FORM OF STOCKHOLDER AGREEMENT
The parties to this Stockholder Agreement (this "Agreement") are
Renaissance Cosmetics, Inc., a Delaware corporation (the "Company"), and
[INSERT NAME OF THE STOCKHOLDER] (the "Stockholder").
The Stockholder has been granted an option (the "Option") to purchase
shares ("Shares") of the common stock, par value $.01 per share (the "Common
Stock"), of the Company and may in the future, pursuant to the exercise of the
Option, acquire Shares (any such Shares, together with all other Shares acquired
by the Stockholder in the future pursuant to an additional Option or Options
granted by the Company, the "Option Shares").
The Company and the Stockholder desire to promote their mutual interests
and the interests of the Company by imposing certain restrictions on the
transfer of the Option Shares and any other shares of any class of capital stock
of the Company, including but not limited to the Common Stock, now owned or
hereafter acquired by the Stockholder (collectively, the "Shares") and to set
forth their agreement with respect to certain other matters, all upon the terms
and conditions set forth below.
It is therefore agreed as follows:
1. ISSUANCE OF SHARES. In accordance with the Option Agreement between
the Stockholder and the Company (the "Option Agreement"), the Stockholder may
purchase Option Shares from the Company and will pay to the Company the exercise
price for those Shares in accordance with the terms of that Option Agreement.
2. CERTAIN RIGHTS AND RESTRICTIONS OF THE STOCKHOLDER. For a period of
fifteen years after the date of this Agreement, the Stockholder may not sell,
assign, transfer, pledge, hypothecate, mortgage, encumber, dispose of by gift,
bequest or otherwise transfer or dispose of (collectively, "Transfer") any
right, title or interest in any or all of his or her Shares except as follows:
(a) The Stockholder may Transfer (inter vivos or testamentary) all or
part of his or her Shares to his or her spouse, children, parents, brothers or
sisters, nieces and nephews or to a trust for the benefit of any such persons,
or to any affiliate (as defined below) of the Stockholder, or to a corporation
or limited or general partnership, the shareholders or partners of which consist
entirely of the Stockholder and/or his permitted transferees or to a guardian
for a disabled stockholder, provided that such Shares shall remain subject to
this Agreement. Such Shares also may be transferred back to the transferor. As
used in this Agreement, an "affiliate" of any person means any other person
controlled by, controlling or under "common control" (as that term is defined in
the Securities Act of 1933 (the "Securities Act")) with that person.
(b) The Stockholder may sell any or all of his or her Shares in a
public offering of shares of the Company pursuant to a registration statement
under the Securities Act or in connection with a merger, consolidation or other
reclassification of the capital stock of the Company.
(c) The Stockholder may transfer his or her Shares in accordance with
Sections 3, 4, 5 or 6.
3. INVOLUNTARY TRANSFERS OF SHARES. In the event of any Involuntary
Transfer (as hereinafter defined) by the Stockholder of any Shares, the
following procedures shall apply:
(a) If the Stockholder is deprived or divested of Shares by an
Involuntary Transfer, he or she shall promptly give written notice of such
Transfer in reasonable detail to the other stockholder[s] of the Company who
have entered into a Stockholder Agreement or similar instrument with the Company
for the purpose of imposing upon those stockholders Share transfer restrictions,
or providing those stockholders with rights similar to those provided herein,
and each of their permitted transferees (collectively, the "Other Stockholders"
and together with the Stockholder, the "Stockholders"), and the person or
persons who take or propose to take any interest in such Shares (the "Subject
Shares") as a result of such Involuntary Transfer (the "Transferee") shall hold
such interest subject to the rights of the Other Stockholders as set forth
below.
(b) Upon receipt of the notice referred to in Section 3(a) above or
upon discovery of such Involuntary Transfer, the Other Stockholders shall have
the irrevocable option, exercisable by written notice (specifying the number of
Subject Shares to be purchased) to the Transferor within 60 days following the
receipt of such notice (or other discovery), but not the obligation, to purchase
the Subject Shares, subject to the terms set forth herein. Each Other
Stockholder may exercise the option for a number of Subject Shares that bears
the same relation to the total number of Subject Shares as (x) the number of
shares held by that Other Stockholder bears to (y) the aggregate number of
shares then held by all of the Other Stockholders exercising such option, or for
such other number of Subject Shares as all of the Other Stockholders exercising
such option may agree. Upon the termination of that 60-day period, the
Stockholder shall notify the Company in writing of the number of Subject Shares
that Other Stockholders have elected to purchase in accordance with this
provision; the Company shall then have an option, exercisable within 15 days
after the Stockholder gives the Company the notice referred to in the first
clause of this sentence, but not the obligation, to purchase any Subject Shares
the Other Stockholders have not elected to purchase.
