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EXECUTION VERSION
ROWECOM INC.
$9,000,000
FLOATING RATE SENIOR SECURED CONVERTIBLE NOTES DUE APRIL 30, 2002
GUARANTIED BY DIVINE, INC.
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AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
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Dated as of December 14, 2001
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TABLE OF CONTENTS
SECTION PAGE
1. PRIOR ISSUANCE OF NOTES; PARENT GUARANTY....................................................1
1.1. Prior Issuance of Notes............................................................1
1.2. Parent Guaranty....................................................................2
2. REQUEST FOR CONSENT TO AMENDMENTS...........................................................2
2.1. Agreement and Consent..............................................................2
2.2. Restatement Date...................................................................2
2.3. Other Current Holders..............................................................2
3. CONDITIONS TO THE EFFECTIVENESS OF THIS AGREEMENT...........................................2
3.1. Representations and Warranties.....................................................3
3.2. Performance; No Default............................................................3
3.3. Compliance Certificates............................................................3
3.4. Opinions of Counsel................................................................4
3.5. Good Standing Certificates.........................................................4
3.6. Other Agreements...................................................................4
3.7. Payment of Fees and Expenses.......................................................4
3.8. Changes in Corporate Structure.....................................................4
3.9. Evidence of Perfection and Priority of Liens.......................................5
3.10. Compliance with Laws and Other Agreements..........................................5
3.11. No Material Adverse Change.........................................................5
3.12. Reaffirmation Letter for Certain Financing Documents...............................5
3.13. Acquisition........................................................................5
3.14. Xxxxx Federal Assignment of Claims.................................................6
3.15. Proceedings Satisfactory...........................................................6
4. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE COMPANY................................6
4.1. Organization; Power and Authority..................................................6
4.2. Authorization, etc.................................................................7
4.3. Full Disclosure....................................................................7
4.4. Organization and Ownership of Shares of Subsidiaries...............................7
4.5. Financial Statements; Debt; Fiscal Year............................................8
4.6. Compliance with Laws, Other Instruments, etc.......................................9
4.7. Governmental Authorizations, etc...................................................9
4.8. Litigation; Observance of Statutes and Orders......................................9
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4.9. Title to Property; Priority of Liens...............................................10
4.10. Corporate Names....................................................................10
4.11. Business Locations; Agent for Service of Process...................................10
4.12. Solvent Financial Condition........................................................10
4.13. Surety Obligations.................................................................10
4.14. Brokers............................................................................11
4.15. Intellectual Property..............................................................11
4.16. Governmental Approvals.............................................................11
4.17. Restrictions.......................................................................11
4.18. No Defaults........................................................................12
4.19. Leases.............................................................................12
4.20. Pension Plans......................................................................12
4.21. Labor Relations....................................................................12
4.22. Not a Regulated Entity.............................................................13
4.23. Margin Stock.......................................................................13
4.24. The Acquisition....................................................................13
5. REPRESENTATIONS OF CURRENT HOLDERS..........................................................13
5.1. Purchase for Investment............................................................14
5.2. Investor Qualifications............................................................14
5.3. Material, Non-public Information...................................................14
5.4. Acceptable Credit Facility.........................................................15
6. GENERAL COVENANTS...........................................................................15
6.1. Visits and Inspections.............................................................15
6.2. Notices............................................................................15
6.3. Financial and Other Information....................................................16
6.4. Taxes..............................................................................17
6.5. Compliance with Laws...............................................................18
6.6. Insurance..........................................................................18
6.7. Intellectual Property..............................................................18
6.8. Pledged Shares.....................................................................18
6.9. Payment of Notes and Maintenance of Office.........................................18
6.10. Domestic Subsidiary Guaranties.....................................................19
6.11. Order Processing...................................................................19
6.12. Customer Deposits..................................................................19
6.13. Equipment..........................................................................20
6.14. Registration of Conversion Shares..................................................20
7. PAYMENTS....................................................................................24
7.1. Interest Payments..................................................................24
7.2. Optional Principal Payments........................................................24
7.3. Required Payments..................................................................24
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7.4. Conversion Privilege and Conversion Rate...........................................25
7.5. Notation of Notes on Payment.......................................................34
7.6. No Other Payments of Principal; Acquisition of Notes...............................34
8. NEGATIVE COVENANTS..........................................................................34
8.1. Restricted Payments................................................................34
8.2. Mergers; Consolidations; Acquisitions..............................................35
8.3. Loans..............................................................................36
8.4. Debt...............................................................................36
8.5. Affiliate Transactions.............................................................37
8.6. Liens..............................................................................37
8.7. Limitation on Issuance of Stock....................................................38
8.8. Restricted Investments.............................................................38
8.9. Tax Consolidation..................................................................38
8.10. Upstream Payments..................................................................38
8.11. Organization Documents.............................................................38
8.12. Restrictive Agreements.............................................................39
8.13. Limitation on Side Agreements......................................................39
8.14. Conduct of Business................................................................39
9. EVENTS OF DEFAULT...........................................................................39
10. DEFAULT REMEDIES............................................................................42
10.1. Acceleration of Maturity Notes.....................................................42
10.2. Other Remedies.....................................................................43
10.3. Nonwaiver; Remedies Cumulative.....................................................43
10.4. Annulment of Acceleration of Notes.................................................44
11. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES...............................................44
11.1. Registration of Notes..............................................................44
11.2. Exchange of Notes..................................................................44
11.3. Replacement of Notes...............................................................45
11.4. Issuance Taxes.....................................................................46
12. PAYMENTS ON NOTES...........................................................................46
12.1. Place of Payment...................................................................46
12.2. Manner of Payment..................................................................46
13. EXPENSES, ETC...............................................................................47
13.1. Transaction Expenses...............................................................47
13.2. Survival...........................................................................48
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14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT................................48
15. AMENDMENT AND WAIVER........................................................................48
15.1. Requirements.......................................................................48
15.2. Solicitation of Holders of Notes...................................................49
15.3. Binding Effect, etc................................................................49
15.4. Notes held by the Company, etc.....................................................50
16. NOTICES.....................................................................................50
17. REPRODUCTION OF DOCUMENTS...................................................................51
18. CONFIDENTIAL INFORMATION....................................................................51
19. PARENT GUARANTY.............................................................................52
19.1. Guarantied Obligations.............................................................52
19.2. Payments and Performance...........................................................53
19.3. Releases...........................................................................53
19.4. Waivers............................................................................54
19.5. Marshaling; Invalid Payments.......................................................56
19.6. Immediate Liability................................................................56
19.7. Primary Obligations................................................................56
19.8. No Reduction or Defense............................................................57
19.9. No Election........................................................................58
19.10. Severability.......................................................................59
19.11. Appropriations.....................................................................59
19.12. Other Enforcement Rights...........................................................59
19.13. Restoration of Rights and Remedies.................................................59
19.14. Subrogation; Subordination.........................................................60
19.15. Survival...........................................................................60
20. MISCELLANEOUS...............................................................................61
20.1. Indemnification of each Holder of Notes............................................61
20.2. Successors and Assigns.............................................................61
20.3. Severability.......................................................................62
20.4. Construction.......................................................................62
20.5. Counterparts.......................................................................62
20.6. Governing Law......................................................................62
20.7. Legends............................................................................62
20.8. Termination........................................................................64
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SCHEDULE A -- INFORMATION RELATING TO CURRENT HOLDERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 3.8 -- Changes in Corporate Structure
SCHEDULE 4.3 -- Full Disclosure
SCHEDULE 4.4 -- Organization of the Parent, the Company and
Ownership of Subsidiary Stock
SCHEDULE 4.5 -- Debt
SCHEDULE 4.8 -- Certain Litigation
SCHEDULE 4.10 -- Corporate Names
SCHEDULE 4.11 -- Business Locations
SCHEDULE 4.13 -- Surety Obligations
SCHEDULE 4.14 -- Broker Fees
SCHEDULE 4.15 -- Intellectual Property
SCHEDULE 4.17 -- Restrictive Agreements
SCHEDULE 4.18 -- Waived Defaults and Events of Default
SCHEDULE 4.19 -- Leases
SCHEDULE 4.20 -- Pension Plans
SCHEDULE 4.21 -- Labor Relations
SCHEDULE 8.5 -- Affiliate Transactions
SCHEDULE 8.6 -- Liens
EXHIBIT 1 -- Form of Floating Rate Senior Secured Convertible Note
Due April 30, 2002
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EXHIBIT 3.3(b) -- Form of Company Secretary's Certificate
EXHIBIT 3.3(c) -- Form of Parent Secretary's Certificate
EXHIBIT 3.3(d) -- Form of Subsidiary Guarantor Secretary's Certificate
EXHIBIT 3.4(a) -- Form of Obligors' counsel opinion
EXHIBIT 3.4(b) -- Form of Xxxxxxx Xxxx'x counsel opinion
EXHIBIT 3.12 -- Form of Reaffirmation Letter
ANNEX 1 -- Address of Parent, Company and Agent
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ROWECOM INC.
00 XXXXXXXXX XXXX
XXXXXXXX, XX 00000
FLOATING RATE SENIOR SECURED CONVERTIBLE NOTES DUE APRIL 30, 2002
GUARANTIED BY DIVINE, INC.
As of December 14, 2001
TO EACH OF THE CURRENT HOLDERS
LISTED IN THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
RoweCom Inc., a Delaware corporation (together with its successors and
assigns, the "COMPANY") and divine, inc., a Delaware corporation (together with
its successors and assigns, the "PARENT"), agree with you as follows:
1. PRIOR ISSUANCE OF NOTES; PARENT GUARANTY
1.1. PRIOR ISSUANCE OF NOTES.
The Company issued and sold $9,000,000 in aggregate principal amount of
its Floating Rate Senior Secured Notes due December 28, 2001 (the "ORIGINAL
NOTES" and as amended by this Agreement, the "NOTES") pursuant to those separate
Note Purchase Agreements, each dated as of January 31, 2001 between the Company
and the purchasers identified in Schedule A thereto (individually, an "ORIGINAL
NOTE PURCHASE AGREEMENT" and collectively, the "ORIGINAL NOTE PURCHASE
AGREEMENTS"). The entire original aggregate principal amount of the Original
Notes currently remains outstanding. The register kept by the Company for the
registration and transfer of the Notes indicates that you and each of the other
Persons named in Schedule A hereto (collectively, the "CURRENT HOLDERS") is as
of the Restatement Date a holder of each of the aggregate principal amount of
the Original Notes indicated in such Schedule. Certain capitalized terms used in
this Agreement are defined in Schedule B; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.
1.2. PARENT GUARANTY.
Payment by the Company of all amounts due with respect to the Notes and
performance by the Company and its Subsidiaries of its Obligations are
guarantied by the Parent pursuant to the Parent Guaranty provided in Section 19.
2. REQUEST FOR CONSENT TO AMENDMENTS
2.1. AGREEMENT AND CONSENT.
Subject to the satisfaction of the conditions set forth in
Section 3, you agree, by execution of this Agreement, that:
(a) the Original Note Purchase Agreement is hereby amended and
restated in the form of this Agreement; and
(b) the form of Original Note attached to the Original Note
Purchase Agreement as Exhibit 1 is hereby amended and restated in the
form attached hereto as Exhibit 1. The Original Notes outstanding on
the Restatement Date are hereby, without any further action required on
the part of any other Person, deemed to be automatically amended and
restated to conform to and have the terms provided in the form attached
hereto as Exhibit 1 (except that the principal amount and the payee of
each Note shall remain unchanged). Upon request of any Current Holder
or the Company, the Company shall deliver a new Note, as amended and
restated in the form attached hereto as Exhibit 1, against surrender of
the related Original Note.
2.2. RESTATEMENT DATE.
Subject to the satisfaction of the conditions set forth in Section 3,
the closing (the "RESTATEMENT CLOSING") of the transactions contemplated by this
Agreement will be held contemporaneously with the execution and delivery of this
Agreement on or about December 14, 2001 (the "RESTATEMENT DATE") at the office
of Xxxxxxx Xxxx LLP, Xxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000.
2.3. OTHER CURRENT HOLDERS.
Contemporaneously with the execution and delivery hereof, the Company
is entering into a separate Amended and Restated Note Purchase Agreement
identical (except for the name, address and signature of the Current Holder)
hereto (this Agreement and such other separate Amended and Restated Note
Purchase Agreements, collectively, as may be amended from time to time, the
"OTHER AGREEMENTS") with each other Current Holder.
3. CONDITIONS TO THE EFFECTIVENESS OF THIS AGREEMENT
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This Agreement shall become effective, if at all, at such time as you
shall have indicated your written consent to this Agreement by executing and
delivering the applicable counterpart of this Agreement and each other Current
Holder shall have indicated its written consent to its respective Other
Agreement. It is understood that any Current Holder may withhold its consent for
any reason or for no reason, and that, without limitation of the foregoing, any
Current Holder hereby makes the granting of its consent contingent upon delivery
to it of the following:
3.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Obligors in this Agreement
shall be correct when made and at the time of the Restatement Date.
3.2. PERFORMANCE; NO DEFAULT.
Each Obligor and Xxxxxxx Xxxx shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by it or him prior to or on the Restatement Date and
after giving effect to this Agreement and the Acquisition, no Default or Event
of Default shall have occurred and be continuing.
3.3. COMPLIANCE CERTIFICATES.
(a) Officer's Certificate. Each of the Company and the Parent
shall have delivered to you an Officer's Certificate, dated the
Restatement Date, certifying that the conditions specified in Sections
3.1, 3.2 and 3.11 have been fulfilled.
(b) Company Secretary's Certificate. The Company shall have
delivered to you a certificate, dated the Restatement Date, and
executed by its Secretary or one of its Assistant Secretaries,
substantially in the form set out in Exhibit 3.3(b), certifying as to
the resolutions (and attaching a copy thereof) and other corporate
proceedings relating to the authorization, execution and delivery of
the Notes, this Agreement, the Reaffirmation Letter and the other
Financing Documents to which it is a party.
(c) Parent Secretary's Certificate. The Parent shall have
delivered to you a certificate, dated the Restatement Date, and
executed by its Secretary or one of its Assistant Secretaries,
substantially in the form set out in Exhibit 3.3(c), certifying that
the following documents, which shall be attached thereto, are true and
correct: (i) resolutions and other corporate proceedings relating to
the authorization, execution and delivery of this Agreement (including
the Parent Guaranty) and the other Financing Documents to which it is a
party, (ii) a copy of the Parent's articles of incorporation and all
amendments thereto, (iii) a copy of the Parent's by-laws
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and all amendments thereto, and (iv) a good standing certificate issued
by the Secretary of State of the state of Delaware.
(d) Subsidiary Guarantor Secretary's Certificate. Each
Subsidiary Guarantor shall have delivered to you a certificate, dated
the Restatement Date, and executed by its Secretary or one of its
Assistant Secretaries, substantially in the form set out in Exhibit
3.3(d), certifying as to the resolutions (and attaching a copy thereof)
and other corporate proceedings relating to the authorization,
execution and delivery of the Reaffirmation Letter and the other
Financing Documents to which it is a party.
3.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to
you, dated the Restatement Date (a) from Xxxxxx Xxxxxx Xxxxx, counsel for the
Parent, the Company and certain Subsidiary Guarantors in substantially the form
as Exhibit 3.4(a) attached hereto and (b) from counsel for Xxxxxxx Xxxx in
substantially the form as Exhibit 3.4(b) attached hereto.
3.5. GOOD STANDING CERTIFICATES.
You shall have received good standing certificates for each Obligor
issued by the Secretary of State or other appropriate official of such Obligor's
jurisdiction of organization and each jurisdiction where the failure of such
Obligor to be qualified would have a Material Adverse Effect.
3.6. OTHER AGREEMENTS.
None of the other Current Holders shall have withheld its consent to
this Agreement and the Other Agreements having become effective.
3.7. PAYMENT OF FEES AND EXPENSES.
The Company shall have paid on or before the Restatement Date all fees
and disbursements required to be paid pursuant to Section 13 and pursuant to the
separate commitment letters between you, the other Current Holders, the Parent
and the Company.
3.8. CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 3.8, none of the Obligors shall have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation (other than the Acquisition) and shall not have succeeded to all
or any substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to in
Section 4.5.
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3.9. EVIDENCE OF PERFECTION AND PRIORITY OF LIENS.
You or the Agent, on your behalf, shall have received for filing any
filing or recordation necessary to perfect the Liens of Agent in the Collateral
and evidence in form satisfactory to you that such Liens constitute valid and
perfected security interests and Liens, and that there are no other Liens upon
any Collateral except for Permitted Liens.
3.10. COMPLIANCE WITH LAWS AND OTHER AGREEMENTS.
You shall have determined or received assurances satisfactory to you
that none of the Financing Documents or any of the transactions contemplated
thereby violate any Applicable Law, court order or agreement binding upon any
Obligor.
3.11. NO MATERIAL ADVERSE CHANGE.
No material adverse change in the financial condition of any Obligor or
in the quality, quantity or value of any Collateral shall have occurred since
July 6, 2001.
3.12. REAFFIRMATION LETTER FOR CERTAIN FINANCING DOCUMENTS.
The Company, the Subsidiary Guarantors, Xxxxxxx Xxxx and the Agent
shall have executed and delivered to you and the other Current Holders a
reaffirmation letter (the "REAFFIRMATION LETTER") dated the Restatement Date,
substantially in the form of Exhibit 3.12 with respect to each of the following:
(a) the Xxxxxxx Xxxx Pledge Agreement;
(b) the Subsidiary Guaranties;
(c) the Pledge Agreements;
(d) the Company Security Agreement;
(e) the Intellectual Property Security Agreements;
(f) the Collateral Agency Agreement; and
(g) any other Subsidiary Guarantor Security Document.
3.13. ACQUISITION.
Knowledge Resources Acquisition Corp., (the "ACQUIRED COMPANY"), a
direct, wholly-owned Subsidiary of the Parent shall have merged with and into
the Company and the Company shall thereafter be the surviving corporation (such
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transaction herein referred to as the "ACQUISITION") and a direct, wholly-owned
Subsidiary of the Parent on the Restatement Date pursuant to that certain
Agreement and Plan of Merger and Reorganization, dated as of July 6, 2001
(together with all certificates, agreements, exhibits, schedules, annexes and
documents executed or delivered in connection therewith, as any of the foregoing
may be amended, modified or supplemented from time to time, the "ACQUISITION
DOCUMENTS"), among the Acquired Company, the Company and the Parent. The
conversion of Capital Stock in the Company into Capital Stock of the Parent
shall occur within five (5) days of the Restatement Date.
3.14. XXXXX FEDERAL ASSIGNMENT OF CLAIMS.
The Company shall have obtained from Fleet Capital Corporation (or its
successors, assigns or agent) a release of the Assignment of Monies Due And To
Become Due dated January 31, 2001 executed by The Xxxxx Company, Inc. in favor
of Fleet Capital Corporation (regarding monies due and owing from the United
States of America through The Library of Congress Contracts and Logistics
Service).
3.15. PROCEEDINGS SATISFACTORY.
All proceedings taken in connection with the transactions contemplated
by this Agreement and the Financing Documents and all documents and papers
relating thereto shall be satisfactory to you and your special counsel. You and
your special counsel shall have received copies of such documents and papers as
you or they may reasonably request.
4. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE COMPANY
To induce you to enter into this Agreement, each of the Parent (with
respect to itself only) and the Company (with respect to itself and all of its
Subsidiaries) warrants and represents as follows:
4.1. ORGANIZATION; POWER AND AUTHORITY.
Each of the Obligors is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each of the Obligors has the corporate power and
authority to own or hold under lease the Properties it purports to own or hold
under lease, to transact the business it transacts and proposes to transact, to
execute and deliver the Financing Documents
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and the Acquisition Documents to which it is a party and to perform the
provisions thereof.
4.2. AUTHORIZATION, ETC.
The Financing Documents and the Acquisition Documents have been duly
authorized by all necessary corporate action on the part of the Obligors party
thereto, and each Financing Document constitutes, and upon execution and
delivery thereof will constitute, a legal, valid and binding obligation of such
Obligor enforceable against such Obligor in accordance with the respective terms
of such Financing Documents except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.3. FULL DISCLOSURE.
Except as expressly described in Schedule 4.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements delivered to you pursuant to the provisions of the Original
Note Purchase Agreements, since September 30, 2001 there has been no change in
the financial condition, operations, business or properties of the Company or
any Subsidiary of the Company except changes that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to the Parent or the Company that could reasonably be
expected to have a Material Adverse Effect that has not been set forth herein or
in the other documents, certificates and other writings delivered to you by or
on behalf of the Company specifically for use in connection with the
transactions contemplated hereby. The Collateral Certificates and the
information contained therein are true and correct as of the Restatement Date,
after giving effect to the Acquisition.
4.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.
(a) After giving effect to the Acquisition, Schedule 4.4
contains (except as noted therein) complete and correct lists of the
Company's Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, and the percentage
of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary.
(b) After giving effect to the Acquisition, all of the
outstanding shares of capital stock or similar equity interests of each
Person shown in Schedule 4.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Parent,
7
the Company or another Subsidiary free and clear of any Lien (except as
otherwise disclosed in Schedule 4.4).
