms used in
this Agreement are defined in Article I; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement; references to a "section" or a "subdivision" are, unless
otherwise specified, to a section or a subdivision of this Agreement.
The Company, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, agrees with the Purchasers as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. In addition to any terms defined elsewhere in this
Agreement, unless otherwise specifically provided herein, the following terms
shall have the following meanings for all purposes when used in this Agreement,
and in any note, agreement, certificate, report or other document made or
delivered in connection with this Agreement:
"Accreted Value" means, with respect to any Senior Discount Note and as
of any date before April 15, 1999, the sum of (a) the issue price of such
Senior- Discount Note (which shall be equal to $900.90 per $1,000 principal
amount at maturity of the Senior Discount Notes) and (b) the amount which has
accreted at such time calculated by applying an accretion rate for the period
from the Issue Date through such date of 11.0% per annum simple interest. As of
any date on or after April 15, 1999, the Accreted Value of any Senior Discount
Note shall be equal to the principal amount at maturity of such Senior Discount
Note. Accretion shall be calculated on the basis of a 360-day year.
"Acquired Person" means, with respect to any specified Person, any
other Person acquired by such specified Person, whether by purchase, merger,
consolidation, other business combination or otherwise.
"Affiliate" means, with respect to any specified Person, any other
Person (a) directly or indirectly controlling (including, but not limited to,
all directors and executive officers of such Person), controlled by or under
direct or indirect common control with such specified Person, or (b) that
directly or
indirectly owns more than 10% of the voting securities of such Person. A Person
shall be deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" means this Agreement, as amended, modified or supplemented
from time to time, together with any exhibits, schedules or other attachments
thereto.
"Approvals" means each and every approval, consent, filing or
registration by, or with, any Governmental Body or any creditor or shareholder
of the Company, necessary (a) to authorize or permit the execution, delivery or
performance by the Company of the Transaction Documents, and (b) for the
validity or enforceability of any of such Transaction Documents against the
Company.
"Asset Disposition" means any sale, lease, transfer, conveyance or
other disposition (in one or series of related transactions) otherwise permitted
under this Agreement, including any such disposition by means of a merger,
consolidation or similar transaction, of shares of Capital Stock of a Subsidiary
(other than directors' qualifying shares), Property or other assets (each
referred to for the purposes of this definition as a "disposition") by the
Company or any of its Subsidiaries but excluding the following: (a) a
disposition by a Subsidiary to the Company or another Subsidiary or by the
Company or a Subsidiary to another Subsidiary, (b) a disposition of tangible
property or assets which have become obsolete or are otherwise not used, useful.
or necessary, so long as such disposition is at fair market value (as determined
by the Company in good faith), (c) a disposition that constitutes a Restricted
Payment or a Public Offering, in each case so long as effected in accordance
with all applicable provisions of this Agreement, and (d) a disposition of
inventory in the ordinary course of business, in each case so long as effected
in accordance with all applicable provisions of this Agreement.
"Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code, or any similar
Federal or state law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person duly authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
2
"Business Day" means any day other than a Legal Holiday.
"Capital Lease" means a lease of (or other Indebtedness arrangements
conveying the right to use) real or personal property to any Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with GAAP. The stated
maturity of such obligation shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Capital Lease Obligation" of any Person means the obligation of such
Person to pay rent or other payment amounts under a Capital Lease.
"Capital Stock" of any Person means any and all shares of, or
interests, rights, participations, and/or other equivalents in (however
designated), corporate stock or equity securities of such Person, including each
class of common stock and preferred stock of such Person and partnership or
limited liability company interests, whether general or limited, of such Person,
and including any securities convertible into or exercisable or exchangeable
for, or any right to acquire, any equity interest in such Person.
"Cash Equivalents" means: (a) marketable obligations issued or
unconditionally guaranteed by the United States government, in each case
maturing within 360 days after the date of acquisition thereof; (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 360 days after the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc.; (c) commercial paper maturing no
more than 360 days after the date of acquisition thereof, issued by a
corporation organized under the laws of any state of the United States or of the
District of Columbia and, at the time of acquisition, having a rating in one of
the two highest rating categories obtainable from either Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc.; (d) money market funds whose
investments are made solely in securities described in clause (a) maturing
within 360 days after the date of acquisition thereof; (e) certificates of
deposit maturing within 360 days after the date of acquisition thereof, issued
by any commercial bank that is a member of the Federal Reserve System that has
capital, surplus and undivided profits (as shown on its most recent statement of
condition) aggregating not less than $100,000,000 and is rated A or better by
Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation; and (f)
repurchase agreements entered into with any commercial bank of the nature
referred to in clause (e) secured by a fully
3
perfected Lien in any obligation of the type described in any of clauses (a)
through (e), having a fair market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation thereunder of
such commercial bank.
"Change of Control" means any transaction or series of transactions in
which any of the following occurs: (a) Xxxxxxx X. XxXxxxx ceases to own at least
10% of the outstanding Common Stock or ceases to serve as Chief Executive
Officer of the Company; or (b) any Person or group (within the meaning of Rule
13d-3 under the Exchange Act and Sections 13(d) and 14(d) of the Exchange Act)
becomes the direct or indirect "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of 40% or more of the issued and outstanding shares of
Capital Stock entitled to vote in the election of directors of the Company or
the Surviving Person (if other than the Company).
"Change of Control Trigger Date" has the meaning ascribed thereto in
Section 7.12 hereof.
"Charter Documents" has the meaning ascribed thereto in Section 4.1
hereof.
"Closing" has the meaning ascribed thereto in Section 2.3 hereof.
"Closing Date" has the meaning ascribed thereto in Section 2.3 hereof.
"Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"Commission" means the United States Securities and Exchange Commission
or any other Federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Common Stock Purchase Warrants" means the warrants of the Company
issued pursuant to the Warrant Agreement representing the right to purchase
shares of Common Stock at the exercise price set forth therein.
"Company" means the party named as such above until a successor
replaces it and thereafter means the successor.
"Consolidated" or "consolidated," when used with reference to any
accounting term, means the amount described by such accounting term,
4
determined on a consolidated basis in accordance with GAAP, after elimination of
intercompany items.
"Consolidated EBIT" means, with respect to any Person, for any period,
the Consolidated Net Income of such Person and its consolidated Subsidiaries for
such period, plus or minus (a) a provision for taxes based on income or profits,
to the extent such provision for taxes was included in computing such
Consolidated Net Income, plus (b) Consolidated Interest Expense for such period,
all as determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the Consolidated EBIT of such Person and its consolidated Subsidiaries
for such period, plus depreciation, amortization and all other non-cash charges,
to the extent such depreciation, amortization and other non-cash charges were
deducted in computing such Consolidated EBIT (including amortization of goodwill
and other intangibles), all as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio of (a) the Consolidated EBITDA for the period of the
most recent two consecutive fiscal quarters for which financial statements are
available to (b) Consolidated Interest Expense for such two fiscal quarters;
PROVIDED, HOWEVER, that (i) if the Company or any Subsidiary has issued any
Indebtedness since the beginning of such period that remains outstanding or if
the transaction giving rise to the need to calculate the Consolidated Interest
Coverage Ratio is an issuance of Indebtedness, or both, Consolidated EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such Indebtedness had
been issued on the first day of such period and with respect to the discharge of
any other Indebtedness refinanced, refunded, exchanged or otherwise discharged
with the proceeds of such new Indebtedness as if any such discharge had occurred
on the first day of such period, (ii) if since the beginning of such period the
Company or any Subsidiary shall have made any Asset Disposition, Consolidated
EBITDA for such period shall be reduced by an amount equal to the Consolidated
EBITDA (if positive) directly attributable to the assets which are the subject
of such Asset Disposition for such period, or increased by an amount equal to
the Consolidated EBITDA (if negative) directly attributable thereto for such
period and Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Subsidiary refinanced, refunded, exchanged or
otherwise discharged with respect to the Company and its continuing Subsidiaries
in connection with such Asset Dispositions for such
5
period (or if the Capital Stock of any Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Subsidiary to the extent the Company and its continuing Subsidiaries are no
longer liable for such Indebtedness after such sale), and (iii) if since the
beginning of such period the Company or any Subsidiary (by merger or otherwise)
shall have made an Investment in any Subsidiary (or any person which becomes a
Subsidiary) or an acquisition of assets or stock, including any acquisition of
assets or stock occurring in connection with a transaction causing a calculation
to be made hereunder, which constitutes all of an operating unit of a business,
Consolidated EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the issuing of any
Indebtedness), as if such Investment or acquisition occurred on the first day of
such period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto, and the amount of Consolidated Interest Expense associated with any
Indebtedness issued in connection therewith, the pro forma calculations shall be
determined in good faith by a responsible financial or accounting Officer of the
Company. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period.
"Consolidated Interest Expense" means, with respect to any Person, for
any period, (a) the total aggregate amount of interest expense (including
amortization of original issue discount and non-cash interest payments or
accruals and the interest component of any Capital Lease Obligations, but
excluding any intercompany interest owed by such Person to any Subsidiary or by
any Subsidiary to such Person or to any other Subsidiary of such Person) of such
Person and its consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP, (b) all fees, commissions, discounts and other charges of
such Person and its consolidated Subsidiaries with respect to letters of credit
and bankers' acceptances, determined on a consolidated basis in accordance with
GAAP and (c) the product of (i) the total amount of dividends declared on
Disqualified Capital Stock (whether paid or not) of such Person and its
consolidated Subsidiaries times (ii) a fraction, the numerator of which is one
and the denominator of which is- one minus the then current combined federal,
state and local effective income tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP
(after consideration of any deferred tax assets of such Person then available
including without limitation, any amounts of available net operating loss
carryover).
6
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the net income (or loss) of such Person and its
consolidated Subsidiaries for such period, before payment or accrual of
preferred dividends, on a consolidated basis, determined in accordance with
GAAP; PROVIDE that (a) the net income of any other Person in which such Person
or any of its Subsidiaries has an interest (which interest does not cause the
net income of such other Person to be consolidated with the net income of such
Person and its Subsidiaries in accordance with GAAP) shall be included only to
the extent of the amount of dividends or distributions actually paid to such
Person or such Person's Subsidiaries by such other Person in such period; (b)
the net income of any Subsidiary of such Person that is subject to any Payment
Restriction shall be excluded to the extent such Payment Restriction actually
prevented the payment of an amount that otherwise could have been paid to, or
received by, such Person or a Subsidiary of such Person not subject to any
Payment Restriction, PROVIDED, HOWEVER, that with respect to the Consolidated
Net Income of the Company, the Consolidated Net Income of the Company's
Subsidiaries shall not be so excluded, notwithstanding the existence of any such
Payment Restriction, so long as the terms of any such Payment Restriction
limiting the payment of dividends by the Company's Subsidiaries are not more
restrictive at the time of determination of Consolidated Net Income than the
Payment Restrictions limiting such payment of dividends in effect on the date
hereof; (c) subject to the provisions of clause (a) above, the net income (or
loss) of any other Person shall not be included for any periods during which
such other Person is not a consolidated subsidiary of such Person and the net
income (or loss) of any successor to such Person by consolidation or merger or
transfer of all or substantially all assets shall not be included for any
periods prior to such consolidation, merger, or transfer of all or substantially
all assets; and (d) there shall be excluded the following: (i) such Person's
share, determined in accordance with GAAP, of the net loss of any other Person
in which such Person or any of its Subsidiaries has an interest (which interest
does not cause the net loss of such other Person to be consolidated with the net
income or loss of such Person and its Subsidiaries in accordance with GAAP),
(ii) the net income of any other Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition, (iii) all
gains realized upon or in connection with or as a consequence of the issuance of
the Capital Stock of such Person or any of its Subsidiaries, any gains on
pension reversions received by such Person or any of its Subsidiaries, or any
proceeds from life insurance policies received by such Person or any of its
Subsidiaries, (iv) all gains, together with any related provision for taxes,
realized in connection with any sale of assets by such Person or any of its
Subsidiaries during such period (including, without limitation, dispositions
pursuant to sale and leaseback transactions), (v) all gains realized in
connection with the acquisition of debt securities for a cost less than
principal plus accrued
7
interest, (vi) all extraordinary gains, together with any related provision for
taxes, realized by such Person or any of its Subsidiaries during such period,
and (vii) the cumulative effect of a change in accounting principles in the year
of adoption of such change.
"Convertible Preferred Stock" means, with respect to the Company, the
Company's (a) Series A Cumulative Convertible Preferred Stock, liquidation
preference $100.00 per share, (b) Series B Convertible Preferred Stock,
liquidation preference $100.00 per share and (c) Series C Convertible Preferred
Stock, liquidation preference $100.00 per share.
"Current Affiliate" has the meaning ascribed thereto in Section 4.10
hereof.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DDJ" means DDJ Capital Management, LLC.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Disposition" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets in one transaction or a series of related transactions.
"Disqualified Capital Stock" means, (a) with respect to any Person, any
Capital Stock of such Person or its Subsidiaries that, on or prior to the stated
maturity date of the Senior Discount Notes, by its terms, by the terms of any
agreement related thereto or by the terms of any security into which it is
convertible, puttable or exchangeable, is, or upon the happening of an event or
the passage of time would be, required to be redeemed or repurchased by such
Person or its Subsidiaries, including at the option of the holder, in whole or
in part, or has, or upon the happening of an event or passage of time would
have, a redemption or similar payment due, or (b) any other Capital Stock of
such Person or its Subsidiaries designated as Disqualified Capital Stock by such
Person at the time of issuance.
"Dollars" and "$" mean lawful currency of the United States of America.
"Employee Program" has the meaning ascribed thereto in Section 4.10
hereof.
8
"Environment" means soil, surface waters, groundwater, land, stream
sediments, surface or subsurface strata and ambient air.
"Environmental Law(s)" means and includes any federal, state, local or
foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or agency interpretation, policy or guidance
relating to pollution or protection of the Environment, health, safety or
natural resources, including, without limitation, those relating to the use,
handling, transportation, treatment, storage, disposal, release or discharge of
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time, or any successor thereto, and the
rules and regulations issued thereunder, as from time to time in effect.
"Event of Default" has the meaning ascribed thereto in Section 9.1
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as the same
may be amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"Fair Market Value" or "fair market value" means, with respect to any
assets or properties, the amount at which such assets or properties would change
hands between a willing buyer and a willing seller, within a commercially
reasonable time, each having reasonable knowledge of the relevant facts, neither
being under a compulsion to sell or buy, as such amount is determined by (a) the
Board of Directors of the Company acting in good faith or (b) an appraisal or
valuation firm of national or regional standing selected by the Company, with
experience in the appraisal or valuation of properties or assets of the type for
which Fair Market Value is being determined.
"Financial Statements" has the meaning ascribed thereto in Section 4.23
hereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination, as in
effect from time to time.
9
"Governmental Body" means any governmental or quasi-governmental
authority including, without limitation, any federal, state, territorial,
county, municipal or other governmental or quasi-governmental agency, board,
branch, bureau, commission, court, department or other instrumentality or
political unit or subdivision, whether domestic or foreign.
"Gross Proceeds" means, when used with respect to a Public Offering or
a private offering of Capital Stock, the number of shares of Capital Stock sold
by the Company in such offering multiplied by the price paid for such shares by
the purchasers thereof.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness of any other Person (the
"Primary Obligor") in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person, (a) to purchase or pay (or
advance or supply funds, for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the. payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the holder of such Indebtedness of the
payment of such Indebtedness, or (c) to maintain working capital, equity capital
or other financial statement, condition or liquidity of the Primary Obligor so
as to enable the Primary Obligor to pay such Indebtedness (and "Guaranteed,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); PROVIDED, HOWEVER, that the Guarantee by any Person shall not
include endorsements -by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Hazardous Materials" means petroleum or petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas, and any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"Hazardous Waste" means and includes any hazardous waste as defined or
regulated under any Environmental Law.
"Holder" means a Person in whose name a Senior Discount Note is
registered in the register of registered holders of Senior Discount Notes kept
by the Company.
"Illegal Transfer Notice" has the meaning ascribed thereto in Section
11.13 hereof.
10
"Incur" or "incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, Guarantee or otherwise become liable in respect of such
Indebtedness or other obligation, including by way of merger or acquisition of
another Person, or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
(and "Incurrence," "Incurred," "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing).
"Indebtedness" means, with respect to any Person, (a) all liabilities,
contingent or otherwise, of such Person (i) for borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such Person or only
to a portion thereof and whether short-term or long-term, secured or unsecured),
(ii) evidenced by bonds, notes, debentures, drafts accepted or similar
instruments or letters of credit (including such liabilities representing the
balance deferred and unpaid of the purchase price of any property, other than
any such liability that represents an account payable or any other monetary
obligation to a trade creditor created, incurred, assumed or guaranteed by such
Person in the ordinary course of business in connection with obtaining goods,
materials or services, which account is not overdue according to the original
terms of sale, unless such account payable is being contested in good faith),
(iii) for the payment of money relating to Capital Lease Obligations; or (iv)
under the terms of any amendment, renewal, extension or refunding of any
liability of the types referred to in the preceding clauses (i), (ii) or (iii);
(b) the maximum fixed repurchase price of all Disqualified Capital Stock of such
Person or, if there is no such maximum fixed repurchase price, the liquidation
preference of such Disqualified Capital Stock, plus accrued but unpaid
dividends; (c) outstanding reimbursement obligations of such Person with respect
to letters of credit or bankers' acceptances issued for the benefit of such
Person; (d) net obligations of such Person with respect to Interest Rate or
Currency Protection Agreements; (e) all liabilities of others of the kind
described in the preceding clause (a), (b), (c) or (d) that such Person has
Guaranteed or that is otherwise its legal liability; and (f) all obligations of
others secured by a Lien to which any of the Property or assets of such Person
are subject (other than obligations of a lessor under any operating lease
pursuant to which the Company or any of its Subsidiaries leases Property, if
such lessor grants a Lien on such lease to secure such lessor's Indebtedness),
whether or not the obligations secured thereby shall have been assumed by such
Person or shall otherwise be such Person's legal liability (PROVIDED that if the
obligations so secured have not been assumed by such Person or are not otherwise
such Person's legal liability, such obligations shall be deemed to be in an
amount equal to the fair market value of such Properties or assets, as
determined in good faith by the Board of Directors of such Person, which
determination shall be evidenced by a Board
11
Resolution). For purposes of the preceding sentence, the "maximum fixed
repurchase price" of any Disqualified Capital Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock (or any equity security for which it
may be exchanged or converted), such fair market value shall be determined in
good faith by the Board of Directors of such Person, which determination shall
be evidenced by a Board Resolution.
"Indemnified Party" or "Indemnified Parties" has the meaning ascribed
thereto in Section 12.1(a) hereof.
"Independent Financial Advisor" means a reputable accounting, appraisal
or a nationally recognized investment banking firm that is, in the reasonable
judgment of the Board of Directors of the Company, qualified to perform the task
for which such firm has been engaged hereunder and disinterested and independent
with respect to the Company and its Affiliates.
"Insolvency or Liquidation Proceeding" means, with respect to any
Person, (a) any insolvency or bankruptcy or similar case or proceeding, or any
reorganization, receivership liquidation, dissolution or winding up of such
Person, whether voluntary or involuntary, or (b) any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of such Person.
"Intellectual Property" has the meaning ascribed thereto in Section
4.24(a) hereof.
"Interest Payment Date" means each October 15 and April 15 commencing
October 15, 1999.
"Interest Rate or Currency Protection Agreements" means any interest
rate swap agreement, interest rate cap agreement, currency swap agreement or
other financial agreement or arrangement designed to protect the Company or any
Subsidiary against fluctuations in interest rates or currency exchange rates and
which shall have a notional amount no greater than the payments due with respect
to Indebtedness being hedged thereby.
"Investment" means any investment by any Person in any other Person,
whether by a purchase of assets, in any transaction or series of related
transactions, individually or in the aggregate, purchase of Capital Stock,
capital contribution, loan, advance (other than reasonable loans and advances to
employees for moving and travel expenses, as salary advances,
12
and other similar expenses incurred, in each case in the ordinary course of
business consistent with past practice) or similar credit extension constituting
Indebtedness of such other Person, and any Guarantee of Indebtedness of such
other Person.
"IRS" means the Internal Revenue Service or any successor agency.
"Issue Date" means the date of original issuance of the Senior Discount
Notes.
"Legal Holiday" means a Saturday, Sunday or a day on which banking
institutions in New York City, New York, or Boston, Massachusetts, or at such
place of payment, are not required to be open.
"License" or "Licenses" has the meaning ascribed thereto in Section 4.3
hereof.