(c) The closing of any such sale of Subject Shares to one or more
Other Stockholders or, if applicable, the Company, shall be at the offices of
the Company not later than 30 days after the Stockholder provides the Company
with the written notice referred to in the first clause of the last sentence of
(b) above. The purchase price per Share of any Subject Shares purchased
pursuant to this Section 3 shall be the amount that is equal to the fair market
value (determined without giving effect to the fact that the Subject Shares may
represent a
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minority interest in the Company), as of the Valuation Date (as defined
below), of the Subject Shares as such fair market value is determined by an
independent appraiser selected by the Company and reasonably acceptable to
the Transferee, payable in immediately available funds. The "Valuation Date"
shall be the last day of the calendar quarter immediately preceding the
Involuntary Transfer.
(d) In the event that the Other Stockholders and the Company do not
purchase all of the Subject Shares involved in an Involuntary Transfer pursuant
to this Section 3, the Transferee shall take and hold all rights and interests
in any Subject Shares not so purchased and shall execute a copy of this
Agreement and be bound by the provisions hereof with the same rights and
obligations as the Stockholders.
(e) For purposes of this Agreement, the term "Involuntary Transfer"
shall mean any involuntary transfer by or in which the Stockholder shall be
deprived or divested of any right, title or interest in or to any Shares,
including, without limitation, any levy of execution, transfer in connection
with bankruptcy, reorganization, insolvency or similar proceedings or any
Transfer to a public officer or agency pursuant to any abandoned property or
escheat law.
4. CERTAIN RIGHTS TO CAUSE SALE OF COMPANY.
(a) If, at any time, the holders of a majority in interest of the
outstanding shares of Common Stock determine to sell all of their Shares of
Common Stock in an arms-length transaction to any unaffiliated third person
pursuant to a bona fide written offer for all of the Shares of the Common Stock,
and the Stockholder receives written notice thereof not fewer than 20 days
before the proposed date of the sale, the Stockholder shall also sell, and the
Stockholder shall be entitled to sell, all of his or her Shares in the same
transaction at the closing thereof (and shall deliver certificates for all of
his or her Shares at such closing, free and clear of all claims, liens and
encumbrances), provided that the Stockholder shall receive the same
consideration per Share upon such sale as the Other Stockholders. It is
expressly acknowledged that the foregoing provisions are an integral part of
this Agreement and in the event that the Stockholder shall fail to comply
herewith, in addition to all other rights and remedies available, the Other
Stockholders (who shall for this purpose be deemed to be intended third party
beneficiaries of this Agreement) shall have the right to obtain equitable relief
to compel the Stockholder to perform his or her obligations hereunder. By
execution of this Agreement, the Stockholder hereby irrevocably appoints each of
the Company's Chairman, Vice Chairman, President, Chief Executive Officer, Chief
Operating Officer, Vice President, Secretary and any Assistant Secretary, acting
singly, as his or her attorney-in-fact to execute and deliver all documents
necessary to effect the sale of his or her Shares in accordance with the
foregoing.
(b) In the event of a proposed sale of stock of the Company as
described in Section 4(a), the Stockholder shall in all events be required to
deliver his or her Shares of Common Stock to the buyer at the closing of the
sale regardless of whether there is any dispute
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between the Company and the Stockholder. Any such dispute shall be resolved
after the closing and shall in no event delay the closing.