(c) Each Subsidiary identified in Schedule 4.4 is a
corporation or other legal entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization,
and is duly qualified as a foreign corporation or other legal entity
and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to
which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.5. FINANCIAL STATEMENTS; DEBT; FISCAL YEAR.
(a) Financial Statements. All of the consolidated financial
statements of the Company and its Subsidiaries (including in each case
the related schedules and notes) delivered to you during the 12-month
period preceding the Restatement Date fairly present in all material
respects the consolidated financial position of the Company and its
Subsidiaries as of the respective dates specified in such financial
statements and the consolidated results of their operations and cash
flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
(b) Debt. Schedule 4.5(b) lists all Material Debt for Money
Borrowed of the Company and the Subsidiaries of the Company as of the
Restatement Date, after giving effect to the transactions to occur on
such date including the Acquisition, and provides the following
information with respect to each item of such Debt: the obligor, each
guarantor thereof and each other Person similarly liable in respect
thereof, the holder thereof, the outstanding amount, the current
portion of the outstanding amount, the final maturity, required sinking
fund payments, and a description of the collateral securing such Debt.
After giving effect to this Agreement, no Obligor is in default, and no
waiver of default is currently in effect, in the payment of any
principal or interest on any Material Debt of any Obligor and no event
or condition exists with respect to any Debt of any Obligor the
outstanding principal amount of which is Material that would permit (or
that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Debt to become due and payable before its
stated maturity or before its regularly scheduled dates of payment.
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(c) Fiscal Years. The fiscal year of the Company ends on the
last day of December in each year. The fiscal year of the Parent ends
on the last day of December in each year.
4.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by each of the Obligors of the
Financing Documents to which each is a party will not (a) contravene, result in
any breach of, or constitute a default under, or result in the creation of any
Lien in respect of any Property of such Obligor under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, corporate charter or by-laws,
or any other Material agreement, lease or instrument to which such Obligor is
bound or by which such Obligor or any of its respective Properties may be bound
or affected unless permitted by the Financing Documents, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to such Obligor, or (c) violate any provision of any Applicable Law.
4.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Obligors of any of the Financing
Documents other than the Federal Assignment of Claims required by the Original
Note Purchase Agreements to be filed in favor of the Agent and the Current
Holders and Uniform Commercial Code financing statements required to be filed
pursuant to the Financing Documents.
4.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 4.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Parent or the
Company, threatened against or affecting any Obligor or any of the
Company's Subsidiaries or any Property of the Obligors or the Company's
Subsidiaries in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect.
(b) None of the Obligors or any of the Company's Subsidiaries
are in default under any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without
limitation Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
9
4.9. TITLE TO PROPERTY; PRIORITY OF LIENS.
The Company and each Domestic Subsidiary of the Company has good,
indefeasible and marketable title to and fee simple ownership of, or valid and
subsisting leasehold interests in, all of its real Property, and good title to
or leasehold interest in all of its personal Property, in each case free and
clear of all Liens except Permitted Liens. The Company has paid or discharged,
and has caused each Domestic Subsidiary to pay and discharge, all lawful claims
which, if unpaid, might become a Lien against any Properties of the Company or
such Domestic Subsidiary that is not a Permitted Lien. The Liens granted to
Agent pursuant to the Financing Documents are Liens subject only to those other
Permitted Liens which are expressly permitted by the terms of this Agreement to
have priority over the Liens of Agent.
4.10. CORPORATE NAMES.
Neither the Company nor any Domestic Subsidiary has been known as or
used any corporate, fictitious or trade names except those listed on Schedule
4.10 hereto. Other than as a result of the Acquisition and as otherwise set
forth on Schedule 4.10, neither the Company nor any Domestic Subsidiary has been
the surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person.
4.11. BUSINESS LOCATIONS; AGENT FOR SERVICE OF PROCESS.
As of the Restatement Date and after giving effect to the Acquisition,
the chief executive office and other places of business of the Company and the
Domestic Subsidiaries are as listed on Schedule 4.11 hereto. During the one-year
period preceding the Restatement Date, neither the Company nor any Subsidiary
Guarantor has had an office, place of business or agent for service of process
other than as listed on Schedule 4.11. Except as shown on Schedule 4.11, on the
Restatement Date, no Inventory of the Company or any Subsidiary Guarantor is
stored with a bailee, warehouseman or similar Person, nor is any Inventory of
the Company or any Subsidiary Guarantor consigned to any Person. As of the
Restatement Date, the Persons listed on Schedule 4.11 have consigned Inventory
to the Company in the amounts referenced therein.
4.12. SOLVENT FINANCIAL CONDITION.
Each of the Parent, the Company, the Subsidiary Guarantors and the
Company's other material Subsidiaries, after giving effect to the consummation
of the transactions described in the Financing Documents, is Solvent.
4.13. SURETY OBLIGATIONS.
10
Except as set forth on Schedule 4.13 hereto, on the Restatement Date
(after giving effect to the Acquisition), neither the Company nor any Subsidiary
of the Company is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person which could result in a Material Adverse Effect.
4.14. BROKERS.
Except as set forth on Schedule 4.14 hereto, to the best of their
knowledge, there are no claims against the Parent, the Company or any Subsidiary
of the Company for brokerage commissions, finder's fees or investment banking
fees in connection with the transactions contemplated by this Agreement or any
of the other Financing Documents or the Acquisition.
4.15. INTELLECTUAL PROPERTY.
The Company and the Domestic Subsidiaries each owns or has the lawful
right to use all Intellectual Property necessary for the present and planned
future conduct of its business without any conflict with the rights of others;
there is no objection to, or pending (or, to the Company's knowledge,
threatened) Intellectual Property Claim which could reasonably be expected to
have a Material Adverse Effect, and the Company is not aware of any grounds for
challenge or objection thereto; and, except as may be disclosed on Schedule
4.15, neither the Company nor any Domestic Subsidiary pays any royalty or other
compensation to any Person for the right to use any Intellectual Property. All
such patents, trademarks, service marks, tradenames, copyrights, licenses and
other similar rights are listed on Schedule 4.15, to the extent they are
registered under any Applicable Law or are otherwise material to the Company's
or any such Domestic Subsidiary's business.
4.16. GOVERNMENTAL APPROVALS.
Each of the Parent, the Company and the Company's Subsidiaries has, and
is in good standing with respect to, Governmental Approval necessary to continue
to conduct its business as heretofore conducted by it and to own or lease and
operate its Properties as now owned or leased by it, the failure of which would
result in a Material Adverse Effect.
4.17. RESTRICTIONS.
None of the Parent, the Company nor any Subsidiary of the Company is a
party or subject to any contract, agreement, or charter or other corporate
restriction, which has or could be reasonably expected to have a Material
Adverse Effect. None of the Parent, the Company nor any Subsidiary of the
Company is a party or subject to any Restrictive Agreements (including, without
limitation, any
11
agreement or contract that restricts its right or ability to issue capital stock
or rights with respect thereto), except as set forth on Schedule 4.17, none of
which prohibit the execution or delivery of any of the Financing Documents by
any Obligor or the performance by any Obligor of its obligations under any of
the Financing Documents to which it is a party, in accordance with the terms of
such Financing Documents.
4.18. NO DEFAULTS.
Except as disclosed on Schedule 4.18 with respect to the Original Note
Purchase Agreements (it being agreed hereto that all such Defaults and Events of
Default on such Schedule 4.18 are hereby waived by you as of the effectiveness
of this Agreement), no event has occurred and no condition exists which would,
upon or after the execution and delivery of the Financing Documents and after
giving effect to the Acquisition or the Obligors' performance hereunder,
constitute a Default or an Event of Default.
4.19. LEASES.
Schedule 4.19 is a complete listing of (a) all Material capitalized
leases of the Company and the Domestic Subsidiaries and (b) all Material
operating leases of the Company and the Subsidiary Guarantors as of the
Restatement Date. Each of the Company and the Company's Subsidiaries is in
substantial compliance with all of the terms of each of its respective
capitalized and operating leases which are Material and there is no basis upon
which the lessors under any such leases could terminate same or declare the
Company or any of the Company's Subsidiaries in default thereunder.
4.20. PENSION PLANS.
Except as disclosed on Schedule 4.20, neither the Company nor any
Subsidiary of the Company has any Plan on the Restatement Date. The Company and
each such Company Subsidiary is in substantial compliance with the requirements
of ERISA and the regulations promulgated thereunder with respect to each Plan.
No fact or situation that is reasonably likely to result in a Material Adverse
Effect exists in connection with any Plan. Except as disclosed on Schedule 4.20,
neither the Company nor any of the Company's Subsidiaries has any withdrawal
liability in connection with a Multiemployer Plan.
4.21. LABOR RELATIONS.
Except as described on Schedule 4.21, neither the Company nor any of
its Subsidiaries is a party to any collective bargaining agreement. There are no
Material grievances, disputes or controversies with any union or any other
organization of the Company's or any such Subsidiary's employees, or, to the
12
Company's knowledge, any threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
4.22. NOT A REGULATED ENTITY.
No Obligor is (a) an "investment company" or a "person directly or
indirectly controlled by or acting on behalf of an investment company" within
the meaning of the Investment Company Act of 1940; (b) a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935; or (c) subject to regulation
under the Federal Power Act, the Interstate Commerce Act, any public utilities
code or any other Applicable Law regarding its authority to incur Debt.
4.23. MARGIN STOCK.
No Obligor is engaged, principally or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock.
4.24. THE ACQUISITION.
(a) All Documents Provided; No Other Agreements. The Parent
and the Company have provided to the Current Holders true, correct and
complete copies of the Acquisition Documents. There is no agreement or
understanding between any of the parties to the Acquisition Documents
except as set forth in the Acquisition Documents.
(b) Closing of the Acquisition. The Acquisition has been
closed.
(c) Governmental Consent; Xxxx-Xxxxx-Xxxxxx. All consents,
approvals and authorizations of, and filings, registrations and
qualifications with, any Governmental Authority on the part of the
Parent, the Company and the Acquired Company required in connection
with the consummation of the Acquisition have been obtained or made and
remain in full force and effect, except for any thereof which the
Parent, the Company or the Acquired Company has failed to obtain if
such failure, in the aggregate for all such consents, approvals,
authorizations, filings, registrations and qualifications not so
obtained or made, would not reasonably be expected to have a Material
Adverse Effect. Specifically, the Parent is the "Ultimate Parent
Entity" (as such term is defined in the rules promulgated under the
Xxxx-Xxxxx-Xxxxxx Act) of the Company.
5. REPRESENTATIONS OF CURRENT HOLDERS
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5.1. PURCHASE FOR INVESTMENT.
Each of the Current Holders will acquire the Notes and the Registrable
Shares acquired by it hereunder for its own account for investment and not with
a view to distributing all or any part thereof except for resales of Registrable
Shares pursuant to a registration statement as contemplated in Section 6.14 and
except for sales or other transfers of Notes or Registrable Shares in
transactions registered under the Securities Act or exempt from registration
under the Securities Act. The Current Holders acknowledge that (a) the Notes
have not been registered under the Securities Act; (b) the Parent is under no
obligation to file a registration statement with the SEC with respect to the
Notes, and (c) as such, these Securities may be resold without registration
under the Securities Act only in certain limited circumstances described
therein.
5.2. INVESTOR QUALIFICATIONS.
Each of the Current Holders (a) has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of its investment in the Securities acquired by it hereunder, including
but not limited to the Registrable Shares; (b) is able to bear the complete loss
of its investment in the Securities acquired by it hereunder, including, but not
limited to the Registrable Shares; (c) has had the opportunity to ask questions
of, and receive answers from, the Parent, the Company and their management
concerning the business and prospects of the Parent and the Company,
respectively, and to obtain any additional information, to the extent available
without unreasonable effort and without a breach of confidentiality obligations;
(d) is an accredited investor within the meaning of Rule 501 of the Securities
Act; and (e) acknowledges that in connection with the decision to enter into
this Agreement, such Current Holder has (i) received and had the opportunity to
review a copy of the Proxy Statement/Prospectus dated September 17, 2001 issued
by the Parent and the Company to the Company's stockholders in connection with
the Acquisition, (ii) had the opportunity to review copies of (1) the Parent's
Annual Report on Form 10-K for the year ended December 31, 2000, (2) the
Parent's Quarterly Reports on Forms 10-Q for the quarterly periods ended March
30, 2001 and June 30, 2001, respectively, and (3) such forms, reports and
documents of the Parent, including any Current Reports on Form 8-K filed since
December 31, 2000, as are available through the Electronic Data Gathering and
Retrieval System of the SEC and as such Current Holder believed appropriate to
review in connection with its decision hereunder.
5.3. MATERIAL, NON-PUBLIC INFORMATION.
Each Current Holder acknowledges that it is aware of, and it will
advise its employees, agents and representatives who are informed of any
material, non-public information regarding the Parent of, the restrictions
imposed by the United
14
States Securities laws on the purchase or sale of Securities by any Person who
has received material, non-public information from the issuer of such Securities
and on the communication of such information to any other Person when it is
reasonably foreseeable that such other Person is likely to purchase or sell such
Securities in reliance upon such information.
5.4. ACCEPTABLE CREDIT FACILITY.
Each Current Holder agrees to enter into one or more intercreditor
agreements with the lender under an Acceptable Credit Facility pursuant to which
each Current Holder agrees to (a) subordinate, on terms and conditions
reasonably satisfactory to each such Current Holder, all Liens granted by the
Subsidiary Guarantors to the holders of the Notes to the Liens granted by any
Subsidiary Guarantor to the lender under an Acceptable Credit Facility, and (b)
provide the lender under an Acceptable Credit Facility with 10 days prior notice
before any holder of Notes or the Agent takes action to foreclose its Liens on
the assets of such Subsidiary Guarantors.
6. GENERAL COVENANTS
Each of the Obligors covenants that on and after the Restatement Date
and after giving effect to the Acquisition and so long as any of the Obligations
shall be outstanding:
6.1. VISITS AND INSPECTIONS.
The Company shall permit your representatives and representatives of
the other Current Holders, during normal business hours, to (a) visit and
inspect the Properties of the Company and the Domestic Subsidiaries once per
Fiscal Year (or if a Default or Event of Default has occurred, from time to
time, and as often as may be requested), (b) discuss on a quarterly basis or
more frequently as herein described, with its or their officers, employees and
independent accountants, the Company and the Company's Subsidiaries' business,
assets, liabilities, financial condition, business prospects and results of
operations, and (c) conduct field audits once per Fiscal Year (or if a Default
or Event of Default has occurred, from time to time, and as often as may be
requested). If a Default or an Event of Default has occurred and is continuing,
expenses incurred by the holders of the Notes in connection with this Section
shall be paid by the Company in accordance with Section 13.1.
6.2. NOTICES.
The Parent or the Company shall promptly notify each holder of Notes in
writing of the occurrence of any event or the existence of any fact which
renders any representation or warranty in this Agreement (including the Parent
Guaranty) or
15
any of the other Financing Documents inaccurate, incomplete or misleading in any
Material respect.
6.3. FINANCIAL AND OTHER INFORMATION.
The Parent shall:
(a) keep, and cause each of the Company and each Subsidiary of
the Company to keep, adequate records and books of account with respect
to its business activities in which proper entries are made in
accordance with GAAP reflecting all its financial transactions; and
cause to be prepared and furnished to each holder of Notes the
following (all to be prepared in accordance with GAAP applied on a
consistent basis, unless the Parent's certified public accountants
concur in any change therein and such change is disclosed to each
holder of Notes and is consistent with GAAP);
(b) (i) deliver not later than one hundred five (105) days
after the close of each Fiscal Year (beginning with Fiscal Year ended
December 31, 2001), its Annual Report on Form 10-K for such fiscal year
(together with the Parent's annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in
accordance with the requirements therefor and filed with the SEC; and
(ii) shall cause the Company to deliver not later than one hundred five
(105) days after the close of each of the Company's fiscal years
(beginning with fiscal year ended December 31, 2001) financial
statements of the Company and the Subsidiaries of the Company as of the
end of such year, on a Consolidated and consolidating basis, certified
by the chief financial officer of the Company as prepared in accordance
with GAAP;
(c) (i) deliver not later than forty-five (45) days after the
end of each Fiscal Quarterly accounting period, including the last
quarter of the Fiscal Year and beginning with the Fiscal Quarter ended
December 31, 2001 the Parent's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the SEC;
and (ii) shall cause the Company to deliver not later than forty-five
(45) days after the end of each fiscal quarterly accounting period,
including the last quarter of the Company's fiscal year and beginning
with the fiscal quarter ended December 31, 2001, interim financial
statements of the Company and the Subsidiaries of the Company as of the
end of such quarter and of the portion of the Company's financial year
then elapsed, on a Consolidated and consolidating basis, certified by
the chief financial officer of the Company as prepared in accordance
with GAAP;
16
(d) deliver not later than twenty (20) days after the end of
each month hereafter, including the last month of the Fiscal Year and
beginning with the Parent's fiscal month ended November 30, 2001, a
statement of consolidated cash on hand of the Parent and its
Subsidiaries;
(e) deliver promptly after the sending thereof copies of any
proxy statements, financial statements or reports which the Parent or
the Company or any of the Company's Subsidiaries has made available to
the Parent's shareholders and copies of any regular, periodic and
special reports or registration statements which the Parent, the
Company and the Company's Subsidiaries files with the SEC or any
Governmental Authority which may be substituted therefor, or any
national securities exchange;
(f) promptly after the sending to any holder of Notes, deliver
any statement, report or certificate of the Parent, the Company or any
Subsidiary, including without limitation any previously furnished
pursuant to an Acceptable Credit Facility, copies of such statement,
report or certificate to the extent that the information contained in
such statement, report or certificate has not already been delivered to
each holder of Notes;
(g) promptly after the execution thereof, deliver copies of
any Acceptable Credit Facility and all amendments, waivers and
modifications thereto;
(h) promptly after (and in any event within 3 Business Days
of) becoming aware (A) of the existence of any condition or event which
constitutes a Default or an Event of Default, or (B) that the holder of
any Note, or of any Debt, shall have given notice or taken any other
action with respect to a claimed Default, Event of Default, or default
or event of default, a notice specifying the nature of the claimed
Default, Event of Default, or default or event of default and the
notice given or action taken (if any) by such holder and what action
the Parent or the Company is taking or proposes to take with respect
thereto; and
(i) deliver such other data and information (financial and
otherwise) as any holder of Notes, from time to time, may reasonably
request, bearing upon or related to the Collateral or the Company or
the Subsidiary Guarantors financial condition or results of operations;
Concurrently with the delivery of the financial statements described
in clauses (b), (c) and (d) of this Section 6.3, the Company shall cause to be
prepared and furnished to each holder of Notes a Compliance Certificate on
behalf of the Parent executed by the chief financial officer of the Parent.
6.4. TAXES.
17
Each Obligor shall pay and discharge all Taxes prior to the date on
which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.
6.5. COMPLIANCE WITH LAWS.
Each Obligor shall comply with all Applicable Law, including ERISA, all
Environmental Laws, OSHA, FLSA and all laws, statutes, regulations and
ordinances regarding the collection, payment and deposit of Taxes, and obtain
and keep in force any and all Governmental Approvals necessary to the ownership
of its Properties or to the conduct of its business, to the extent that any such
failure to comply, obtain or keep in force could be reasonably expected to have
a Material Adverse Effect.
6.6. INSURANCE.
In addition to the insurance required pursuant to the Financing
Documents with respect to the Collateral, each of the Obligors shall maintain
with financially sound and reputable insurers, (a) insurance with respect to its
Properties and business against such casualties and contingencies of such type
(including product liability, workers' compensation, larceny, embezzlement, or
other criminal misappropriation insurance) and in such amounts as is customary
in the business of such Obligor, as the case may be and (b) business
interruption insurance in an amount solely for the Company and the Company's
Subsidiaries of not less than $13,860,886 in the aggregate.
6.7. INTELLECTUAL PROPERTY.
The Company shall, promptly after applying for or otherwise acquiring
any Intellectual Property, deliver to each holder of Notes (or the Agent for
their benefit), in form and substance acceptable to the Required Holders and in
recordable form, all documents necessary for the holders of Notes to perfect
their Lien on such Intellectual Property.
6.8. PLEDGED SHARES.
Within 15 days of acquiring any Equity Interests in a Domestic
Subsidiary, the Company or the Subsidiary Guarantor, as the case may be, shall
pledge to the Agent, for the benefit of itself and each holder of Notes from
time to time, a security interest in 100% of the Equity Interests it owns in
each such Domestic Subsidiary.
6.9. PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.
The Company will punctually pay, or cause to be paid, the principal of,
and interest on, the Notes, as and when the same shall become due according to
the
18
terms hereof and of the Notes, and will maintain an office at the address of
the Company as provided on Annex 1 hereto where notices, presentations and
demands in respect hereof or the Notes may be made upon it. Such office will be
maintained at such address until such time as the Company notifies the holders
of the Notes of any change of location of such office, which will in any event
be located within the United States of America.
6.10. DOMESTIC SUBSIDIARY GUARANTIES.
The Company will cause each Person that becomes a Domestic Subsidiary
at any time after the Restatement Date to execute and deliver to the holders of
Notes, within 15 days of such Person becoming a Domestic Subsidiary, a
Subsidiary Guaranty in respect of the Notes. At the time each such Domestic
Subsidiary executes such Subsidiary Guaranty, the Company shall cause such
Domestic Subsidiary to deliver to each holder of Notes a certificate of the
secretary or assistant secretary of such Domestic Subsidiary attaching and
certifying as true, complete and accurate copies of the constitutive documents
of such Domestic Subsidiary and corporate resolutions (or equivalent)
authorizing such transaction, in each case certified as true and correct by an
appropriate officer of such Domestic Subsidiary.