"Lien" means any mortgage, pledge, lien, encumbrance, charge or adverse
claim affecting title or resulting in an encumbrance against real or personal
property, or a security interest of any kind, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell which is intended to constitute or create a security
interest, mortgage, pledge or lien, and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction); PROVIDED that in no event shall an operating lease (as
opposed to a Capital Lease Obligation) or a license with respect to any
intangible asset be deemed to constitute a Lien hereunder.
"Losses" has the meaning ascribed thereto in Section 12.1(a) hereof.
"Material Adverse Effect" means a material adverse effect on the
business, Property, operations or condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole.
"Mezzanine Debt Financing" means the issuance, transfer, conveyance,
sale, or other disposition for cash by the Company or any of its Subsidiaries of
Subordinated Indebtedness.
"Multiemployer Plan" has the meaning ascribed thereto in Section 4.10
hereof.
"Net Cash Proceeds" means, with respect to (a) any Mezzanine Debt
Financing or (b) any Securities Sale, as the case may be, the aggregate
13
amount of cash or Cash Equivalents actually received from time to time (whether
as initial consideration or through payment or disposition of deferred
consideration) by or on behalf of the Person issuing the Indebtedness or
securities, as the case may be, in connection with such transaction after
deducting therefrom only (without duplication) (i) brokerage commissions,
underwriting fees and discounts, legal fees, finder's fees, accountants' fee and
expenses, printers' fees and expenses, road show expenses and other similar
transaction fees and commissions incurred in connection with such transaction,
and (ii) the amount of Taxes payable in connection with or as a result of such
transaction, but only to the extent that the amounts so deducted are properly
attributable to such transaction and are, in the case of clause (i), at the time
of receipt of such cash, actually paid to a Person that is not an Affiliate of
such Person and, in the case of clause (ii), on the earlier of the dates on
which the tax return covering such taxes is filed or required to be filed,
actually paid to a Person that is not an Affiliate of such Person.
"Notice of Default" has the meaning ascribed thereto in Section 9.1(b)
hereof.
"Obligations" with respect to any instrument or agreement means any and
all principal, interest, penalties, premiums, fees, indemnifications,
reimbursements, damages and other charges, obligations and liabilities existing
from time to time under such instrument or agreement, whether direct or
indirect, joint or several, actual, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, including any obligations or
liabilities to repay, redeem, repurchase, retire, acquire or defease any
Indebtedness under such instrument or agreement, or any obligation to establish
a sinking fund for any such purpose.
"Offer" means an irrevocable offer by the Company to repurchase for
cash Senior Discount Notes after any Change of Control Trigger Date or Repayment
Trigger Date.
"Officer" means, with respect to any Person, the Chairman of the Board
(if an officer), the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer or the Secretary of such Person.
"Officers' Certificate" means a certificate executed on behalf of the
Company by (a) two Officers of the Company or (b) or by an Officer and an
Assistant Secretary of the Company.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Purchasers.
14
"PARI PASSU" means, when used with respect to the ranking of any
Indebtedness of any Person in relation to other Indebtedness of such Person,
that each such Indebtedness (a) either (i) is not subordinated or junior in
right of payment to any other Indebtedness of such Person or (ii) is subordinate
in right of payment to the same Indebtedness of such Person as is the other and
is so subordinate to the same extent and (b) is not subordinate in right of
payment to the other or to any Indebtedness of such Person as to which the other
is not so subordinate.
"Pari Passu Indebtedness" means any Indebtedness of the Company, other
than the Senior Discount Notes, whether outstanding on the date hereof or
Incurred hereafter, which (a) ranks PARI PASSU with the Senior Discount Notes
and (b) by its terms, or by the terms of any agreement or instrument pursuant to
which such Indebtedness is Incurred, (i) does not provide for payments of
principal of such Indebtedness at the final stated maturity thereof or by way of
a sinking fund applicable thereto or by way of any mandatory redemption,
retirement or repurchase thereof by the Company (including any redemption,
retirement or repurchase which is contingent upon events or circumstances, but
excluding any retirement required by virtue of acceleration of such Indebtedness
upon an event of default thereunder), in each case prior to the final stated
maturity of the Senior Discount Notes and (ii) does not permit redemption or
other retirement (including pursuant to an offer to purchase made by the issuer)
of such other Indebtedness at the option of the holder thereof prior to the
final stated maturity of the Senior Discount Notes, other than a redemption or
other retirement at the option of the holder of such Indebtedness (including
pursuant to an offer to purchase made by the issuer) which is conditioned upon
the change of control of the Company pursuant to provisions substantially
similar to those contained in Section 7.12 hereof.
"Payment Restriction" means, with respect to a Subsidiary of any
Person, any encumbrance, restriction or limitation, whether by operation of the
terms of its charter or by reason of any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation, on the ability of (a)
such Subsidiary to (i) pay dividends or, make other distributions on its Capital
Stock or make payments on any obligation, liability or Indebtedness owed to such
Person or any other Subsidiary of such Person, (ii) make loans or advances to
such Person or any other Subsidiary of such Person, or (iii) transfer any of its
properties or assets to such Person or any other Subsidiary of such Person, or
(b) such Person or any other Subsidiary of such Person to receive or retain any
such (i) dividends, distributions or payments, (ii) loans or advances, or (iii)
transfers of properties or assets.
15
"Permitted Disposition" means (a) any transfer, conveyance, sale,
lease, license or other disposition (a "sale") by the Company or any of its
Subsidiaries of its inventory or license of its intangible Property in the
ordinary course of its business; (b) any sale by the Company or any of its
Subsidiaries of its equipment or other tangible or intangible Property that is
obsolete or no longer useful or necessary to its business provided that such
sale is at Fair Market Value, and provided further that sales under this clause
(b) would not, individually or in the aggregate, have a Material Adverse Effect;
(c) any sale by the Company or any of its Subsidiaries in the ordinary course of
its business, and in a manner consistent with its customary and usual cash
management practices, of its Permitted Investments of the kind described in
clause (a) of the definition thereof, (d) the creation or Incurrence of any
Liens in any Property of the Company or any of its Subsidiaries that are
permitted by this Agreement and (e) any sale of Property by or at the direction
of a secured party holding a Lien on such Property, which Lien is permitted by
this Agreement, pursuant to the exercise by such secured party of its rights as
a creditor.
"Permitted Investment" by any Person means (a) Investments in cash and
Cash Equivalents, (b) Investments existing on the date hereof, (c) Investments
by the Company in any Subsidiary, (d) Investments by any Subsidiary in the
Company or other Subsidiaries, (e) Investments in the form of accounts.
receivable arising from sales of goods or services in the ordinary course of
business, PROVIDED that for any accounts receivable that are more than 120 days
overdue, appropriate reserves or allowances have been established in accordance
with GAAP, and (f) Investments in the form of advances or prepayments to
suppliers or employees in the ordinary course of business.
"Permitted Liens" shall mean (a) Liens for Taxes, assessments, and
similar governmental charges to the extent (1) not delinquent or (2) being
contested in good faith by appropriate proceedings and as to which reserves have
been set aside on the books of the Company to the extent required by GAAP; (b)
statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen, or other like Liens arising in the ordinary course of
business and with respect to amounts not yet delinquent or being contested in
good faith by appropriate process of law, and for which a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
on the books of the Company; (c) pledges or deposits in the ordinary course of
business to secure lease obligations or nondelinquent obligations under workers'
compensation, unemployment insurance or other social security benefits; (d)
Liens to secure the performance of public statutory obligations that are not
delinquent, appeal bonds, performance bonds or other obligations of a like
nature (other than for
16
borrowed money); (e) zoning restrictions, easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the business of the
Company or any Subsidiary incurred in the ordinary course of business; (f) Liens
in respect of purchase money or similar acquisition Indebtedness Incurred to
acquire furniture, fixtures, equipment or other operating assets, provided that
the principal amount of the Indebtedness secured by such Lien does not exceed
the acquisition cost of such assets; (g) Liens securing Indebtedness which
secures assets leased pursuant to Capital Lease Obligations; (h) Liens securing
Senior Indebtedness permitted to be incurred by Section 7.7(c)(iii) or Section
7.7(c)(iv); and (i) Liens imposed pursuant to condemnation or eminent domain or
substantially similar proceedings; provided that in the case of clauses (f) and
(g), any Indebtedness secured by such Liens was not Incurred in violation of
Section 7.7.
"Person" means any individual, corporation, limited or general
partnership, limited liability company, or Governmental Body.
"Post-Petition Interest" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.
"Preferred Stock" as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Principal" of a debt security means the principal of the security
including the premium, if any, on the security.
"Property" or "property" means any assets or property of any kind or
nature whatsoever, real, personal, or mixed (including fixtures), whether
tangible or intangible.
"Public Offering" with respect to any Person, means a firm commitment
underwritten primary public offering of Capital Stock of such Person.
17
"Purchase Date" has the meaning ascribed thereto in Section 6.7 hereof.
"Purchasers" has the meaning ascribed thereto in the introduction
hereof.
"Purchasers' Special Counsel" means Xxxxxxx, Procter & Xxxx LLP, a
partnership including professional corporations, acting as special counsel to
the Purchasers in connection with the transactions contemplated hereunder or
such other counsel, as the Purchasers may select.
"Record Date" means a record date specified in the Senior Discount
Notes whether or not such record date is a Business Day.
"Redemption Date" means, when used with respect to any Senior Discount
Note to be redeemed, the date fixed for such redemption pursuant to this
Agreement and the Senior Discount Notes.
"Redemption Price" means, when used with respect to any Senior Discount
Note to be redeemed, the price fixed for such redemption pursuant to this
Agreement and the Senior Discount Notes, which shall include, without
duplication, in each case, accrued and unpaid interest to the Redemption Date
(subject to Section 6.4 hereof).
"Refinancing Indebtedness" means Indebtedness of the Company or any of
its Subsidiaries Incurred or given in exchange for, or the proceeds of which are
used to, extend, refinance, renew, replace, substitute, defease or refund any
other Indebtedness of the Company or any of its Subsidiaries (and related
interest, premium, penalties, breakage costs, fees, expenses and other amounts
owing in respect of such Indebtedness, to the extent permitted to be Incurred by
Section 7.7(c)(ii)) Incurred in accordance with the terms of this Agreement,
including Section 7.7.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the Closing Date, by and between the Company and the
Purchasers, as the same may be amended, modified, or supplemented from time to
time in accordance with the terms thereof.
"Related Business" means the businesses conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the date hereof and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses. Without limiting the generality of
the foregoing, Related Business shall include providing, in response to on-line
computer-based orders, direct delivery to home consumers of (i) groceries,
household staples (i.e., home cleaners, health and beauty
18
aids), and similar products such as are found in a typical grocery store and
(ii) other services.
"Release" means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing, or
dumping into the Environment.
"Repayment Trigger Date" has the meaning ascribed thereto in Section
7.13(b) hereof.
"Restricted Payment" means, with respect to any Person, without
duplication: (a) any dividend or other distribution, whether in cash or in
Property or securities, declared or paid on any shares of such Person's Capital
Stock (other than any dividends, distributions or other payments in respect of
any Capital Stock made by any Subsidiary to the Company or a Wholly-Owned
Subsidiary), or the making by such Person or any of its Subsidiaries of any
other distribution in respect of such Person's Capital Stock or any warrants,
rights or options to purchase or acquire shares of any class of such Capital
Stock (other than exchangeable or convertible Indebtedness of such Person); (b)
the redemption, repurchase, retirement or other acquisition for value by such
Person or any of its Subsidiaries, directly or indirectly, of such Person's
Capital Stock (and, in the case of a Subsidiary, Capital Stock of the Company)
other than Capital Stock owned by the Company or a Wholly-Owned Subsidiary, or
any warrants, rights or options to purchase or acquire shares of any class of
such Capital Stock, provided that this clause (b) shall not include the
transaction among the Company and the stockholders of the Company's Subsidiary,
Streamline Mid-Atlantic, as such transaction is described in Schedule 4.26
hereto; (c) any payment to purchase, redeem, defease or otherwise acquire or
retire for value any Pari Passu Indebtedness or Subordinated Indebtedness (other
than with the proceeds of Refinancing Indebtedness permitted under this
Agreement or with the proceeds of sales of Capital Stock), except in accordance
with the mandatory redemption or repayment provisions set forth in the original
documentation, as such documentation exists on the date hereof, governing such
Indebtedness; and (d) any Investment other than Permitted Investments.
"Restricted Security" has the meaning ascribed thereto in Section 11.13
hereof.
"Rule 144" means Rule 144 as promulgated by the Commission under the
Securities Act, and any successor rule or regulation thereto.
"Rule 144A" means Rule 144A as promulgated by the Commission under the
Securities Act, and any successor rule or regulation thereto.
19
"Sale" means any sale, lease, conveyance, exchange, transfer,
assignment, pledge, hypothecation or other disposition of any Property.
"Securities" means, collectively, the Senior Discount Notes and the
Common Purchase Warrants.
"Securities Act" means the Securities Act of 1933, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"Securities Sale" means the issuance or sale by the Company or any of
its Subsidiaries, for cash, of shares of Capital Stock (other than directors'
qualifying shares) or other ownership interests, or any securities convertible
into or exercisable or exchangeable for, or options, warrants, rights or any
other interests with respect to, any shares of Capital Stock or other ownership
interests of the Company or any such Subsidiary; PROVIDED, HOWEVER, that
compensatory issuances of Capital Stock and the exercise of (a) warrants or (b)
compensatory options to purchase Capital Stock shall not constitute a Securities
Sale.
"Senior Indebtedness" means and includes all principal of, premium and
interest (including Post-Petition Interest) on and other Obligations with
respect to any Indebtedness of the Company (other than as otherwise provided in
this definition), whether outstanding on the date hereof or hereafter Incurred,
other than the Senior Discount Notes; PROVIDED, HOWEVER, that the following
shall not constitute Senior Indebtedness: (a) any Indebtedness which by the
terms of the instrument creating or evidencing the same is PARI PASSU,
subordinated or junior in right of payment to the Senior Discount Notes in any
respect; (b) that portion of any Indebtedness Incurred in violation of this
Agreement; (c) any Preferred Stock; or (d) any Indebtedness of the Company which
is subordinated to or junior in right of payment in any respect to any other
Indebtedness of the Company. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include (i) Indebtedness evidenced by the Senior
Discount Notes, (ii) Indebtedness which when incurred and without respect to any
election under Section 1111(b) of Xxxxx 00, Xxxxxx Xxxxxx Code, is without
recourse to the Company, (iii) any liability for foreign, Federal, state, local
or other Taxes owed or owing by the Company, (iv) Indebtedness of the Company to
the extent such liability constitutes Indebtedness to a Subsidiary or any other
Affiliate of the Company or any of such Affiliate's Subsidiaries, (v)
Indebtedness for the purchase of goods or materials in the ordinary course of
business or (vi) Indebtedness owed by the Company for compensation to employees
or for services.
20
"Senior Discount Notes" means the Company's Senior Discount Notes due
April 15, 2001, as amended or supplemented from time to time in accordance with
the terms hereof, that are issued pursuant to this Agreement and each note
delivered in substitution or exchange for any such note.
"Subordinated Indebtedness" means Indebtedness of the Company which is
subordinated or junior in right and priority of payment to the Senior Discount
Notes.
"Subsidiary" of any Person means any other Person with respect to which
either (i) more than 50% of the interests having ordinary voting power to elect
a majority of the directors or individuals having similar functions of such
other Person (irrespective of whether at the time interests of any other class
or classes of such Person shall or might have voting power upon the occurrence
of any contingency), or (ii) more than 50% of the equity interests of such other
Person, is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries. When used herein without reference to
any Person, Subsidiary means a Subsidiary of the Company.
"Taxes" means any present or future federal, state, county, local,
foreign or other income, Property, excise, franchise, sales, use, value added,
employees' income withholding, social security, unemployment and other taxes, of
any nature whatsoever now or hereafter imposed, levied, collected, withheld, or
assessed by any Governmental Body, which have become due or payable by the
Company or any of its Subsidiaries, or by any predecessors thereto, including
any fines or penalties with respect thereto or interest thereon, whether
disputed or not.
"Threat of Release" means a substantial likelihood of a Release which
under applicable Environmental Laws requires action to prevent or mitigate
damage to the Environment which may result from such Release.
"Transaction Documents" means, collectively, this Agreement, the Senior
Discount Notes, the Common Stock Purchase Warrants, the Registration Rights
Agreement, the Warrant Agreement and any and all agreements, certificates,
instruments and other documents contemplated thereby or executed and delivered
in connection therewith.
"Units" has the meaning ascribed thereto in Section 2.1 (c) hereof.
"Warrant Agreement" means the Warrant Agreement of even date herewith
by and between the Company and the Purchasers, as amended,
21
modified or supplemented from time to time in accordance with the terms thereof.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment at final maturity, in respect thereof, with (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly-Owned Subsidiary" means, with respect to any Person, a
Subsidiary 100% of the equity interests in which (however measured) are owned by
such Person or a Wholly-Owned Subsidiary of such Person or such Person and one
or more Wholly-Owned Subsidiaries of such Person taken together, except in any
case for the minimum equity interest required to be held by directors, if any,
to satisfy the requirements of any applicable statute requiring that directors
own qualifying shares.
1.2 ACCOUNTING TERMS. All accounting terms used and not defined in this
Agreement shall be construed in accordance with GAAP and all financial data
required to be delivered hereunder shall be prepared in accordance with such
principles.
ARTICLE II
PURCHASE AND SALE OF UNITS
2.1 ISSUANCE OF UNITS.
(a) The Company has authorized the issuance and sale of up to
$7,770,000 aggregate principal amount of its Senior Discount Notes, to be issued
pursuant to and in accordance with the terms of this Agreement. Each Senior
Discount Note will be issued in the principal amount of $10,000, substantially
in the form set forth in EXHIBIT A hereto, with such changes thereto, if any, as
may be approved by the Purchasers and the Company.
(b) The Company has authorized the issuance and sale of up to
850,000 Common Stock Purchase Warrants, each exercisable to purchase one share
of the Common Stock of the Company (subject to vesting and later adjustment upon
the occurrence of certain conditions set forth in the Warrant Agreement), to be
acquired by the Purchasers in accordance with the terms of this Agreement. The
Common Stock Purchase Warrants will be substantially in the form of the Warrant
Certificate as set forth in EXHIBIT A of the
22
Warrant Agreement, with such changes thereto, if any, as may be approved by the
Purchasers and the Company.
(c) The Senior Discount Notes and the Common Stock Purchase
Warrants will be issued in attached units ("Units") each consisting of $10,000
principal amount of Senior Discount Notes and 1,093.95 Common Stock Purchase
Warrants, 579.15 of which are vested on the date hereof, subject to detachment
of the Common Stock Purchase Warrants from the Senior Discount Notes upon the
terms and subject to the conditions set forth herein.
(d) The Company and the Purchasers hereby agree that for
Federal income tax purposes, including for purposes of determining original
issue discount and the issue price of the Senior Discount Notes under sections
1271-1275 of the Code and the regulations issued thereunder, the $9,009.01 issue
price of each Unit shall be allocated $814.03 to each $1,000 of principal amount
of the Senior Discount Notes and $1.50 to each Common Stock Purchase Warrant
vested on the date hereof. The Company and the Purchasers hereby further agree
that the allocation of the issue price pursuant to the preceding sentence shall
be binding on the Company for purposes of any determination by the Company of
the issue price of the Senior Discount Notes pursuant to the first sentence of
Treasury Regulations section 1.1273-2(f)(2).
2.2 SALE AND PURCHASE OF UNIT. Subject to the terms and conditions of
this Agreement, the Company agrees to issue and sell to the Purchasers and each
of the Purchasers severally agrees to purchase from the Company, at the Closing
provided for in Section 2.3, the Units set forth opposite such Purchaser's name
on EXHIBIT E hereto, at the purchase price of $9,009.01 per Unit payable in cash
by wire transfer of immediately available funds.
2.3 CLOSING OF SALE OF UNITS. The purchase and delivery of the Units to
be purchased by the Purchasers shall take place at the offices of Xxxxxxx,
Procter & Xxxx LLP, Exchange Place, Boston, Massachusetts, at a closing (the
"Closing") on April 15, 1998, or at such other place or on such other date as
the Purchasers and the Company may agree upon (such date on which- the Closing
shall have actually occurred, the "Closing Date"). At the Closing, the Company
will deliver or cause to be delivered to each Purchaser the Units to be
purchased by it against payment of the purchase price therefor. The Units to be
purchased hereunder shall be in the form of Senior Discount Notes and Common
Stock Purchase Warrant certificates, in each case dated the date of the Closing
and in the amounts and registered in the names of the Persons set forth on
EXHIBIT E hereto. If at the Closing the Company shall fail to tender to any
Purchaser any of the Units to be purchased by it as provided in
23
this Article H, or any of the conditions specified in Article III for the
benefit of such Purchaser or the Company, as the case may be, shall not have
been satisfied or waived in writing by such Purchaser or the Company, as
applicable, such Purchaser or the Company, as the case may be, shall, at its
election, be relieved of all further obligations under this Agreement, without
thereby waiving any other rights it may have by reason of such failure or such
non-fulfillment.