5. TAG-ALONG RIGHTS.
(a) With respect to any proposed Transfer of Shares other than as
provided in Sections 2(a), 2(b), 3, 4 and 6, for a period of fifteen years after
the date of this Agreement, the Stockholder may not transfer any Shares unless
prior to such sale or disposition the Company and each Other Stockholder shall
have been given notice of the proposed transaction and each Other Stockholder
shall have been provided a firm irrevocable right, which right shall be
exercisable by written notice (which shall specify the number of Shares (up to
the total number of Shares held by the Other Stockholders, as applicable) that
the Stockholder desires to sell) within 60 days after giving notice to each
Other Stockholder, and which shall be acknowledged by the proposed transferee
(the "Purchaser"), to sell to the Purchaser, at the same time and upon the same
terms and conditions offered to the Stockholder by the Purchaser, the number of
Shares of Common Stock that bears the same ratio to the total number of Shares
of Common Stock proposed to be sold by the Stockholder to the Purchaser as the
total number of Shares of Common Stock owned by the Other Stockholder bears to
the total number of outstanding Shares of Common Stock, provided that in order
to be entitled to exercise its right to sell shares to the Purchaser pursuant to
this Section 5, the Other Stockholder must agree to make substantially the same
representations, warranties, covenants and indemnities and other similar
agreements as the Stockholder agrees to make in connection with the proposed
transfer of the Shares of the Stockholder.
(b) To the extent that the Other Stockholders exercise the foregoing
option, the number of Shares of Common Stock to be sold by the Stockholder shall
be reduced by the aggregate number of shares that the Other Stockholders are
entitled to include in the sale of shares of Common Stock to the Purchaser and
shares of Other Stockholders shall be substituted therefor.
(c) Any Purchaser of Shares of Common Stock pursuant to this
provision shall execute a copy of this Agreement and be bound by the provisions
hereof with the same rights and obligations as the Stockholder.
(d) The rights provided in this provision may be exercised in whole
or in part by the Other Stockholders.
6. REPURCHASE OF STOCK OF THE STOCKHOLDER.
(a) In the event that the employment of the Stockholder with the
Company is terminated for whatever reason (or, in the case of a non-employee
director, such director ceases to be a director), the Company shall have the
right, but not the obligation, to repurchase all of the Shares of the
Stockholder (including, but not limited to, the Option Shares) and any other
securities of the Company (as applicable) received in respect of the Shares,
which right shall be
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exercised by written notice to the Stockholder within 60 days of termination
of employment (or termination of the directorship) of the Stockholder.
(b) If the employment of the Stockholder with the Company is
terminated by the Company for cause (as reasonably defined by the Company) (or
if the directorship of a non-employee director is terminated for cause under
applicable Delaware law), or if the Stockholder voluntarily terminates his
employment without the written consent of the Company, the purchase price for
all of the Stockholders' Shares and other securities (as applicable) pursuant to
Section 6(a) shall be the actual cost thereof to the Stockholder.
(c) If the employment (or directorship) of the Stockholder is
terminated for any reason other than as set forth in Section 6(b), including due
to death, disability or retirement (on or after reaching the retirement age
established by Company policy) of the Stockholder, the purchase price for the
Shares and other securities (as applicable) pursuant to Section 6(a) shall be
the fair market value of the Shares and other securities (as applicable) as of
the date of termination. The fair market value shall be either (x) the average
for the bid and asked prices for the 60-day period prior to the date of
termination if the Common Stock is then traded in the over-the-counter market,
(y) the price on the date of termination if the Common Stock is then traded on a
national securities exchange, or (z) if there is no public market, as fair
market value shall be determined by an independent appraiser selected by mutual
agreement of the attorneys for the Company and the Stockholder (and failing such
agreement by the American Arbitration Association in New York, New York). The
cost of such appraiser shall be borne equally by the Company and the
Stockholder.
(d) In the event the Company elects to purchase the Shares and other
securities (as applicable) of the Stockholder as provided above, the parties
shall close the sale on the 30th day (or next business day if the 30th day is a
holiday) after the date of written notice to the Stockholder from the Company
under (a) above, or after the date of determination of the appraiser as provided
in (c) above, at 10:00 a.m. at the then offices of the Company. At the closing,
the Company will deliver the purchase price of the Shares and other securities
(as applicable) in cash or, at the Company's option, one-third in cash and two-
thirds in the form of a promissory note payable over a three-year period bearing
simple annual interest at 8% and subordinated (pursuant to subordination terms
in substantially the form set forth in Attachment A hereto) to all indebtedness
of the Company, and the Stockholder shall deliver the certificates for all of
his Shares and other securities (as applicable), duly endorsed with payment of
all stock transfer taxes, if any, and free and clear of any and all claims,
liens or encumbrances.