6.11. ORDER PROCESSING.
(a) The Company and each Subsidiary of the Company will place
and process orders with you and all other publisher vendors immediately
upon, and in no case later than 5 Business Days of, receipt of orders
or order requests from the Company's or its Subsidiary's customers to
the Company or any Subsidiary for products sold by you and/or all other
publisher vendors.
(b) The Company and each Subsidiary of the Company will pay to
each publisher vendor with whom the Company or such Subsidiary has
placed an order pursuant to Section 6.11(a) an amount equal to the
sales price of such orders placed with each such publisher (net of
customary commissions), such payments to be made in accordance with
each such publisher's customary practices (a "VENDOR RECEIVABLE").
6.12. CUSTOMER DEPOSITS.
The Company and each Subsidiary of the Company will reimburse, within
10 days of when requested, any and all customers of the Company and its
Subsidiaries, for the amount of all deposits made and actually received by the
Obligors or the Company's Subsidiaries by such customers ("CUSTOMER DEPOSITS")
with respect to orders with publisher vendors that have not yet been placed and
for which such customer has requested reimbursement.
19
6.13. EQUIPMENT.
The Company and the Subsidiary Guarantors shall maintain all Equipment
in a manner consistent with the ordinary course of such Person's business.
Neither the Company nor any Subsidiary Guarantor will permit any of its
Equipment to become affixed to any real Property leased to such Subsidiary
Guarantor so that an interest arises therein under the real estate laws of the
applicable jurisdiction unless the landlord of such real Property has executed a
landlord waiver or leasehold mortgage in favor of and in form acceptable to
Agent, and no such Subsidiary Guarantor will permit any of its Equipment to
become an accession to any personal Property other than Equipment that is
subject to Liens in favor of you and the other Current Holders and other
Permitted Liens.
6.14. REGISTRATION OF CONVERSION SHARES.
(a) Within seven (7) Business Days following the Restatement
Date, the Parent will file with the SEC a registration statement (the
"REGISTRATION STATEMENT") on Form S-3 or other appropriate form for the
purpose of registering under the Securities Act the public resale of
all of the Registrable Shares by the Holders in a non-underwritten
offering. For purposes of this Agreement, "REGISTRABLE SHARES" means
shares of Common Stock of the Parent issuable upon conversion of the
Notes. Prior to filing the Registration Statement with the SEC, but
within three (3) Business Days of the Restatement Date, the Parent will
provide an opportunity to each Current Holder to review and comment to
(within 24 hours of receipt thereof) a draft prepared by the Parent's
counsel of the Registration Statement and the Prospectus (as defined
below). Thereafter, the Parent will use its reasonable best efforts to
cause the Registration Statement to become effective as promptly as
practicable and (subject to the rest of this Section 6.14) to remain
effective with respect to a Registrable Share until such time at which
such Registrable Share: (i) has been resold pursuant to the
Registration Statement or otherwise or (ii) is eligible for resale
pursuant to Rule 144 under the Securities Act without any volume
restrictions. The registration expenses (exclusive of underwriting or
broker-dealer discounts and commissions of the Current Holders and any
transfer taxes relating to Registrable Shares sold by such Current
Holder) and the reasonable legal fees and expenses of one counsel for
the Current Holders with respect to the Registration Statement shall be
borne by the Parent.
(b) Notwithstanding the foregoing but without limiting the
obligation to file the Registration Statement within seven (7) Business
Days following the Restatement Date or any other provision of the
Notes, the Parent, from time to time, may suspend the effectiveness of
the Registration Statement and/or the rights of the Current Holders to
sell Registrable Shares pursuant
20
to the Registration Statement if Parent determines in good faith the
Registration Statement or prospectus included therein (the
"PROSPECTUS") should be amended (including amendments to be made by
filing with the SEC any document(s) that will be incorporated into the
Registration Statement and Prospectus) or supplemented or that such
effectiveness or sales is or are reasonably likely (i) to adversely
affect any material acquisition, financing, or other transaction then
contemplated by the Parent, or (ii) to involve disclosure obligations
which the Parent has a bona fide business purpose for keeping
confidential; provided, that the Parent may not exercise this
suspension right for more than sixty (60) days in any six-month period.
If the Parent exercises this suspension right, no Holder will sell any
Registrable Shares pursuant to the Registration Statement until the
Parent advises that the relevant transaction has been abandoned or
disclosed and/or that Registration Statement or Prospectus has been
appropriately amended or supplemented, and the Parent will use its
reasonable best efforts to cause any amendment or supplement to the
Registration Statement or Prospectus to be made as promptly as
practicable (but in any event within fifteen (15) days) after the date
on which it exercises such suspension right. For purposes of this
paragraph, "Current Holder" includes any subsequent transferee of
Registrable Shares.
(c) It shall be a condition precedent to the obligation of the
Parent to include any Registrable Shares of a Current Holder in the
Registration Statement or Prospectus pursuant to this Section 6.14 that
such Current Holder shall furnish to Parent such information regarding
itself, the Securities of the Parent, including such Registrable
Shares, beneficially owned by it, and the intended method of
disposition of such Registrable Shares as shall be reasonably requested
by the Parent to effect the registration of such Registrable Shares.
Each Current Holder that has included Registrable Shares in a
Registration Statement shall thereafter furnish promptly to the Parent
all information required to make the information previously furnished
to the Parent by such Current Holder not materially misleading and
shall promptly notify the Parent of the sale of such Current Holder's
Registrable Shares pursuant to the Registration Statement, including
the number of Registrable Shares so sold.
(d) Indemnification. In the event any Registrable Shares are
included in a Registration Statement in accordance with Section
6.14(a), then:
(i) By the Parent. The Parent agrees to indemnify and
hold harmless each Current Holder and each Person, if any, who
controls any Current Holder within the meaning of either
section 15 of the Securities Act or section 20 of the Exchange
Act, and the Agent from and against all losses, claims,
damages and liabilities (including,
21
without limitation, any legal or other expenses reasonably
incurred by such Current Holder or controlling Person in
connection with defending any such action or claim) caused by
any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto) pursuant to which such Current Holder's Registrable
Shares were registered under the Securities Act, or caused by
any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or caused by any untrue
statement or alleged untrue statement of a material fact
contained in any related Prospectus (as amended or
supplemented if the Parent shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make
the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities were caused by any such
untrue statement or omission or alleged untrue statement or
omission based upon information furnished to Parent by, or on
behalf of, such Current Holder or the Agent, as the case may
be, for use therein; provided, however, that the foregoing
indemnity with respect to any Prospectus shall not inure to
the benefit of any Current Holder from whom the Person
asserting any such losses, claims, damages or liabilities
acquired Registrable Shares, or any Person controlling such
Current Holder, if, after the Parent has furnished such
Current Holder with a sufficient number of copies of the final
Prospectus (as then amended or supplemented if the Parent
shall have furnished any amendments or supplements thereto), a
copy of such final Prospectus was not sent by, or delivered on
behalf of, such Current Holder to such Person at or prior to
the written confirmation of the sale of the Registrable Shares
to such Person and the final Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability.
(ii) By Current Holders. Each Current Holder agrees,
severally and not jointly, to indemnify and hold harmless the
Parent and each of its directors, each of its officers who
sign the applicable Registration Statement and each Person if
any, who controls Parent within the meaning of either section
15 of the Securities Act or section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Parent to
the Current Holders pursuant to Section 6.14(d)(i), but only
with respect to (A) an untrue statement or alleged untrue
statement or an omission or alleged omission based upon
information furnished to the Parent in writing by, or on
behalf of, such Current Holder for use in the applicable
Registration Statement (or any amendment hereto) or
22
any related Prospectus (or any amendments or supplement
thereto) or (B) any liability in connection with a violation
of the Securities Act as a result of the purchase or sale by
such Current Holder or anyone acquiring such material,
nonpublic information through such Current Holder of
Securities of the Parent while in possession of material,
nonpublic information.
(e) Indemnification. In case any proceeding (including any
governmental investigation) shall be instituted involving any Person in
respect of which indemnity may be sought pursuant to either Section
6.14(d)(i) or 6.14(d)(ii) above, such Person (as used in this Section
6.14(e), the "Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (as used in this Section
6.14(e), the "Indemnifying Party") in writing and, unless in such
Indemnified Party's and its counsel's reasonable judgment a conflict of
interest between such Indemnified Party and Indemnifying Party exists
with respect to such proceeding, shall permit the Indemnifying Party to
assume the defense of such proceeding with counsel reasonably
satisfactory to the Indemnified Party and the Indemnifying Party shall
pay the fees and disbursements of such counsel related to such
proceeding. It is understood that if an Indemnifying Party does not
assume the defense of a proceeding, such Indemnifying Party shall not,
in connection with such proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for (i) the Parent,
its directors, its officers who signed the applicable Registration
Statement and each Person, if any, who controls the Parent or (ii) each
Current Holder and all Persons, if any, who control such Current Holder
and the Agent, as the case may be, and that all such fees and expenses
shall be reimbursed as they are incurred, provided that such
Indemnifying Party shall be liable for the expenses of more than one
counsel if, in an Indemnified Party's and its counsel's reasonable
judgment a conflict of interest between such Indemnified Party and the
other Indemnified Parties exists with respect to such proceeding. In
such case involving Current Holders and such Persons who control
Current Holders and the Agent, such firm shall be designated in writing
by the Current Holders of a majority of the Registrable Shares that are
Indemnifying Parties with respect to such matter. The Indemnified Party
shall cooperate with the Indemnifying Party and shall furnish the
Indemnifying Party all information available to the Indemnified Party
which relate to such action or claim that the Indemnifying Party may
reasonably request. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which such Indemnified Party is or could have
been a party and indemnity could have
23
been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such proceeding.
7. PAYMENTS
7.1. INTEREST PAYMENTS.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months and shall accrue on the unpaid principal balance of each
of the Notes from time to time outstanding from and including the date of such
Note at a rate per annum equal to the Floating Rate payable, pursuant to Section
7.3, on the Prepayment Date and on the Maturity Date, and, to the extent
permitted by law in respect of any Note, on any overdue payment of principal and
any overdue payment of interest, payable on demand, at a rate per annum equal to
the lesser of:
(a) the Maximum Legal Rate of Interest; and
(b) the Floating Rate plus two percent (2%) per annum (the
"DEFAULT RATE").
All overdue payments shall compound interest on a monthly basis at the
rate set forth above.
7.2. OPTIONAL PRINCIPAL PAYMENTS.
The Company may not, without your prior written consent, prepay the
principal amount of the Notes in whole or in part, at any time unless otherwise
required by this Agreement.
7.3. REQUIRED PAYMENTS.
On the Prepayment Date, the Company shall be required: (x) only at your
sole election, to prepay up to 75% (but in no event more than the amount
indicated in Section 7.3(a)(iii) hereof) of the principal amount of the Notes
held by you in accordance with this Section 7.3 and (y) to pay all interest
accrued to such Prepayment Date on the entire principal amount of all Notes held
by you. Subject to Section 10.1 and this Section 7.3, any remaining principal
of, and the interest then accrued and unpaid on, the Notes shall be due and
payable on the Maturity Date.
(a) Notice of Payment. You shall provide written notice of a
required prepayment of the Notes pursuant to this Section 7.3(a) to the
Company not less than five (5) days and no more than fifteen (15) days
prior to the Prepayment Date, stating:
24
(i) the Prepayment Date;
(ii) that such payment is to be made pursuant to this
Section 7.3;
(iii) the principal amount of each Note required to
be paid on the Prepayment Date; and
(iv) the interest required to be paid on all Notes
held by you, accrued to the Prepayment Date.
Notice of payment having been so given to the Company, the
aggregate principal amount of the Notes to be paid stated in such
notice, and interest on all Notes accrued to the Prepayment Date, shall
become due and payable on the Prepayment Date.
(b) Notice to Other Holders of Notes. You shall have provided
a copy of the notice delivered in Section 7.3(a) to each other holder
of Notes, provided, that the Company shall have no liability to any
other holder of the Notes if payment of interest is made to you
pursuant to this Section 7.3 and you fail to comply with any of the
terms of this Section 7.3(b).
7.4. CONVERSION PRIVILEGE AND CONVERSION RATE.
(a) Conversion Rate. Subject to and upon compliance with the
provisions of this Section 7.4, at your option at any time, the Notes
held by you or any portion which is $50,000 or an integral multiple
thereof may be converted into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/100th of a share) of
Common Stock at the Conversion Rate, determined as hereinafter
provided, in effect at the time of conversion. The rate at which shares
of Common Stock shall be delivered upon conversion of each $50,000
principal amount of the Notes held by you (herein called the
"CONVERSION Rate") shall be initially the result of (a) 50,000 divided
by (b) a per share price to be equal to the average Closing Price of
the Common Stock over the 10 consecutive Trading Days immediately prior
to and including the Restatement Date. The Conversion Rate shall be
adjusted in certain instances as provided in this Section 7.4.
(b) Exercise of Conversion Privilege. In order to exercise the
conversion privilege, you shall surrender the Notes held by you, duly
endorsed or assigned to the Company or in blank, at the office of the
Company referred to in Section 15, accompanied by a written statement
stating that you elect to convert the Note or Notes held by you or, if
less than the entire principal amount thereof is to be converted (but
in no event less than $50,000), the portion thereof to be converted.
Interest accrued in
25
respect of any portion of the Notes surrendered for conversion shall be
paid to you on the Prepayment Date or, to the extent the Prepayment
Date has already passed, the Maturity Date, notwithstanding the
exercise of the right of conversion. The Notes shall be deemed to have
been converted immediately prior to the close of business on the day of
surrender of the Notes for conversion in accordance with the foregoing
provisions, and at such time your rights as a holder of the Notes shall
cease with respect to the portion so converted, and the Person or
Persons entitled to receive the Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of
such Common Stock at such time. As promptly as practicable on or after
the conversion date (but in no event more than five (5) Business Days
after the conversion date), the Parent shall issue and deliver to you,
a certificate or certificates for the number of full shares of Common
Stock issuable upon conversion, together with payment in lieu of any
fraction of a share, as provided in Section 7.4(c). After the
Registration Statement becomes effective, all shares of Common Stock
delivered upon conversion shall rank pari passu with other shares of
Common Stock and will be freely tradeable subject to Sections 5.3 and
6.14(b). In case any Note or Notes held by you are converted in part
only, upon such conversion the Company shall execute and deliver to
you, at the expense of the Company, a new Note, substantially in the
form of the Note so delivered to the Company, in an aggregate principal
amount equal to the unconverted portion of the principal amount of such
Note.
(c) Fractions of Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Notes held by you. Instead of
any fractional share of Common Stock which would otherwise be issuable
upon conversion of the Notes held by you (or specified portions
thereof), the Company shall calculate and pay a cash adjustment in
respect of such fraction (calculated to the nearest 1/100th of a share)
in an amount equal to the same fraction of the Closing Price at the
close of business on the day immediately preceding the date of
conversion; alternatively, at the option of the Parent the Parent shall
round up to the next higher whole share.
(d) Adjustment of Conversion Rate. The Conversion Rate shall
be subject to adjustments from time to time as follows:
(i) In case the Parent shall pay or make a dividend
or other distribution on any class of Capital Stock of the
Parent payable in shares of any class of common stock of the
Parent, the Conversion Rate in effect at the opening of
business on the day following the date fixed for the
determination of shareholders entitled to receive such
dividend or other distribution shall be increased by dividing
such Conversion Rate by a fraction of which the numerator
shall be the number of
26
shares of all classes of common stock of the Parent
outstanding at the close of business on the date fixed for
such determination and the denominator shall be the sum of
such number of shares and the total number of shares
constituting such dividend or other distribution, such
increase to become effective immediately after the opening of
business on the day following the date fixed for such
determination. In the event that such dividend or distribution
is not so paid or made, the Conversion Rate shall again be
adjusted to the Conversion Rate that would then be in effect
if such dividend or distribution had not been declared. For
the purposes of this Section 7.4(d)(i), the number of shares
of common stock of the Parent at any time outstanding shall
not include shares held in the treasury of the Parent but
shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of common stock of the
Parent. The Parent will not pay any dividend or make any
distribution on shares of Capital Stock of the Parent held in
the treasury of the Parent.
(ii) Subject to the last sentence of paragraph (v) of
this Section 7.4(d), in case the Parent shall after the date
hereof, issue rights, options or warrants to all holders of
any class of its common stock entitling them to subscribe for
or purchase shares of common stock at a price per share less
than the current market price per share (determined as
provided in paragraph (vi) of this Section 7.4(d)) of the
common stock on the date fixed for the determination of
shareholders entitled to receive such rights, options or
warrants, the Conversion Rate in effect at the opening of
business on the day following the date fixed for such
determination shall be increased by dividing such Conversion
Rate by a fraction of which the numerator shall be the number
of shares of common stock outstanding at the close of business
on the date fixed for such determination plus the number of
shares of common stock which the aggregate of the offering
price of the total number of shares of common stock so offered
for subscription or purchase would purchase at such current
market price and the denominator shall be the number of shares
of common stock outstanding at the close of business on the
date fixed for such determination plus the number of
additional shares of common stock so offered for subscription
or purchase, such increase to become effective immediately
after the opening of business on the day following the date
fixed for such determination. For the purposes of this
paragraph (ii), the number of shares of common stock at any
time outstanding shall not include shares held in the treasury
of the Parent but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of
common stock. The Parent will not issue any rights, options or
warrants in respect of shares of common
27
stock held in the treasury of the Parent. To the extent that
shares of common stock are not delivered after the expiration
or termination of such rights, options or warrants, the
Conversion Rate shall be readjusted to the Conversion Rate
that would then be in effect had the adjustment made upon the
issuance of such rights, options or warrants been made on the
basis of delivery of only the number of shares of common stock
actually delivered.
(iii) Except as may otherwise be provided for in
7.4(d)(i), in case outstanding shares of common stock shall be
subdivided into a greater number of shares of common stock,
the Conversion Rate in effect at the opening of business on
the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and, conversely,
in case outstanding shares of common stock shall each be
combined into a smaller number of shares of common stock, the
Conversion Rate in effect at the opening of business on the
day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately
after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(iv) Subject to the last sentence of this paragraph
(iv) and the last sentence of paragraph (v) of this Section
7.4(d), in case the Parent shall, by dividend or otherwise,
distribute to all holders of its common stock evidences of its
indebtedness, shares of any class of Capital Stock, or other
property (including Securities, but excluding (A) any rights,
options or warrants referred to in paragraph (ii) of this
Section 7.4(d), (B) any dividend or distribution paid
exclusively in cash, (C) any dividend or distribution referred
to in paragraph (i) of this Section 7.4(d) and (D) any merger
or consolidation to which Section 7.4(k) applies), the
Conversion Rate shall be increased so that the same shall
equal the rate determined by dividing the Conversion Rate in
effect immediately prior to the close of business on the date
fixed for the determination of shareholders entitled to
receive such distribution by a fraction of which the numerator
shall be the current market price per share (determined as
provided in paragraph (vi) of this Section 7.4(d)) of the
common stock on the date fixed for such determination less the
then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and
described in a Board Resolution delivered to you) of the
portion of the assets, shares or evidences of indebtedness so
distributed applicable to one share of common stock and the
denominator shall be such current market price per share of
the common stock, such adjustment to become effective
immediately
28
prior to the opening of business on the day following the date
fixed for the determination of shareholders entitled to
receive such distribution. If the Board of Directors
determines the fair market value of any distribution for
purposes of this paragraph (iv) by reference to the actual or
when issued trading market for any Securities comprising such
distribution, it must in doing so consider the prices in such
market over the same period used in computing the current
market price per share pursuant to paragraph (vi) of this
Section 7.4(d). In lieu of making the foregoing adjustment, in
the event that the Parent shall distribute rights or warrants
relating to Securities of the Parent (other than those
referred to in paragraph (ii) of this Section) ("RIGHTS") pro
rata to holders of common stock, the Parent shall make proper
provision so that you and each holder of the Notes who
converts the Notes (or any portion thereof) after the record
date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon
such conversion, in addition to the shares of Common Stock
issuable upon such conversion (the "CONVERSION SHARES"), a
number of Rights to be determined as follows: (x) if such
conversion occurs on or prior to the date for the distribution
to the holders of Rights of separate certificates evidencing
such Rights (the "DISTRIBUTION DATE"), the same number of
Rights to which a holder of a number of shares of common stock
equal to the number of Conversion Shares is entitled at the
time of such conversion in accordance with the terms and
provisions of and applicable to the Rights; and (y) if such
conversion occurs after the Distribution Date, the same number
of Rights to which a holder of the number of shares of common
stock into which the principal amount of the Notes so
converted was convertible immediately prior to the
Distribution Date would have been entitled on the Distribution
Date in accordance with the terms and provisions of and
applicable to the Rights. In the event that such dividend or
distribution is not so paid or made, the Conversion Rate shall
again be adjusted to the Conversion Rate that would then be in
effect if such dividend or distribution had not been declared.