ARTICLE III
CONDITIONS TO CLOSING
3.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASERS ON THE
CLOSING DATE. Each Purchaser's obligation to purchase and pay for the Units to
be sold to it at the Closing is subject to the fulfillment to its satisfaction,
prior to or at the Closing, of the following conditions, provided that any or
all of the following conditions may be waived, in whole or in part, by such
Purchaser with respect to this Agreement in its sole and absolute discretion:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and its Subsidiaries contained in this Agreement
and in the other Transaction Documents shall be correct in all material respects
when made and at the time of the Closing, after giving effect to the sale of the
Units, except that any representations and warranties that relate to a
particular date or period shall be correct in all material respects only as of
such date or for such period.
(b) PERFORMANCE: NO DEFAULT. The Company shall have performed
and complied in all material respects with all agreements and conditions
contained in this Agreement and the other Transaction Documents required to be
performed or complied with prior to or at the Closing, and at the time of the
Closing, after giving effect to the sale of the Units, no Default or Event of
Default shall have occurred and be continuing.
(c) COMPLIANCE CERTIFICATE. The Company shall have delivered
to the Purchasers an Officers' Certificate, dated the Closing Date, certifying
on behalf of the Company that the conditions specified in Sections 3.1(a) and
(b) have been fulfilled.
(d) OPINION OF COUNSEL. The Purchasers shall have received
from Xxxxxxx Xxxx LLP, counsel for the Company, a favorable opinion
substantially in the form set forth in EXHIBIT B, addressed to the Purchasers,
dated the Closing Date, and otherwise reasonably satisfactory in substance and
form to the Purchasers.
24
(e) LEGAL INVESTMENT. On the Closing Date, the Purchasers'
purchase of the Units shall be permitted by the laws and regulations of the
jurisdiction to which the Purchasers are subject (including, without limitation,
Section 5 of the Securities Act and Regulations T, U, or X of the Board of
Governors of the Federal Reserve System), and credit controls (whether voluntary
or mandatory) or similar restraints applicable to the Purchasers and shall not
subject the Purchasers to any tax, penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental regulation (other than
applicable securities law restrictions on resale of the Units), and shall not be
enjoined (temporarily or permanently) under, prohibited by or contrary to any
injunction, order or decree applicable to the Purchasers.
(f) COMPLIANCE WITH SECURITIES LAWS. The offering, issuance
and sale of the Units under this Agreement shall have complied with all
applicable requirements of the Federal securities laws and the Purchasers shall
have received evidence, if any, of such compliance in form and substance
reasonably satisfactory to the Purchasers.
(g) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings contemplated by this Agreement, including, without limitation, the
matters set forth in the Transaction Documents and all of the other documents
and instruments incident thereto, shall be reasonably satisfactory to the
Purchasers, and the Purchasers shall have received all such counterpart
originals or certified or other copies of such documents as the Purchasers may
reasonably request.
(h) COMPLETION OF OTHER TRANSACTION. Simultaneously with or
prior to the issuance and sale to the
Purchasers of the Units to be purchased by the Purchasers at the Closing:
(i) the Company and the Purchasers shall have duly
entered into the Registration Rights Agreement substantially in the
form of EXHIBIT C hereto, the Purchasers shall have received
fully-executed counterparts of the Registration Rights Agreement in
such numbers reasonably requested by them, and such agreement shall be
in full force and effect;
(ii) the Company and the Purchasers shall have duly
entered into the Warrant Agreement substantially in the form of EXHIBIT
D hereto, the Purchasers shall have received fully-executed
counterparts of the Warrant Agreement in such numbers reasonably
requested by them, and such agreement shall be in full force and
effect; and
25
(iii) each of the other Transaction Documents and any
other agreements and documents contemplated thereby and in connection
therewith shall have been executed and delivered by all respective
parties thereto and shall be in full force and effect.
(i) RELATED MATTERS. As of the Closing, the Company's Charter
Documents shall not have been modified or amended since the date delivered to
the Purchasers by the Company.
(j) NO ADVERSE U.S. LEGISLATION, ACTION OR DECISION. No
legislation, order, rule, ruling or regulation shall have been enacted or made
by or on behalf of any governmental body, department or agency of the United
States, nor shall any decision of any court of competent jurisdiction within the
United States have been rendered which, in the Purchasers' reasonable judgment,
could materially and adversely affect any of the Units or any part thereof as an
investment. There shall be no action, suit, investigation or proceeding pending
or threatened against or affecting the Purchasers, any of their respective
properties or rights, or any of their respective Affiliates, associates,
officers or directors (in such capacity), before any court, arbitrator or
administrative or governmental body which (i) seeks to restrain, enjoin, prevent
the consummation of or otherwise affect the transactions contemplated by this
Agreement and the other Transaction Documents, or (ii) questions the validity or
legality of any such transactions or seeks to recover damages or to obtain other
relief in connection with any such transactions, and, to the Purchasers'
knowledge, there shall be no valid basis for any such action, proceeding or
investigation.
(k) GOVERNMENTAL AND THIRD PARTY PERMITS, CONSENTS, ETC.
Except as set forth on SCHEDULE 4.4, the Company and its Subsidiaries shall have
duly applied for and obtained all Approvals from each Governmental Body, or
pursuant to any agreement to which the Company or any of its Subsidiaries is a
party or to which any of them or any of their assets is subject, which are
required in connection with this Agreement, the other Transaction Documents or
any other agreements and documents contemplated thereby and in connection
therewith.
(l) SECRETARY'S CERTIFICATE. The Purchasers shall have
received a certificate, dated the Closing Date, of the Secretary or Assistant
Secretary of each of the Company and its Subsidiaries, on behalf of such entity,
(i) certifying as true, complete and correct its Charter Documents and in the
case of the Company, resolutions relating to the transactions contemplated
hereby attached thereto, (ii) in the case of the Company, as to the absence of
proceedings or other action for dissolution, liquidation or reorganization of
the Company, (iii) in the case of any Subsidiary, as to the
26
absence of proceedings or other action for dissolution, liquidation or
reorganization of such Subsidiary, (iv) as to the incumbency and specimen
signatures of officers who shall have executed instruments, agreements and other
documents in connection with the transactions contemplated hereby, and (v)
covering such other matters, and with such other attachments thereto, as
Purchaser's Special Counsel may reasonably request at least one Business Day
before the Closing Date, which certificates and attachments thereto shall be
reasonably satisfactory in form and substance to such Purchaser.
3.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ON THE CLOSING
DATE. The Company's obligation to issue the Units at the Closing is subject to
the fulfillment to its satisfaction, prior to or at the Closing, of the
following conditions, provided that any or all of the following conditions may
be waived, in whole or in part, by the Company with respect to this Agreement in
its sole and absolute discretion:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchasers contained in this Agreement and in the other
Transaction Documents shall be correct in all material respects when made and at
the time of the Closing, after giving effect to the sale of the Units, except
that any representations and warranties that relate to a particular date or
period shall be correct in all material respects only as of such date or for
such period.
(b) PERFORMANCE; NO DEFAULT. The Purchasers shall have
performed and complied in all material respects with all agreements and
conditions contained in this Agreement and the other Transaction Documents
required to be performed or complied with prior to or at the Closing, and at the
time of the Closing -after giving effect to the sale of the Units, no Default or
Event of Default shall have occurred and be continuing.
(c) RELATED MATTERS. Contemporaneously with the Closing,
the Company shall have received payment in full for the Units to be issued
pursuant to this Agreement.
(d) NO ADVERSE U.S. LEGISLATION, ACTION OR DECISION. No
legislation, order, rule, ruling or regulation shall have been enacted or made
by or on behalf of any Governmental Body, nor shall any decision of any court of
competent jurisdiction within the United States have been rendered which, in the
Company's reasonable judgment, could materially and adversely affect any of the
Units or any part thereof as an investment. There shall be no action, suit,
investigation or proceeding pending or threatened in writing, against or
affecting the Company, any of its properties or rights, or any of its
Affiliates, associates, officers or directors, before any court, arbitrator or
27
administrative or governmental body which (i) seeks to restrain, enjoin, prevent
the consummation of or otherwise affect the transactions contemplated by this
Agreement and the other Transaction Documents, or (ii) questions the validity or
legality of any such transactions or seeks to recover damages or to obtain other
relief in connection with any such transactions, and, to the Company's
knowledge, there shall be no valid basis for any such action, proceeding or
investigation.
(e) GOVERNMENTAL AND THIRD PARTY PERMITS, CONSENTS, ETC.
Each Purchaser and its Subsidiaries shall have duly applied for and obtained all
Approvals from each Governmental Body, or pursuant to any agreement to which
such Purchaser is a party or to which its assets are subject, which may be
required in connection with this Agreement, the other Transaction Documents or
any other agreements and documents contemplated thereby and in connection
therewith.
(f) COMPLETION OF OTHER TRANSACTIONS. Simultaneously with or
prior to the issuance and sale to the Purchaser's of the Units to be purchased
by the Purchasers at the Closing:
(i) the Company and the Purchasers shall have duly
entered into the Registration Rights Agreement substantially in the
form of EXHIBIT C hereto, the Company shall have received a
fully-executed counterpart of the Registration Rights Agreement, and
such agreement shall be in full force and effect;
(ii) the Company and the Purchasers shall have duly
entered into the Warrant Agreement substantially in the form of EXHIBIT
D hereto, the Company shall have received a fully-executed counterpart
of the Warrant Agreement, and such agreement shall be in full force and
effect; and
(iii) each of the other Transaction Documents and any
other agreements and documents contemplated thereby and in connection
therewith shall have been executed and delivered by all respective
parties thereto and shall be in full force and effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES, ETC.
In order to induce the Purchasers to purchase the Units, the Company
represents and warrants that the statements contained in this Article IV are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made and as though the Closing Date
were substituted for the date of this Agreement throughout Article IV):
28
4.1 ORGANIZATION AND QUALIFICATION, AUTHORITY. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has full corporate power and
authority to own and lease its properties and carry on its business as presently
conducted, is duly qualified, registered or licensed as a foreign corporation to
do business and is in good standing in each jurisdiction in which the ownership
or leasing of its properties or the character of its present operations makes
such qualification, registration or licensing necessary, except where the
failure so to qualify or be in good standing would not have a Material Adverse
Effect. The Company has heretofore delivered to Purchasers complete and correct
copies of the Certificate of Incorporation and of the by-laws of the Company and
each of its Subsidiaries, each as amended to date and as presently in effect
(collectively, with respect to any such Person, "Charter Documents"). A list of
all jurisdictions in which the Company is qualified, registered or licensed to
do business as a foreign corporation is attached hereto as SCHEDULE 4.1.
4.2 SUBSIDIARIES. The Company's Subsidiaries are set forth on SCHEDULE
4.2 hereto. Each of the Subsidiaries is a corporation, limited liability company
or partnership duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization, has full
corporate, limited liability company or partnership power and authority, as the
case may be, to own and lease its properties, and carry on its business as
presently conducted, is duly qualified, registered or licensed as a foreign
corporation, limited liability company or partnership to do business and is in
good standing in each jurisdiction in which the ownership or leasing of its
properties or the character of its present. operations make such qualification,
registration or licensing necessary, except where the failure so to qualify or
be in good standing would not have a Material Adverse Effect. A list of all
jurisdictions in which each of the Subsidiaries is qualified, registered or
licensed to do business as a foreign corporation, limited liability company or
partnership is attached hereto as SCHEDULE 4.2. Except as disclosed on SCHEDULE
4.2, the Company owns, directly or indirectly, all of the outstanding shares of
Capital Stock or other evidences of equity ownership of each of its Subsidiaries
free of any Lien, restriction (other than restrictions generally applicable to
securities under federal, provincial or state securities laws) or encumbrance,
and said shares have been duly issued and are validly outstanding.
4.3 LICENSES. The Company and its Subsidiaries hold all material
licenses, franchises, permits, consents, registrations, certificates and other
approvals (including, without limitation, those relating to environmental
matters, public and worker health and safety, buildings, highways or zoning)
(individually, a "License" and collectively, "Licenses") required for the
29
conduct of its business as now being conducted, and is operating in substantial
compliance therewith, except where the failure to hold any such License or to
operate in compliance therewith would not have a Material Adverse Effect. The
Company and its Subsidiaries are in substantial compliance with all laws,
regulations, orders and decrees applicable to it, except in each case where the
failure so to comply would not have a Material Adverse Effect, or a material
adverse effect on the ability of the Company or any of its Subsidiaries to
perform on a timely basis any obligation that it has or will have under any
Transaction Document to which it is a party.
4.4 CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION. Except as
set forth on SCHEDULE 4.4, the execution, delivery and performance by the
Company of the Transaction Documents to which it is a party and all other
instruments or agreements to be executed at the Closing in connection therewith,
and the issuance and sale to the Purchasers of the Units pursuant to this
Agreement, are within the Company's corporate power, having been duly authorized
by all necessary corporate action on the part of the Company; do not require any
License, authorization, approval, qualification or formal exemption from, or
other action by or in respect of, or filing of a declaration or registration
with, any court, Governmental Body, agency or official or other Person (except
such as have been obtained or as may be required under the Securities Act or
state securities or Blue Sky laws); do not contravene or constitute a default
under or violation of (a) any provision of applicable law or regulation of any
Governmental Body, (b) the respective Charter Documents of the Company or any of
its Subsidiaries, (c) any agreement (or require the consent of any Person under
any agreement that has not been obtained) to which the Company or any of its
Subsidiaries is a party, or (d) any judgment, injunction, order, decree or other
instrument binding upon the Company, any of its Subsidiaries or any of their
respective properties, except where such contravention, default or violation
would not have a Material Adverse Effect; and do not and will not result in the
creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries, other than Permitted Liens.
4.5 VALIDITY AND BINDING EFFECT. Each of the Transaction Documents has
been duly executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in accordance with
their respective terms, except for (a) the effect upon the Transaction Documents
of bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting the rights of creditors generally, (b) limitations
imposed by a court of competent jurisdiction under general equitable principles
upon the specific enforceability of any of the remedies, covenants or other
provisions of the Transaction Documents and upon the availability of injunctive
relief or other
30
equitable remedies, and (c) any applicable laws relating to the maximum
permissible rate of interest.
4.6 CAPITALIZATION. Except as set forth on SCHEDULE 4.6 hereto, and
except for the Senior Discount Notes and the Warrants, there are no outstanding
subscriptions, options, warrants, rights, convertible or exchangeable securities
or other agreements or commitments of any character obligating the Company or
its Subsidiaries to issue any securities. Except as set forth on SCHEDULE 4.6,
there are no voting trusts or other agreements or understandings to which the
Company or its Subsidiaries is a party with respect to the voting of the Capital
Stock of the Company or the Subsidiaries. Except as set forth on SCHEDULE 4.6 or
as contemplated by the Registration Rights Agreement, neither the Company nor
any of its Subsidiaries has entered into any agreement to register its equity or
debt securities under the Securities Act.
4.7 LITIGATION; DEFAULTS. Except as set forth on SCHEDULE 4.7 or
SCHEDULE 4.9, there is no action, suit, proceeding or investigation pending or,
to the knowledge of the Company, threatened against or affecting the Company,
any of its Subsidiaries, or any properties of any of the foregoing, before or by
any court or arbitrator or any Governmental Body which (individually or in the
aggregate) could reasonably be expected to (i) have a Material Adverse Effect,
or (ii) impair the ability of the Company or any Subsidiary to perform fully on
a timely basis any material obligation which the Company or such Subsidiary has
or will have under any Transaction Document to which the Company or such
Subsidiary is a party. Except as set forth on SCHEDULE 4.7 or SCHEDULE 4.19,
neither the Company nor any of its Subsidiaries is in violation of, or in
default under (and there does not exist any event or condition which, after
notice or lapse of time or both, would constitute such a default under), any
term of its respective Charter Documents, or of any term of any agreement,
instrument, judgment, decree, order, statute, injunction, governmental
regulation, rule or ordinance (including, without limitation, those relating to
zoning, city planning or similar matters) applicable to the Company or any of
its Subsidiaries or to which the Company or any of its Subsidiaries is bound, or
to any properties of the Company or any of its Subsidiaries, except in each case
to the extent that such violations or defaults, individually or in the
aggregate, could not reasonably be expected to (a) affect the validity of any
Transaction Document, (b) have a Material Adverse Effect, or (c) impair the
ability of the Company to perform fully on a timely basis any material
obligation which the Company has or will have under any Transaction Document to
which the Company is a party.
31
4.8 OUTSTANDING DEBT. Except as set forth on SCHEDULE 4.8 hereto, and
except for the Senior Discount Notes, neither the Company nor any of its
Subsidiaries will have outstanding any debt for borrowed money, or obligations
or liabilities evidenced by bonds, debentures, notes or other similar
instruments or under capital leases other than short-term debt incurred in the
ordinary course of business. SCHEDULE 4.8 contains a complete and accurate list
of all material guarantees, assumptions, purchase agreements and similar
agreements and arrangements whereby the Company or any of its Subsidiaries is or
may become directly or indirectly liable or responsible for the indebtedness or
other obligations of another Person other than the Company or any of its
Subsidiaries, except for negotiable instruments endorsed for collection or
deposit in the ordinary course of its business, identifying, with respect to
each of the respective parties, amounts and maturities.
4.9 NO MATERIAL ADVERSE CHANGE. Except as set forth on SCHEDULE 4.9,
since February 28, 1998, there has been no material adverse change in the
condition (financial or other), assets, business, or results of operations of
the Company or any of its Subsidiaries. Except as set forth on SCHEDULE 4.9,
since February 28, 1998, neither the Company nor any Subsidiary has (a) incurred
any obligation or liability (contingent or other), other than obligations and
liabilities incurred in the ordinary course of business, and no Lien has been
placed on any of the properties of the Company or any of its Subsidiaries which
remains in existence on the date hereof, other than Permitted Liens and
liabilities and Liens described on SCHEDULE 4.20 hereto, and (b) acquired or
disposed of any material assets by the Company or any of its Subsidiaries (or
any contract or arrangement therefor) or any other material transaction,
otherwise than for fair. value in the ordinary course of business; (c) paid,
discharged or satisfied any claim, Lien, obligation or liability, other than any
claim, Lien, obligation or liability (i) reflected or reserved against on the
Financial Statements or paid, discharged or satisfied in the ordinary course of
business since the date of the Financial Statements or (ii) incurred and paid,
discharged or satisfied since the date of the Financial Statements, in each case
in the ordinary course of business; (d) written off as uncollectible any
accounts receivable other then in the ordinary course of business and for
amounts not greater than $10,000; (e) terminated or amended, suffered the
termination or amendment of, failed to perform in all material respects all of
its obligations or suffered or permitted any material default to exist under,
any material agreement, license or permit; (f) suffered, or received
notification of, cancellation (nor does it have any knowledge of any set of
facts which would give any other party thereto any right to cancel), or canceled
or waived, any material right with respect to any material agreement, license or
permit; (g) suffered any damage, destruction or loss of tangible property
(whether or not covered by insurance) which in
32
the aggregate exceeds $5,000; (h) made any loan (including any intercompany
advance) to any other Person (other than advances to employees in the ordinary
course of business which do not exceed $5,000 individually or $25,000 in the
aggregate); (i) canceled, waived or released any debt, claim or right in an
amount exceeding $10,000 or otherwise of substantial value; (j) paid any amount
to or entered into any agreement, arrangement or transaction with any Affiliate
outside the ordinary course of business; (k) declared, set aside, or paid any
dividend or distribution with respect to its capital stock or redeemed,
purchased or otherwise acquired any of its capital stock; (1) entered into any
transaction with any of its directors, officers or employees outside the
ordinary course of business; (m) granted any increase outside the ordinary
course of business in the compensation of any officer or employee or made any
other change in employment terms of any officer or employee; (n) suffered any
labor difficulty; (o) made any change in any method of accounting or accounting
practice; or (p) agreed, in writing or otherwise, to any of the foregoing.