(e) Wherever pursuant to this Section 6 the Company has the right to
repurchase the Shares or other securities (as applicable) from the Stockholder
but is prevented from doing so either because (i) such purchase would violate
any law or statute or any order, writ, injunction, decree, judgment, rule or
regulation promulgated, or judgment entered, by any federal, state, local or
foreign court or governmental authority or (ii) if the Company were to purchase
the Shares or other securities of the Company (as applicable) the Company is, or
after giving effect thereto would be, in default or in violation of the terms
of, or subject to a ceiling
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in the availability of credit advances under, any loan or credit agreements,
indentures or promissory notes or other similar documents, the board of
directors of the Company may appoint one or more existing stockholders of the
Company as its designee(s) to purchase the Shares or other securities (as
applicable) in such order of priority and in such amounts as the board shall
determine.
7. RECLASSIFICATION. In the event that any Shares should, as a result of
a stock split or stock dividend or combination of shares or any other change or
exchange for other securities by reclassification, reorganization,
redesignation, merger. consolidation, recapitalization, split-up, spinoff,
partial or complete liquidation, sale of assets, distribution to stockholders,
combination of shares or otherwise, be increased or decreased or changed into or
exchanged for a different number or kind of shares of capital stock or other
securities of the Company or of another corporation, the number of Shares held
by the Stockholder shall be appropriately and proportionately adjusted to
reflect such action and the terms and provisions of this Agreement shall apply
to all of the capital stock of any class of the Company now owned or that may be
issued hereafter to the Stockholder in consequence of any such event.
8. PURCHASE FOR INVESTMENT, LEGEND ON CERTIFICATE. The Stockholder
acknowledges and agrees that all of his or her Shares subject hereto are being,
have been and will be acquired for investment and not with a view to the
distribution thereof and that no Transfer of the Shares may be made except in
compliance with applicable federal and state securities laws. All the stock
certificates for Shares of capital stock of the Company hereafter owned by the
Stockholder and subject to the terms of this Agreement shall have endorsed in
writing, stamped or printed, upon the back thereof, the following legend (or a
legend of similar effect):
THIS CERTIFICATE AND THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO
AND TRANSFERABLE ONLY IN ACCORDANCE WITH THE PROVISION OF A
STOCKHOLDER AGREEMENT DATED _________ __, 199_. A COPY OF THAT
AGREEMENT, AS IT MAY BE AMENDED FROM TIME TO TIME, IS MAINTAINED WITH
THE CORPORATE RECORDS OF THE COMPANY AND IS AVAILABLE FOR INSPECTION
AT THE OFFICE OF THE COMPANY, 000 XXXXXXXXXXXXX XXXXXX, XXXXXXXXX,
XXXXXXXXXXXXX 00000.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE SECURITIES OR BLUE
SKY LAWS AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR UNDER SUCH
STATE SECURITIES OR BLUE SKY LAWS.
9. TERMINATION. This Agreement shall automatically and without further
action terminate at such time as the Company shall close an underwritten public
offering of the Company's shares the gross proceeds to the Company of which are
at least $10 million pursuant
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to a registration statement that has been filed under the Securities Act and
declared effective by the Securities and Exchange Commission.
10. SPECIFIC PERFORMANCE. Inasmuch as the Shares cannot be readily
purchased or sold in the open market and the parties hereto desire to impose
certain restrictions on transfers of Shares, irreparable damage will result in
the event that this Agreement is not specifically enforced and the parties
hereto agree that any damages available at law for a breach of this Agreement
would not be an adequate remedy. Therefore, the provisions hereof and the
obligations of the parties hereunder shall be enforceable in a court of equity,
or other tribunal having jurisdiction, by a decree of specific performance and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies and all other remedies provided for in this Agreement
shall, however, be cumulative and not exclusive and shall be in addition to any
other remedies which any party may have under this Agreement or otherwise.
11. EFFECTIVENESS OF TRANSFERS. No Shares shall be transferred on the
Company's books and records, and no Transfer of Shares shall be otherwise
effective, unless any such Transfer is made in accordance with the term and
conditions of this Agreement. In the event of any purported Transfer of any
Shares in violation of the provisions of this Agreement, such purported Transfer
shall be void and of no effect, and no dividend of any kind whatsoever nor any
distribution pursuant to liquidation or otherwise shall be paid by the Company
to the purported transferee in respect of such Shares (all such dividends and
distributions being deemed waived), and the voting rights of such Shares, if
any, on any matter whatsoever shall remain vested in the transferor, and the
transferor shall not be relieved of any of its obligations hereunder as the
holder of such Shares, during the period commencing with the violation and
ending when compliance shall have occurred.