(v) The reclassification of Common Stock into
Securities other than common stock (other than any
reclassification upon a consolidation or merger to which
Section 7.4(k) applies) shall be deemed to involve (A) a
distribution of such Securities other than common stock to all
holders of common stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of shareholders entitled to receive such
distribution" and "the date fixed for such determination"
within the meaning of paragraph (iv) of this Section 7.4(d)),
and (B) a subdivision or
29
combination, as the case may be, of the number of shares of
common stock outstanding immediately prior to such
reclassification into the number of shares of common stock
outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon
which such combination becomes effective", as the case may be,
and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (iii) of
this Section 7.4(d)). Rights or warrants issued by the Parent
to all holders of its common stock entitling the holders
thereof to subscribe for or purchase shares of common stock,
which rights or warrants (x) are deemed to be transferred with
such shares of common stock, (y) are not exercisable and (z)
are also issued in respect of future issuances of common
stock, in each case in clauses (x) through (z) until the
occurrence of a specified event or events ("TRIGGER EVENT"),
shall for purposes of this Section 7.4(d) not be deemed issued
(and no adjustment to the Conversion Rate shall be required)
until the occurrence of the earliest Trigger Event.
(vi) For the purpose of any computation under
paragraphs (ii) or (iv) of this Section 7.4(d), the current
market price per share of Common Stock on any date shall be
calculated by the Parent and be deemed to be the average of
the daily Closing Prices for the five consecutive Trading Days
selected by the Parent commencing not more than 10 Trading
Days before, and ending not later than, the earlier of the day
in question and the day before the "ex" date with respect to
the issuance or distribution requiring such computation. For
purposes of this paragraph, the term "ex date", when used with
respect to any issuance or distribution, means the first date
on which the common stock trades regular way in the applicable
Securities market or on the applicable Securities exchange
without the right to receive such issuance or distribution.
(vii) No adjustment in the Conversion Rate shall be
required unless such adjustment (plus any adjustments not
previously made by reason of this paragraph (vii)) would
require an increase or decrease of at least one percent in
such rate; provided, however, that any adjustments which by
reason of this paragraph (vii) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 7.4
shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
30
(viii) The Parent may make such increases in the
Conversion Rate, for the remaining term of the Notes or any
shorter term, in addition to those required by paragraphs (i),
(ii), (iii) and (iv) of this Section 7.4(d), as it considers
to be advisable in order to avoid or diminish any income tax
to any holders of shares of Common Stock resulting from any
dividend or distribution of stock or issuance of rights or
warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes. The Parent shall have
the power to resolve any ambiguity or correct any error in the
application of this paragraph (viii) and its actions in so
doing shall, absent manifest error, be final and conclusive.
(e) Notice of Adjustments of Conversion Rate. Whenever the
Conversion Rate is adjusted as provided in Section 7.4(d) the Parent
shall compute the adjusted Conversion Rate in accordance with Section
7.4(d) and shall prepare a certificate signed by the chief financial
officer or the treasurer of the Parent setting forth the adjusted
Conversion Rate and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall promptly be
delivered to you.
(f) Notice of Certain Corporate Action. In case:
(i) the Parent shall declare a dividend (or any other
distribution) on its common stock payable otherwise than
exclusively in cash; or
(ii) the Parent shall authorize the granting to the
holders of its common stock of rights, options or warrants to
subscribe for or purchase shares of capital stock of any class
or of any other rights; or
(iii) of any reclassification of the common stock
(other than a change in par value) of the Parent, or of any
consolidation, merger (other than a merger which does not
result in any reclassification, conversion, exchange or
cancellation of outstanding shares of common stock) or share
exchange to which the Parent is a party and for which approval
of any shareholders of the Parent is required, or of the
conveyance, sale, transfer or lease of all or substantially
all of the assets of the Parent; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Parent;
then the Parent shall deliver to you and each other holder of the Notes
at least 20 days (or 10 days in any case specified in clause (i) or
(ii) above) prior to the applicable record, expiration or effective
date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of
31
such dividend, distribution, rights, options or warrants, or, if a
record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, rights,
options or warrants are to be determined, or (y) the date on which such
reclassification consolidation, merger, conveyance, transfer, sale,
lease, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of
common stock of record shall be entitled to exchange their shares of
common stock for Securities, cash or other property deliverable upon
such reclassification, consolidation, merger, conveyance, transfer,
sale, lease, dissolution, liquidation or winding up. Neither the
failure to give such notice or the notice referred to in the following
paragraph nor any defect therein shall affect the legality or validity
of the proceedings described in clauses (i) through (iv) of this
Section 7.4(f).
(g) Parent to Reserve Common Stock. The Parent shall at all
times reserve and keep available, free from preemptive rights, out of
its authorized but unissued Common Stock, for the purpose of effecting
the conversion of the Notes, the full number of shares of Common Stock
then issuable upon the conversion of the Notes.
(h) Taxes on Conversions. Except as provided in the next
sentence, the Parent will pay any and all taxes and duties that may be
payable in respect of the issue or delivery of shares of Common Stock
on conversion of the Notes pursuant hereto. The Parent shall not,
however, be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than yours or any other holders of the
Notes, and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Parent the amount of any
such tax or duty, or has established to the satisfaction of the Parent
that such tax or duty has been paid.
(i) Covenant as to Common Stock. The Parent agrees that all
shares of Common Stock which may be delivered upon conversion of the
Notes, upon such delivery, will have been duly authorized and validly
issued and will be fully paid and nonassessable (and shall be issued
out of the Parent's authorized but unissued Common Stock) and, except
as provided in Section 7.4(h), the Parent will pay all taxes, liens and
charges with respect to the issue thereof.
(j) Cancellation of Converted Securities. The Notes when
delivered for conversion shall be cancelled with respect to the
converted portion.
(k) Provision in Case of Consolidation, Merger or Sale of
Assets. In case of any consolidation of the Parent with any other
Person, any merger of
32
the Parent into another Person or of another Person into the Parent
(other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of common
stock of the Parent) or any conveyance, sale, transfer or lease of all
or substantially all of the Properties of the Parent, whether or not
the Notes become due and payable as provided in this Agreement, the
Person formed by such consolidation or resulting from such merger or
which acquires such properties and assets, as the case may be, shall
execute and deliver to you and the other holders of the Notes a written
agreement, in form and substance reasonably satisfactory you and the
other holders of the Notes, providing that you and the other holders of
the Notes shall have the right thereafter, during the period the Notes
shall be convertible as specified in Section 7.4(a), to convert the
Notes only into the kind and amount of Securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease (including any Common Stock retainable) by a holder
of the number of shares of Common Stock of the Parent into which the
Notes might have been converted immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease, assuming
such holder of Common Stock of the Parent, (i) is not a Person with
which the Parent consolidated, into which the Parent merged or which
merged into the Parent or to which such conveyance, sale, transfer or
lease was made, as the case may be (a "CONSTITUENT PERSON"), or an
Affiliate of a Constituent Person and (ii) failed to exercise its
rights of election, if any, as to the kind or amount of Securities,
cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease (provided that if the kind or
amount of Securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease is not the
same for each share of Common Stock of the Parent held immediately
prior to such consolidation, merger, conveyance, sale, transfer or
lease by others than a Constituent Person or an Affiliate thereof and
in respect of which such rights of election shall not have been
exercised ("NON-ELECTING SHARE"), then for the purpose of this Section
7.4(k) the kind and amount of Securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer
or lease by the holders of each Non-electing Share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
Non-electing Shares). Such agreement shall provide for adjustments
which, for events subsequent to the effective date of such agreement,
shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 7.4. The above provisions of this Section
7.4(k) shall similarly apply to successive consolidations, mergers,
conveyances, sales, transfers or leases. Notice of the execution of
such an agreement shall be given by the Parent to you and the other
holders of the Notes promptly upon such execution. In this paragraph,
"securities of the kind receivable" upon such consolidation,
33
merger, conveyance, transfer, sale or lease by a holder of Common Stock
means Securities that, among other things, are registered and
transferable under the Securities Act, and listed and approved for
quotation in all Securities markets, in each case to the same extent as
such Securities so receivable by a holder of Common Stock.
7.5. NOTATION OF NOTES ON PAYMENT.
Upon any partial payment of a Note, the holder of such Note may (but
shall not be required to), at its option:
(a) surrender such Note to the Company pursuant to Section
11.2 in exchange for a new Note in a principal amount equal to the
principal amount remaining unpaid on the surrendered Note;
(b) make such Note available to the Company for notation
thereon of the portion of the principal so paid; or
(c) xxxx such Note with a notation thereon of the portion of
the principal so paid.
In case the entire principal amount of any Note is paid, such Note
shall be surrendered to the Company for cancellation and shall not be reissued,
and no Note shall be issued in lieu of the paid principal amount of any Note.
7.6. NO OTHER PAYMENTS OF PRINCIPAL; ACQUISITION OF NOTES.
Except for payments of principal made in accordance with this Section
7, neither the Parent, the Company or any other Person may make any payment of
principal in respect of the Notes. Neither the Parent nor the Company will, and
the Parent will not permit any Subsidiary or any Affiliate to, directly or
indirectly, acquire or make any offer to acquire any Notes.
8. NEGATIVE COVENANTS
Each of the Obligors covenants that on and after the Restatement Date
and so long as any of the Obligations shall be outstanding:
8.1. RESTRICTED PAYMENTS.
The Parent will not permit the Company or any Subsidiary of the Company
to declare or make, or incur any liability to declare or make, any Restricted
Payment other than (a) Upstream Payments by the Company's Subsidiaries; (b)
scheduled payments by the Company or its Subsidiaries under an Acceptable Credit
Facility; (c) Permitted Services Charges; (d) for goods and services to
suppliers and
34
vendors (other than the Parent) in the ordinary course of business; (e) payments
made to employees and consultants for services rendered in the ordinary course
of business; (f) payments made to landlords pursuant to operating leases; (g)
payments for inventory, equipment or other property to the extent permitted by
this Agreement or required by the other Financing Documents; (h) other
reasonable payments made in the ordinary course of business and consistent with
the past business practices of the Company and its Subsidiaries; and (i)
scheduled payments by a Foreign Subsidiary under a facility or instrument
representing Debt for Money Borrowed permitted by Section 8.4(k).
8.2. MERGERS; CONSOLIDATIONS; ACQUISITIONS.
Except for the Acquisition, the Company will not, and neither the
Parent nor the Company will permit any of the Company's Subsidiaries to,
consolidate, merge or amalgamate with or into any other Person or convey,
transfer or lease all or substantially all of its properties in a single
transaction or series of related transactions to any Person (except that a
Foreign Subsidiary of the Company may consolidate or amalgamate with or merge
with, or convey, transfer or lease all or substantially all of its properties in
a single transaction or series of related transactions to, the Parent or a
Subsidiary over which the Parent shall have at least the same degree of control
with respect to the Person which survives such consolidation, amalgamation, or
merger or the Person that purchases, leases or otherwise acquires all or
substantially all of the properties of such Subsidiary as the Company had with
respect to such first Subsidiary and so long as such surviving Person shall have
executed and delivered its assumption of the due and punctual performance and
observance of each covenant and condition contained in Sections 6.11, 6.12 and
8), provided that the foregoing restriction does not apply to the consolidation,
merger or amalgamation of the Company or any Subsidiary Guarantor with, or the
conveyance, transfer or lease of all or substantially all of the properties of
the Company or a Subsidiary Guarantor in a single transaction or series of
related transactions to, any Person so long as:
(a) the successor formed by such consolidation or amalgamation
or the survivor of such merger or the Person that acquires by
conveyance, transfer or lease all or substantially all of the
properties of the Company or such Subsidiary Guarantor as an entirety
shall be a solvent corporation organized and existing under the laws of
the United States or any State thereof (including the District of
Columbia), and, if the Parent is not the successor, (i) such Person
shall have executed and delivered to each holder of Notes its
assumption of the due and punctual performance and observance of each
covenant and condition of this Agreement or the other Financing
Documents to which it was subject, and (ii) shall have caused to be
delivered to each holder of Notes an opinion of counsel for the
surviving corporation, or other counsel reasonably satisfactory to the
Required Holders, to the effect
35
that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms
hereof;
(b) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing.
No such conveyance, transfer or lease of substantially all of the
assets of the Parent shall have the effect of releasing the Parent or any
successor corporation that shall theretofore have become such in the manner
prescribed in this Section 8.2 from its liability under this Agreement
(including the Parent Guaranty) or the other Financing Documents to which it was
subject.
8.3. LOANS.
Neither the Company nor any Subsidiary of the Company will make any
loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person.
8.4. DEBT.
The Parent will not permit the Company or any Subsidiary of the Company
to create, incur, assume, guarantee or suffer to exist any Debt, except:
(a) the Notes;
(b) Debt pursuant to an Acceptable Credit Facility;
(c) Permitted Subordinated Debt;
(d) Accounts payable to trade creditors and current operating
expenses (other than for Money Borrowed or Accounts payable to you and
the other Current Holders);
(e) Obligations to pay Rentals;
(f) Permitted Purchase Money Debt;
(g) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in
the ordinary course of business;
(h) Debt that is not included in any of the preceding
paragraphs of this Section 8.4, is not secured by a Lien (unless such
Lien is a Permitted Lien) and does not exceed at any time, in the
aggregate, the sum of $500,000 as to the Company and all of the
Subsidiary Guarantors;
36
(i) Loans permitted by Section 8.3;
(j) Permitted Intercompany Debt; and
(k) Debt for Money Borrowed of a Foreign Subsidiary so long as
such Debt is used for customary working capital purposes among the
Company and its Subsidiaries.
8.5. AFFILIATE TRANSACTIONS.
Except as set forth on Schedule 8.5 and except for transactions between
the Parent and any Person other than the Company or the Company's Subsidiaries,
no Obligor shall, and no Obligor shall permit any Subsidiary of the Company to,
enter into, or be a party to, any transaction with any Affiliate of the Company
or any of the Company's Subsidiaries or stockholders, except in the ordinary
course of and pursuant to the reasonable requirements of such Obligor's or such
Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to each holder of Notes and are no less favorable to such Obligor or
such Subsidiary than would be obtained in a comparable arm's length transaction
with a Person not an Affiliate or stockholder of the Company or such Subsidiary.
8.6. LIENS.
The Parent will not permit the Company or any Subsidiary Guarantor to
create or suffer to exist any Lien upon any of its Property, income or profits,
whether now owned or hereafter acquired, except the following (collectively,
"PERMITTED LIENS"):
(a) Liens at any time granted in favor of Agent;
(b) Liens for Taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due or being Properly
Contested;
(c) Liens arising in the ordinary course of the Company's or
Subsidiary Guarantor's business by operation of law or regulation, but
only if payment in respect of any such Lien is not at the time required
and such Liens do not, in the aggregate, materially detract from the
value of the Property of the Company or such Subsidiary Guarantor or
materially impair the use thereof in the operation of the Company's or
such Subsidiary Guarantor's business;
(d) Purchase Money Liens securing Permitted Purchase Money
Debt;
(e) Liens arising from the incurrence of additional Debt
permitted by Section 8.4(h) so long as such Liens are junior in right
to the Liens granted to the Agent pursuant to the Financing Documents;
37
(f) such other Liens as appear on Schedule 8.6 hereto;
(g) Liens in favor of the holders of Debt pursuant to an
Acceptable Credit Facility (i) on assets of the Subsidiary Guarantors
whether or not prior in right to the Liens granted in favor of the
Agent, and (ii) on assets of the Company, so long as Liens granted in
favor of the lender under an Acceptable Credit Facility are junior in
right to the Liens granted in favor of the Agent; and
(h) such other Liens as the Required Holders in their sole
discretion may hereafter approve in writing.
8.7. LIMITATION ON ISSUANCE OF STOCK.
Neither the Company nor any Subsidiary of the Company will, directly or
indirectly, issue any shares of its Capital Stock, Equity Interests or other
securities (or warrants, rights or options to acquire shares or other equity
securities) to Persons other than the Parent or any Subsidiary of the Parent
except as pursuant to the Acquisition Documents.
8.8. RESTRICTED INVESTMENTS.
The Parent will not permit the Company or any Subsidiary Guarantor to
make or have any Restricted Investment.
8.9. TAX CONSOLIDATION.
The Parent will not permit the Company or any Subsidiary Guarantor to
file or consent to the filing of any consolidated income tax return with any
Person other than the Parent and its Subsidiaries.
8.10. UPSTREAM PAYMENTS.
The Parent will not permit the Company or any Subsidiary of the Company
to create or suffer to exist any encumbrance or restriction on the ability of a
Subsidiary to make any Upstream Payment, except for encumbrances or restrictions
(a) pursuant to the Financing Documents; (b) existing under Applicable Law; or
(c) existing pursuant to documents relating to Debt permitted by Section 8.4(j)
hereof.
8.11. ORGANIZATION DOCUMENTS.
The Parent will not permit the Company or any Subsidiary Guarantor to
amend, modify or otherwise change any of the terms or provisions in any of its
Organization Documents as in effect on the Restatement Date, except for changes
38
that do not affect in any way such Person's rights and obligations to enter into
and perform the Financing Documents to which it is a party and to pay all of the
Obligations and that do not otherwise have a Material Adverse Effect.
8.12. RESTRICTIVE AGREEMENTS.
The Parent will not permit the Company or any Subsidiary Guarantor to
enter into or become party to any Restrictive Agreement other than those
disclosed in Schedule 4.17 hereto or permitted by this Agreement, provided that
none of such disclosed agreements shall be amended without prior notice to and
the consent of the Required Holders.
8.13. LIMITATION ON SIDE AGREEMENTS.
The Parent will not permit the Company or any Subsidiary Guarantor to
enter into any amendments, waivers or other agreements with you and the other
Current Holders relating to the subject matter of the Financing Documents (other
than as provided in Section 15 of this Agreement).
8.14. CONDUCT OF BUSINESS.
The Parent will not permit the Company or any Subsidiary Guarantor to
engage in any business other than the business engaged in by it on the
Restatement Date and any business or activities which are substantially similar,
related or incidental thereto.
9. EVENTS OF DEFAULT
An "EVENT OF DEFAULT" exists at any time if any of the following occurs
and is continuing thereafter for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise):
(a) Payments on Notes. The Company fails to make any payment
of principal, interest or any other amount on any Note on or before the
date such payment is due (whether due at stated maturity, on demand,
upon acceleration or otherwise); or
(b) Payment of Obligations. Any Obligor fails to make any
payment of any Obligation (other than those referred to in clause (a)
of this Section 9) within five (5) days of the due date thereof
(whether due at stated maturity, on demand, upon acceleration or
otherwise); or
(c) Other Defaults.
39
(i) Covenant Defaults - any Obligor fails to comply
with any provision of Sections 6.3(d), 6.11, 6.12, 6.14, 7.1,
7.2, 7.3 and 7.4; or
(ii) Other Defaults - any Obligor fails to comply
with any other provision hereof or of any other Financing
Document, and such failure continues for more than 15 days
after the sooner to occur of such Obligor's receipt of notice
of such breach from Required Holders or the date on which such
failure or neglect first became known to any officer of any
Obligor, as the case may be; or
(d) Warranties or Representations. Any warranty,
representation or other written statement by or on behalf of any
Obligor contained in any Financing Document, in any written amendment,
supplement, modification or waiver with respect to any Financing
Document or in any instrument furnished in compliance herewith or in
reference hereto, shall have been false or misleading in any material
respect when made; or
(e) Default in Respect of Debt for Money Borrowed. There shall
occur any default or event of default on the part of the Parent, the
Company or any of the Company's Subsidiaries under any agreement,
document or instrument to which such Person is a party or by which such
Person or any of its Property is bound, creating or relating to any
Debt for Money Borrowed (other than the Obligations) if the payment or
maturity of such Debt for Money Borrowed is accelerated in consequence
of such event of default or demand for payment of such Debt for Money
Borrowed is made; or
(f) Insolvency.