4.10 EMPLOYEE PROGRAMS. SCHEDULE 4.10 sets forth a list of every
Employee Program maintained by the Company or any Current Affiliate at any time
during the five-year period ending on the Closing Date or with respect to which
a liability of the Company or an Affiliate (as defined below) exists. Each
Employee Program (other than a Multiemployer Plan) which has been maintained by
the Company during the five-year period ending on the Closing Date and which has
been intended to qualify under Section 401(a) or Section 501(c)(9) of the Code
has received a favorable determination or approval letter from the Internal
Revenue Service regarding its qualification under such section or the remedial
amendment period under Section 401(b) of the Code has not yet expired with
respect to such Employee Program and, to the knowledge of the Company, nothing
has occurred that would adversely affect such qualification since the date of
such letter or application for a determination or approval letter has been
timely made and to the knowledge of the Company, no reason exists why a
favorable determination or approval shall not be granted. Except as set forth on
SCHEDULE 4.10, the Company has no knowledge of any failure of any party to
comply with any laws applicable with respect to the Employee Programs that have
been maintained by the Company or any Current Affiliate, and no such failure
will result from completion of the transactions contemplated hereby. With
respect to any Employee Program ever maintained by the Company or an Affiliate,
there has been no "prohibited transaction," as defined in Section 406 of ERISA
or Code Section 4975, or breach of any duty under ERISA or other applicable law
or any agreement which in any such case could subject the Company to material
liability either directly or indirectly (including, without limitation, through
any obligation of indemnification or contribution) for any damages, penalties,
or taxes, or any other loss or expense. No litigation or
33
governmental administrative proceeding (or investigation) or other proceeding
(other than those relating to routine claims for benefits) is pending or
threatened with respect to any such Employee Program (other than a Multiemployer
Plan).
The Company and its Current Affiliates have not incurred any liability
under title IV of ERISA which has not been paid in full prior to the Closing.
Neither the Company nor any of its Current Affiliates is liable for any material
"accumulated funding deficiency" (whether or not waived) with respect to any
Employee Program ever maintained by the Company or any Affiliate and subject to
Code Section 412 or ERISA Section 302. With respect to any Employee Program
subject to title IV of ERISA, there has been no (and the transactions
contemplated by this Agreement will not result in any) (a) "reportable event,"
within the meaning of ERISA Section 4043 or the regulations thereunder (for
which the notice requirement is not waived Under 29 C.F.R. Part 2615) or (b)
other event or condition which presents a material risk of plan termination or
any other event that may cause the Company or any Current Affiliate to incur
material liability or have a material Lien imposed on its assets under title IV
of ERISA. All payments and/or contributions required to have been made by the
Company and its Current Affiliates (under the provisions of any agreements or
other governing documents or applicable law) with respect to all Employee
Programs subject to title IV of ERISA ever maintained by the Company or any
Affiliate, for all periods prior to the Closing, have been timely made. Except
as described on SCHEDULE 4.10, no Employee Program maintained by the Company or
an Affiliate and subject to title IV of ERISA (other than a Multiemployer Plan)
has any "unfunded benefit liabilities" within the meaning of ERISA Section
4001(a)(18), as of the Closing Date. With respect to Multiemployer Plans
maintained by the Company or any Affiliate, SCHEDULE 4.10 states the aggregate
amount of withdrawal liability or other termination liability that would be
incurred by the Company or any Affiliate if there were a withdrawal from any
such plan as determined by the most recent withdrawal liability calculation
prepared by such plan. Except as disclosed on SCHEDULE 4.10, none of the
Employee Programs which is a welfare plan maintained by the Company or any
Affiliate provides health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by part 6
of subtitle B of title I of ERISA or comparable statutes or regulations) or has
ever promised to provide such post-termination benefits.
For purposes of this section:
(i) "Employee Program" means (A) any employee benefit
plan within the meaning of Section 3(3) of ERISA and employee
34
benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA, and (B) any stock option plans, bonus or incentive
award plans, severance pay policies or agreements, deferred
compensation arrangements, supplemental income arrangements, vacation
plans, and all other employee benefit plans, agreements, and
arrangements not described in (A) above, and (C) any trust used to
fund, benefits under the foregoing maintained by the Company or any
Affiliate.
(ii) For purposes of this Section 4.10, an entity is
an "Affiliate" of the Company if it would have ever been considered a
single employer with the Company under ERISA Section 4001(b) or part of
the same "controlled group" as the Company for purposes of ERISA
Section 302(d)(8)(C); an entity is a "Current Affiliate" if it
currently would be considered a single employer with the Company under
ERISA Section 4001(b) or part of the same "controlled group" as the
Company for purposes of ERISA Section 302(d)(8)(C); and each reference
to the Company includes its Subsidiaries.
(iii) An entity "maintains" an Employee Program if
such entity sponsors, contributes to, or provides benefits under such
Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such
Employee Program, or if such Employee Program provides benefits to or
otherwise covers employees of such entity (or, in respect of such
employees, their spouses, dependents, or beneficiaries).
(iv) "Multiemployer Plan" means a (pension or
non-pension) employee benefit plan to which more than one employer
contributes and which is maintained pursuant to one or more collective
bargaining agreements.
4.11 PRIVATE OFFERING. No form of general solicitation or general
advertising, including, but not limited to, advertisements, articles, notices or
other communications, published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising, was used
by the Company or any of its Subsidiaries or any of the Company's or such
Subsidiary's representatives, or, to the knowledge of the Company, any other
Person acting on behalf of the Company or any of its Subsidiaries, in connection
with the offering of the Units being purchased under this Agreement. During the
six months prior to the Closing, neither the Company, any of its Subsidiaries
nor any Person acting on the Company's or such Subsidiary's behalf has directly
or indirectly offered the Units, or any
35
part thereof or any other similar securities, for sale to, or sold or solicited
any offer to buy any of the same from, or otherwise approached or negotiated in
respect thereof with any Person or Persons other than the Purchasers and other
investors who the Company reasonably believed had such knowledge and experience
in financial and business matters that they were capable of evaluating the
merits and risks of purchasing the Units. The Company further represents to the
Purchasers that, assuming the accuracy of the representations of the Purchasers
as set forth in Section 5 hereof, neither the Company, any of its Subsidiaries
nor any Person acting on the Company's or such Subsidiary's behalf has taken or
will take any action which would subject the issue and sale of the Units to the
provisions of Section 5 of the Securities Act, except as contemplated by the
Registration Rights Agreement. The Company has not sold the Units to anyone
other than the Purchasers designated in this Agreement. During the six months
prior to the Closing, no securities of the same class or series as the
securities comprising the Units have been issued and sold by the Company. Each
Senior Discount Note and Common Stock Purchase Warrant certificate shall bear
substantially the same legend set forth in Section 11.12 hereof, as applicable,
for at least so long as such restrictions apply.
4.12 BROKER'S OR FINDER'S COMMISSIONS. Neither the Company nor any of
its Subsidiaries has engaged any broker or finder or has incurred or become
liable for any broker's commission or finder's fee relating to or in connection
with the transactions contemplated by this Agreement. In addition to and not in
limitation of any other rights hereunder, the Company and its Subsidiaries agree
that they will indemnify and hold harmless the Purchasers from and against any
and all claims, demands or liabilities for broker's, finder's, placement agent's
or other similar fees or commissions and any and all liabilities with respect to
any taxes (including interest and penalties) payable or incurred or alleged to
have been incurred by the Company or any of its Subsidiaries or any Person
acting or alleged to have been acting on the Company's or such Subsidiary's
behalf, in connection with this Agreement, the issuance or sale of the Units or
any other transaction contemplated by any of the Transaction Documents.
4.13 DISCLOSURE.
(a) The historical financial and operating information
delivered to the Purchasers has been derived from the consolidated books and
records of the Company and its Subsidiaries prepared in accordance with GAAP.
(b) Neither this Agreement nor any Schedule or Exhibit
hereto, nor any report, document, certificate or instrument furnished to the
36
Purchasers or their counsel in connection with the transactions contemplated by
this Agreement, when read together, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading. There is no
material fact known to the Company which the Company has not disclosed to the
Purchasers in writing which has or, insofar as the Company can reasonably
foresee, may have or will have a Material Adverse Effect or a material adverse
effect
4.14 FOREIGN ASSETS CONTROL REGULATION, ETC. Neither the issue and sale
of the Units by the Company nor its use of the proceeds thereof as contemplated
by this Agreement will violate, in any material respect, the Foreign Assets
Control Regulations, the Transaction Control Regulations, the Cuban Assets
Control Regulations, the Foreign Funds Control Regulations, the Iranian Assets
Control Regulations, the Nicaraguan Trade Control Regulations, the South African
Transactions Control Regulations, the Libyan Sanctions Regulations, the Soviet
Gold Coin Regulations, the Panamanian Transactions Regulations, the Haitian
Transactions Regulations, or the Iraqi Sanctions Regulations of the United
States Treasury department (31 C.F.R., Subtitle B, Chapter V, as amended) or
Executive Orders 12722 and 12724 (transactions with Iraq).
4.15 FEDERAL RESERVE REGULATIONS AND OTHER MATTERS. Neither the
Company nor any of its Subsidiaries will, directly or indirectly, use
any of the proceeds from the sale of the Unites for the purpose,
whether immediate, incidental or ultimate, of buying any "margin
stock," or of maintaining, reducing or retiring any indebtedness
originally incurred to purchase any stock that is currently a "margin
stock", or for any other purpose which might constitute the
transactions contemplated hereby a "purpose credit," in each case
within the meaning of Regulations G or U of the Board of Governors of
the Federal Reserve System (12 C.F.R. 207 and 221, as amended,
respectively), or otherwise take or permit to be taken any action which
would involve a violation of such Regulation G or Regulation U or of
Regulations T or X of the Board of Governors of the Federal Reserve
System (12 C.F.R. 220 and 224, as amended, respectively) or any other
regulation of such Board. No indebtedness that may be maintained,
reduced or retired with the proceeds from the sale of the Unites was
incurred for the purpose of purchasing or carrying any "margin stock"
and neither the Company nor any of its Subsidiaries own any such
"margin stock" or have any present intention of acquiring, directly or
indirectly any such "margin stock".
37
4.16 INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
4.17 PUBLIC UTILITY HOLDING COMPANY ACT. To the Company's knowledge,
neither the Company nor any of its Subsidiaries is a "holding company."
or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
4. 00 XXXXXXXXXX XXXXXXXX XXX. To the Company's knowledge, neither the
Company nor any of its Subsidiaries is, nor will be, a "rail carrier,"
or a person controlled by or affiliated with a "rail carrier," within
the meaning of Title 49, U.S.C. Neither the Company nor any of its
Subsidiaries is a "carrier" or other person to which 49 U.S.C. Section
11301(b)(1) is applicable.
4.19 ENVIRONMENTAL REGULATION, ETC.
(a) Except as set forth on SCHEDULE 4.19, to the knowledge of
the Company, each of the Company and its Subsidiaries (i) has no liability under
any Environmental Law or common law cause of action relating to or arising from
environmental conditions which could have a Material Adverse Effect, and any
property owned, operated, leased, or used by the Company and its Subsidiaries
and any facilities and operations thereon comply with all applicable
Environmental Laws except to the extent that failure to comply could have a
Material Adverse Effect; (ii) has not entered into or been subject to any
judgment, consent decree, compliance order, or administrative order with respect
to any environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law which could have a
Material Adverse Effect; and (iii) has no reason to believe that any of the
items enumerated in clause (ii) of this paragraph will be forthcoming.
(b) Except as set forth on SCHEDULE 4.19, to the knowledge of
the Company: (i) each of the Company and its Subsidiaries has not generated,
transported, used, stored, treated, disposed of, or managed any Hazardous Waste,
except in accordance with applicable Environmental Laws; (ii) the Company has no
knowledge of any Release or Threat of Release of a Hazardous Material at any
site presently or formerly owned, operated, leased, or used by the Company or
any of its Subsidiaries; (iii) the Company and its Subsidiaries have never had
Hazardous Material transported from
38
any site presently or formerly owned, operated, leased, or used by the Company
or any of its Subsidiaries for treatment, storage, or disposal at any other
place, except in accordance with applicable Environmental Laws except such
noncompliance which could not reasonably be expected to have a Material Adverse
Effect; (iv) the Company and its Subsidiaries do not presently own, operate,
lease or use any site on which underground storage tanks are or were located;(v)
the Company and its Subsidiaries have never placed underground storage tanks on
any site owned, operated, leased or used by the Company or any of its
Subsidiaries; (vi) the Company and its Subsidiaries have never removed
underground storage tanks from any site presently or formerly owned, operated,
leased or used by the Company or any of its Subsidiaries; and (vii) the Company
and its Subsidiaries have never had a Lien imposed by any Governmental Body on
any property, facility, machinery, or equipment owned, operated, leased, or used
by the Company or any of its Subsidiaries in connection with the presence of any
Hazardous Material.
4.20 PROPERTIES AND ASSETS. The Company and its Subsidiaries have good
record and marketable fee title to (or, in the case of licensed Property, valid
licenses to) all real Property and all other Property and assets, whether
tangible or intangible, owned by them and reasonably necessary in the conduct of
business of the Company or such Subsidiaries, except defects in title which do
not and will not have a Material Adverse Effect. All of the leases necessary in
any material respect for the operation of their respective properties and
assets, under which the Company or any of its Subsidiaries holds any Property or
assets, real or personal, are valid, subsisting and enforceable and afford
peaceful and undisturbed possession of the subject matter of the lease, and no
material default by the Company or any of its Subsidiaries exists under any of
the provisions thereof. All buildings, machinery and equipment of the Company
and its Subsidiaries are in good repair and working order, except for ordinary
wear and tear, and except as would have a Material Adverse Effect. All material
current and proposed uses of such Property or assets of the Company and its
Subsidiaries are permitted as of right and no regulation or ordinance interferes
with such current or proposed uses. To the knowledge of the Company, there is no
pending or formally proposed change in any such laws, regulations and ordinances
which would have a Material Adverse Effect. Except as set forth on SCHEDULE
4.20, no condemnation proceeding is pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries. All Property and
assets of any kind (real or personal, tangible or intangible) of the Company and
its Subsidiaries are free from all Liens except for (a) Liens which would not
have a Material Adverse Effect; (b) Liens disclosed on SCHEDULE 4.20 hereto; and
(c) Permitted Liens. Except as set forth on SCHEDULE 4.20 hereto, neither the
Company nor any of its
39
Subsidiaries has signed any material financing statement, as debtor or lessee,
or any security agreement authorizing any secured party thereunder to file any
such financing statement.
4.21 INSURANCE. A list of all insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors under which the Company or any of its Subsidiaries may
derive any material benefit is set forth on SCHEDULE 4.21 hereof. There is no
claim by the Company or any of its Subsidiaries pending under any of such
policies or bonds as to which coverage has been questioned, reserved, denied or
disputed by the underwriters of such policies or bonds or their agents where
such question, reservation, denial or dispute would have a Material Adverse
Effect. All premiums due and payable under all such policies and bonds have been
paid, and the Company and its Subsidiaries are otherwise in full compliance with
the terms and conditions of all such policies and bonds. Except as set forth on
SCHEDULE 4.21, such policies of insurance and bonds (or other policies and bonds
providing substantially similar insurance coverage) are and have been in full
force and effect for at least the last year or since the inception of the
Company or any of its Subsidiaries, as the case may be, and remain in full force
and effect. Such policies of insurance and bonds are of the type and in amounts
customarily carried by Persons conducting business similar to that presently
conducted by the Company and its Subsidiaries. The Company knows of no
threatened termination of any such policies or bonds.
4.22 EMPLOYMENT PRACTICES. Except as set forth on SCHEDULE 4.22 hereto,
neither the Company nor any of its Subsidiaries is a party to or in the process
of negotiating any collective bargaining or labor agreement or union contract.
As of the date of this Agreement, there is no (a) charge, complaint or suit
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries respecting employment, hiring for employment,
terminating from employment, employment practices, employment discrimination,
terms and conditions of employment, safety, wrongful termination, or wages and
hours, (b) unfair labor practice charge or complaint pending or, to the
knowledge of the Company, threatened against, or decision or order in effect and
binding on, the Company or any of its Subsidiaries before or of the National
Labor Relations Board, (c) grievance or arbitration proceeding arising out of or
under collective bargaining agreements pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, (d) strike,
labor dispute, slow-down, work stoppage or other interference with work pending
or, to the knowledge of the Company, threatened against the Company or its
Subsidiaries, or (e) to the knowledge of the Company, union organizing
activities or union representation question threatened or existing with respect
to any groups of
40
employees of the Company or any of its Subsidiaries, which in the case of
(a)-(e) above could be reasonably expected to have a Material Adverse Effect.
4.23 FINANCIAL STATEMENTS.
(a)......The Company has delivered to the Purchasers the
following financial statements (the "Financial Statements"), copies of which are
attached hereto as SCHEDULE 4.23:
(1) A balance sheet of the Company for its
fiscal year ending on December 31, 1997 and
statements of income, retained earnings and
cash flows for the year then ended.
(2) A balance sheet of the Company as of
February 28, 1998 and statements of income,
retained earnings and cash flows for the
period then ended, certified by the
Company's Chief Financial Officer or
Controller.
Said financial statements have been prepared in accordance with
generally accepted accounting principles applied consistently during
the periods covered thereby, are complete and correct in all material
respects, and present fairly in all material respects the financial
condition of the Company at the dates of said statements and the
results of its operations and its cash flows for the periods covered
thereby.
(b) As of February 28, 1998 and as of the date hereof and
the Closing Date, and except as set forth in the Schedules hereto, there are no
material liabilities or claims relating to the Company or its Subsidiaries of
any nature, whether accrued, absolute, contingent or otherwise, asserted or, to
the Company's knowledge, unasserted, except liabilities or claims stated or
adequately reserved against in the Financial Statements or liabilities or claims
incurred in the ordinary course of the Company's and its Subsidiaries'
operations which are not required to be reflected in the Financial Statements or
in the notes thereto under GAAP. Nothing has come to the attention of the
Company since the date of the Financial Statements which would indicate that the
Financial Statements did not fairly present in all material respects the
financial position of the Company and its Subsidiaries as of the respective
dates thereof.
4.24 INTELLECTUAL PROPERTY.
41
(a) Except as described on SCHEDULE 4.24, the Company and
its Subsidiaries have ownership of, or the right or license to use (i) all
patent, copyright, trade secret, trademark, or other proprietary rights, used in
the business of the Company or any of its Subsidiaries and material to the
Company and its Subsidiaries on a consolidated basis, and (ii) all customer
lists, designs, manufacturing or other processes, computer software systems,
data compilations, research results and other information required for or
incident to their products or their business as presently conducted or
contemplated (clauses (i) and (ii), collectively, "Intellectual Property"). All
patents, patent applications, trademarks, trademark applications and
registrations and registered copyrights which are owned by or licensed to the
Company or any of its Subsidiaries or used or to be used by the Company or any
of its Subsidiaries in their business as presently conducted, and which are
material to the Company and its Subsidiaries on a consolidated basis are listed
on SCHEDULE 4.24. Except as described on SCHEDULE 4.24, all of such patents,
patent applications, trademarks, trademark applications and registrations and
registered copyrights have been duly registered in, filed in or issued by the
United States Patent and Trademark Office, the United States Register of
Copyrights, or the corresponding offices of other jurisdictions as identified on
SCHEDULE 4.24, and have been properly maintained and renewed in accordance with
all applicable provisions of law and administrative regulations in the United
States and each such jurisdiction. There are no claims or demands of any other
Person pertaining to any of such Intellectual Property and no proceedings have
been instituted, or are pending or, to the knowledge of the Company, threatened,
which challenge the rights of the Company or any of its Subsidiaries in respect
thereof.
(b) All material licenses or other agreements under which the
Company or any of its Subsidiaries is granted rights in Intellectual Property
are listed on SCHEDULE 4.24. Except as set forth on SCHEDULE 4.24, all said
licenses or other agreements are in full force and effect and there is no
material default by any party thereto.
(c) The Company and its Subsidiaries regularly require all
professional and technical employees, and other employees having access to
valuable non-public information of the Company or any of its Subsidiaries, to
execute agreements under which such employees are required to convey to the
Company or any of its Subsidiaries, as applicable, ownership of all inventions
and developments conceived or created by them in the course of their employment
and to maintain the confidentiality of all such information of the Company and
its Subsidiaries. To the Company's knowledge, neither the Company nor its
Subsidiaries made any such information available to any Person other than
employees of the Company or any of its Subsidiaries
42
except pursuant to written agreements requiring the recipients to maintain the
confidentiality of such information and appropriately restricting the use
thereof. To the knowledge of the Company, there are no infringements by others
of any of its or any Subsidiary's Intellectual Property rights.