12. ADDITIONAL STOCKHOLDERS. Subject to the restrictions on transfers of
Shares contained herein, any person or entity required to become a party to this
Agreement in connection with the acquisition of Shares from the Stockholder or a
successor thereto, shall, on or before the transfer or issuance to it of Shares,
sign the signature page hereto and shall thereby become a party to this
Agreement. As a party to this Agreement, each holder of Shares shall be bound
by this Agreement and shall hold such Shares with all rights conferred, and
subject to all of the obligations and restrictions imposed, hereunder.
13. CERTAIN DEFINITIONS. As used in this Agreement "person" shall mean
any individual, group, partnership, corporation, business trust, joint stock
company, trust, unincorporated association, joint venture or other entity of
whatever nature.
14. ACTION NECESSARY TO EFFECTUATE THE AGREEMENT. The parties hereto
agree to take or cause to be taken all such corporate and other action as may be
necessary to effect the intent and purposes of this Agreement.
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15. MISCELLANEOUS.
(a) NOTICES. All notices, instructions and other communications
in connection with this Agreement shall be in writing and may be given by
personal delivery or mailed, certified mail, return receipt requested,
postage prepaid or by a nationally recognized overnight courier to the
parties at the address of the Company as follows, and at the address of the
Stockholder as set forth on the signature page to this Agreement (or at such
other address as the Company or the Stockholder may specify in a notice to
the Company or Stockholder, as the case may be):
If to the Company: Xx. Xxxxxx X. Xxxxxx
President and Chief Executive Officer
Renaissance Cosmetics, Inc.
000 Xxxxxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
and
Xx. Xxxxxx X. Xxxxxx
President and Chief Executive Officer
Renaissance Cosmetics, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
With a copy to: Xxxxxxxxxx Xxxxx Xxxxxx & Xxxxxxxxxx
000 Xxxxxxxxxxx Xxxxxx Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Notices shall be deemed to have been given (i) when actually delivered
personally, (ii) the next business day if sent by overnight courier (with
proof of delivery) and (iii) on the fifth day after mailing by certified mail.
(b) NO WAIVER. No course of dealing and no delay on the part of
any party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such
party's rights, powers and remedies conferred by this Agreement or shall
preclude any other or further exercise thereof or the exercise of any other
right, power and remedy.
(c) BINDING EFFECT; ASSIGNABILITY. This Agreement shall be
binding upon and, except as otherwise provided herein, shall inure to the
benefit of the respective parties and their permitted successors and assigns.
This Agreement shall not be assignable except as otherwise provided herein.
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(d) SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereby waive any
provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
(e) MODIFICATION. No term or provision of this Agreement may be
amended, altered, modified, rescinded or terminated except upon the express
written consent of the party against whom the same is sought to be enforced.
(f) LEGAL FEES. In the event that it becomes necessary for the
Company to retain legal counsel to enforce the Company's rights under this
Agreement, all costs, fees and expenses associated with the retention of such
counsel shall be borne by the Stockholder.
(g) LAW GOVERNING. This Agreement shall be construed both as to
validity and performance in accordance with, and governed by, the laws of the
state of Delaware, without giving effect to its choice of law rules.
(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and all signatures
need not appear on any one counterpart.
(i) HEADINGS. All headings and captions in this Agreement are for
purposes of reference only and shall not be construed to limit or affect the
substance of this Agreement.
(j) AGREEMENT GOVERNS IN EVENT OF CONFLICT. In the event the
provisions of the Company's certificate of incorporation or by-laws conflict
with or are inconsistent with the provisions of this Agreement, this
Agreement shall govern.
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(k) ENTIRE AGREEMENT. This Agreement contains, and is intended
as, a complete statement of all the terms of the arrangements between the
parties with respect to the matters provided for, supersedes any previous
agreements and understandings between the parties with respect to those
matters and cannot be changed or terminated orally.
RENAISSANCE COSMETICS, INC.