(i) Involuntary Bankruptcy Proceedings:
(A) a receiver, liquidator, custodian or
trustee of any Obligor, or of all or any substantial
part of the Property of any of them, is appointed by
court order; or an order for relief is entered with
respect any Obligor or any Obligor is adjudicated
bankrupt or insolvent;
(B) all or any substantial part of the
Property of any Obligor is sequestered by court
order; or
(C) a petition is filed against any Obligor
under any bankruptcy, reorganization, winding-up,
arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, and is not
dismissed within thirty (30) days after such filing;
40
(ii) Voluntary Petitions:(iii) any Obligor files a
petition in voluntary bankruptcy or seeks relief under
provision of any bankruptcy, reorganization, winding-up,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter
in effect, or consents to the filing of any petition against
it under any such law; or
(g) Assignments for Benefit of Creditors, etc. any Obligor
makes an assignment for the benefit of its or his creditors, or admits
in writing its or his inability, or fails, to pay its debts generally
as they become due, or consents to the appointment of a receiver,
liquidator or trustee of any Obligor or of all or a substantial part of
its or his Property; or
(h) Undischarged Final Judgments. A final judgment or final,
judgments for the payment of money aggregating in excess of (i) $50,000
is or are outstanding against one or more of the Company or any
Subsidiary of the Company and (ii) $500,000 is or are outstanding
against the Parent, and any one of such judgments shall have been
outstanding for more than 60 days from the date of its entry and shall
not have been discharged in full or stayed; or
(i) Financing Documents. Any Financing Document shall cease to
be in full force and effect or shall be declared by a court or other
Governmental Authority of competent jurisdiction to be void, voidable
or unenforceable against any Obligor or any Affiliate; the perfection
or priority of any Lien granted to Agent or any of the holders of Notes
is challenged or affected; the validity or enforceability of any
Financing Document against any Obligor or any Affiliate shall be
challenged or contested by any Obligor or Affiliate that is a party
thereto; or any Obligor or Affiliate shall deny that any Obligor has
any further liability or obligation under any Financing Document or any
provision thereof; or
(j) Material Adverse Effect. There shall occur any event or
condition that has a Material Adverse Effect; or
(k) Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of any Obligor for a
period which significantly affects such Obligor's capacity to continue
its business, consistent with its financial position as of the
Restatement Date (after giving effect to the Acquisition), on a
profitable basis; or any Obligor shall suffer the loss or revocation of
any license or permit now held or hereafter acquired by such Obligor
which is necessary to the continued or lawful operation of its
business; or any Obligor shall be enjoined, restrained or in any way
41
prevented by court, governmental or administrative order from
conducting all or any material part of its business affairs; or
(l) ERISA. A Reportable Event shall occur which could
reasonably be expected to constitute grounds for the termination by the
PBGC of any Plan or for the appointment by the appropriate United
States district court of a trustee for any Plan, or if any Plan shall
be terminated or any such trustee shall be requested or appointed, or
if any Obligor is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan resulting from
such Obligor's complete or partial withdrawal from such Plan which
would result in a Material Adverse Effect; or
(m) Repudiation of or Default Under Guaranty. The Parent or
any Subsidiary Guarantor shall revoke or attempt to revoke the Parent
Guaranty or the Subsidiary Guaranty signed by such Obligor, as the case
may be, shall repudiate such Parent's or Subsidiary Guarantor's
liability thereunder, or shall be in default under the terms thereof;
or
(n) Change in Control. A Change in Control occurs; or
(o) Criminal Forfeiture. Any Obligor, or any Subsidiary of the
Company shall be convicted under any criminal law that could lead to a
forfeiture of any Property of such Obligor, as the case may be.
10. DEFAULT REMEDIES
10.1. ACCELERATION OF MATURITY NOTES.
(a) Acceleration on Event of Default.
(i) Automatic. If any Event of Default specified in
Section 9(f) or Section 9(g) shall exist, all of the Notes at
the time outstanding shall automatically become immediately
due and payable together with interest accrued thereon,
without presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived.
(ii) By Action of Holders. If any Event of Default
(other than an Event of Default specified in Section 9(f) or
Section 9(g)) shall exist, the holders of at least a majority
in principal amount of the Notes then outstanding may exercise
any right, power or remedy permitted to such holder or holders
by law, and shall have, in particular, without limiting the
generality of the foregoing, the right to declare, the entire
principal of, and all interest accrued on, all the Notes then
outstanding to be due and payable, and such Notes shall
thereupon become forthwith due and payable, without any
presentment, demand, protest
42
or other notice of any kind, all of which are hereby expressly
waived, and the Company shall forthwith pay to the holder or
holders of all the Notes then outstanding the entire principal
of, and interest accrued on, the Notes.
(b) Acceleration on Payment Default. During the existence of
an Event of Default described in Section 9(a), and irrespective of
whether the Notes then outstanding shall have become due and payable
pursuant to Section 10.1(a)(ii), any holder of Notes who or which shall
have not consented to any waiver with respect to such Event of Default
may, at his or its option, by notice in writing to the Company, declare
the Notes then held by such holder to be, and such Notes shall
thereupon become, forthwith due and payable together with all interest
accrued thereon, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, and the
Company shall forthwith pay to such holder the entire principal of and
interest accrued on such Notes.
10.2. OTHER REMEDIES.
During the existence of an Event of Default, irrespective of whether
the Notes then outstanding shall become due and payable pursuant to Section
10.1, and irrespective of whether any holder of Notes then outstanding shall
otherwise have pursued or be pursuing any other rights or remedies, any holder
of Notes may proceed to protect and enforce its rights hereunder and under such
Notes by exercising such remedies as are available to such holder in respect
thereof under applicable law, either by suit in equity or by action at law, or
both, whether for specific performance of any agreement contained herein or in
aid of the exercise of any power granted herein, provided, however, that the
maturity of such holder's Notes may be accelerated only in accordance with
Section 10.1. It is agreed that the holders of the Notes shall not have any
claims against the Parent or any of its Subsidiaries with respect to or based
upon the Conversion Shares issued pursuant to the terms of this Agreement,
whether such claims relate to the value of such Common Stock or otherwise, if
such claims are based solely on a Default or Event of Default having occurred
under the terms of this Agreement or any Financing Document other than a Default
or an Event of Default arising from the Obligors' failure to comply with Section
6.14 or Section 7.4.
10.3. NONWAIVER; REMEDIES CUMULATIVE.
No course of dealing on the part of any holder of Notes nor any delay
or failure on the part of any holder of Notes to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. All rights and remedies of each holder of Notes hereunder
and under
43
applicable law are cumulative to, and not exclusive of, any other rights or
remedies any such holder of Notes would otherwise have.
10.4. ANNULMENT OF ACCELERATION OF NOTES.
If a declaration is made pursuant to Section 10.1, then and in every
such case, the Required Holders may, by written instrument filed with the
Company, rescind and annul such declaration, and the consequences thereof;
provided, however, that at the time such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for the
payment of any moneys due on or pursuant hereto or the Notes;
(b) all arrears of interest upon all of the Notes and all of
the other sums payable hereunder and under the Notes (except any
principal of, or interest on, the Notes which shall have become due and
payable by reason of such declaration under Section 10.1 shall have
been duly paid; and
(c) each and every other Default and Event of Default shall
have been waived pursuant to Section 15 or otherwise made good or
cured;
and provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
11. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
11.1. REGISTRATION OF NOTES.
The Company shall keep a register for the registration and registration
of transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an accredited
investor, promptly upon request therefor, a complete and correct copy of the
names and addresses of all registered holders of Notes.
11.2. EXCHANGE OF NOTES.
(a) Exchange of Notes. Upon surrender of any Note to the
Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by
a written instrument of transfer duly executed by the registered holder
of such Note or
44
his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, at the Company's expense (except as
provided below), one or more new Notes (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Note. Each such new
Note shall be payable to such Person as such holder may request and
shall be substantially in the form of the Note set forth in Exhibit 1.
Each such new Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Note or dated
the date of the surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to cover
any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. The Notes shall not be transferred in denominations
of less than US$100,000, provided that a holder of Notes may transfer
its entire holding of Notes regardless of the principal amount of such
holder's Notes.
(b) Costs. The Company will pay the cost of delivering to or
from such holder's home office or custodian bank from or to the
Company, insured to the reasonable satisfaction of such holder, the
surrendered Note and any Note issued in substitution or replacement for
the surrendered Note. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes.
11.3. REPLACEMENT OF NOTES.
Upon receipt by the Company from the registered holder of a Note of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Note (which evidence shall be, in the case of a Current
Holder, notice from such Current Holder of such loss, theft, destruction or
mutilation), and:
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the Company; provided, however, that if the
holder of such Note is a Current Holder, the unsecured agreement of
indemnity of such Person shall be deemed to be satisfactory; or
(b) in the case of mutilation, upon surrender and cancellation
thereof;
the Company at its own expense will execute and deliver, in lieu thereof, a
replacement Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
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11.4. ISSUANCE TAXES.
The Company will pay all Taxes (if any) due in connection with and as
the result of the issuance and sale of the Notes and in connection with any
modification, waiver or amendment of this Agreement or the Notes and shall save
each holder of Notes harmless without limitation as to time against any and all
liabilities with respect to all such Taxes.
12. PAYMENTS ON NOTES
12.1. PLACE OF PAYMENT.
Subject to Section 12.2, payments of principal and interest becoming
due and payable on the Notes shall be made as set forth in Schedule A. The
Company may at any time, by notice to each holder of a Note, change the place of
payment of the Notes so long as such place of payment shall be either the
principal office of the Company in such jurisdiction or the principal office of
a bank or trust company in such jurisdiction.
12.2. MANNER OF PAYMENT.
(a) Manner of Payment. So long as you or your nominee shall be
the holder of any Note, and notwithstanding anything contained in
Section 12.1 or in such Note to the contrary, the Company will pay all
sums becoming due on such Note for principal and interest by the method
and at the address specified for such purpose below your name in
Schedule A, or by such other method or at such other address as you
shall have from time to time specified to the Company in writing for
such purpose, without the presentation or surrender of such Note or the
making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment
most recently designated by the Company pursuant to Section 12.1. In
the absence of such written direction, all amounts payable with respect
to each Note shall be paid by check mailed and addressed to the
registered holder of such Note at the address shown in the register
maintained by the Company pursuant to Section 11.1. Prior to any sale
or other disposition of any Note held by you or your nominee you will,
at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 11.2. The Company will afford the benefits of this
Section 12.2 to any Person that is the direct or indirect transferee of
any Note purchased by you under this Agreement and
46
that has made the same agreement relating to such Note as you have made
in this Section 12.2.
(b) Payments Due on Non-Business Days. If any payment due on,
or with respect to, any Note shall fall due on a day other than a
Business Day, then such payment shall be made on the first Business Day
following the day on which such payment shall have so fallen due;
provided that if all or any portion of such payment shall consist of a
payment of interest, for purposes of calculating such interest, such
payment shall be deemed to have been originally due on such first
following Business Day, such interest shall accrue and be payable to
(but not including) the actual date of payment, and the amount of the
next succeeding interest payment shall be adjusted accordingly.
(c) Payments, When Received. Any payment to be made to the
holders of Notes hereunder or under the Notes shall be deemed to have
been made on the Business Day such payment actually becomes available
at such holder's bank prior to the close of business of such bank,
provided that interest for one day at the non-default interest rate of
the Notes shall be due on the amount of any such payment that actually
becomes available to such holder at such holder's bank after 12:00 noon
(local time of such bank).
(d) Payments in United States Dollars. All payments under this
Agreement and the Notes shall be made in United States Dollars.
13. EXPENSES, ETC.
13.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay (i) all reasonable costs and expenses (including reasonable
attorneys' fees of a special counsel and, if reasonably required, local or other
counsel) incurred on or before the Acceptance Date by you and each other Current
Holder or holder of a Note in connection with such transactions; and (ii) all
costs and expenses (including reasonable attorneys' fees of one special counsel
selected by the Required Holders and, if reasonably required, local or other
counsel) incurred after the Acceptance Date by you and each other Current Holder
or holder of a Note in connection with such transactions in an aggregate amount
of not more than $100,000 solely with respect to the transactions contemplated
to occur on the Restatement Date. The Company will also pay all reasonable costs
and expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by you and each other
Current Holder or holder of a Note in connection with any amendments, waivers or
consents under or in respect of this Agreement (including the Parent Guaranty),
the Other
47
Agreements, the Notes or any other Financing Document (whether or not such
amendment, waiver or consent becomes effective) and any agreement or
negotiations relating to any Acceptable Credit Facility, including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under any Financing
Document or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with any Financing Document, or by
reason of being a holder of any Note or Registrable Share, (b) the costs and
expenses of the Agent, and (c) the costs and expenses, including financial
advisors' fees and their attorneys' fees, incurred in connection with the
insolvency or bankruptcy of the Parent, the Company or any Subsidiary of the
Company or in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company will pay, and will save you
and each other holder of a Note harmless from, all claims in respect of any
fees, costs or expenses if any, of brokers and finders (other than those
retained by you).
13.2. SURVIVAL.
The obligations of the Company under this Section 13 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of any Financing Document, and the termination of all Financing
Documents.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
All representations and warranties contained herein shall survive the
execution and delivery of each Financing Document, the purchase or transfer by
you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to any Financing Document
shall be deemed representations and warranties of the Obligors under this
Agreement. Subject to the preceding sentence, the Financing Documents embody the
entire agreement and understanding between you and the Obligors and supersede
all prior agreements and understandings relating to the subject matter hereof.
15. AMENDMENT AND WAIVER
15.1. REQUIREMENTS.
This Agreement, the Other Agreements and the Notes may be amended, and
the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
48
Parent, the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, or 4 hereof, or any defined
term (as it is used therein), will be effective as to you unless consented to by
you in writing, and (b) no such amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby, (i)
subject to the provisions of Section 10 relating to acceleration or rescission,
change the amount or time of any prepayment or payment of principal of, or
reduce the rate or change the time of payment or method of computation of
interest on, the Notes, (ii) change the percentage of the principal amount of
the Notes the holders of which are required to consent to any such amendment or
waiver, or (iii) amend any of Sections 6.14, 7, 9(a), 9(b), 10, 15 or 18, or any
defined term as used in such Sections.
15.2. SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a
decision is required, to enable such holder to make an informed and
considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof or of the Notes. The
Company will deliver executed or true and correct copies of each
amendment, waiver or consent effected pursuant to the provisions of
this Section 15 to each holder of outstanding Notes promptly following
the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes or any waiver or amendment of any
of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same
terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.
15.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 15
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Parent and the Company without regard to
whether such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Parent or the
49
Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein, the term "THIS AGREEMENT" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.
15.4. NOTES HELD BY THE COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under any
Financing Document, or have directed the taking of any action provided herein or
in the Notes to be taken upon the direction of the holders of a specified
percentage of the aggregate principal amount of Notes then outstanding, Notes
directly or indirectly owned by the Company or any of its Affiliates shall be
deemed not to be outstanding.
16. NOTICES
All notices and communications provided for hereunder, under the Notes
or under any Financing Document shall be in writing and shall be delivered (a)
by facsimile transmission if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or at
such other address as you or it shall have specified to the
Company in writing,
(ii) if to any other holder of any Note, to such
holder at such address as such other holder shall have
specified to the Company in writing,
(iii) if to the Agent, to the address set forth in
Annex 1,
(iv) if to the Company, to the Company at its address
set forth in Annex 1, or at such other address as the Company
shall have specified to the holder of each Note in writing, or
(v) if to the Parent, to the Parent at its address
set forth in Annex 1, or at such other address as the Parent
shall have specified to the holder of each Note in writing.
50
Notices under this Section 16 will be deemed given and effective only
when actually received.
17. REPRODUCTION OF DOCUMENTS
This Agreement and the other Financing Documents and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications that may hereafter be executed, (b) documents received by you at
the Restatement Closing and on the Original Closing Date (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Parent and the Company agree and stipulate that, to the extent permitted by
Applicable Law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 17 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
18. CONFIDENTIAL INFORMATION.
For the purposes of this Section 18, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of any Obligor in connection with
the transactions contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature, and that was clearly marked or labeled or otherwise
adequately identified when received by you as being confidential information of
the Obligors, provided that such term does not include information that (a) was
publicly known or otherwise known to you prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by you or any
person acting on your behalf, (c) otherwise becomes known to you other than
through disclosure by any Obligor or (d) constitutes financial statements
delivered to you under Section 6.3 that are otherwise publicly available. You
will maintain the confidentiality of such Confidential Information in accordance
with procedures adopted by you in good faith to protect confidential information
of third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates, (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially
51
in accordance with the terms of this Section 18, (iii) any other holder of any
Note, (iv) any Person to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 18), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 18),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) any nationally recognized rating agency that requires access to
information about your investment portfolio, or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 18 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 18.
19. PARENT GUARANTY
19.1. GUARANTIED OBLIGATIONS.
The Parent, in consideration of the execution and delivery of this
Agreement and the continued availability to the Company of the loans evidenced
by the Notes held by you and the other Current Holders and the financial
accommodations provided by you and the other Current Holders to the Company,
hereby irrevocably, unconditionally, and absolutely guaranties, on a continuing
basis, to each holder as and for the Parent's own debt, until final and
indefeasible payment of the amounts referred to in clause (a) below has been
made:
(a) the due and punctual payment by the Company of the
principal of, and interest on, the Notes at any time outstanding and
the due and punctual payment of all other amounts payable, and all
other indebtedness owing, by the Company to the holders under this
Agreement, the Other Agreements and the Notes (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed
or allowable in such proceeding), in each case when and as the same
shall become due and payable, whether at maturity,
52
pursuant to mandatory or optional prepayment, by acceleration or
otherwise, all in accordance with the terms and provisions hereof and
thereof; it being the intent of the Parent that the guaranty set forth
herein shall be a continuing guaranty of payment and not a guaranty of
collection;
(b) the due and punctual payment by the Company of the
Customer Deposits and the Vendor Receivables whether due to orders
placed or return of Customer Deposits pursuant the terms of this
Agreement; and
(c) the punctual and faithful performance, keeping,
observance, and fulfillment by the Company of all duties, agreements,
covenants and Obligations of the Company contained in the Financing
Documents.
All of the obligations set forth in clauses (a), (b) and (c) of this Section
19.1 are referred to herein as the "GUARANTIED OBLIGATIONS" and the guaranty
thereof set forth in this Section 19 is sometimes referred to herein as the
"PARENT GUARANTY."
19.2. PAYMENTS AND PERFORMANCE.
In the event that the Company fails to make, on or before the due date
thereof, any payment to be made of any principal amount of, or interest on, or
in respect of, the Notes or of any other amounts due to any holder under the
Notes, in any other Financing Documents, or if the Company shall fail to
perform, keep, observe, or fulfill any other Obligation in the manner provided
in the Financing Documents after in each case giving effect to any applicable
grace periods or cure provisions or waivers or amendments, the Parent shall
cause forthwith to be paid the moneys, or to be performed, kept, observed, or
fulfilled each of such Obligations, in respect of which such failure has
occurred in accordance with the terms and provisions of the Financing Documents.
In furtherance of the foregoing, if an Event of Default shall exist, all of the
Guarantied Obligations shall, in the event of and in the manner and subject to
the limitations provided in this Agreement for the acceleration of the Notes
(including, without limitation, the provisions related to the annulment
thereof), forthwith become due and payable without notice, regardless of whether
the acceleration of the Notes shall be stayed, enjoined, delayed or otherwise
prevented.
Nothing shall discharge or satisfy the obligations of the Parent
hereunder except the full and final performance and indefeasible payment of the
Guarantied Obligations contained in Section 19.1(a).
19.3. RELEASES.
The Parent consents and agrees that, without any notice whatsoever to
or by the Parent and without impairing, releasing, abating, deferring,
suspending,
53
reducing, terminating or otherwise affecting the obligations of the Parent
hereunder, each holder, by action or inaction, may:
(a) compromise or settle, renew or extend the period of
duration or the time for the payment, or discharge the performance of,
or may refuse to, or otherwise not, enforce, or may, by action or
inaction, release all or any one or more parties to, any one or more of
any Financing Document, or any other guaranty or agreement or
instrument related thereto or hereto;
(b) assign, sell or transfer, or otherwise dispose of, any one
or more of the Notes;
(c) grant waivers, extensions, consents and other indulgences
of any kind whatsoever to the Company or any other Person liable in any
manner in respect of all or any part of the Guarantied Obligations;
(d) amend, modify or supplement in any manner whatsoever and
at any time (or from time to time) any one or more of any Financing
Document, any other guaranty or any agreement or instrument related
thereto or hereto;
(e) release or substitute any one or more of the endorsers of
the Guarantied Obligations whether parties hereto or not; and
(f) sell, exchange, release, accept, surrender or enforce
rights in, or fail to obtain or perfect or to maintain, or caused to be
obtained, perfected or maintained, the perfection of any Lien or other
security interest or charge on, by action or inaction, any property at
any time pledged or granted as security in respect of the Guarantied
Obligations, whether so pledged or granted by the Company, the Parent
or any other Person.
The Parent hereby ratifies and confirms any such action specified in
this Section 19.3 and agrees that the same shall be binding upon the Parent,
whether or not the Parent shall have consented thereto or received notice
thereof. The Parent hereby waives any and all defenses, counterclaims or offsets
which the Parent might or could have by reason thereof.
19.4. WAIVERS.
To the fullest extent permitted by law, the Parent hereby waives:
(a) notice of acceptance of this Parent Guaranty;
(b) notice of any purchase or acceptance of the Notes under
this Agreement or the Other Agreements, or the creation, existence or
acquisition of any of the Guarantied Obligations, subject to the
Parent's right to make
54
inquiry of each holder to ascertain the amount of the Guarantied
Obligations at any reasonable time;
(c) notice of the amount of the Guarantied Obligations,
subject to the Parent's right to make inquiry of each holder to
ascertain the amount of the Guarantied Obligations at any reasonable
time;
(d) notice of adverse change in the financial condition of
the Company or any other Obligor or any other fact that might increase
the Parent's risk hereunder;
(e) notice of presentment for payment, demand, protest, and
notice thereof as to the Notes or any other instrument;
(f) notice of any Default or Event of Default;
(g) all other notices and demands to which the Parent might
otherwise be entitled (except if such notice or demand is specifically
otherwise required to be given to the Parent under this Agreement);
(h) the right by statute or otherwise to require any or each
holder to institute suit against any Obligor or to exhaust the rights
and remedies of any or each holder against any Obligor, the Parent
being bound to the payment of each and all Guarantied Obligations,
whether now existing or hereafter accruing, as fully as if such
Guarantied Obligations were directly owing to each holder by the
Parent;
(i) any defense arising by reason of any disability or other
defense (other than the defense that the Guarantied Obligations shall
have been fully and finally performed and indefeasibly paid) of the
Company or by reason of the cessation from any cause whatsoever of the
liability of the Company in respect thereof;
(j) any stay (except in connection with a pending appeal),
valuation, appraisal, redemption or extension law now or at any time
hereafter in force that, but for this waiver, might be applicable to
any sale of property of the Parent made under any judgment, order or
decree based on this Agreement, and the Parent covenants that it will
not at any time insist upon or plead, or in any manner claim or take
the benefit or advantage of any such law; and
(k) at all times prior to the full and final performance and
indefeasible payment of the Guarantied Obligations, any claim of any
nature arising out of any right of indemnity, contribution,
reimbursement, indemnification or any similar right or any claim of
subrogation (whether such right or claim arises under contract, common
law or statutory or civil law) arising in respect
55
of any payment made under this Agreement or in connection with this
Agreement, against the Company or the estate of the Company (including
Liens on the property of the Company or the estate of the Company), in
each case whether or not the Company at any time shall be the subject
of any proceeding brought under any bankruptcy law, and the Parent
further agrees that it will not file any claims against the Company or
the estate of the Company in the course of any such proceeding or
otherwise, and further agrees that each holder may specifically enforce
the provisions of this clause (k).