(d) To the knowledge of the Company, the present business,
activities and products of the Company or any of its Subsidiaries do not
infringe any intellectual property of any other Person, except where such
infringement would not have a Material Adverse Effect. No proceeding charging
the Company or any of its Subsidiaries with infringement of any adversely held
Intellectual Property has been filed or is, to the knowledge of the Company,
threatened to be filed. To the Company's knowledge, there exists no unexpired
patent or patent application which includes claims that would be infringed by or
otherwise have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is making unauthorized use of any confidential information or trade
secrets of any Person, including without limitation any former employer of any
past or present employee of the Company or any of its Subsidiaries, except where
such use would not have a Material Adverse Effect. Except as set forth on
SCHEDULE 4.24, neither the Company or any of its Subsidiaries nor, to the
knowledge of the Company, any of its or any Subsidiary's employees have any
agreements or arrangements with any Persons other than the Company or any of its
Subsidiaries related to confidential information or trade secrets of such
Persons or restricting any such employee's engagement in business activities of
any nature. The activities of the Company or any of its Subsidiaries or any of
its or any Subsidiary's employees on behalf of the Company or any of its
Subsidiaries do not violate any such agreements or arrangements known to the
Company which any such employees have with other Persons.
4.25 TAXES. The Company and its Subsidiaries, and any predecessors to
the Company and any of its Subsidiaries, have filed or obtained extensions of
all Tax returns heretofore required by law to be filed by any of them. All
material Taxes have been paid in full or are adequately provided for in
accordance with GAAP on the financial statements of the applicable Person. All
material deposits, Taxes and other assessments and levies required by law to be
made, withheld, collected or provided for by the Company or any of its
Subsidiaries including deposits with respect to Taxes constituting employees'
income withholding taxes, have been duly made, withheld, collected or provided
for and have been paid over to the proper federal, state or local authority, or
are held by the applicable Person for such payment. No Liens arising from or in
connection with Taxes have been filed and are currently in effect against the
Company or any of its Subsidiaries, except for Liens for Taxes which are not yet
due. Except as set forth on SCHEDULE 4.25 hereto, neither the Company nor any of
its Subsidiaries, nor any predecessors
43
thereto, has executed or filed with the IRS or any other taxing authority any
agreement or document extending, or having the effect of extending, the period
for assessment or collection of any Taxes. The federal income tax returns of the
Company and each of its Subsidiaries, and any predecessors thereto, have been
examined by the IRS, or the statute of limitations with respect to federal
income taxes has expired, for all tax years to and including the fiscal year
ended December 31, 1994 and, except as set forth on SCHEDULE 4.25, any
deficiencies have been paid in full or are being contested in good faith by
appropriate action or appropriate reserves therefor in accordance with GAAP have
been established on the Company's or applicable Subsidiaries' books. Except as
set forth on SCHEDULE 4.25, neither the Company nor any of its Subsidiaries is a
party to any tax sharing agreement or arrangement. Except as set forth on
SCHEDULE 4.25, no audits or investigations are pending or, to the knowledge of
the Company, threatened with respect to any tax returns or taxes of the Company
or any of its Subsidiaries, or any predecessor thereto.
4.26 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
4.26, there are no material transactions, agreements or understandings, existing
or presently contemplated between or among the Company or any of its
Subsidiaries and any of its officers or directors or stockholders or any of
their Affiliates or associates.
4.27 LIMITATION ON SUBSIDIARY PAYMENT RESTRICTIONS. Except as set forth
on SCHEDULE 4.27 hereto, or as set forth in this Agreement, neither the Company
nor any of its Subsidiaries is subject to any consensual restriction on the
ability of any such Subsidiary (a) to pay dividends or make any other
distributions on such Subsidiary's Capital Stock to, or pay any indebtedness
owing to, or repurchase or redeem any of such Subsidiary's Capital Stock from,
the Company or any other Subsidiary of the Company, (b) to make any loans or
advances to the Company or any other Subsidiary of the Company, or (c) to
transfer any of its Property or assets to the Company or any other Subsidiary.
4.28 NO OTHER BUSINESS. The Company has not and is not engaged in any
material respect in any business other than providing direct delivery to home
consumers of (i) groceries, household staples (i.e., home cleaners, health and
beauty aids), and similar products such as are found in a typical grocery store
and (ii) other services and products.
4.29 PARTY IN INTEREST. The Company is not a "party in interest," as
that term is defined in Section 3.14 of ERISA, with respect to any employee
benefit plan having an interest in the General Motors Employees Domestic Group
Pension Trust.
44
4.30 AGREEMENTS. Set forth on SCHEDULE 4.30 is a list of each
agreement, arrangement or understanding to which the Company or any Subsidiary
is a party (a copy or if oral, a description of each of which designated with an
asterisk on SCHEDULE 4.30 has been delivered to the Purchasers):
(a) for the lease of personal property from or to third
parties providing for annual lease payments to any single lessor or from any
single lessee in excess of $25,000;
(b) for the purchase, distribution or sale of supplies,
products or other personal property of for the furnishing or receipt of
information or services, in each case calling for performance over a period of
more than one year or involving more than $50,000 other than purchases in the
ordinary course of business;
(c) concerning any partnership or joint venture;
(d) under which it has created, incurred, assumed, or
guaranteed (or may create, incur, assume or guarantee) indebtedness (including
Capitalized Lease Obligations) involving more than $50,000 or pursuant to which
a Lien is or may be imposed on any of its assets, tangible or intangible other
than in the ordinary course of business.
(e) concerning noncompetition;
(f) with any director, officer or employee and involving
employment or severance for an amount in excess of $100,000 per year;
(g) the consequences of a default or termination of which
could result in a material adverse change in the condition (financial or other)
assets, business or results of operations of the Company or any of its
Subsidiaries;
(h) otherwise involving more than $50,000 or not entered into
in the ordinary course of business; and
(i) otherwise material to the Company's business
Except as set forth on SCHEDULE 4.30, neither the Company nor any
Subsidiary is in default, nor is there any basis for any valid claim of default,
and no event has occurred which, with notice or lapse of time, would constitute
a default under any material agreement, arrangement or understanding set forth
on SCHEDULE 4.30, except for defaults which, either individually or in the
aggregate, could not result in a material adverse
45
change in the condition (financial or other) assets, business or results of
operations of the Company or any of its Subsidiaries. Except as set forth on
SCHEDULE 4.30, to the knowledge of the Company, no other Person is in default
under any such agreement.
4.31 ACCOUNTS RECEIVABLE AND INVENTORY.
(a) The accounts receivable of the Company reflected on
the Financial Statements or arising after the date thereof (i) arose from the
sale of inventory or provision of services in the ordinary course of business,
(ii) reflect extensions of credit consistent with past practices of the Company;
(iii) have been made for valuable consideration, (iv) will be legally
enforceable in all material respects according to their terms (except as
affected by bankruptcy, insolvency fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or by principles of equity and prevailing standards of commercial
reasonableness), and (v) will not be subject to any valid defense or right of
offset or similar claim.
(b) Except for items which are in the possession or
control of suppliers, the inventories of the Company are in the physical
possession of the Company at a facility of the Company, or are in transit from
suppliers of the Company to one of such facilities. Subject to the reserves set
forth on the Financial Statements or established in the ordinary course of
business thereafter, such inventories are in good condition and are of a quality
presently usable and suitable for the purposes for which they are intended and
are in a condition and a quantity such that they can be used in the ordinary
course of business of the Company.
ARTICLE V
PURCHASE FOR INVESTMENT; SOURCE OF FUNDS
Each Purchaser makes severally as to itself the representations
contained in this Article V.
5.1 PURCHASE FOR INVESTMENT. Each Purchaser represents that (a) by
reason of its business and financial experience, and the business and financial
experience of those persons, if any, retained by it to advise it with respect to
its investment in the Units, it together with such advisers have such knowledge,
sophistication and experience in business and financial matters as to be capable
of evaluating the merits and risk of the prospective investment, (b) it is an
accredited investor as defined in Regulation D under the Securities Act and (c)
it is purchasing the Units for its own account or for one or more separate
accounts maintained by it or for the account of one or more institutional
investors on whose behalf such Purchaser has authority to
46
make this representation for investment and not with a view to the distribution
or other disposition thereof or with any present intention of distributing or
selling any of the Units except in compliance with the Securities Act and except
to one or more such institutional investors, provided that the disposition of
such Purchaser's or such investor's property shall at all times be within its
control. Such Purchaser understands and agrees that the Units have not been
registered under the Securities Act and may be resold (which resale is not now
contemplated) only if registered pursuant to the provisions thereunder or if an
exemption from registration is available.
5.2 AUTHORITY. Each Purchaser represents that it has full power and
authority and has taken all action necessary to authorize it to enter into and
perform its obligations under this Agreement and all other Transaction Documents
and other documents or instruments contemplated hereby or thereby. This
Agreement is the legal, valid and binding obligation of such Purchaser, and is
enforceable against it in accordance with its terms.
ARTICLE VI
REDEMPTIONS AND OFFERS TO PURCHASE
6.1 NOTICE OF REDEMPTION. If the Company elects or is required to
redeem Senior Discount Notes pursuant to Section 6.6 hereof, at least 30 days
but not more than 60 days before any Redemption Date, the Company shall mail by
first class mail a notice of redemption to the registered address of each Holder
of Senior Discount Notes or portions thereof that are to be redeemed. With
respect to any redemption of Senior Discount Notes, the notice shall identify
the Senior Discount Notes or portions thereof to be redeemed and shall state:
(i) the Redemption Date; (ii) the Redemption Price for the Senior Discount Notes
and the amount of unpaid and accrued interest on such Senior Discount Notes as
of the date of redemption; (iii) if any Senior Discount Note is being redeemed
in part, the portion of the principal amount of such Senior Discount Note to be
redeemed and that, after the Redemption Date, upon surrender of such Senior
Discount Note, a new Senior Discount Note or Senior Discount Notes in principal
amount equal to the unredeemed portion will be issued; (iv) that Senior Discount
Notes called for redemption must be surrendered to the Company to collect the
Redemption Price for such Senior Discount Notes; (v) that, unless the Company
defaults in paying the Redemption Price, interest on Senior Discount Notes
called for redemption ceases to accrue on and after the Redemption Date and the
only remaining right of the Holders of such Senior Discount Notes is to receive
payment of the Redemption Price. upon surrender to the Company of the Senior
Discount Notes redeemed; and (vi) if fewer than all the Senior Discount Notes
are to be redeemed, the identification of the particular Senior Discount Notes
(or
47
portion thereof) to be redeemed, as well as the aggregate principal amount of
Senior Discount Notes to be redeemed and the aggregate principal amount of
Senior Discount Notes to be outstanding after such partial redemption.
6.2 SELECTION OF SENIOR DISCOUNT NOTES TO BE REDEEMED OR PURCHASED. If
less than all outstanding Senior Discount Notes are to be redeemed or if less
than all Senior Discount Notes tendered pursuant to an Offer are to be accepted
for payment, the Company shall select the outstanding Senior Discount Notes to
be redeemed or accepted for payment in compliance with the requirements of the
principal national securities exchange, if any, on which the Senior Discount
Notes are listed or, if the Senior Discount Notes are not listed on a securities
exchange, on a pro rata basis. The Company shall select for redemption or
purchase Senior Discount Notes or portions of Senior Discount Notes in principal
amounts of $1,000 or integral multiples thereof; except that if all of the
Senior Discount Notes of a Holder are selected for redemption or purchase, the
aggregate principal amount of the Senior Discount Notes held by such Holder,
even if not a multiple of $1,000, may be redeemed or purchased. Except as
provided in the preceding sentence, provisions of this Agreement that apply to
Senior Discount Notes called for redemption or tendered pursuant to an Offer
also apply to portions of Senior Discount Notes called for redemption or
tendered pursuant to an Offer.
6.3 EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed
to the Holders, Senior Discount Notes called for redemption in such notice
become due and payable on the Redemption Date at the Redemption Price. Upon
surrender to, the Company, the Senior Discount Notes called for redemption shall
be paid at the Redemption Price on the Redemption Date.
6.4 PAYMENT OF REDEMPTION PRICE. On or prior to any Redemption Date,
the Company shall segregate money sufficient to pay the Redemption Price of all
Senior Discount Notes to be redeemed on that date. Unless the Company defaults
in the payment of such Redemption Price, interest on the Senior Discount Notes
to be redeemed will cease to accrue on such Senior Discount Notes on the
applicable Redemption Date, whether or not such Senior Discount Notes are
presented for payment. If a Senior Discount Note is redeemed on or after an
interest Record Date but on or prior to the related Interest Payment Date, then
any accrued and unpaid interest shall be paid to the Person in whose name such
Senior Discount Note was registered at the close of business on such Record
Date. If any Senior Discount Note called for redemption shall not be so paid
upon surrender for redemption, interest will be paid on the unpaid principal,
premium, if any, and interest from the Redemption Date until such principal,
premium and interest is paid, at the rate of interest provided in the Senior
Discount Notes and Section 7.1. If a
48
Redemption Date is a non-Business Day, payment shall be made on the next
succeeding Business Day and no interest shall accrue for the period from the
Redemption Date to such succeeding Business Day.
6.5 SENIOR DISCOUNT NOTES REDEEMED IN PART. Upon surrender of a Senior
Discount Note that is redeemed in part, the Company shall issue to the Holder
thereof at the Company's expense a new Senior Discount Note equal in principal
amount to the unredeemed portion of the Senior Discount Note surrendered.
6.6 OPTIONAL AND MANDATORY REDEMPTION.
(a) The Senior Discount Notes will be subject to redemption at
any time after the Closing Date, in whole or from time to time in part (in
multiples of $1,000 of principal amount) at the option of the Company at the
price set forth below.
(i) prior to the first anniversary of the Closing
Date, at a price equal to the Accreted Value thereof plus a call
premium equal to (A) one percent of the Accreted Value of such Senior
Discount Notes plus (B) an additional 0.5% for each additional thirty
days (payable on the first day of each such period), beginning the
thirty-first day following the Closing Date, prior to the Redemption
Date, up to a maximum call premium of 4% of the Accreted Value of such
Senior Discount Notes;
(ii) during the period from and including the first
anniversary of the Closing Date through the day immediately prior to
the second anniversary of the Closing Date, at a price equal to 104% of
the Accreted Value of such Senior Discount Notes plus any accrued and
unpaid interest to the Redemption Date; and
(iii) at any time on or after the second anniversary
of the Closing Date, at a price equal to 102% of the Accreted Value of
such Senior Discount Notes, plus any accrued and unpaid interest to the
Redemption Date.
(b) On the second anniversary of the Closing Date, the Company
shall redeem (without prepayment penalty or premium) an aggregate principal
amount of Senior Discount Notes equal to $2.0 million less the aggregate
principal amount of Senior Discount Notes previously redeemed by the Company.
The redemption price payable by the Company with respect to any Senior Discount
Notes redeemed pursuant to this Section 6.6(b) shall be equal to 100% of the
principal amount so redeemed, plus any accrued and unpaid interest thereon to
the Redemption Date.
49
(c) Upon any partial prepayment or redemption of the Senior
Discount Notes, the principal amount so prepaid or redeemed shall be allocated
to all Senior Discount Notes at the time outstanding in proportion to the
respective outstanding principal amounts thereof, and a corresponding pro rata
adjustment shall be made in the minimum denomination of a Senior Discount Note
pursuant to Section 11.1.
6.7 MANDATORY OFFERS.
(a) Within 10 Business Days after any Change of Control
Trigger Date or any Repayment Trigger Date, the Company shall mail a notice to
each Holder containing all instructions and materials necessary to enable such
Holders to tender Senior Discount Notes pursuant to the Offer and stating: (i)
that an Offer is being made pursuant to Section 7.12 or 7.13, as the case may
be, the length of time the Offer shall remain open, and the maximum aggregate
principal amount of Senior Discount Notes that the Company is required to
purchase pursuant to such Offer; (ii) the purchase price for the Senior Discount
Notes (as set forth in Section 7.12 or 7.13, as the case may be), the amount of
accrued and unpaid interest on such Senior Discount Notes as of the purchase
date, and the purchase date (which shall be no earlier than 30 days nor later
than 40 days from the date such notice is mailed (the "Purchase Date")); (iii)
that any Senior Discount Note not tendered will continue to accrue interest if
interest is then accruing; (iv) that, except to the extent the Company defaults
in the payment of the purchase price the Purchase Date with respect to any
Senior Discount Notes tendered, interest shall cease to accrue on the Purchase
Date with respect to all Senior Discount Notes tendered in connection with such
Offer; (v) that Holders electing to tender any Senior Discount Note or portion
thereof will be required to surrender their Senior Discount Note, with a form
entitled "Option of Holder to Elect Purchase" completed, to the Company at the
address specified in Section 13.2 hereof prior to the close of business on the
Business Day preceding the Purchase Date, PROVIDED that Holders electing to
tender only a portion of any Senior Discount Note must tender a principal amount
of $1,000 or integral multiples thereof; (vi) that Holders will be entitled to
withdraw their election to tender Senior Discount Notes if the Company receives,
not later than the close of business on the second Business Day preceding the
Purchase Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Senior Discount Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have such Senior Discount Notes purchased; (vii) that Holders whose Senior
Discount Notes are accepted for payment in part will be issued new Senior
Discount Notes equal in principal amount to the unpurchased portion of Senior
Discount Notes surrendered, PROVIDED that only Senior Discount Notes in a
principal amount of $1,000 or integral
50
multiples thereof will be accepted for payment in part and (viii) if the Offer
is made with respect to a Change of Control, the circumstances and relevant
facts regarding such Change of Control.
(b) On the Purchase Date for any Offer, the Company shall
(i) in the case of an Offer resulting from a Change of Control, accept for
payment all Senior Discount Notes or portions thereof tendered pursuant to such
Offer, (ii) in the case of an Offer resulting from one or more Securities Sales
or Mezzanine Debt Financings the aggregate Net Cash Proceeds of which exceed
$30,000,000, accept for payment all Senior Discount Notes or portions thereof
tendered pursuant to such Offer.
(c) With respect to any Offer, except to the extent that the
Company defaults in the payment of the purchase price for any Senior Discount
Notes on the Purchase Date in connection with such Offer, interest shall cease
to accrue on the Purchase Date with respect to all Senior Discount Notes
tendered in connection with such Offer.
(d) Promptly after the Purchase Date with respect to an Offer,
(i) the Company shall mail to each Holder of Senior Discount Notes or portions
tendered for payment pursuant to the terms of this Agreement an amount equal to
the purchase price for, plus any accrued and unpaid interest on, such Senior
Discount Notes, (ii) with respect to any tendered Senior Discount Note which the
Company is not required to accept for payment pursuant to the terms of this
Agreement, the Company shall return such Senior Discount Note to the Holder
thereof, and (iii) with respect to any Senior Discount Note accepted for payment
in part pursuant to the terms of this Agreement, the Company shall authenticate
and mail to each such Holder a new Senior Discount Note equal in principal
amount to the unpurchased portion of the tendered Senior Discount Note.
(e) The Company will give notice to each Holder of the results
of the Offer on or as soon as practicable after the Purchase Date, and (ii)
comply with Rule 14e-1 under the Exchange Act and any other securities laws and
regulations to the extent such laws and regulations are applicable to any Offer.
ARTICLE VII
COVENANTS
7.1 PAYMENT OF SENIOR DISCOUNT NOTES. The Company shall pay the
principal of, and premium, if any, and interest on, the Senior Discount Notes on
the dates and in the manner provided in the Senior Discount Notes. Holders must
surrender their Senior Discount Notes to the Company to collect principal
payments. Principal, premium, or interest shall be
51
considered paid on the date due if, by 2:00 p.m., Boston, Massachusetts time, on
such date, the Company shall have executed wire transfers in immediately
available funds designated for and sufficient to pay such principal, premium or
interest. To the extent lawful, the Company shall pay interest (including
Post-Petition Interest) on overdue principal, premium and interest (without
regard to any applicable grace period) at a rate equal to 3.0% per annum in
excess of the then applicable interest rate on the Senior Discount Notes.