By:
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Name:
------------------------
Title:
-----------------------
Dated: , 199
---------------- ---
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[INSERT NAME OF STOCKHOLDER]
Address of the Stockholder for Notices:
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DATED - 04/04/97
ATTACHMENT A
TO STOCKHOLDER AGREEMENT
FORM OF SUBORDINATION PROVISIONS TO BE INCLUDED
(ATTACHED)
FORM OF SUBORDINATION PROVISIONS TO BE INCLUDED
IN PROMISSORY NOTES ISSUABLE PURSUANT
TO SECTION 6(D) OF THE STOCKHOLDER AGREEMENT
1. This note is subordinate and junior in right of payment, as provided
below, to all indebtedness other than trade debt of the Company including, but
not limited to, principal, interest, fees, penalties, indemnities, "post-
petition" interest in bankruptcy (whether or not allowed by law) of the Company,
letters of credit, interest rate caps and collars and the like, and any and all
renewals, extensions, restatements or refinancings thereof, to any lender which
is a bank, insurance company, financing institution, finance company or other
institutional lender (all such lenders together with any other holder of
Superior Indebtedness (as defined below), hereinafter called the "Lenders"),
whether now existing or hereafter created, and the direct or contingent
obligations of the Company to any lender who provides the Company with a
revolving credit and/or term debt facility (all of said indebtedness hereinafter
called "Superior Indebtedness").
2. (a) The payment of all amounts (including principal, interest, fees,
penalties and indemnities) owing in respect of this note are hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment in full of all Superior Indebtedness. The provisions of this
Section 2 shall constitute a continuing offer to all persons who, in reliance
upon such provisions, become holders of, or continue to hold, Superior
Indebtedness, and such provisions are made for the benefit of the holders of
Superior Indebtedness, and such holders are hereby made obligees hereunder the
same as if their names were written herein as such, and they and/or each of them
may proceed to enforce such provisions.
(b) Upon the maturity of any Superior Indebtedness, whether at stated
maturity, by acceleration or otherwise, all amounts owing in respect thereof
shall first be paid in full, or such payment duty provided for in cash, or in a
manner satisfactory to the holder or holders of such Superior Indebtedness,
before any payment is made on account of the principal of, or interest on, or
any amount otherwise owing in respect of, this note.
(c) Upon the happening of any default or event of default under the
documents evidencing the Superior Indebtedness, unless and until such default
shall have been cured or waived in writing, no payment shall be made with
respect to this note.
(d) In the event that, notwithstanding the preceding provisions, the
Company shall make any payment on account of the principal of, or interest on,
or amounts otherwise owing in respect of, this note, at a time when payment is
not permitted by said provisions, such payment shall be held by the Payee in
trust for the benefit of, and shall be paid forthwith over and delivered to, the
holders of Superior Indebtedness or their representative or representatives
under the agreements pursuant to which the Superior Indebtedness may have been
issued, as their respective interests may appear, for application pro rata to
the payment of all Superior
Indebtedness remaining unpaid to the extent necessary to pay all Superior
Indebtedness in full in accordance with terms of such Superior Indebtedness,
after giving effect to any concurrent payment or distribution to or for the
holders of Superior Indebtedness.
(e) Upon any distribution of assets of the Company upon any
dissolution, winding up or liquidation of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):
(i) the holders of all Superior Indebtedness shall first be
entitled to receive payment in full of all amounts due thereon in cash before
the Payee is entitled to receive any payment on account of the principal of, or
interest on, or any other amount owing in respect of, this note;
(ii) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which.the Payee
would be entitled except for the provisions hereof, shall be paid by the
liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or other trustee or agent, directly to the holders of Superior Indebtedness or
their representative or representatives under the agreements pursuant to which
the Superior Indebtedness may have been issued, to the extent necessary to make
payment in full in cash of all Superior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Superior Indebtedness; and
(iii) in the event that, notwithstanding the foregoing
provisions, any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, shall be received by
the Payee on account of principal of, or interest on, or other amounts due
on, this note before all Superior Indebtedness is paid in cash in full, such
payment or distribution shall be received and held in trust for and shall be
paid over to the holders of the Superior Indebtedness remaining unpaid or
unprovided for or their representative or representatives under the
agreements pursuant to which the Superior Indebtedness may have been issued,
for application to the payment of such Superior Indebtedness until all such
Superior Indebtedness shall have been paid in full in cash, after giving
effect to any concurrent payment or distribution to the holders of such
Superior Indebtedness.