19.5. MARSHALING; INVALID PAYMENTS.
The Parent consents and agrees:
(a) that each holder, and each Person acting for the benefit
of one or more of the holders, shall be under no obligation to marshal
any assets in favor of the Parent or against or in payment of any or
all of the Guarantied Obligations; and
(b) that, to the extent that the Company makes a payment or
payments to any holder, which payment or payments or any part thereof
are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required, for any of the foregoing reasons
or for any other reason, to be repaid or paid over to a custodian,
trustee, receiver, administrative receiver, administrator or any other
party or officer under any bankruptcy law, other common or civil law,
or equitable cause, then, to the extent of such payment or repayment,
the obligation or part thereof intended to be satisfied thereby shall
be revived and continued in full force and effect as if such payment or
payments had not been made and the Parent shall be primarily liable for
such obligation.
19.6. IMMEDIATE LIABILITY.
The Parent agrees that the liability of the Parent in respect of this
Parent Guaranty shall be immediate and shall not be contingent upon the exercise
or enforcement by any holder or any other Person of whatever remedies such
holder or other Person may have against the Company or any other guarantor or
the enforcement of any Lien or realization upon any security such holder or
other Person may at any time possess.
19.7. PRIMARY OBLIGATIONS.
This Parent Guaranty is a primary and original obligation of the Parent
and is an absolute, unconditional, continuing and irrevocable guaranty of
payment and performance and shall remain in full force and effect without
respect to any action
56
by any holder specified in Section 19.3 or any future changes in conditions,
including, without limitation, change of law or any invalidity or irregularity
with respect to the issuance or assumption of any Obligations (including,
without limitation, the Notes) of or by any Obligor, or with respect to the
execution and delivery of any agreement (including, without limitation, the
Financing Documents) of the Company or any other Person.
19.8. NO REDUCTION OR DEFENSE.
The obligations of the Parent under this Agreement, and the rights of
any holder to enforce such obligations by any proceedings, whether by action at
law, suit in equity or otherwise, shall not be subject to any reduction,
limitation, impairment or termination, whether by reason of any claim of any
character whatsoever or otherwise, including, without limitation, claims of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense (other than any defense based upon the irrevocable payment and
performance in full of the obligations of the Company under any Financing
Document), set-off, counterclaim, recoupment or termination whatsoever;
provided, that the foregoing shall not be deemed to limit the Parent from
enforcing or pursuing any claim, defense, set-off, counterclaim, recoupment,
termination, reduction, limitation, impairment or other right of the Parent as
against such Parent's customers after the indefeasible payment in full of the
Obligations.
Without limiting the generality of the foregoing, the obligations of
the Parent shall not be discharged or impaired by:
(a) any default (including, without limitation, any Default or
Event of Default), failure or delay, willful or otherwise, in the
performance of any obligations by the Parent, the Company, any other
Subsidiary or any of their respective Affiliates;
(b) any proceeding of, or involving, the Company or any other
Subsidiary under any bankruptcy law, or any merger, consolidation,
reorganization, dissolution, liquidation, sale of assets or winding-up
or change in corporate constitution or corporate identity or loss of
corporate identity of the Company, any of the other Subsidiaries or any
of their respective Affiliates;
(c) any incapacity or lack of power, authority or legal
personality of, or dissolution or change in the members or status of,
the Company or any other Person (other than the Parent);
(d) impossibility or illegality of performance on the part of
the Company under any Financing Document or any other instruments or
agreements;
57
(e) the invalidity, irregularity or unenforceability of any
Financing Document or any other instruments or agreements;
(f) in respect of the Company or any other Person, any change
of circumstances, whether or not foreseen or foreseeable, whether or
not imputable to the Company or any other Person, or other
impossibility of performance through fire, explosion, accident, labor
disturbance, floods, droughts, embargoes, wars (whether or not
declared), terrorist activities, civil commotions, acts of God or the
public enemy, delays or failure of suppliers or carriers, inability to
obtain materials or any other causes affecting performance, or any
other force majeure, whether or not beyond the control of the Company
or any other Person and whether or not of the kind hereinbefore
specified;
(g) any attachment, claim, demand, charge, Lien, order,
process or any other happening or event or reason, similar or
dissimilar to the foregoing, or any withholding or diminution at the
source, by reason of any taxes, assessments, expenses, indebtedness,
obligations or liabilities of any character, foreseen or unforeseen,
and whether or not valid, incurred by or against any Person,
corporation or entity, or any claims, demands, charges, Liens or
encumbrances of any nature, foreseen or unforeseen, incurred by any
Person, or against any sums payable under any Financing Document so
that such sums would be rendered inadequate or would be unavailable to
make the payments herein provided; or
(h) any order, judgment, decree, ruling or regulation (whether
or not valid) of any court of any nation or of any political
subdivision thereof or any Governmental Authority, or any other action,
happening, event or reason whatsoever which shall delay, interfere
with, hinder or prevent, or in any way adversely affect, the
performance by the Company of any of its obligations under any
Financing Document.
19.9. NO ELECTION.
Each holder shall, individually or collectively, have the right to seek
recourse against the Parent to the fullest extent provided for herein for its
obligations under this Agreement or any other Financing Document. No election to
proceed in one form of action or proceeding, or against any party, or on any
obligation, shall constitute a waiver of such holder's right to proceed in any
other form of action or proceeding or against other parties unless such holder
has expressly waived such right in writing. Specifically, but without limiting
the generality of the foregoing, no action or proceeding by or on behalf of any
holder against the Company or any other Person under any document or instrument
evidencing obligations of the Company or such other Person to or for the benefit
of such holder shall serve to
58
diminish the liability of the Parent under this Agreement except to the extent
that such holder unconditionally shall have realized payment by such action or
proceeding.
19.10. SEVERABILITY.
Each of the rights and remedies granted under this Section 19 to each
holder in respect of the Notes held by such holder may be exercised by such
holder without notice to, or the consent of or any other action by, any other
holder (except where this Agreement expressly requires the consent of the
Required Holders or all of the holders in respect of the exercise of such rights
and remedies).
19.11. APPROPRIATIONS.
Until all amounts which may be or become payable by the Company under
or in connection with this Agreement and the Financing Documents, or by the
Parent under or in connection with this Parent Guaranty, have been irrevocably
paid in full, any holder (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys,
security or rights held or received by such holder (or any trustee or
agent on its behalf) in respect of those amounts, or apply and enforce
the same in such manner and order as it sees fit (whether against those
amounts or otherwise) and the Parent shall not be entitled to the
benefit of the same; and
(b) hold in a suspense account any moneys received from the
Parent, or on account of the Parent's liability under this Agreement,
without liability to pay interest on those moneys.
19.12. OTHER ENFORCEMENT RIGHTS.
Each holder may proceed to protect and enforce this Parent Guaranty by
suit or suits or proceedings in equity, at law or in bankruptcy or insolvency,
and whether for the specific performance of any covenant or agreement contained
herein or in execution or aid of any power herein granted; or for the recovery
of judgment for the obligations hereby guarantied or for the enforcement of any
other proper, legal or equitable remedy available under applicable law.
19.13. RESTORATION OF RIGHTS AND REMEDIES.
If any holder shall have instituted any proceeding to enforce any right
or remedy against the Parent under this Parent Guaranty or otherwise and such
proceeding shall have been discontinued or abandoned for any reason, or shall
have been determined adversely to such holder, then and in every such case each
such holder, the Company and the Parent shall, except as may be limited or
affected by
59
any determination in such proceeding, be restored severally and
respectively to its respective former position hereunder, and thereafter the
rights and remedies of such holder shall continue as though no such proceeding
had been instituted.
19.14. SUBROGATION; SUBORDINATION.
(a) Waiver of Rights Against Company.
Until the final payment and performance in full of all of the
Obligations and any and all other obligations of the Company or
Subsidiary Guarantors to any holder of Notes, the Parent shall not
exercise any rights against the Company or any Subsidiary Guarantor as
a result of payment by the Parent hereunder, by way of subrogation,
reimbursement, restitution, contribution or otherwise, and will not
prove any claim in competition with any holder of Notes in respect of
any payment hereunder in any bankruptcy, insolvency or reorganization
case or proceedings of any nature; the Parent will not claim any
setoff, recoupment or counterclaim against the Company or any
Subsidiary Guarantor in respect of any liability of the Parent to the
Company or such Subsidiary Guarantor; and the Parent waives any benefit
of and any right to participate in any collateral security which may be
held by any such holder.
(b) Subordination.
The payment of any amounts due with respect to any Debt of the
Company or any Subsidiary of the Company now or hereafter owed to the
Parent is hereby subordinated to the prior payment in full of all of
the Obligations and any and all other obligations of the Company or the
Subsidiary Guarantors to each holder of Notes. The Parent agrees that,
after the occurrence of any default in the payment or performance of
any of the Obligations, the Parent will not demand, xxx for or
otherwise attempt to collect any such Debt of the Company or any
Subsidiary of the Company to the Parent until all of the Obligations
shall have been paid in full. If, notwithstanding the foregoing
sentence, the Parent shall collect, enforce or receive any amounts in
respect of such Debt, such amounts shall be collected, enforced and
received by the Parent as trustee for each holder of Notes and be paid
over to each such holder of Notes on account of the Obligations without
affecting in any manner the liability of the Parent under the other
provisions of this Parent Guaranty.
19.15. SURVIVAL.
So long as the Guarantied Obligations shall not have been fully and
finally performed and indefeasibly paid, the obligations of the Parent under
this Parent
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Guaranty shall survive the transfer and payment of any Note and the payment in
full of all the Notes.
20. MISCELLANEOUS
20.1. INDEMNIFICATION OF EACH HOLDER OF NOTES.
From and at all times after the Original Closing Date, and in addition
to all other rights and remedies of each holder of Notes against the Company,
the Company agrees to indemnify and hold harmless each holder of Notes and each
director, trustee, officer, employee, agent, investment advisor and affiliate of
each such holder (each, an "INDEMNIFIED PARTY") against any and all claims
(whether valid or not), losses, damages, liabilities, costs and expenses of any
kind or nature whatsoever (including, without limitation, reasonable attorneys'
fees, costs and expenses), incurred by or asserted against any Indemnified
Party, from and after the Original Closing Date, whether direct, indirect or
consequential, as a result of or arising from or in any way relating to any
suit, action or proceeding (including any inquiry or investigation) by any
Person, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any Person under any statute or regulation, including,
but not limited to, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with (x) the
negotiation, preparation and execution of this Agreement and the other Financing
Documents (subject to the limitations described in Section 13.1), and (y) the
performance or enforcement of this Agreement, the Notes or the other Financing
Documents, or any transactions contemplated herein or therein, or any of the
transactions contemplated hereunder or thereunder, whether or not such
Indemnified Party is a party to any such action, proceeding, suit or the target
of any such inquiry or investigation; provided, however, that no Indemnified
Party shall have the right to be indemnified hereunder for any liability
resulting from the willful misconduct or gross negligence of such Indemnified
Party or breach by such Indemnified Party of its own obligations under this
Agreement. All of the foregoing losses, damages, costs and expenses of any
Indemnified Party shall be payable as and when incurred upon demand by such
Indemnified Party and shall be additional obligations hereunder. The rights of
the Indemnified Parties under this Section 20.1 shall survive the termination of
this Agreement.
20.2. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in the Financing Documents
by or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not; provided that a
Current Holder that assigns its rights under this Agreement prior to the
effective date of the Registration Statement may only do so to a Person who
satisfies the representations
61
and warranties contained in Section 5. Notwithstanding the foregoing, the Parent
may not assign its rights, duties or obligations hereunder or under the
Registrable Shares without the prior written consent of all registered holders
of Notes and/or Registrable Shares then outstanding.
20.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
20.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
20.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
20.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the Commonwealth of
Massachusetts excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State.
20.7. LEGENDS.
(a) Until (i) the Notes are effectively registered under the Securities
Act and applicable state securities laws, or (ii) you deliver to the Company a
written opinion of counsel to the effect that such legend is no longer necessary
under the Securities Act and applicable state securities laws, the
62
Company will cause each Note to be stamped or otherwise imprinted with a legend
to substantially the following effect:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. NO TRANSFER, SALE, OR OTHER DISPOSITION OF
THIS NOTE MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED PURSUANT TO THE SECURITIES ACT
UNLESS THE HOLDER HEREOF SHALL HAVE DELIVERED TO ROWECOM INC.
A WRITTEN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO ROWECOM INC., THAT AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE FOR SUCH
TRANSFER, SALE OR OTHER DISPOSITION."
(b) Until (i) the Registrable Shares are effectively registered under
the Securities Act and applicable state securities laws or (ii) you deliver to
the Parent a written opinion of counsel to the effect that such legend is no
longer necessary under the Securities Act and applicable state securities laws,
the Parent will cause each certificate representing a Registrable Share to be
stamped or otherwise imprinted with a legend to substantially the following
effect:
"THESE SHARES OF DIVINE, INC. CLASS A COMMON STOCK
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. NO TRANSFER,
SALE, OR OTHER DISPOSITION OF THESE SHARES OF DIVINE, INC.
CLASS A COMMON STOCK MAY BE MADE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED PURSUANT TO THE
SECURITIES ACT OR UNLESS THE HOLDER HEREOF SHALL HAVE
DELIVERED TO DIVINE, INC. A WRITTEN OPINION OF COUNSEL, IN
FORM, SUBSTANCE AND SCOPE ACCEPTABLE TO DIVINE, INC., THAT AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE FOR SUCH
TRANSFER, SALE OR OTHER DISPOSITION."
(c) Whenever the restrictions contained in the legends described in
Sections 20.7(a) and 20.7(b) shall terminate as to any Note or Registrable
Share, within five (5) days of any request therefor, the holder thereof shall be
entitled to receive from the Parent or the Company, as the case may be,
63
without expense (other than transfer taxes, if any), new Notes or
Registrable Shares of like tenor not bearing the applicable legend set
forth in this Section 20.7.
20.8. TERMINATION.
Notwithstanding anything to the contrary contained in this Agreement or
in any of the other Financing Documents, the parties hereto hereby agree that,
upon the later to occur of (a) payment in full of all amounts due with respect
to the Notes, including the payment of all fees, costs and expenses provided for
in this Agreement and the other Financing Documents, and (b) the conversion of
all Notes outstanding at any time into shares of Common Stock as provided for in
this Agreement, this Agreement (including the Parent Guaranty) and all other
Financing Documents shall terminate and be of no force or effect; provided that
the rights of (x) each Indemnified Party under Section 20.1 and (y) the Current
Holders, the holders of the Notes and the Indemnified Parties under Section 6.14
shall survive the termination of this Agreement.
[Rest of page left intentionally blank; next page is signature page.]
64
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
Very truly yours,
ROWECOM INC.
By: /s/ Authorized Signatory
---------------------------------------
Name:
Title:
DIVINE, INC.
By: /s/ Authorized Signatory
---------------------------------------
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
ELSEVIER SCIENCE, INC.
By: /s/ Authorized Signatory
-----------------------------
Name:
Title:
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
Very truly yours,
ROWECOM INC.
By: /s/ Authorized Signatory
---------------------------------------
Name:
Title:
DIVINE, INC.
By: /s/ Authorized Signatory
---------------------------------------
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
HARCOURT, INC.
By: /s/ Authorized Signatory
--------------------------
Name:
Title:
2
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
Very truly yours,
ROWECOM INC.
By: /s/ Authorized Signatory
---------------------------------------
Name:
Title:
DIVINE, INC.
By: /s/ Authorized Signatory
---------------------------------------
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
XXXX XXXXX & SONS, INC.
By: /s/ Authorized Signatory
-----------------------------
Name:
Title:
3
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
Very truly yours,
ROWECOM INC.
By: /s/ Authorized Signatory
---------------------------------------
Name:
Title:
DIVINE, INC.
By: /s/ Authorized Signatory
---------------------------------------
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
LIPPINCOTT, XXXXXXXX & XXXXXXX, INC.
By: /s/ Authorized Signatory
-----------------------------
Name:
Title:
4
SCHEDULE A
ADDRESSES OF CURRENT HOLDERS; PAYMENT INSTRUCTIONS
========================================= ==========================================================================
CURRENT HOLDER NAME ELSEVIER SCIENCE, INC.
----------------------------------------- --------------------------------------------------------------------------
Name in which to register Notes ELSEVIER SCIENCE, INC.
----------------------------------------- --------------------------------------------------------------------------
Note registration number; R-1; $5,000,000
principal amount
----------------------------------------- --------------------------------------------------------------------------
Payments on account of Notes
ESI- Office Account
Method ABA: 000000000
A/C: 3075-3564
Account information Citibank NA
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: RoweCom Inc. Note Payments
Federal Funds Wire Transfer
----------------------------------------- --------------------------------------------------------------------------
Accompanying information Name of Issuer: RoweCom Inc.
Description of
Security: Floating Rate Senior Note Due April 30, 2002
Due date and application (as among principal, premium and interest) of
the payment being made:
---------------------------------------- --------------- ----------------------------------------------------------
Schedule A-1
========================================= ==========================================================================
CURRENT HOLDER NAME ELSEVIER SCIENCE, INC.
----------------------------------------- --------------------------------------------------------------------------
Address/Fax for notices related to 1) Elsevier Science, Inc.
payments 000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx Vice President & General
Counsel
Fax: (000) 000-0000
2) Elsevier Science BV
Xxxxxxxxxx xxxxxxxxxx 00,
0000 XX
Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attn: Xxx Xxxxx Director, Business Control
Fax: (x00) 00 000 0000
----------------------------------------- --------------------------------------------------------------------------
Address/Fax for all other notices 1) Elsevier Science, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx Vice President & General
Counsel
Fax: (000) 000-0000
2) Elsevier Science BV
Xxxxxxxxxx xxxxxxxxxx 00,
0000 XX
Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attn: Xxx Xxxxx Director, Business Control
Fax: (x00) 00 000 0000
----------------------------------------- --------------------------------------------------------------------------
Instructions re Delivery of Notes: Elsevier Science, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx Vice President & General Counsel
----------------------------------------- --------------------------------------------------------------------------
Tax identification number 00-0000000
========================================= ==========================================================================
Schedule A-2
========================================= ==========================================================================
CURRENT HOLDER NAME XXXX XXXXX & SONS, INC.
----------------------------------------- --------------------------------------------------------------------------
Name in which to register Notes XXXX WILEY & SONS, INC.
----------------------------------------- --------------------------------------------------------------------------
Note registration number; R-2; $1,500,000
principal amount
----------------------------------------- --------------------------------------------------------------------------
Payments on account of Notes
Method Federal Funds Wire Transfer
Account information Citibank, N.A., New York
ABA No.: 000000000
Account Name: Xxxx Xxxxx & Sons, Inc.
Account No.: 00000000
Re: RoweCom note payments
Ref: See "Accompanying Information" below
----------------------------------------- --------------------------------------------------------------------------
Accompanying information Name of Issuer: RoweCom Inc.
Description of
Security: Floating Rate Senior Note Due
April 30, 2002
Due date and application (as among principal,
premium and interest) of the payment being made:
----------------------------------------- --------------------------------------------------------------------------
Address/Fax for notices related to Xxxx Wiley & Sons, Inc.
payments 000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxx, Senior V.P. - General Counsel
Fax: (000) 000-0000
and
Xxxx Wiley & Sons, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxx, Senior V.P. - Finance
Fax: (000) 000-0000
----------------------------------------- --------------------------------------------------------------------------
Schedule A-3
========================================= ==========================================================================
CURRENT HOLDER NAME XXXX WILEY & SONS, INC.
----------------------------------------- --------------------------------------------------------------------------
Address/Fax for all other notices Xxxx Xxxxx & Sons, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Senior V.P. - General Counsel
Fax: (000) 000-0000
and
Xxxx Xxxxx & Sons, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxx, Senior V.P. - Finance
Fax: (000) 000-0000
----------------------------------------- --------------------------------------------------------------------------
Instructions re Delivery of Notes: Xxxx Xxxxx & Sons, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Senior V.P. - General Counsel
----------------------------------------- --------------------------------------------------------------------------
Tax identification number 00-0000000
========================================= ==========================================================================
Schedule A-4
========================================= ==========================================================================
CURRENT HOLDER NAME HARCOURT, INC.