7.2 REPORTS.
FINANCIAL AND OTHER INFORMATION. The Company will deliver to each
Purchaser who, as of 5 days prior to the date on which document is to be
delivered, holds Senior Discount Note's having an aggregate Accreted Value of at
least $1.0 million, the following:
(a) as soon as available and in any event within 45 days after
the end of the first, second and third quarterly accounting periods in each
fiscal year of the Company, an unaudited balance sheet of the Company as at the
end of such period and the related unaudited statements of operations,
stockholders' equity and changes in cash flow of the Company for such period and
(in the case of the second and third quarterly periods) for the period from the
beginning of the current fiscal year to the end of such quarterly period,
setting forth in each case in comparative form the figures for the corresponding
periods of the previous fiscal year;
(b) as soon as available and in any event within 120 days
after the end of each fiscal year of the Company, provided that unaudited copies
of the same information shall be provided within 90 days after the end of each
fiscal year, an audited balance sheet of the Company as at the end of such
fiscal year and the related audited statement of operations, stockholder's
equity and changes in cash flow of the Company for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and accompanied by the report thereon of a firm of
independent public accountants of recognized national standing selected by the
Company, which report (i) shall state that the examination by such accountants
in connection with such financial statements has been made in accordance with
generally accepted auditing standards and (ii) shall include the opinion of such
accountants that such financial statements (x) have been prepared in accordance
with generally accepted accounting principles consistent with those applied in
prior fiscal periods, except as otherwise specified in such opinion, and (y)
present fairly in all material respects the financial condition of the Company
at the dates of said financial statements and the results of the Company's
operations for the periods covered thereby;
52
(c) as soon as available and in any event within 30 days after
the end of each month, an unaudited balance sheet of the Company as at the end
of such month and the related unaudited statements of operations, stockholders'
equity and changes in cash flows of the Company for such month and for the
current fiscal year to the end of such month, setting forth in comparative form
the Company's projected financial statements for the corresponding periods for
the current fiscal year and setting forth net new subscribers to services
provided;
(d) as soon as available, but in any event within 30 days
after commencement of each new fiscal year, a business plan and projected
financial statements for such fiscal year; and
(e) with reasonable promptness, (i) such other notices,
information and data with respect to the Company as the Company delivers to the
holders of Common Stock; including, promptly upon receipt thereof, any
additional reports, management letters or other detailed information concerning
significant aspects of the Company's operations or financial affairs given to
the Company by its independent accountants (and not otherwise contained in other
materials provided hereunder), and (ii) such other information and data as the
Purchasers may from time to time reasonably request.
Notwithstanding the foregoing, the Company's obligations to deliver the
information specified in clauses (c), (d) and (e)(ii) of this Section 7.2 shall
terminate once the Company becomes subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (a
"Reporting Company"). In addition, once the Company becomes a Reporting Company,
the Company shall not be required to deliver to any Holder the information
specified in clauses (a) and (b) above before such information is filed with the
Securities and Exchange Commission.
The foregoing financial statements shall be prepared on a consolidated basis if
the Company then has any subsidiaries. The financial statements delivered
pursuant to paragraphs (a) and (c) shall be accompanied by a certificate of the
chief financial officer or controller of the Company stating that such
statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except as noted) and fairly present the
financial condition and results of operations of the Company at the date thereof
and for the periods covered thereby.
7.3 COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Holders, within 15 days
after the end of each calendar quarter, an Officers' Certificate stating that
(i)
53
a review of the activities of the Company and its Subsidiaries during the
preceding calendar quarter has been made to determine whether the Company has
kept, observed, performed and fulfilled all of its obligations under this
Agreement and the Senior Discount Notes, (ii) such review was supervised by the
Officers of the Company signing such certificate, and (iii) that to the best
knowledge of each Officer signing such certificate, (A) the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Agreement and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Agreement (or, if a Default or Event of
Default occurred, describing all such Defaults or Events of Default of which
each such Officer may have knowledge and what action the Company has taken or
proposes to take with respect thereto), and (B) no event has occurred and
remains in existence by reason of which payments on account of the principal of,
or premium, if any, or interest on, the Senior Discount Notes are prohibited or
if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations
of the American Institute of Certified Public Accountants, the audited financial
statements delivered by the Company pursuant to Section 7.2(b) hereof shall be
accompanied by a written statement of Price Waterhouse, the Company's
independent public accountants (or another independent accounting firm of
established national reputation reasonably satisfactory to the Holders), that in
making the examination necessary for certification of such financial statements
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Sections 7.1, 7.5, 7.7, 7.8, 7.9, 7.10,
7.11, 7.13, 7.17, 7.18, 7.19, 7.20 or 7.21, or if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company will, so long as any of the Senior Discount
Notes are outstanding, deliver to the Holders, promptly after any Officer of the
Company becomes aware of (i) any Default or Event of Default, (ii) any default
or event of default under any other mortgage, agreement or instrument that could
result in an Event of Default under Section 9.1, or (iii) any condition or event
which has resulted in or is reasonably likely to result in any material
liability under any federal, state or local statute or regulation relating to
public health and safety, worker. health and safety or pollution or protection
of the environment or any other material adverse change, event or circumstance
affecting the Company or any Subsidiary (including, without limitation, the
filing of any material litigation against the Company or any
54
Subsidiary or the existence of any dispute with any Person which involves a
reasonable likelihood of such litigation being commenced) an Officers'
Certificate specifying such Default, Event of Default or default and what action
the Company is taking or proposes to take with respect thereto.
7.4 STAY, EXTENSION AND USURY LAWS. The Company covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that might affect the covenants or the performance of its obligations
under this Agreement and the Senior Discount Notes; and the Company (to the
extent it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power granted to the Holders
pursuant to this Agreement, but will suffer and permit the execution of every
such power as though no such law has been enacted.
7.5 LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any Subsidiary
to, directly or indirectly, make any Restricted Payment.
(b) Notwithstanding Section 7.5(a), the following Restricted
Payments may be made: (i) the payment of any cash dividend on the Company's or
any Subsidiary's Capital Stock, provided that the aggregate amount of cash
dividends payable by the Company and its Subsidiaries, other than dividends
payable to the Company or any Subsidiary, during any twelvemonth period shall
not exceed twenty percent (20%) of the Company's Consolidated Net Income; (ii)
the redemption or repayment of the Senior Discount Notes under the circumstances
set forth in this Agreement, (iii) dividends or distributions on Capital Stock
payable in Capital Stock (other than Disqualified Capital Stock); (iv)
redemptions, repurchases, retirements or other acquisitions of Capital Stock of
any Person in exchange for Capital Stock (other than Disqualified Capital
Stock); (v) payments to purchase, redeem, defease or otherwise acquire or retire
any Pari Passu Indebtedness or Subordinated Indebtedness so long as such payment
consists of Capital Stock (other than Disqualified Capital Stock); (vi)
repurchases of securities at cost upon termination of employment or other
association with a Person by any officer, director, employee or consultant of
such Person; and (vii) any payments in respect of Senior Indebtedness.
7.6 CORPORATE EXISTENCE. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate or similar existence of each of its Subsidiaries in
accordance with the respective organizational documents of
55
each of its Subsidiaries and the rights (charter and statutory), licenses and
franchises of the Company and each of its Subsidiaries; PROVIDED, HOWEVER, that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate or similar existence of any Subsidiary, if the
Company's Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole and that the loss thereof is not adverse in any
material respect to the holders of the Senior Discount Notes and the Warrants.
7.7 LIMITATION ON INDEBTEDNESS.
(a) Except as set forth in this Section 7.7, the Company shall
not, and shall not permit any Subsidiary, after the date hereof, directly or
indirectly, to Incur any Indebtedness.
(b) Notwithstanding Section 7.7(a) and in addition to
Indebtedness permitted to be Incurred under Section 7.7(c), the Company or any
Subsidiary may Incur Subordinated Indebtedness if (i) no Default or Event of
Default shall have occurred and be continuing at the time or as a consequence of
the Incurrence of such Indebtedness, (ii) on the date of the Incurrence of such
Indebtedness, the Consolidated Interest Coverage Ratio of the Company and its
Subsidiaries at the time of such Incurrence, after giving pro forma, effect
thereto, is not less than 2.0 to 1, and (iii) any Subordinated Indebtedness so
Incurred under this Section 7.7(b) by its terms, or by the terms of any
agreement or instrument pursuant to which such Subordinated Indebtedness is
Incurred, (A) does not provide for payments of principal of such Indebtedness at
the stated maturity thereof or by way of a sinking fund applicable thereto or by
way of any mandatory redemption, defeasance, retirement or repurchase thereof by
the Company (including any redemption, retirement or repurchase which is
contingent upon events or circumstances, but excluding any retirement required
by virtue of acceleration of such Indebtedness upon an event of default
thereunder), in each case prior to the final stated maturity of the Senior
Discount Notes and (B) does not permit redemption or other retirement thereof
(including pursuant to an offer to purchase made by the Company) at the option
of the holder thereof prior to the final stated maturity of the Senior Discount
Notes, other than a redemption or other retirement at the option of the holder
of such Subordinated Indebtedness (including pursuant to an offer to purchase
made by the Company) which is' conditioned upon a change of control of the
Company pursuant to provisions substantially similar to those contained in
Section 7.12.
56
(c) Notwithstanding Section 7.7(a), and in addition to 7.7(b),
the Company and its Subsidiaries may Incur, after the date hereof, any
of the following Indebtedness:
(i) Indebtedness outstanding at the date hereof as
set forth on SCHEDULE 4.8, including the Indebtedness evidenced by the
Senior Discount Notes;
(ii) Refinancing Indebtedness with respect to
Indebtedness that was Incurred prior to the date hereof or, if incurred
after the date hereof, was Incurred in compliance with the provisions
of this Agreement; PROVIDED, HOWEVER, that (A) the principal amount of
such Refinancing Indebtedness shall not exceed the principal amount (or
accreted value, in the case of Indebtedness issued at a discount) of
the Indebtedness so extended, refinanced, renewed, replaced,
substituted, defeased or refunded (plus the amount of fees, costs and
expenses incurred and the amount of any premium, penalties, breakage
costs and other similar amounts required to be paid in connection with
such refinancing pursuant to the terms of the instrument governing the
Indebtedness so extended, refinanced, renewed, replaced, substituted,
defeased or refunded or the amount of any premium reasonably determined
by the Company as necessary to accomplish a refinancing by means of a
tender offer or privately negotiated repurchase, which determination
shall be supported by a fairness opinion from an Independent Financial
Advisor, plus the fees, costs and expenses of such tender offer or
repurchase); and (B) the Refinancing Indebtedness shall (1) have a
Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, substituted, defeased or refunded; (2)
not have a final scheduled maturity earlier than the final scheduled
maturity of the Indebtedness being extended, refinanced, replaced,
renewed, substituted, defeased or refunded; (3) not permit redemption
at the option of the holder earlier than the earliest date of
redemption at the option of the holder of the Indebtedness being
extended, refinanced, renewed, replaced, substituted, defeased or
refunded; and (4) rank no more senior or be at least as subordinated,
as the case may be, in right of payment to the Senior Discount Notes as
the Indebtedness being extended, refinanced, replaced, renewed,
substituted, defeased or refunded; and
(iii) Senior Indebtedness of the Company not to
exceed an aggregate of $10,000,000 Incurred in connection with the
Company's establishment of a senior secured credit facility with a bank
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or other lending institution, the terms of which shall include
subordination provisions acceptable to DDJ, in its reasonable
discretion.
(iv) Indebtedness of the Company or any Subsidiary in
an aggregate amount not exceeding $10,000,000, whether or not secured
by a Lien, the proceeds of which are used solely to purchase inventory
and/or purchase or lease assets acquired in the ordinary course of
business.
7.8 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Neither the Company nor
any of its Subsidiaries shall enter into, amend, modify or supplement, or permit
any Subsidiary to enter into amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors, employees, stockholders or Affiliates or with any
individual related by blood, marriage or adoption to any such individual or with
any entity in which any such Person or individual owns a beneficial interest,
except for customary employment arrangements and benefit programs on reasonable
terms and except as otherwise expressly contemplated by this Agreement.
7.9 LIMITATION ON LIENS. The Company shall not, and shall not permit
any of its Subsidiaries to, Incur, assume, suffer to exist, create or otherwise
cause to be effective any Lien on any asset now owned or hereafter acquired, or
any income or profits therefrom or assign or convey any right to receive income
therefrom to secure any Indebtedness except: (a) Permitted Liens, (b) Liens
existing as of the date hereof (and any extension, renewal or replacement Liens
upon the same Property subject to such Liens, provided the principal amount of
Indebtedness secured by each Lien constituting such an extension, renewal or
replacement Lien shall not exceed the principal amount of Indebtedness secured
by the Lien theretofore existing, and (c) Liens replacing, extending or
renewing, in whole or in part, any Lien described in the foregoing clauses (a)
and (b), including in connection with any refinancing of the Indebtedness, in
whole or in part, secured by any such Lien effected in accordance with Section
7.7, PROVIDED that if any such clauses limit the amount secured by or the
Property or assets subject to such Liens, no, such replacement, extension or
renewal shall increase the amount of Indebtedness or the Property or assets
subject to such Liens.
7.10 PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall, and shall
cause each of its Subsidiaries to, pay or discharge, before the same shall
become delinquent, (a) all Taxes, assessments and governmental charges
(including withholding taxes and penalties, interest and additions to taxes)
levied or imposed upon it or any of its Subsidiaries or properties of the
58
Company or any of its Subsidiaries and (b) all lawful claims for labor,
materials and supplies that, if unpaid might by law become a Lien upon the
Property of it or any of its Subsidiaries; PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such Tax, assessment, charge or claim if the amount, applicability or validity
thereof is being contested in good faith by appropriate proceedings and an
adequate reserve has been established therefor to the extent required by GAAP.
7.11 RESTRICTIONS AGAINST LIMITATIONS ON UPSTREAM PAYMENTS. The Company
shall not, and shall not permit any Subsidiary of the Company to, create or
otherwise cause or suffer to exist or to become effective any Payment
Restriction or other encumbrance or restriction on the ability of any Subsidiary
of the Company to (a) pay dividends or make any other distributions on its
Capital Stock or any other interest or participation in, or measured by, its
profits owned by, or pay any Indebtedness owed to, the Company or a Subsidiary
of the Company, (b) make loans or advances to the Company or a Subsidiary of the
Company, or (c) transfer any of its Properties or assets to the Company or any
Subsidiary of the Company, except for such Payment Restrictions or encumbrances
existing under or by reason of: (i) applicable law; (ii) non-assignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices; (iii) instruments governing purchase money
Indebtedness for Property acquired in the ordinary course of business that only
impose restrictions on the Property so acquired; or (iv) Refinancing
Indebtedness permitted under this Agreement with respect to Indebtedness
described in clause (iii), PROVIDED that the restrictions contained in the
agreements governing such Refinancing Indebtedness are no more restrictive in
the aggregate than those contained in the instrument governing the Indebtedness
being refinanced immediately prior to such refinancing.
7.12 CHANGE OF CONTROL. Upon the occurrence of a Change of Control
(such date being the "Change of Control Trigger Date"), each Holder will have
the right to require the Company to repurchase all or any part of such Holder's
Senior Discount Notes pursuant to the Offer (but, with respect to any partial
tender of Senior Discount Notes, the Company shall only be required to purchase
principal amounts in integral multiples of $1,000) at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest to the Purchase Date. The Offer shall be effected in accordance with
Section 6.7 and Article VI (to the extent applicable) and the provisions of this
Section 7.12.
7.13 REDEMPTION FROM THE PROCEEDS OF SECURITIES SALES AND MEZZANIN
DEBT FINANCING.
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(a) Subject to 7.13(b), the Company will not, and will
not permit any of its Subsidiaries to, undertake any Securities Sale or any
Mezzanine Debt Financing, unless: (i) the Company or the applicable Subsidiary
receives consideration, which, at the time of such Securities Sale or Mezzanine
Debt Financing, is at least equal to the fair market value of the Capital Stock
or other equity or debt securities sold or otherwise disposed of (as determined
in good faith by the Board of Directors of the Company evidenced by a Board
Resolution); and (ii) in the case of a Securities Sale, such Securities Sale
does not involve Disqualified Capital Stock.
(b) As soon as practicable, but in no event later than 10
Business Days after any date (with respect to both a Securities Sale or a
Mezzanine Debt Financing, a "Repayment Trigger Date") that the aggregate amount
of Net Cash Proceeds from all such Securities Sales and Mezzanine Debt
Financings, occurring on or after the date hereof exceed $25,000,000, the
Company shall commence an Offer to purchase one-half of the Senior Discount
Notes held by each Holder, at an offer price equal to 100% of the Accreted Value
thereof, plus accrued and unpaid interest to the Purchase Date. The Offer shall
be effected in accordance with Section 6.7 and Article VI (to the extent
applicable) and the provisions of this Section 7.13. To the extent that any such
Net Cash Proceeds remain after completion of an Offer, the Company may use the
remaining amount for any purpose permitted by this Agreement.
7.14 MAINTENANCE OF PROPERTIES. The Company will cause all properties
used or useful in the conduct of its business or the business of any Subsidiary
of the Company to be maintained and kept in good condition, repair and working
order, subject to normal wear and tear, and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 7.14 shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, as determined by the Company in good faith, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
7.15 MAINTENANCE OF INSURANCE. The Company shall, and shall cause its
Subsidiaries to, (a) keep at all times all of their properties which are of an
insurable nature insured against loss or damage with financially sound and
reputable insurers to the extent that property of similar character is usually
so insured by corporations similarly situated and owning like properties in
accordance with good business practice, and (b) will maintain with financially
60
sound and reputable insurers insurance against other hazards and risks and
liability to persons and property to the extent and in a manner customary for
corporations in similar business similarly situated. The Company shall, and
shall cause its Subsidiaries to, use the proceeds from any such insurance policy
to repair, replace or otherwise restore the property to which such proceeds
relate, except to the extent that a different use of such proceeds is, as
determined by the Company, in good faith, desirable in the conduct of its
business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
7.16 COMPLIANCE WITH LAWS AND OBLIGATIONS. The Company shall comply,
and shall cause each of its Subsidiaries to comply, with (i) all applicable
statutes, rules, regulations, orders and restrictions of the United States of
America, all states and municipalities thereof, and of any governmental
department, commission, board, regulatory authority, bureau, agency and
instrumentality of the foregoing, in respect of the conduct of their respective
businesses and the ownership of their respective properties, except such as are
being contested in good faith and by appropriate proceedings and except for such
noncompliance as would not in the aggregate have a Material Adverse Effect and
(ii) all other material obligations which the Company or any Subsidiary incurs
pursuant to any contract or agreement, whether oral or written, express or
implied, as such obligations become due, unless and to the extent that the same
are being contested in good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with GAAP, consistently applied) have been
established on its books with respect thereto.
7.17 LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL STOCK OF
SUBSIDIARIES AND ACQUISITIONS AND SALES. The Company (a) shall not, and shall
not permit any Subsidiary to, transfer, convey, sell, or otherwise dispose of
any Capital Stock of a Subsidiary, or securities convertible into or exercisable
or exchangeable for, or options, warrants, rights or any other interest with
respect to, Capital Stock of a Subsidiary to any Person if such transfer, sale,
conveyance or disposition would cause such Subsidiary to cease to be a
Subsidiary, and (b) shall not permit any Subsidiary to issue shares of its
Capital Stock (other than directors' qualifying shares), or securities
convertible into or exercisable or exchangeable for, or options, warrants,
rights or any other interest with respect to, its Capital Stock to any Person if
such issuance would cause such Subsidiary to cease to be a Subsidiary.
7.18 LIMITATION ON SALE OF ASSETS. The Company shall not, and shall not
permit any of its Subsidiaries to sell, lease or otherwise dispose of any assets
of the Company or its Subsidiaries in any transaction or series of related
transactions (other than a Permitted Disposition) or sell or
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permanently dispose of any of its or any Subsidiary's Intellectual Property
(other than a Permitted Disposition).
7.19 LIMITATIONS ON MERGERS AND ACQUISITIONS. The Company shall
not:
(a) merge or consolidate with any Person or permit any
Subsidiary to merge or consolidate with any Person (other than the Company or a
Wholly-Owned Subsidiary);
(b) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation, any
reorganization into a limited liability company, a partnership or any other
non-corporate entity which is treated as a partnership for federal income tax
purposes); or
(c) acquire, or permit any Subsidiary to acquire, any interest
in any company or business (whether by a purchase of assets, purchase of stock,
merger or otherwise), other than a Permitted Investment.
Provided that the Company may engage in a transaction described in
clauses (a) and (b) of this Section 7.19 if, concurrently with the closing of
such transaction, all outstanding Senior Discount Notes are either redeemed
pursuant to Section 6.6 hereof, or Offered to be redeemed pursuant to Section
7.12 hereof.
7.20 LIMITATIONS ON EXPENDITURES AND OTHER ACTIVITIES. The Company
shall not:
(a) enter into, or permit any Subsidiary to enter into, the
ownership, active management or operation of any business other than providing
direct delivery to home consumers of (i) groceries, household staples (i.e.,
home cleaners, health and beauty aids), and similar products such as are found
in a typical grocery store and (ii) other services and products;
(b) make any capital expenditures (including, without
limitation, payments with respect to Capital Leases, as determined in accordance
with GAAP consistently applied) exceeding $10,000,000 in the aggregate on a
consolidated basis during any twelve-month period;
(c) enter into any leases or other rental agreements
(excluding Capital Leases, as determined in accordance with generally accepted
accounting principles consistently applied) under which the amount
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of the aggregate lease payments for all such agreements exceeds $5,000,000 on a
consolidated basis for any twelve-month period; or
(d) change its fiscal year.