Without in any way modifying the provisions hereof or affecting the
sub-ordination effected hereby if such notice is not given, the Company shall
give prompt written notice to the Payee of any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit
of creditors or otherwise).
(f) Subject to the prior payment in full of all Superior
Indebtedness, the Payee shall be subrogated to the rights of the holders of
Superior Indebtedness to receive payments or distributions of assets of the
Company applicable to the Superior Indebtedness until all amounts owing on
this note shall be paid in full, and for the purpose of such subrogation no
payments
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or distributions to the holders of the Superior Indebtedness by or on behalf
of the Company or by or on behalf of the Payee by virtue of the provisions
hereof which otherwise would have been made to the Payee shall, as between
the Company, its creditors other than the holders of Superior Indebtedness,
and the Payee, be deemed to be payment by the Company to or on account of the
Superior Indebtedness, it being understood that the provisions hereof are,
and are intended solely for the purpose of defining the relative rights of
the Payee, on the one hand, and the holders of the Superior Indebtedness, on
the other hand.
(g) Nothing contained in this Section 2 is intended to or shall
impair, as between the Company and the Payee, the obligation of the Company to
pay to the Payee the principal of and interest on this note as and when the same
shall become due and payable in accordance with its terms, or is intended to or
shall affect the relative rights of the Payee and creditors of the Company other
than the holders of the Superior Indebtedness, nor except as provided herein
shall anything herein prevent the Payee from exercising all remedies otherwise
permitted by applicable law, subject to the rights, if any, under the provisions
hereof of the holders of Superior Indebtedness in respect of cash property, or
securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets of the Company referred to in the provisions hereof
the Payee shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending or a certificate of the liquidating
trustee or agent or other person making any distribution to the Payee, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Superior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to the
provisions hereof.
(h) No right of any present or future holders of any Superior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act in good faith by any such holders,
or by any noncompliance by the Company with the terms and provisions of this
note, regardless of any knowledge thereof with which any such holders may have
or be otherwise charged. The holders of the Superior Indebtedness may, without
in any way affecting the obligations of the Payee with respect thereto, at any
time or from time to time in their absolute discretion, change the manner, place
or terms of payment of, change or extend the time of payment of, or renew,
replace or alter, any Superior Indebtedness, or amend, modify or supplement any
agreement or instrument governing or evidencing such Superior Indebtedness or
any other document referred to therein, or exercise or refrain from exercising
any other of their rights under the Superior indebtedness, including, without
limitation, the waiver of default thereunder and the release of any collateral
securing such Superior Indebtedness, all without notice to or assent from the
Payee.
(i) Without in any way modifying the provisions of this Section 2 or
affecting the subordination effected hereby if such notice is not given (other
than Section 2 (d)), the Company shall give the Payee prompt written notice of
any maturity or event of default of Superior Indebtedness after which such
Superior Indebtedness remains unsatisfied.
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(j) In case any one or more Events of Default shall occur and be
continuing, the Payee, subject to the subordination provisions of this note
(including without limitation, Sections 1 and 2), may proceed to protect and
enforce his, her or its rights by an action at law, suit in equity or other
appropriate proceeding.
(k) The holder of this note acknowledges and agrees that the Lenders
have relied upon and will continue to rely upon, and are third-party
beneficiaries of, the subordination provisions set forth herein in purchasing
the debt and other priorities of the Company and in making loans and otherwise
extending credit to the Company and any subsidiary or successor thereto.
(l) The Lenders shall not be prejudiced in their right to enforce the
subordination provisions contained herein in accordance with the terms hereof by
any act or failure to act on the part of the Company, except as provided in
Section 2 (d)(ii).
(m) The subordination provisions contained herein are for the benefit
of the Lenders and may not be rescinded, canceled, amended or modified in any
way without the prior written consent thereto of such Lenders as shall then be
holding Superior Indebtedness.
(n) Notwithstanding any inconsistent term of this note, no holder of
this note shall, prior to the Maturity Date, unless the holder hereof is
entitled to accelerate the indebtedness hereunder, have any right to institute
any proceeding to enforce any indebtedness evidenced by this note or to
institute any bankruptcy, insolvency, reorganization or similar proceeding with
respect to the Company.
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