----------------------------------------- --------------------------------------------------------------------------
Name in which to register Notes HARCOURT, INC.
----------------------------------------- --------------------------------------------------------------------------
Note registration number; principal R-3; $1,500,000
amount
----------------------------------------- --------------------------------------------------------------------------
Payments on account of Note
Method Federal Funds Wire Transfer
Account information Chase Manhattan Bank
ABA No. 000000000
Account Name: Harcourt, Inc.
Account No. 9102753275
Ref: See "Accompanying Information" below
----------------------------------------- --------------------------------------------------------------------------
Accompanying information Name of Issuer: RoweCom Inc.
Description of
Security: Floating Rate Senior Note Due April 30, 2002
Due date and application (as among principal, premium and interest) of
the payment being made:
----------------------------------------- --------------------------------------------------------------------------
Address/Fax for notices related to Harcourt, Inc.
payments c/o Elsevier Science division (Academic Press)
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx, Vice President
Fax: (000) 000-0000
----------------------------------------- --------------------------------------------------------------------------
Address/Fax for all other notices Harcourt, Inc.
c/o Elsevier Science division (Academic Press)
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx, Vice President
Fax: (000) 000-0000
----------------------------------------- --------------------------------------------------------------------------
Schedule A-5
========================================= ==========================================================================
CURRENT HOLDER NAME XXXX XXXXX & SONS, INC.
----------------------------------------- --------------------------------------------------------------------------
Instructions re Delivery of Notes Harcourt, Inc.
c/o Elsevier Science division (Academic Press)
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx, Vice President
----------------------------------------- --------------------------------------------------------------------------
Tax identification number 00-0000000
----------------------------------------- --------------------------------------------------------------------------
Schedule A-6
========================================= ==========================================================================
CURRENT HOLDER NAME LIPPINCOTT XXXXXXXX & XXXXXXX, INC.
----------------------------------------- --------------------------------------------------------------------------
Name in which to register Note LIPPINCOTT XXXXXXXX & XXXXXXX, INC.
----------------------------------------- --------------------------------------------------------------------------
Note registration number; principal R-4; $1,000,000
amount
----------------------------------------- --------------------------------------------------------------------------
Payment on account of Note
Method Federal Funds Wire Transfer
Account information Allfirst Bank
ABA No. 052 000 113
Wolters Kluwer United States Inc.
Account Name: WKUS Concentration Account
Account No. 158-97471
Re: Attn: Xxx Xxxx; Payment of RoweCom Trade Debts
Ref: See "Accompanying Information" below
----------------------------------------- --------------------------------------------------------------------------
Accompanying information Name of Issuer: RoweCom Inc.
Description of
Security: Floating Rate Senior Note Due
April 30, 2002
Due date and application (as among principal,
premium and interest) of the payment being made:
----------------------------------------- --------------------------------------------------------------------------
Schedule A-7
========================================= ==========================================================================
CURRENT HOLDER NAME LIPPINCOTT XXXXXXXX & XXXXXXX, INC.
----------------------------------------- --------------------------------------------------------------------------
Address/Fax for notices related to Wolters Kluwer International Health & Science
payments 000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxxxxx Xxxxxxx, Chief Executive Officer
Fax: 000-000-0000
with a copy to:
Wolters Kluwer US Corporation
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, General Counsel
Fax: 000-000-0000
and
Lippincott Xxxxxxxx & Xxxxxxx, Inc.
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X'Xxxx, Vice President of Finance
Fax: 000-000-0000
Wolters Kluwer International Health & Science
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, Chief Financial Officer
Fax: 000-000-0000
Wolters Kluwer US Corporation
000 X. Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxx Xxxx, Treasurer
Fax: 000-000-0000
----------------------------------------- --------------------------------------------------------------------------
Schedule A-8
========================================= ==========================================================================
CURRENT HOLDER NAME LIPPINCOTT XXXXXXXX & XXXXXXX, INC.
----------------------------------------- --------------------------------------------------------------------------
Address/Fax for all other notices Wolters Kluwer International Health & Science
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxxxxx Xxxxxxx, Chief Executive Officer
Fax: 000-000-0000
with a copy to:
Wolters Kluwer US Corporation
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, General Counsel
Fax: 000-000-0000
and
Lippincott Xxxxxxxx & Xxxxxxx, Inc.
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X'Xxxx, Vice President of Finance
Fax: 000-000-0000
----------------------------------------- --------------------------------------------------------------------------
Instructions re Delivery of Notes Wolters Kluwer US Corporation
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
with a copy to:
Lippincott Xxxxxxxx & Xxxxxxx, Inc.
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X'Xxxx, Vice President of Finance
----------------------------------------- --------------------------------------------------------------------------
Tax identification number 00-0000000
----------------------------------------- --------------------------------------------------------------------------
Schedule A-9
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
"ACCEPTABLE CREDIT FACILITY" means a loan or credit agreement
or bank facility entered into after the Restatement Date pursuant to which the
Company and/or any Subsidiary Guarantor is an obligor that is (a) on similar
commercial terms (except that any Lien subordination provisions shall only be
agreed to by the Current Holders as indicated in Section 5.4) and used for
similar business purposes as the Loan and Security Agreement that was entered
into on or about January 31, 2001 among Xxxxxx, Xxxxxx'x Subsidiaries, Corporate
Subscription Services, Inc. and Fleet Capital Corporation so long as all Debt
and attendant obligations related to such loan or credit agreement or bank
facility are pari passu with the Notes and covenants, payment arrangements and
other provisions contained in such loan or credit agreement or bank facility do
not otherwise violate the terms of this Agreement and do not affect the
Prepayment Date or the Maturity Date, or (b) otherwise permitted to exist by the
Required Holders on terms and conditions reasonably acceptable to the Required
Holders.
"ACCEPTANCE DATE" means October 15, 2001.
"ACCOUNTS" means all rights of any Person to payment for goods
sold, leased or otherwise marketed in the ordinary course of business and all
rights of any Person to payment for services rendered in the ordinary course of
business and all sums of money or other proceeds due thereon pursuant to
transactions with account debtors, except for that portion of the sum of money
or other proceeds due thereon that relate to sales, use or property taxes in
conjunction with such transactions, recorded on books of account in accordance
with GAAP.
"ACQUIRED COMPANY" is defined in Section 3.14.
"ACQUISITION" is defined in Section 3.14.
"ACQUISITION DOCUMENTS" is defined in Section 3.14.
"AFFILIATE" means a Person (other than a Subsidiary): (a)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, a Person; (b) which beneficially
owns or holds 10% or more of any class of the Voting Stock of a Person; or (c)
10% or more of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the equity
Schedule B-1
interest) of which is beneficially owned or held by a Person or a Subsidiary of
a Person.
"AGENT" means Wilmington Trust Company, a Delaware
corporation, as agent on behalf of the Original Purchasers and the Current
Holders pursuant to the Collateral Agency Agreement.
"AGREEMENT, THIS" is defined in Section 15.3.
"APPLICABLE INTEREST LAW" means any present or future law
which has application to the interest and other charges pursuant to this
Agreement and the Notes; provided, however, that pursuant to Section 20.6, the
parties have selected the internal laws of the State of Massachusetts as the
Applicable Interest Law for purposes of this Agreement.
"APPLICABLE LAW" means all laws, rules and regulations
applicable to the Person, conduct, transaction, covenant, Financing Document or
Material Contract in question, including all applicable common law and equitable
principles; all provisions of all applicable state, municipal, federal and
foreign constitutions, statutes, rules, regulations and orders of governmental
bodies; and all orders, judgments and decrees of all courts and arbitrators.
"BANKRUPTCY CODE" means title 11 of the United States Code, as
amended and in effect from time to time.
"BOARD OF DIRECTORS" means either the board of directors of
the Parent or any duly authorized committee of that board.
"BOARD RESOLUTION" means a vote duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant Secretary
of the Parent to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, shall have been
delivered to you and each other holder of the Notes.
"BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which commercial banks in New York, New York, Boston, Massachusetts
or Chicago, Illinois are required or permitted by law (other than a general
banking moratorium or holiday for a period exceeding four (4) consecutive days)
to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP.
Schedule B-2
"CAPITALIZED LEASE OBLIGATION" means any Debt represented by
obligations under a Capital Lease.
"CAPITAL STOCK" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all similar ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"CASH EQUIVALENTS" means (a) marketable direct obligations
issued or unconditionally guarantied by the United States government and backed
by the full faith and credit of the United States government having maturities
of not more than 12 months from the date of acquisition; (b) domestic
certificates of deposit and time deposits having maturities of not more than 12
months from the date of acquisition, bankers' acceptances having maturities of
not more than 12 months from the date of acquisition and overnight bank
deposits, in each case issued by any commercial bank organized under the laws of
the United States, any state thereof or the District of Columbia, which at the
time of acquisition are rated A-1 (or better) by S&P or P-1 (or better) by
Xxxxx'x, and not subject to offset rights in favor of such bank arising from any
banking relationship with such bank; (c) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in
clauses (a) and (b) entered into with any financial institution meeting the
qualifications specified in clause (b) above; and (d) commercial paper having at
the time of investment therein or a contractual commitment to invest therein a
rating of A-1 (or better) by S&P or P-1 (or better) by Xxxxx'x, and having a
maturity within 9 months after the date of acquisition thereof.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C.ss.9601 et seq. and its implementing
regulations, as amended and in effect from time to time.
"CHANGE IN CONTROL" means either (a) the transfer (other than
pursuant to Section 8.2) of all or substantially all of the Property of the
Parent, the Company or any Subsidiary of the Company as an entirety in one or a
series of transactions, (b) the acquisition by any Person or group of Persons of
control of a majority of the Voting Stock of the Parent, the Company or any
Subsidiary of the Company, or (c) the Parent ceases to own, directly or
indirectly, 100% of the Capital Stock of the Company or any of the Company's
Subsidiaries that were wholly-owned Subsidiaries of the Company on the
Restatement Date after giving effect to the Acquisition.
"CLOSING PRICE" means, with respect to the Common Stock of the
Parent, for any Trading Day, the reported last sale price per share on the
Nasdaq National Market, the Nasdaq Small Cap Market or any other system of
automated
Schedule B-3
dissemination of quotations of Securities prices or, if the Common Stock is not
quoted on the Nasdaq National Market, the Nasdaq Small Cap Market or any other
system of automated dissemination of quotations of Securities prices, on the
principal national Securities exchange on which the Common Stock is listed or
admitted to trading, or if not quoted on the Nasdaq National Market, the Nasdaq
Small Cap Market or any other system of automated dissemination of quotations of
Securities prices or listed or admitted to trading on any national Securities
exchange, the reported last trade price per share in the over-the-counter market
or the electronic bulletin board as reported by Bloomberg Financial Markets, the
Nasdaq Stock Market, Inc., the National Quotations Bureau Incorporated or such
other organization that succeeds to their function of reporting such prices.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
"COLLATERAL" all of the Property and interests in Property
described in Section 1 of the Company Security Agreement; all Property described
in any other Financing Documents as security for the payment or performance of
any of the Obligations; and all other Property and interests in Property that
now or hereafter secure (or are intended to secure) the payment and performance
of any of the Obligations.
"COLLATERAL AGENCY AGREEMENT" means that certain Collateral
Agency Agreement, dated as January 31, 2001, by and among the Agent, the
Original Purchasers, the Company, the Subsidiary Guarantors and Xxxxxxx Xxxx
pursuant to which the Original Purchasers have appointed the Agent with respect
to certain matters relating to the Collateral, as amended from time to time.
"COLLATERAL CERTIFICATES" means the Collateral Certificates
delivered by each of the Company and the Subsidiary Guarantors to you and the
other Current Holders on or prior to the Restatement Date.
"COMMON STOCK" means the Class A Common Stock, $.001 per
share, of the Parent authorized at the date of this instrument as originally
executed. Subject to the provisions of Section 7.4(k), shares issuable on
conversion of the Notes shall include only shares of Class A Common Stock or
shares of any class or classes of common stock resulting from any
reclassification or reclassifications thereof; provided, however, that if at any
time there shall be more than one such resulting class, the shares so issuable
on conversion of the Notes shall include shares of all such classes, and the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class
Schedule B-4
resulting from all such reclassifications bears to the total number of shares
of such classes resulting from all such reclassifications.
"COMMON STOCK" includes any stock of any class of Capital
Stock which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the issuer thereof and which is not subject to redemption by the issuer
thereof. Unless the context otherwise clearly requires, any reference to "common
stock" is a reference to common stock of the Parent.
"COMPANY" has the meaning specified in the first sentence of
this Agreement.
"COMPANY SECURITY AGREEMENT" means the security agreement
dated as of January 31, 2001 between the Company and the Agent, as amended from
time to time.
"COMPLIANCE CERTIFICATE" means a Compliance Certificate to be
provided by the Parent or the Company, as the case may be, in accordance with
Section 6.3: (a) stating that no Default or Event of Default has occurred or if
a Default or an Event of Default has occurred and is continuing, stating the
nature thereof and the action which the Parent proposes to take with respect
thereto; (b) setting forth the information specified in Section 4.11 as may be
applicable from time to time; and (c) addressing such other matters as any
holder of Notes request.
"CONFIDENTIAL INFORMATION" is defined in Section 18.
"CONSOLIDATED" means the consolidation in accordance with GAAP
of the accounts or other items as to which such term applies.
"CONSTITUENT PERSON" is defined in Section 7.4(k).
"CONTINGENT OBLIGATION" means, with respect to any Person, any
obligation of such Person arising from any guaranty, indemnity or other
assurance of payment or performance of any Debt, lease, dividend or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including (a) the direct or
indirect guaranty, endorsement (other than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of a primary obligor, (b) the
obligation to make take-or-pay or similar payments, if required, regardless of
nonperformance by any other party or parties to an agreement, (c) any obligation
of such Person, whether or not contingent, (i) to purchase any such primary
obligation or any Property constituting direct or indirect
Schedule B-5
security therefor, (ii) to advance or supply funds (A) for the purchase or
payment of any such primary obligations or (B) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Property, Securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation with respect to which such Contingent
Obligation is made (or, if less, the maximum amount of such primary obligation
for which such Person may be liable pursuant to the terms of the instrument
evidencing such Contingent Obligation) or, if not stated or determinable, the
maximum reasonably anticipated liability with respect thereto (assuming such
Person is required to perform thereunder), as determined by such Person in good
faith.
"CONVERSION RATE" is defined in Section 7.4(a).
"CONVERSION SHARES" is defined in Section 7.4(d).
"CURRENT HOLDERS" is defined in Section 1.1.
"CUSTOMER DEPOSITS" is defined in Section 6.12.
"XXXXXX" means Xxxxxx, Inc., a Delaware corporation.
"DEBT" means, as applied to any Person, without duplication:
(a) all items which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person as of the date as of which Debt is to be determined, including
Capitalized Lease Obligations; (b) all Contingent Obligations of such Person;
(c) all reimbursement obligations in connection with letters of credit or letter
of credit guaranties issued for the account of such Person; and (d) in the case
of the Parent and the Company (without duplication), the Obligations. The Debt
of a Person shall include any recourse Debt of any partnership or joint venture
in which such Person is a general partner or joint venturer.
"DEFAULT" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.
"DEFAULT RATE" is defined in Section 7.1(b).
Schedule B-6
"DISTRIBUTION" means, in respect of any entity, (a) any
payment of any dividends or other distributions on Equity Interests of the
entity and (b) any redemption or other acquisition of Equity Interests.
"DISTRIBUTION DATE" is defined in Section 7.4(d).
"DOMESTIC SUBSIDIARY" means a Subsidiary of the Company that
is incorporated under the laws of a state of the United States or the District
of Columbia, including Xxxxxx.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ENVIRONMENTAL RELEASE" means a release as defined in CERCLA
or under any applicable Environmental Laws.
"EQUIPMENT" means all of any Person's machinery, apparatus,
equipment, fittings, furniture, fixtures, motor vehicles and other tangible
personal Property (other than Inventory) of every kind and description, whether
now owned or hereafter acquired by such Person and wherever located, and all
parts, accessories and special tools therefor, all accessions thereto, and all
substitutions and replacements thereof.
"EQUITY INTEREST" means the interest of (a) a shareholder
and/or a warrant holder in a corporation, (b) a partner (whether general or
limited) in a partnership (whether general, limited or limited liability), (c) a
member in a limited liability company, or (d) any other Person having any other
form of equity security or ownership interest.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Parent or
any of its Subsidiaries under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 9.
Schedule B-7
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXTRAORDINARY EXPENSES" means all reasonable costs, expenses,
fees or advances that Agent or any holder of Notes may suffer or incur, whether
prior to or after the occurrence of an Event of Default, and whether prior to,
after or during the pendency of an Insolvency Proceeding of any Obligor, on
account of or in connection with (a) the audit, inspection, repossession,
storage, repair, appraisal, insuring, completion of the manufacture of,
preparing for sale, advertising for sale, selling, collecting or otherwise
preserving or realizing upon any Collateral; (b) the defense of Agent's Lien
upon any Collateral or the priority thereof or any adverse claim with respect to
the Notes, the Financing Documents or the Collateral asserted by any Obligor,
any receiver or trustee for any Obligor or any creditor or representative of
creditors of any Obligor; (c) the settlement or satisfaction of any Liens upon
any Collateral (whether or not such Liens are Permitted Liens); (d) the
collection or enforcement of any of the Obligations; (e) the negotiation,
documentation, and closing of any restructuring or forbearance agreement with
respect to the Financing Documents or Obligations; (f) amounts advanced by Agent
pursuant to the Company Security Agreement; or (g) the enforcement of any of the
provisions of any of the Financing Documents. Such costs, expenses and advances
may include transfer fees, taxes, storage fees, insurance costs, permit fees,
utility reservation and standby fees, legal fees, appraisal fees, brokers' fees
and commissions, auctioneers' fees and commissions, accountants' fees,
environmental study fees, wages and salaries paid to employees of the Company or
its Subsidiaries or independent contractors in liquidating any Collateral,
travel expenses, all other fees and expenses payable or reimbursable by the
Company or any other Obligor under any of the Financing Documents, and all other
fees and expenses associated with the enforcement of rights or remedies under
any of the Financing Documents but excluding compensation paid to employees
(including inside legal counsel who are employees) of Agent.
"FEIN" means, with respect to any Person, the Federal Employer
Identification Number of such Person.
"FINANCING DOCUMENTS" means and includes this Agreement
(including the Parent Guaranty), the Other Agreements (including the Parent
Guaranty), the Notes, the Pledge Agreements, the Intellectual Property Security
Agreement, the Company Security Agreement, the Subsidiary Guarantor Security
Documents, the Subsidiary Guaranties, the Collateral Agency Agreement, the
Subordination Agreement, the Reaffirmation Letter and the other agreements,
certificates and instruments to be executed and/or delivered pursuant to the
terms
Schedule B-8
of each of the foregoing, as each may be amended, restated or otherwise modified
from time to time.
"FISCAL QUARTER" means each consecutive period of three months
beginning on the first day of a Fiscal Year.
"FISCAL YEAR" means the fiscal year of the Parent and its
Subsidiaries for accounting and tax purposes, which ends on the last day of
December in each year.
"FLSA" means the Fair Labor Standards Act of 1938, as amended
and in effect from time to time.
"FLOATING RATE" means a rate of interest equal to the sum of
1.00% plus the Prime Rate applicable on such date.
"FOREIGN SUBSIDIARY" means a Subsidiary of the Company that is
not incorporated under the laws of a state of the United States or the District
of Columbia.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"GOVERNMENTAL APPROVALS" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Parent or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any Properties of the Parent or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTIED OBLIGATIONS" is defined in Section 19.1.
Schedule B-9
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such indebtedness or obligation or any
Property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease Properties or to purchase Properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"HOLDER" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 11.1.
"INDEMNIFIED PARTY" is defined in Section 20.1.
"INSOLVENCY PROCEEDING" means any action, case or proceeding
commenced by or against a Person, or any agreement of such Person, for (a) the
entry of an order for relief under any chapter of the Bankruptcy Code or other
insolvency or debt adjustment law (whether state, federal or foreign), (b) the
appointment of a receiver, trustee, liquidator or other custodian for such
Person or any part of its Property, (c) an assignment or trust mortgage for the
benefit of creditors of such Person, or (d) the liquidation, dissolution or
winding up of the affairs of such Person.
Schedule B-10
"INTELLECTUAL PROPERTY" means Property constituting under any
Applicable Law a patent, patent application, copyright, trademark, trademark
application, service xxxx, tradename, mask work, trade secret or license or
other right to use any of the foregoing.
"INTELLECTUAL PROPERTY CLAIM" means the assertion by any
Person of a claim (whether asserted in writing, by action, suit or proceeding or
otherwise) that the Company's or any Subsidiary's ownership, use, marketing,
sale or distribution of any Inventory, Equipment, Intellectual Property or other
Property is violative of any ownership or right to use any Intellectual Property
of such Person.
"INTELLECTUAL PROPERTY SECURITY AGREEMENTS" means,
collectively, each of the Intellectual Property Security Agreements dated as of
January 31, 2001 between the Agent and each of the Company and the Subsidiary
Guarantors, as amended from time to time.