7.21 BOOKS AND RECORDS. The Company shall maintain proper books of
record and account which present fairly in all material respects its financial
condition and results of operations and make provisions on its financial
statements for all such proper reserves as in each case are required in
accordance with GAAP, consistently applied.
7.22 COMPLIANCE WITH AGREEMENTS. The Company shall perform and observe
(i) all of its obligations to each holder of the Senior Discount Notes and all
of its obligations to each holder of the Common Stock set forth in the Company's
Certificate of Incorporation and bylaws, (ii) all of its obligations to each
holder of the Warrants set forth in the Warrant Agreement (as that term is
defined therein) and (iii) all of its obligations to each holder of Registrable
Shares set forth in the Registration Rights Agreement (as that term is defined
therein).
7.23 CURRENT PUBLIC INFORMATION. In the event that the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company shall at all times file all
reports required to be filed by it under the Securities Act and the Securities
Exchange Act and the rules and regulations adopted by the Securities and
Exchange Commission thereunder and shall take such further action as any holder
or holders of Restricted Securities may reasonably request, all to the extent
required to enable such holders to sell Restricted Securities pursuant to (i)
Rule 144 adopted by the Securities and Exchange Commission under the Securities
Act (as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the Securities and Exchange Commission. Upon
request, the Company shall deliver to any holder of Restricted Securities a
written statement as to whether it has complied with such requirements.
7.24 REQUIRED SECURITIES SALES.
(a) During the period from the Closing Date through
October 14, 1998, the Company shall use reasonable efforts to sell Capital
Stock (other than Disqualified Capital Stock and debt convertible into equity
securities of the Company) in a sale or sales on terms satisfactory to DDJ in
its reasonable discretion resulting in Net Cash Proceeds to the Company of at
least $3.5 million; and
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(b) During the period from the Closing Date through January
14, 1999, the Company shall use reasonable efforts to sell, including sales
pursuant to Section 7.24(a), Capital Stock (other than Disqualified Capital
Stock and debt convertible into equity securities of the Company) in a sale or
sales on terms satisfactory to DDJ in its reasonable discretion, including sales
pursuant to clause (a) of this Section 7.24, resulting in Net Cash Proceeds to
the Company of at least $7.0 million.
7.25 TERMINATION. The obligations of the Company under this Article VII
shall terminate as of the date on which no Senior Discount Notes are
outstanding.
ARTICLE VIII
[INTENTIONALLY DELETED]
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 EVENTS OF DEFAULT.
(a) Each of the following constitutes an "Event of Default":
(i) the Company shall fail to make any payment in respect of (A) the principal
of or premium, if any, on the Senior Discount Notes as the same shall become
due, whether at maturity, upon acceleration, redemption or otherwise, or (B)
interest on or in respect of any Senior Discount Notes as the same shall become
due, and such failure shall continue for a period of 15 Business Days; (ii)
failure by the Company for 30 days after receipt of notice from the Holders of
at least 25% of the principal amount of the outstanding Senior Discount Notes to
comply with any other provisions of this Agreement or any Senior Discount Notes;
(iii) default under any mortgage, agreement or instrument under which there may
be Incurred or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness now exists, or is created after the date hereof, if (A) such
default results in the acceleration of such Indebtedness prior to its express
maturity or shall constitute a default in the payment of such Indebtedness at
final maturity of such Indebtedness, and (B) the principal amount of any such
Indebtedness that has been accelerated or not paid at maturity, when added to
the aggregate principal amount of all other such Indebtedness that has been
accelerated or not paid at maturity, exceeds $500,000; (iv) failure by the
Company or any of its Subsidiaries to pay final judgments, the uninsured portion
of which exceeds $100,000, which judgments are not paid, discharged, bonded or
stayed for a period of 90 days after the date of entry thereof; (v) if under any
Bankruptcy Law, (A) the Company or any Subsidiary commences a
64
voluntary case, consents to the entry of an order for relief against it in an
involuntary case, consents to the appointment of a Custodian of it or for all or
substantially all of its Property, or makes a general assignment for the benefit
of its creditors, or (B) a court of competent jurisdiction enters an order or
decree, and such order or decree remains unstayed and in effect for 60 days,
that is for relief against the Company or any Subsidiary in an involuntary case,
appoints a Custodian of the Company or any Subsidiary or for all or
substantially all of the Property of the Company or any Subsidiary, or orders
the liquidation of the Company or any Subsidiary; and (vi) any of the
Transaction Documents shall cease, for any reason, to be in full force and
effect in any material respect, except as a result of an amendment, waiver or
termination thereof as contemplated or permitted hereby, or the Company shall so
assert in writing.
(b) Any notice of default delivered to the Company by the
Holders of Senior Discount Notes must be in writing and must specify the Event
of Default, demand that it be remedied and state that the notice is a "Notice of
Default."
9.2 ACCELERATION.
(a) If an Event of Default (other than an Event of Default
under Section 9. 1 (a) (v)) occurs and is continuing, the Holders of at least
25% in principal amount of the then outstanding Senior Discount Notes may
declare all outstanding Senior Discount Notes to be due and payable immediately
and, upon such declaration, the principal amount of, and premium, if any, and
any accrued and unpaid interest on, all such Senior Discount Notes, to the date
of payment shall be due and payable immediately.
(b) Notwithstanding anything to the contrary in this
Agreement, if an Event of Default arises under Section 9.1(a)(v) the principal
amount of, and premium, if any, and any accrued and unpaid interest on, all
outstanding Senior Discount Notes shall IPSO FACTO become and be immediately due
and payable without any declaration or other act on the part of any Holder.
(c) To the extent permitted under Section 10.2(b), the
Holders of a majority in aggregate principal amount of the then outstanding
Senior Discount Notes by notice to the Company may rescind any declaration of
acceleration of such Senior Discount Notes and its consequences if (i) the
rescission would not conflict with any judgment or decree, (ii) if all existing
Defaults and Events of Default (other than the nonpayment of principal of, or
premium, if any, or interest on, the Senior Discount Notes which shall have
become due by such declaration) shall have been cured or waived, and (iii) the
65
Company has delivered to the Holders an Officers' Certificate to the effect of
clauses (i) and (ii) above.
(d) In the event of a declaration of acceleration under
this Agreement because an Event of Default set forth in Section 9. 1(a)(iii) has
occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if either (i) the holders of the
Indebtedness which is the subject of such Event of Default have waived such
failure to pay at maturity or have rescinded the acceleration in respect of such
Indebtedness within 10 days of such maturity or declaration of acceleration, as
the case may be, and no other Event of Default has occurred during such 10-day
period which has not been cured or waived, or (ii) such Indebtedness shall have
been discharged or the maturity thereof shall have been extended such that it is
not then due and payable, or the underlying default has been cured within 10
days of such maturity or declaration of acceleration, as the case may be.
9.3 OTHER REMEDIES. If an Event of Default. occurs and is continuing,
the Holders may pursue any available remedy to collect the payment of principal
of, or premium, if any, or interest on the Senior Discount Notes or to enforce
the performance of any provision of the Senior Discount Notes or this Agreement.
A delay or omission by any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
9.4 WAIVER OF PAST DEFAULTS. Subject to the provisions of Sections 9.6
and 10.2 hereof, the Holders of a majority in aggregate principal amount of the
then outstanding Senior Discount Notes by notice to the Company may on behalf of
all Holders waive any existing Default or Event of Default and its consequences
under this Agreement, except a continuing Default or Event of Default in the
payment of the principal of, or premium, if any, or interest on, any Note (which
may only be waived with the consent of each Holder affected). Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Agreement; PROVIDED that no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
9.5 CONTROL BY A MAJORITY. The Holders of a majority in principal
amount of the Senior Discount Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Holders.
9.6 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other
provision of this Agreement, the right of any Holder of a Senior Discount Note
to receive payment of principal of, and premium, if any, and
66
interest on such Senior Discount Note, on or after the respective dates
expressed in such Senior Discount Note, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
9.7 HOLDERS MAY FILE PROOFS OF CLAIM. The Holders may file such proofs
of claim and other papers or documents as may be necessary or advisable to have
the claims of the Holders allowed in any Insolvency or Liquidation Proceeding or
other judicial proceeding relative to the Company (or any other obligor upon the
Senior Discount Notes), its creditors or its property.
9.8 UNDERTAKING FOR COSTS. In any suit for the enforcement of any right
or remedy under this Agreement, a court in its discretion may require the filing
by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant.
ARTICLE X
AMENDMENTS
10.1 AMENDMENTS AND SUPPLEMENTS PERMITTED WITHOUT CONSENT OF HOLDERS.
Notwithstanding Section 10.2, the Company may amend or supplement this Agreement
or the Senior Discount Notes without the consent of any Holder to: (i) cure any
ambiguity, defect or inconsistency, provided that such amendment does not
adversely affect the rights of any Holder; (ii) provide for uncertificated
Senior Discount Notes in addition to or in place of certificated Senior Discount
Notes; (iii) provide for the assumption of the Company's obligations to the
Holders in the event of any Disposition involving the Company that is permitted
under Article VIII in which the Company is not the Surviving Person; or (iv)
make any change that would (A) provide any additional rights or benefits to
Holders or (B) not adversely affect the legal rights under this Agreement of any
Holder.
10.2 AMENDMENTS AND SUPPLEMENTS REQUIRING CONSENT OF HOLDERS: OTHER
CONSENTS.
(a) Except as otherwise provided in Sections 10. 1 and 10.2(b),
this Agreement and the Senior Discount Notes may be amended or supplemented with
the written consent of the Holders of at least a majority of the aggregate
principal amount of the then outstanding Senior Discount Notes (including
consents obtained in connection with a tender offer or exchange offer for the
Senior Discount Notes), and any existing Default or
67
Event of Default or compliance with any provision of this Agreement or the
Senior Discount Notes may be waived with the consent of Holders of at least a
majority of the aggregate principal amount of the then outstanding Senior
Discount Notes (including consents obtained in connection with a tender offer or
exchange offer for the Senior Discount Notes).
(b) Without the consent of each Holder affected, no amendment,
supplement or waiver to this Agreement shall: (i) reduce the principal amount of
Senior Discount Notes whose Holders must consent to an amendment, supplement or
waiver; (ii) reduce the principal of or change the fixed maturity of any Senior
Discount Note, or alter the provisions with respect to the redemption of the
Senior Discount Notes in a manner adverse to the Holders; (iii) reduce the rate
of or change the time for payment of interest on any Senior Discount Note; (iv)
waive a Default or Event of Default in the payment of principal of, or premium,
if any, or interest on, the Senior Discount Notes (except that Holders of at
least a majority in aggregate principal amount of the then outstanding Senior
Discount Notes may (A) rescind an acceleration of the Senior Discount Notes that
resulted from a non-payment default, and (B) waive the payment default that
resulted from such acceleration); (v) make any Senior Discount Note payable in
money other than that stated in the Senior Discount Notes; (vi) make any change
in the provisions of this Agreement relating to waivers of past Defaults or the
rights of Holders to receive payments of principal of, or premium, if any, or
interest on, the Senior Discount Notes; (vii) waive a redemption payment with
respect to any Senior Discount Note; or (viii) make any change in Section 9.4,
Section 9.6 or this sentence.
(c) It shall not be necessary for the consent of the Holders
under this Section 10.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof. After an amendment, supplement or waiver under this Section 10.2
becomes effective, the Company shall mail to each Holder affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Agreement or waiver.
(d) Except as otherwise specified in this Agreement, if any
consent or approval of the Holders is required pursuant to the terms of this
Agreement, such consent or approval shall be deemed to have been given if given
by at least a majority of the aggregate principal amount of then outstanding
Senior Discount Notes.
10.3 REVOCATION AND EFFECT OF CONSENTS.
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(a) Until an amendment, supplement or waiver becomes effective,
a consent to it by a Holder of a Senior Discount Note is a continuing consent by
the Holder and every subsequent holder of a Senior Discount Note or portion of a
Senior Discount Note that evidences the same Indebtedness as the consenting
Holder's Senior Discount Note, even if notation of the consent is not made on
any such Senior Discount Note. However, any such Holder or subsequent Holder may
revoke the consent as to his or her Senior Discount Note or portion of a Senior
Discount Note if the Company receives the notice of revocation before the date
on which the Company mails to the Holders an Officers' Certificate certifying
that the Holders of the requisite principal amount of Senior Discount Notes have
consented (and not theretofore revoked such consent) to the amendment or waiver.
(b) The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the holders of Senior Discount Notes
entitled to consent to any amendment or waiver. If a record date is fixed, then
notwithstanding the provisions of the immediately preceding paragraph, those
Persons who were holders of Senior Discount Notes at such record date (or their
duly designated proxies), and only those Persons, shall be entitled to consent
to such amendment or waiver or to revoke any consent previously given, whether
or not such Persons continue to be holders of Senior Discount Notes after such
record date. No consent shall be valid or effective for more than 90 days after
such record date.
(c) After an amendment or waiver becomes effective it shall
bind every Holder, unless it is of the type described in Section 10.2(b), in
which case the amendment or waiver shall only bind each Holder that consented to
it and every subsequent holder of a Senior Discount Note that evidences the same
debt as the consenting Holder's Senior Discount Note.
10.4 NOTATION ON OR EXCHANGE OF SENIOR DISCOUNT NOTES. The Company may
place an appropriate notation about an amendment, supplement or waiver on any
Senior Discount Note thereafter issued in exchange for any Senior Discount Note
issued as of the date of such amendment, supplement or waiver. The Company in
exchange for all Senior Discount Notes may issue new Senior Discount Notes that
reflect the amendment, supplement or waiver. Failure to make the appropriate
notation or issue a new Senior Discount Note shall not affect the validity and
effect of such amendment, supplement or waiver.
10.5 BOARD APPROVAL. The Company may not sign an amendment, supplement
or waiver with respect to this Agreement until the Board of Directors of the
Company approves it.
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ARTICLE XI
THE SENIOR DISCOUNT NOTES
11.1 FORM AND DATING. The Senior Discount Notes shall be substantially
in the form of EXHIBIT A hereto, which exhibit is part of this Agreement. The
Senior Discount Notes may have notations, legends or endorsements required by
law, stock exchange rule or usage. The Company shall approve the form of the
Senior Discount Notes and any notation, legend or endorsement on them. Subject
to adjustment as provided in Section 6.6(c) hereof, the Senior Discount Notes
shall be issued, and may be transferred only, in denominations of $10,000 and
integral multiples thereof. The terms and provisions contained in the Senior
Discount Notes shall constitute, and are hereby expressly made, a part of this
Agreement and to the extent applicable, the Company, by its execution and
delivery of this Agreement, expressly agrees to such terms and provisions and to
be bound thereby.
11.2 EXECUTION AND AUTHENTICATION. Two Officers of the Company (each of
whom shall have been duly authorized by all requisite corporate actions) shall
sign each Senior Discount Note for the Company by manual or facsimile signature.
If an Officer whose signature is on a Senior Discount Note no longer holds that
office at the time the Senior Discount Note is issued, the Senior Discount Note
shall nevertheless be valid. The Company's seal shall be reproduced on each
Senior Discount Note.
With respect to the sale and issuance of the Senior Discount Notes, the
Company shall authorize for issuance, upon the execution and delivery of this
Agreement, Senior Discount Notes in an aggregate principal amount up to
$7,770,000. In no case shall the aggregate principal amount of outstanding
Senior Discount Notes exceed $7,770,000 at any time, except as provided in
Section 11.5.
11.3 TRANSFER AND EXCHANGE.
(a) When Senior Discount Notes are presented to the Company
with a request to register a transfer or to exchange them for an equal principal
amount of Senior Discount Notes of other authorized denominations, the Company
shall register the transfer or make the exchange if its requirements for such
transaction are met; PROVIDED, HOWEVER, that any Senior Discount Note presented
or surrendered for registration of transfer or exchange shall be duly endorsed
or accompanied by a written instruction of transfer in form satisfactory to the
Company or duly executed by the Holder of such Senior Discount Note or by its
attorney duly authorized in writing.
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(b) The Company shall not be required to issue, register the
transfer of or exchange any Senior Discount Note (i) selected for redemption, in
whole or in part, except the unredeemed portion of any Senior Discount Note
being redeemed in part may be transferred or exchanged, or (ii) during an Offer
if such Senior Discount Note is tendered pursuant to such Offer and not
withdrawn.
(c) No service charge shall be made for any registration of
transfer or exchange (except as otherwise expressly permitted herein), but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Sections 10.4 or 11.7 which the Company shall pay).
(d) Prior to due presentment for registration of transfer of
any Senior Discount Note, the Company may deem and treat the Person in whose
name any Senior Discount Note is registered as the absolute owner of such Senior
Discount Note (whether or not such Senior Discount Note shall be overdue and
notwithstanding any notation of ownership or other writing on such Senior
Discount Note made by anyone other than the Company) for the purpose of
receiving payment of principal of, and premium, if any, and interest on, such
Senior Discount Note and for all other purposes, and notice to the contrary
shall not affect the Company.
11.4 REPLACEMENT SENIOR DISCOUNT NOTES. If any mutilated Senior
Discount Note is surrendered to the Company, or if the Company receives evidence
to its satisfaction of the destruction, loss or theft of any Senior Discount
Note, the Company shall issue a replacement Senior Discount Note and each such
replacement Senior Discount Note shall be an additional obligation of the
Company. If the Company requires, the Holder must supply an indemnity bond that
is sufficient in the judgment of the Company to protect the Company from any
loss that any of them may suffer if a Senior Discount Note is replaced. The
Company may charge for its reasonable expenses in replacing a Senior Discount
Note.
11.5 OUTSTANDING SENIOR DISCOUNT NOTES. The Senior Discount Notes
outstanding at any time are all the Senior Discount Notes the Company has issued
except for those it has canceled, those delivered to it for cancellation, and
those described in this Section 11.5 as not outstanding. If a Senior Discount
Note is replaced pursuant to Section 11.4 (other than a mutilated Note
surrendered for replacement), it ceases to be outstanding unless the Company
receives proof satisfactory to it that a bona fide purchaser holds the replaced
Senior Discount Note. A mutilated Senior Discount Note ceases to be outstanding
upon surrender of such Senior Discount Note and
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replacement thereof pursuant to Section 11.4 hereof. If the entire principal of,
and premium, if any, and accrued interest on, any Senior Discount Note is
considered paid under Section 6. 1, it ceases to be outstanding and interest on
it ceases to accrue. Subject to Section 11.6, a Senior Discount Note does not
cease to be outstanding because the Company or any Affiliate of the Company
holds such Senior Discount Note.
11.6 TREASURY SENIOR DISCOUNT NOTES. In determining whether the Holders
of the required principal amount of Senior Discount Notes have concurred in any
directions, waiver or consent, Senior Discount Notes owned by the Company or any
Subsidiary or Affiliate of the Company shall be considered as though they are
not outstanding. Notwithstanding the foregoing, Senior Discount Notes that the
Company or any Affiliate of the Company offers to purchase or acquires pursuant
to an exchange offer, tender offer or otherwise shall not be deemed to be owned
by the Company or any Affiliate of the Company until legal title to such Senior
Discount Notes passes to the Company or such Affiliate, as the case may be.
11.7 TEMPORARY SENIOR DISCOUNT NOTES. Until definitive Senior Discount
Notes are ready for delivery, the Company may prepare and issue Temporary Senior
Discount Notes. temporary Senior Discount Notes shall be substantially in the
form of definitive Senior Discount Notes but may have variations that the
Company considers appropriate for temporary Senior Discount Notes. Without
unreasonable delay, the Company shall prepare and issue definitive Senior
Discount Notes in exchange for temporary Senior Discount Notes. Until such
exchange, temporary Senior Discount Notes shall be entitled to the same rights,
benefits and privileges as definitive Senior Discount Notes.
11.8 CANCELLATION. The Company shall cancel any Senior Discount Notes
surrendered to it for registration of transfer, exchange, replacement, payment
(including all Senior Discount Notes called for redemption and all Senior
Discount Notes accepted for payment pursuant to an Offer) or cancellation. The
Company may not issue new Senior Discount Notes to replace any Senior Discount
Notes that have been canceled. If the Company or any Affiliate of the Company
acquires any Senior Discount Notes (other than by redemption pursuant to
Section 6.6 or an Offer pursuant to Section 6.7), such acquisition shall not
operate as a redemption or satisfaction of the Indebtedness represented by
such Senior Discount Notes unless and until such Senior Discount Notes are
canceled pursuant to this Section 11.8.
11.9 DEFAULTED INTEREST. If the Company defaults in a payment of
interest on the Senior Discount Notes, it shall pay the defaulted interest in
any lawful manner plus, to the extent lawful, interest payable on the
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defaulted interest, to Holders on a subsequent special record date, in each case
at the rate provided in the Senior Discount Notes and Section 7.1. The Company
shall fix or cause to be fixed each such special record date and payment date.
At least 15 days before the special record date, the Company shall mail a notice
that states the special record date, the related payment date and the amount of
interest (including interest, if any, on the defaulted interest) to be paid.
11.10 RECORD DATE. The record date for purposes of determining the
identity of Holders of Senior Discount Notes entitled to vote or consent to any
action by vote or consent authorized or permitted under this Agreement shall be
10 days prior to the first solicitation of such vote or consent.
11.11 RESTRICTIVE LEGENDS. Except as otherwise permitted by this
Section 11.11, each Unit, and each constituent Senior Discount Note and Common
Stock Purchase Warrant certificate (or Common Stock certificate issued on
exercise thereof), issued pursuant to this Agreement shall be stamped or
otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE.
SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT
TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR
RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER EXEMPTION FROM
REGISTRATION UNDER SUCH ACT RELATING TO SUCH ACT, PROVIDED
THAT, IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL
REASONABLY SATISFACTORY IN FORM AND SUBSTANCE IS FURNISHED TO
THE COMPANY THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT IS AVAILABLE.
73
IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER
DISPOSITION OF THIS SECURITY IS RESTRICTED BY, AND THE RIGHTS.
OF THE HOLDER OF SUCH SECURITY ARE SUBJECT TO THE TERMS AND
CONDITIONS CONTAINED IN, A SECURITIES PURCHASE AGREEMENT DATED
AS OF APRIL 15,1998, A COMPLETE AND CORRECT COPY OF THE FORM
OF WHICH WILL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF
UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THIS DEBT INSTRUMENT WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT
("OID"). STREAMLINE, INC., AT 00 XXXXXXXXX XXXXXX, XXXXXXXX,
XXXXXXXXXXXXX, WILL, BEGINNING APRIL 15,1998, MAKE AVAILABLE
TO HOLDERS UPON REQUEST THE ISSUE PRICE, THE AMOUNT OF OID,
THE ISSUE DATE AND THE YIELD TO MATURITY.
The Company shall maintain a copy of this Agreement and any amendments
thereto on file in its principal office, and will make such copy available
during normal business hours for inspection to any party thereto or will provide
such copy to any Purchaser upon its request.
Whenever the legend requirement imposed by this Section 11.11 shall
terminate, as hereinabove provided, the respective holders of Securities for
which such legend requirements have terminated shall be entitled to receive from
the Company, at the Company's expense, Senior Discount Notes or new Common Stock
Purchase Warrant certificates, as applicable, without such. legend.
11.12 NOTICE OF TRANSFER; OPINIONS OF COUNSEL. The holder of each
Senior Discount Note and Common Stock Purchase Warrant certificate (or Common
Stock certificate issued on exercise thereof) bearing the restrictive legend set
forth in Section 11.11 above (a "Restricted Security") agrees in connection with
any transfer of such Restricted Security to give to the Company, upon request
(a) written description of the manner or circumstances of such transfer and/or
an opinion of counsel, which is knowledgeable in securities law matters
(including in-house counsel or regular counsel to such Purchaser or its
investment advisor), in form and substance reasonably satisfactory to the
Company, to the effect that the
74
transfer of such Restricted Security may be effected without registration of
such Restricted Security under the Securities Act. If for any reason the Company
(after having been furnished with the opinion required to be furnished pursuant
to this Section 11.12) shall fail to notify such holder within 5 days after such
holder shall have delivered such description and/or opinion to the Company that,
in its or its counsel's opinion, the transfer may not be legally effective (the
"Illegal Transfer Notice"), such holders shall thereupon be entitled to
consummate the transfer of the Restricted Security as proposed; PROVIDED,
HOWEVER, that such procedure shall not be required, and any such attempted
transfer shall not be effective, in respect of a proposed transfer which is
expressly prohibited by the terms of this Agreement because it represents an
attempt to transfer Senior Discount Notes in an aggregate principal amount of
less than $10,000 (subject to adjustment) in contravention of Section 11.1
hereof. If the holder of the Restricted Security delivers to the Company an
opinion of counsel (including in-house counsel or regular counsel to such
Purchaser or its investment adviser) in form and substance reasonably
satisfactory to the Company that subsequent transfers of such Restricted
Security will not require registration under the Securities Act, or if the
Company does not provide the holders with an Illegal Transfer Notice as set
forth above, the Company will promptly after such contemplated transfer deliver
new certificates for such Restricted Security which do not bear the Securities
Act legend set forth in Section 11.11 above. The restrictions imposed by this
Article XI upon the transferability of any particular Restricted Security shall
cease and terminate when such Restricted Security has been sold pursuant to an
effective registration statement under the Securities Act or transferred
pursuant to Rule 144 promulgated under the Securities Act. The holder of any
Restricted Security as to which such restrictions shall have terminated shall be
entitled to receive from the Company a new security of the same type but not
bearing the restrictive Securities Act legend set forth in Section 11.11 and not
containing any other reference to the restrictions imposed by this Article XI.
Notwithstanding any of the foregoing, no opinion of counsel will be required to
be rendered pursuant to this Section 11.12 with respect to the transfer of any
Securities on which the restrictive legend has been removed in accordance with
this Section 11.12. As used in this Section 11.12, the term "transfer"
encompasses any sale, transfer or other disposition of any Securities referred
to herein.
ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION: EXPENSES, ETC.
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(a) In addition to any and all obligations of the Company to
indemnify the Purchasers hereunder or under the other Transaction Documents, the
Company agrees, without limitation as to time, to indemnify and hold harmless
each Purchaser, its Affiliates, and the employees, officers, directors, and
agents of such Purchaser and its Affiliates (individually, an "Indemnified
Party" and, collectively the "Indemnified Parties") from and against any and all
losses, claims, damages, liabilities, costs (including the reasonable costs of
preparation and attorneys' fees) and expenses (including expenses of
investigation) (collectively, "Losses") incurred or suffered by an Indemnified
Party (i) in connection with or arising out of any breach of any warranty, or
the inaccuracy of any representation, as the case may be, made by the Company,
or the failure of the Company to fulfill any agreement or covenant contained in
this Agreement or (ii) in connection with any proceeding against the Company or
any Indemnified Party brought by any third party arising out of or in connection
with this Agreement or the other Transaction Documents or the transactions
contemplated hereby or thereby, as the case may be, or any action taken in
connection herewith or therewith (or any other document or instrument executed
herewith or pursuant hereto or thereto), whether or not the transactions
contemplated by this Agreement are consummated or whether or not any Indemnified
Party is a formal party to any proceeding; PROVIDED, HOWEVER, that the Company
shall not be liable for any losses resulting from action on the part of any
Indemnified Party which is finally determined in such proceeding to be wrongful
or which is an act of gross negligence, recklessness, or willful misconduct by
such Indemnified Party. The Company agrees promptly to reimburse any Indemnified
Party for all such Losses as they are incurred or suffered by such Indemnified
Party.
Except as otherwise provided herein, the Company agrees (for the
benefit of the Purchasers) to pay, and to hold each Purchaser harmless from and
against, all costs and expenses (including, without limitation, reasonable
attorneys' fees, expenses and disbursements), if any, incurred in connection
with the enforcement against the Company of this Agreement or any other
agreement to which the Company is a party or any other agreement or instrument
furnished pursuant hereto or thereto, as the case may be, or in connection
herewith or therewith in any action in which such Purchaser shall prevail or in
any action in which such Purchaser shall in good faith assert any provision of
any of the foregoing as a defense.
(b) If any Indemnified Party is entitled to indemnification
hereunder, such Indemnified Party shall give prompt notice to the Company of any
claim or of the commencement of any proceeding against the Company or any
Indemnified Party brought by any third party with respect to which such
Indemnified Party seeks indemnification pursuant hereto; PROVIDED,
76
HOWEVER, that the failure so to notify the Company shall not relieve the Company
from any obligation or liability except to the extent the Company is prejudiced
by such failure. The Company shall have the right, exercisable by giving written
notice to an Indemnified Party promptly after the receipt of written notice from
such Indemnified Party of such claim or proceeding, to assume, at the expense of
the Company, the defense of any such claim or proceeding with counsel reasonably
satisfactory to such Indemnified Party. The Indemnified Party or Parties will
not be subject to any liability for any settlement made without its or their
consent (but such consent will not be unreasonably withheld). The Company shall
not consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by claimant or plaintiff to
such Indemnified Party or Parties of a release, in form and substance reasonably
satisfactory to the Indemnified Party or Parties, from all liability in respect
of such claim, litigation or proceeding.
(c) In addition to any other obligations of the Company to
indemnify the Purchasers herein or pursuant to any of the Transaction Documents
or any other agreements or documents executed and delivered in connection
herewith or therewith, the Company will pay, and will save each Purchaser and
each other holder of any of the Securities harmless from liability for the
payment of, the following expenses arising in connection with the transactions
contemplated hereby: (a) the costs and expenses, including reasonable attorneys'
fees, incurred by such Purchaser in enforcing any rights under this Agreement or
in responding to any subpoena or other legal process issued in connection with
this Agreement or the transactions contemplated hereby or thereby or by reason
of such Purchaser having acquired any of the Securities, including, without
limitation, costs and expenses incurred by such Purchaser in any bankruptcy
case; (b) the cost of delivering to such Purchaser's principal office, insured
to its satisfaction, the Units delivered to such Purchaser hereunder and any
Securities delivered to such Purchaser upon any substitution of Securities
pursuant to this Agreement or any of the Transaction Documents and of such
Purchaser's delivering any Securities, insured to its satisfaction, upon any
such substitution; and (c) the reasonable out-of-pocket expenses incurred by
such Purchaser in connection with any amendments or waivers.
ARTICLE XIII
MISCELLANEOUS
13.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SEVERABILITY. All
representations and warranties contained in this Agreement or the Transaction
Documents or made in writing by or on behalf of the Company in connection with
the transactions contemplated by this Agreement or the
77
Transaction Documents shall survive, for the duration of any statutes of
limitation applicable thereto, the execution and delivery of this Agreement, any
investigation at any time made by the Purchasers or on the Purchasers' behalf,
the purchase of the Units by the Purchasers under this Agreement and any
disposition of or payment on the Units. All statements contained in any
certificate or other instrument delivered to the Purchasers by or on behalf of
the Company pursuant to this Agreement or the Transaction Documents at the
Closing shall be deemed representations and warranties of the Company under this
Agreement. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction.
13.2 NOTICES, ETC. Any notice or communication under this Agreement
shall be duly given if in writing and delivered in person, mailed by registered
or certified mail, postage prepaid, return receipt requested or delivered by
telecopier or overnight air courier guaranteeing next day delivery to the
other's address:
If to the Company: Streamline, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Executive Officer
Fax: (000) 000-0000
Tel: (000) 000-0000
With a copy to: Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
If to the Purchasers: DDJ Capital Management, LLC
000 Xxxxxx Xxxxxx, Xxxxx X-0
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
Tel: (000) 000-0000
With a copy to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx Xxxxxx, P.C.
Fax: (000) 000-0000
Tel: (000) 000-0000
78
The Company or the Purchasers by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; the date receipt is acknowledged, if mailed by registered or
certified mail; when answered back, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
Any notice or communication to any Holder shall be mailed by
first-class mail to his or her address shown on the register maintained by the
Company. Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.
13.3 SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of the
parties hereto are referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the respective parties which are contained in this Agreement
shall bind and inure to the benefit of the successors and assigns of all other
parties, provided that such transfer or assignment is made in compliance with
Section 11.3 and Section 11.12 hereof. The terms and provisions of this
Agreement and the other Transaction Documents shall inure to the benefit of and
shall be binding upon any assignee or transferee of the Purchasers, provided
that such transfer or assignment is made in compliance with Section 11.3 and
Section 11.12 hereof, and in the event of such transfer or assignment, the
rights and privileges herein conferred upon the Purchasers shall automatically
extend to and be vested in, and become an obligation of such transferee or
assignee, all subject to the terms and conditions hereof. In connection
therewith, such transferee or assignee may disclose all documents and
information which such transferee or assignee now or hereafter may have relating
to the Securities, this Agreement, the other Transaction Documents, the Company,
any other Persons referred to herein or any of the business of any of the
foregoing entities, subject to full compliance with Section 13.9 hereof.
13.4 DESCRIPTIVE HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
13.5 SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Purchasers or to the holders of a specified
79
portion of the principal amount of any class of the Securities, the
determination of such satisfaction shall be made by the Purchasers or such
holders, as the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
13.6 GOVERNING LAW. THIS AGREEMENT AND THE UNITS SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAW.
13.7 SERVICE OF PROCESS. The Company and each Purchaser (a) hereby
irrevocably submits itself to the jurisdiction of the state courts of the
Commonwealth of Massachusetts and to the jurisdiction of the United States
District Court for the District of Massachusetts for the purpose of any suit,
action or other proceeding arising out of or based upon this Agreement, the
Securities, the other Transaction Documents or the subject matter hereof or
thereof brought by the Company, a Purchaser or its successors or assigns, and
(b) hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or the subject matter
hereof may not be enforced in or by such court, and (c) hereby waives any
offsets or counterclaims in any such action, suit or proceeding (other than
compulsory counterclaims). The Company and each Purchaser hereby consents to
service of process by registered mail at the address to which notices are to be
given. The Company and each Purchaser agrees that its submission to jurisdiction
and its consent to service of process by mail is made for the express benefit of
the Company and the Purchasers, respectively. Final judgment against the Company
or any Purchaser in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions (a) by suit, action or proceeding on the
judgment, a certified or true copy of which shall be conclusive evidence of the
fact and of the amount of any indebtedness or liability of the Company or any
Purchaser therein described or (b) in any other manner provided by or pursuant
to the laws of such other jurisdiction; PROVIDED, HOWEVER, that the Company or a
Purchaser may at its option bring suit or institute other judicial proceedings
against the a Purchaser or Company or any of such Purchaser's or the Company's
assets in any state or federal court of the United States or in any country or
place where such Purchaser or Company or such assets may be found.
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13.8 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
13.9 DISCLOSURE TO OTHER PERSONS. Each Purchaser agrees to keep
confidential any financial information delivered by the Company pursuant to this
Agreement (other than information that is publicly available) and such other
non-public proprietary information delivered by the Company that is clearly
designated in writing to be or otherwise known by such Purchaser to be
confidential; PROVIDED, HOWEVER, that nothing herein shall prevent such
Purchaser from disclosing such information: (a) to any prospective purchaser who
agrees in writing to be bound by this Section 13.9, (b) to any Affiliate,
director, officer, employee, agent and professional consultant of any
prospective purchasers, in its capacity as such or any actual purchaser,
participant, assignee, or transferee of such Purchaser's or prospective
purchaser's rights under any Unit or any part thereof that agrees in writing to
be bound by this Section 13.9, (c) upon order of any court or administrative
agency having jurisdiction over such party, (d) upon the request or demand of
any regulatory agency or authority having jurisdiction over such party, (e)
which has been publicly disclosed through no breach of such Purchaser, (f) which
has been obtained from any Person that is not a party hereto or an Affiliate of
any such party, (g) in connection with the exercise of any remedy hereunder, (h)
to the certified public accountants for such Purchaser or as required in summary
financial or descriptive business information disclosed by such Purchaser that
is an investment fund as part of its regular reports to its investors or
partners, or (i) as otherwise expressly contemplated by this Agreement. In order
to permit the Company to remove or limit any order, request or demand or to
obtain confidential treatment for any disclosure pursuant to (c) or (d) above,
such Purchaser will use reasonable efforts to inform the Company of any such
request for disclosure prior to disclosure. Nothing in this Section 13.9 shall
be construed to create or give rise to any fiduciary duty on the part of such
Purchaser to the Company. The Company shall not, nor shall it permit any
Subsidiary to, disclose any Purchaser's name or identity as an investor in the
Company in any press release or other public announcement or in any document or
material filed with any governmental entity, without the prior written consent
of such Purchaser, unless such disclosure is required by applicable law or
governmental regulations or by order of a court of competent jurisdiction, in
which case prior to making such disclosure the Company shall give written notice
to such Purchaser describing in reasonable detail the proposed content of such
disclosure and shall permit the Purchaser to review and comment upon the form
and substance of such disclosure.
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13.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Agreement may
not be used to interpret another agreement, indenture, loan or debt agreement of
the Company or any Subsidiary. Any such agreement, indenture, loan or debt
agreement may not be used to interpret this Agreement.
13.11 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE TRIAL BY
JURY IN ANY LITIGATION, SUIT OR PROCEEDING, IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES, ANY OTHER
TRANSACTION DOCUMENTS, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS
AGREEMENT, THE SECURITIES OR ANY OTHER TRANSACTION DOCUMENTS, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, PROVIDED,
HOWEVER, THAT WITH RESPECT TO ANY COMPULSORY COUNTERCLAIM (I.E., A CLAIM BY ONE
PARTY AGAINST ANOTHER PARTY WHICH IF NOT BROUGHT IN SUCH ACTION WOULD RESULT IN
THE PARTY BRINGING SUCH CLAIM BEING FOREVER BARRED FROM BRINGING SUCH CLAIM),
THE PARTY BRINGING SUCH CLAIM SHALL HAVE THE RIGHT TO RAISE SUCH COMPULSORY
COUNTERCLAIM IN ANY SUCH LITIGATION.
13.12 MERGER. This Agreement and the Senior Discount Notes constitute
the entire agreement of the Company and the Holders and express the entire
understanding of the Company and the Holders with respect to the Senior Discount
Notes.
13.13 EXPENSES. The Company agrees to pay, on demand, all reasonable
out-of-pocket expenses incurred by the Holders, including, without limitation,
reasonable legal and accounting fees, in connection with the collection of
amounts upon the occurrence of an Event of Default hereunder, and the revision,
protection or enforcement of any of the Holder's rights against the Company
under this Agreement and the Senior Discount Notes.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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SECURITIES PURCHASE AGREEMENT
UNITS OF SENIOR DISCOUNT NOTES. AND COMMON STOCK PURCHASE WARRANTS
COMPANY SIGNATURE PAGE
If this Agreement is satisfactory, please so indicate by signing the
applicable attached signature page of this Agreement and delivering such
counterpart to the Company whereupon this Agreement will become binding among
the parties hereto in accordance with its terms.
STREAMLINE, INC.,
a Delaware corporation
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: Chairman and Chief Executive
Officer
SECURITIES PURCHASE AGREEMENT FOR UNITS OF SENIOR
DISCOUNT NOTES AND COMMON STOCK PURCHASE WARRANTS
PURCHASER COUNTERPART SIGNATURE PAGE
Accepted and agreed as of the Aggregate Number and
date first written above: Purchase Price of Units
to be Purchased:
Number of Units: 222
DDJ Canadian High Yield Fund
Comprised of:
By: DDJ Capital Management, LLC, Aggregate principal
as attorney-in-fact amount of Senior Discount
Notes to be Purchased:
$2,220,000
By: /s/ XXXXX X. XXXXXXXXX
----------------------
Name: XXXXX X. XXXXXXXXX Aggregate Number of
Title: Member Shares of Common Stock
Purchase Warrants to be
Purchased (Base Amount):
242,857
Purchase Price: $2,000,000.22
Address: c/o DDJ Capital Management, LLC
Attn: Xxxxx Xxxxxxxxx Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Nominee (name in which the Units are to be registered, if different than name of
Purchaser):
Royal Trust Corporation, in trust for Account No. 110455024
Tax I.D. Number:
------------------------
(if acquired in the name of a nominee, the taxpayer I.D.
number of such nominee)
SECURITIES PURCHASE AGREEMENT FOR UNITS OF SENIOR
DISCOUNT NOTES AND COMMON STOCK PURCHASE WARRANTS
PURCHASER COUNTERPART SIGNATURE PAGE
Accepted and agreed as of the Aggregate Number and
date first written above: Purchase Price of Units
to be Purchased:
Number of Units: 555
Mellon Bank, N.A., solely in its capacity as Comprised of:
Trustee for General Motors Employees Aggregate principal
Domestic Group Pension Trust as directed amount of Senior Discount
by DDJ Capital Management, LLC, and not Notes to be Purchased
in its individual capacity $5,550,000
By: /s/ XXXXXXXXXX XXXX Aggregate Number of
-------------------- Shares of Common Stock
Name: Xxxxxxxxxx Xxxx Purchase Warrants to be
Title: Authorized Signatory Purchased (Base Amount):
607,143
Purchase Price: $5,000,000.55
Address: c/o DDJ Capital Management, LLC
Attn: Xxxxx Xxxxxxxxx Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Nominee (name in which the Units are to be registered, if different than name of
Purchaser):
Mellon Bank, N.A., solely in its capacity as Trustee for General Motors
Employees Domestic Group Pension Trust
Tax I.D. Number: 00-000-0000
(if acquired in the name of a nominee, the taxpayer I.D.
number of such nominee)