"INVENTORY" means all of any Person's inventory, whether now
owned or hereafter acquired, including all goods intended for sale or lease by
such Person, to be furnished by the such Person under contracts of service, or
for display or demonstration; all work in process; all raw materials and other
materials and supplies of every nature and description used or which might be
used in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise used or
consumed in such Person's business; and all documents evidencing and General
Intangibles relating to any of the foregoing, whether now owned or hereafter
acquired by such Person. As used in this definition, "General Intangibles" means
all general intangibles of any Person, whether now owned or hereafter created or
acquired by such Person, including all choices in action, causes of action,
company or other business records, inventions, blueprints, designs, patents,
patent applications, trademarks, trademark applications, trade names, trade
secrets, service marks, goodwill, brand names, copyrights, registrations,
licenses, franchises, customer lists, tax refund claims, computer programs,
operational manuals, all claims under guaranties, security interests or other
security held by or granted to such Person to secure payment of any of any of
the Accounts of such Person by an Account Debtor, all rights to indemnification
and all other intangible Property of such Person of every kind and nature (other
than Accounts).
"INVESTMENTS" means any investment, made in cash or by
delivery of property, by the Company or any of its Subsidiaries (a) in any
Person, whether by acquisition of stock, Debt or other obligation or Security,
or by loan, Guaranty, advance capital contribution or otherwise, or (b) in any
Property.
Schedule B-11
"LIEN" means any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on common law, statute or contract. The term "Lien" shall
also include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purpose of the Agreement, the Company
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement or other arrangement pursuant to which
title to the Property has been retained by or vested in some other Person for
security purposes. The term "Lien" shall not include any restriction on sales
imposed by federal or state securities laws.
"LIEN PERFECTION DOCUMENTS" means all instruments, agreements,
filings and recordings necessary or, in Agent's reasonable determination,
necessary or desirable to perfect, maintain or continue the perfection of, or
achieve or maintain the perfected status of any Lien granted to Agent pursuant
to any of the Financing Documents by the Company or Subsidiary Guarantor,
including all UCC-1 financing statements, pledges, assignments, hypothecations,
registrations of pledge, notifications, bailment agreements, landlord or
mortgagee waivers, processor waivers, intercreditor agreements, subordination
agreements, chattel mortgage filings or similar instruments, agreements or
documents.
"MARGIN STOCK" shall have the meaning ascribed to it in
Regulation U of the Board of Governors of the Federal Reserve.
"MATERIAL" means material in relation to the business,
operations, affairs, financial condition, assets, or Properties of the Parent
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, operations, affairs, financial condition, assets or Properties
of the Obligors taken as a whole, or (b) the ability of any Obligor to perform
its or his obligations under this Agreement (including the Parent Guaranty), the
Notes or the other Financing Documents to which each is a party or (c) the
validity or enforceability of this Agreement (including the Parent Guaranty),
the Notes or the other Financing Documents.
"MATERIAL CONTRACT" means an agreement to which an Obligor is
a party (other than the Financing Documents) which is deemed to be a material
contract as provided in Regulation S-K promulgated by the SEC under the
Securities Act.
"MATURITY DATE" means April 30, 2002.
Schedule B-12
"MAXIMUM LEGAL RATE OF INTEREST" means the maximum rate of
interest that a holder of Notes may from time to time legally charge the Company
by agreement and in regard to which the Company would be prevented successfully
from raising the claim or defense of usury under the Applicable Interest Law as
now or hereafter construed by courts having appropriate jurisdiction.
"MONEY BORROWED" means, as applied to any Person, (a) Debt
arising from the lending of money by any other Person to such Person; (b) Debt,
whether or not in any such case arising from the lending of money by another
Person to such Person, (i) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (ii) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (iii) upon
which interest charges are customarily paid (other than accounts payable) or
that was issued or assumed as full or partial payment for Property; (c) Debt
that constitutes a Capitalized Lease Obligation; (d) reimbursement obligations
with respect to letters of credit or guaranties of letters of credit and (e)
Debt of such Person under any guaranty of obligations that would constitute Debt
for Money Borrowed under clauses (a) through (d) hereof, if owed directly by
such Person.
"MOODY'S" means Xxxxx'x Investors Services, a division of The
McGraw Hill Companies, Inc.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NON-ELECTING SHARES" is defined in Section 7.4(k).
"NOTE SHAREHOLDERS" means Zero Stage Capital VI Limited
Partnership, Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxx, and Working Ventures Canadian Fund,
Inc.
"NOTES" is defined in Section 1.1.
"OBLIGATIONS" means, in each case, whether now in existence or
hereafter arising, (a) the principal of, and interest and premium, if any, on,
the Notes; (b) all other Debts, covenants, duties and obligations (including
Contingent Obligations) now or at any time or times hereafter owing by any
Obligor to Agent or any holder of Notes or Registrable Shares under or pursuant
to this Agreement or any of the other Financing Documents (including the Parent
Guaranty), whether evidenced by any note or other writing, whether arising from
any extension of credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise, and whether direct or indirect, absolute
or contingent, due or to become due, primary or secondary, or joint or several,
including all interest, charges,
Schedule B-13
expenses, fees or other sums (including Extraordinary Expenses) chargeable to
any or all Obligors hereunder or under any of the other Financing Documents.
"OBLIGOR" means the Parent, the Company and each Subsidiary
Guarantor.
"OFFICER'S CERTIFICATE" means a certificate of a Senior
Officer or of any other officer of the Parent whose responsibilities extend to
the subject matter of such certificate.
"ORGANIZATION DOCUMENTS" means, with respect to any Person,
its charter, certificate or articles of incorporation, bylaws, articles of
organization, operating agreement, members agreement, partnership agreement,
voting trust, or similar agreement or instrument governing the formation or
operation of such Person.
"ORIGINAL CLOSING DATE" means January 31, 2001.
"ORIGINAL NOTE PURCHASE AGREEMENT" is defined in Section 1.1.
"ORIGINAL NOTES" is defined in Section 1.1.
"ORIGINAL PURCHASERS" means the purchasers of the Original
Notes pursuant to the Original Note Purchase Agreements.
"OSHA" means the Occupational Safety and Hazard Act of 1970,
as amended and in effect from time to time.
"OTHER AGREEMENTS" is defined in Section 2.3.
"PARENT" has the meaning specified in the first sentence of
this Agreement.
"PARENT GUARANTY" is defined in Section 19.1.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"PERMITTED INTERCOMPANY DEBT" means unsecured Debt of the
Company or a Subsidiary Guarantor owing to the Parent, the Company or another
Subsidiary Guarantor ("Intercompany Debt") which by its terms or by the terms of
any instrument or agreement relating thereto (a) matures after the Maturity
Date, (b) is
Schedule B-14
subordinated to the Notes, and (c) has no principal, interest or other payment
arrangements payable or due until after the Maturity Date.
"PERMITTED LIEN" means a Lien of a kind specified in Section
8.6 of this Agreement.
"PERMITTED PURCHASE MONEY DEBT" means Purchase Money Debt of
the Company and the Subsidiary Guarantors which is incurred after the
Restatement Date and which is secured by no Lien or only by a Purchase Money
Lien, provided that the aggregate amount of Purchase Money Debt outstanding at
any time does not exceed $500,000. For the purposes of this definition, the
principal amount of any Purchase Money Debt consisting of capitalized leases
shall be computed as a Capitalized Lease Obligation.
"PERMITTED SERVICES CHARGES" means fees or charges owed to, or
liabilities in favor of, the Parent for (a) services rendered to the Company by
the Parent or liabilities assumed by the Parent which arise in the ordinary
course of the Company's business and would otherwise have been satisfied by the
Company; (b) overhead costs to the extent reasonably allocated to the Company by
the Parent; and (c) additional goods and services, including incremental
services, rendered or distributed to the Company that (i) exceed the Company's
historical operations or cost base, (ii) are a result of transactions which meet
the requirements of Section 8.5 of this Agreement and (iii) constitute a
liability that is subordinated to the Notes and contain payment arrangements
which are deferred until after the Maturity Date.
"PERMITTED SUBORDINATED DEBT" means the Debt related to the
promissory notes issued to the Note Shareholders in the original approximate
aggregate principal amount of US$6,175,000 (or its equivalent).
"PERSON" means an individual, partnership, corporation,
limited liability company, joint venture, association, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Parent or any ERISA
Affiliate or with respect to which the Parent or any ERISA Affiliate may have
any liability.
"PLEDGE AGREEMENTS" means each of (a) the Stock Pledge
Agreement dated as of January 31, 2001 by and between the Company and the Agent,
as amended from time to time, and (b) the Stock Pledge Agreement dated as of
Schedule B-15
January 31, 2001 by and between the Subsidiary Guarantors and the Agent, as
amended from time to time.
"PREPAYMENT DATE" means, in each Current Holder's sole
election, either (a) December 28, 2001, or (b) to the extent the Registration
Statement is not yet effective on December 28, 2001, then any date after
December 28, 2001 that is five (5) days after the date on which the Current
Holders have received notice that the Registration Statement has become
effective.
"PRIME RATE" means the variable per annum rate of interest so
designated from time to time by Fleet National Bank as its base rate. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer of Fleet National Bank.
"PROPERLY CONTESTED" means, in the case of any Debt of an
Obligor (including any Taxes) that is not paid as and when due or payable by
reason of such Obligor's bona fide dispute concerning its liability to pay same
or concerning the amount thereof, (a) such Debt is being properly contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted; (b) such Obligor has established appropriate reserves as shall be
required in conformity with GAAP; (c) the non-payment of such Debt will not have
a Material Adverse Effect and will not result in a forfeiture of any assets of
such Obligor; (d) no Lien is imposed upon any of such Obligor's assets with
respect to such Debt unless such Lien is at all times junior and subordinate in
priority to the Liens in favor of Agent (except only with respect to Property
taxes that have priority as a matter of applicable state law) and enforcement of
such Lien is stayed during the period prior to the final resolution or
disposition of such dispute; (e) if the Debt results from, or is determined by
the entry, rendition or issuance against an Obligor or any of its assets of a
judgment, writ, order or decree, enforcement of such judgment, writ, order or
decree is stayed pending a timely appeal or other judicial review; and (f) if
such contest is abandoned, settled or determined adversely (in whole or in part)
to such Obligor, such Obligor forthwith pays such Debt and all penalties,
interest and other amounts due in connection therewith.
"PROPERTY" or "PROPERTIES" means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, xxxxxx or inchoate.
"PROSPECTUS" is defined in Section 6.14(b).
"PURCHASE MONEY DEBT" means and includes (a) Debt (other than
the Obligations) for the payment of all or any part of the purchase price of any
fixed assets, (b) any Debt (other than the Obligations) incurred at the time of
or within 10
Schedule B-16
days prior to or after the acquisition of any fixed assets for the purpose of
financing all or any part of the purchase price thereof, and (c) any renewals,
extensions or refinancings (but not any increases in the principal amounts)
thereof outstanding at the time.
"PURCHASE MONEY LIEN" means a Lien upon fixed assets which
secures Purchase Money Debt, but only if such Lien shall at all times be
confined solely to the fixed assets acquired through the incurrence of the
Purchase Money Debt secured by such Lien and such Lien constitutes a purchase
money security interest under the UCC.
"REAFFIRMATION LETTER" is defined in Section 3.13.
"REGISTRABLE SHARES" is defined in Section 6.14(a).
"REGISTRATION STATEMENT" is defined in Section 6.14(a).
"RENTALS" means, as of the date of determination, all payments
which the lessee is required to make by the terms of any lease.
"REPORTABLE EVENT" means the occurrence, with respect to any
Plan, of any of the events set forth in Section 4043(b) of ERISA provided that
the requirement to report such event has not been waived by the PBGC or pursuant
to regulations issued by the PBGC.
"REQUIRED HOLDERS" means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates) and in any event shall mean
Elsevier Science, Inc. and one other Current Holder (other than Harcourt, Inc.
and any Affiliate of Elsevier Science, Inc. solely in such Affiliate's capacity
as purchaser of Harcourt Inc.'s Note or in its capacity as a holder of part but
not all of the Notes held by Elsevier Science, Inc. on the Restatement Date).
"RESTATEMENT CLOSING" is defined in Section 2.2.
"RESTATEMENT DATE" is defined in Section 2.2.
"RESTRICTED INVESTMENT" means any Investment or acquisition of
Property by the Company or any Subsidiary Guarantor in exchange for cash or
other Property, whether in the form of an acquisition of Equity Interests or
Debt, or the purchase or acquisition by the Company or any Subsidiary Guarantor
of any other Property, or a loan, advance, capital contribution or subscription,
except
Schedule B-17
acquisitions of the following: (a) Investments otherwise permitted by this
Agreement; and (b) Cash Equivalents.
"RESTRICTED PAYMENT" means (a) any Distribution, (b) any
payment, repayment, redemption, retirement, repurchase or other acquisition,
direct or indirect, by the Company or any of its Subsidiaries of, on account of,
or in respect of, the principal and interest of any Debt (other than the Notes)
(or installment thereof), and (c) any liability for or any capital expenditures
or any payment, repayment, purchase, repurchase or other acquisition, direct or
indirect, by the Company or any of its Subsidiaries of, on account of, or in
respect of, property, equipment, inventory, goods and services.
"RESTRICTIVE AGREEMENT" means an agreement (other than any of
the Financing Documents or, for purposes of clauses (a), (b), (d) or (e) hereof
and so long as none of the Financing Documents are violated, an Acceptable
Credit Facility) that, if and for so long as an Obligor or any Domestic
Subsidiary of such Obligor is a party thereto, would prohibit, condition or
restrict such Obligor's or Domestic Subsidiary's right to (a) incur or repay
Debt for Money Borrowed (including any of the Obligations); (b) grant Liens upon
any of such Obligor's or Domestic Subsidiary's assets (including Liens granted
in favor of Agent or the Required Holders pursuant to the Financing Documents);
(c) declare or make Distributions; (d) amend, modify, extend or renew any
agreement evidencing Debt for Money Borrowed (including any of the Financing
Documents); or (e) repay any Debt owed to any Obligor.
"XXXXXXX XXXX PLEDGE AGREEMENT" means the Pledge Agreement
dated as of January 31, 2001 by and between Xxxxxxx Xxxx and the Agent, as
amended from time to time, pursuant to which Xxxxxxx Xxxx pledged all shares of
stock and warrants legally or beneficially owned by him in the Company together
with Irrevocable Stock Powers and Irrevocable Warrant Powers fully executed in
blank.
"RIGHTS" is defined in Section 7.4(d).
"S&P" means Standard & Poor's Corporation.
"SEC" means, at any time, the Securities and Exchange
Commission or any other federal agency at such time administering the Securities
Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
Schedule B-18
"SECURITY" means "security" as defined by section 2(1) of the
Securities Act.
"SENIOR OFFICER" means any one of the chief executive officer,
the chief financial officer, and the president of the Parent.
"SOLVENT" means, as to any Person, such Person (a) owns
Property whose fair saleable value is greater than the amount required to pay
all of such Person's Debts (including contingent Debts), (b) is able to pay all
of its Debts as such Debts mature, (c) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage, and (d) is not "insolvent" within the meaning of Section 101(32) of
the Bankruptcy Code.
"SUBORDINATION AGREEMENT" means the subordination agreement
dated on or about the Original Closing Date between the Company and each of the
holders of Permitted Subordinated Debt.
"SUBSIDIARY" means any corporation of which a Person owns,
directly or indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination. Unless the context otherwise clearly
requires, any reference to a "Subsidiary" is a reference to a Subsidiary of the
Parent or the Company, as the context may require.
"SUBSIDIARY GUARANTORS" means Xxxxxx, Corporate Subscription
Services, Inc., a New Jersey corporation, The Xxxxx Company, Inc., a
Massachusetts corporation, The Xxxxxx Subscription Agency, Incorporated, a
Delaware corporation, XxXxxxxx Subscription Service, Inc., an Illinois
corporation, Xxxxxx Information Quest, Inc., a California corporation and each
other Domestic Subsidiary from time to time and each other Person (other than
the Parent) who guaranties payment or performance of the whole or any part of
the Obligations.
"SUBSIDIARY GUARANTOR SECURITY DOCUMENTS" (a) each security
agreement that may be duly executed by a Subsidiary Guarantor in favor of Agent,
in form and content acceptable to the Agent, in connection with the consummation
of the transactions contemplated by this Agreement and by which such Subsidiary
Guarantor shall grant a security interest in favor of Agent, for its benefit and
for the ratable benefit of all holders of Notes from time to time, in all of
such Subsidiary Guarantor's Properties as security for the Obligations and such
Subsidiary Guarantor's Subsidiary Guaranty, (b) each Intellectual Property
Security Agreement in form and content acceptable to the Agent and (c) all Lien
Perfection Documents requested by Agent.
Schedule B-19
"SUBSIDIARY GUARANTY" means a guaranty agreement (as amended
from time to time, each a "SUBSIDIARY GUARANTY," and collectively, the
"SUBSIDIARY GUARANTIES") entered into by Xxxxxx and all other Domestic
Subsidiaries from time to time, substantially in the form of Exhibit 4.11 to the
Original Note Purchase Agreements, guaranteeing the obligations and indebtedness
of the Company under this Agreement, the Notes or the other Financing Documents.
"SUBSIDIARY STOCK" means, with respect to any Person, the
share capital or other Equity Interests (or any options or warrants to purchase
share capital or other Equity Interests or other securities exchangeable for or
convertible into share capital or other Equity Interests) of any Subsidiary of
such Person.
"TAXES" means any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including income, receipts, excise, Property, sales, use, transfer,
license, payroll, withholding, social security and franchise taxes now or
hereafter imposed or levied by the United States or any other Governmental
Authority and all interest, penalties, additions to tax and similar liabilities
with respect thereto, but excluding, in the case of each holder of Notes, taxes
imposed on or measured by the net income or overall gross receipts of such
holder of Notes.
"TRADING DAY" means (i) if the Common Stock is quoted on the
Nasdaq National Market, the Nasdaq Small Cap Market or any other system of
automated dissemination of quotations of Securities prices, a day on which
trades may be effected through such system; (ii) if the Common Stock is listed
or admitted for trading on any national Securities exchange, a day on which such
national Securities exchange is open for business; or (iii) if the Common Stock
is not listed or admitted for trading on any national Securities exchange or
quoted on the Nasdaq National Market, the Nasdaq Small Cap Market or any other
system of automated dissemination of quotation of Securities prices, a day on
which the Common Stock is traded regular way in the over-the-counter market or
the electronic bulletin board and for which a Closing Price for the Common Stock
is available.
"TRANSFER" means, with respect to any Person, any transaction
in which such Person sells, conveys, transfers or leases (as lessor) any of its
Property, including, without limitation, Subsidiary Stock and Capital Stock.
"TRIGGER EVENT" is defined in Section 7.4(e).
"UPSTREAM PAYMENT" means a payment or Distribution of cash or
other Property by a Subsidiary to the Company, whether in repayment of Debt owed
Schedule B-20
by such Subsidiary to the Company, to pay dividends on account of the Company's
ownership of Equity Interests or otherwise.
"VENDOR RECEIVABLES" is defined in Section 6.11(b).
"VOTING STOCK" means Equity Interests of any class or classes
of a corporation or other entity the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of the corporate
directors or Persons performing similar functions.
Schedule B-21
SCHEDULE 3.8
CHANGES IN CORPORATE STRUCTURE
ACQUIRED COMPANIES
MDLB Enterprises, L.L.C. d/b/a Xxxxx Publishing (The Company acquired certain
assets and assumed certain liabilities of this entity pursuant to an Asset
Purchase Agreement, dated as of September 5, 2001).
Schedule 3.8-1
SCHEDULE 4.3
FULL DISCLOSURE
1. The Company has lost approximately $48,000,000 in annual revenue. In
addition, the Company's working capital deficit has increased.
Schedule 4.3-1
SCHEDULE 4.4
ORGANIZATION OF THE PARENT, THE COMPANY AND OWNERSHIP OF SUBSIDIARY STOCK
(a)
LEGAL NAME STATES OF PERCENTAGE OF SHARES HELD BY
INCORPORATION*/FOREIGN RECORD OWNER
QUALIFICATION
RoweCom Inc. DE*/MA N/A
The Xxxxx Company, Inc. MA*/ CA, MD, NJ, NY SC, TX, 100% held by Xxxxxx, Inc.
VA, IL
Xxxxxx, Inc. DE*/MA 100% held by RoweCom Inc.
Xxxxxx Subscription Agency, Inc. DE*/IL 100% held by Xxxxxx, Inc.
XxXxxxxx Subscription Services, IL*/None 100% held by Xxxxxx, Inc.
Inc.
Xxxxxx Information Quest, Inc. CA*/MA 100% held by Xxxxxx, Inc.
Corporate Subscription Services NJ*/MA 100% held by RoweCom Inc.
Inc.
The remaining domestic subsidiaries, Apogee Holdings, Inc., a Delaware
corporation ("Apogee") and RoweCom Merger Corporation, a Delaware corporation
("RMC"), were dissolved by filing Certificates of Dissolution with the Secretary
of State of Delaware on October 23, 2001. Apogee was a wholly-owned subsidiary
of The Xxxxx Company, Inc. and RMC was a wholly-owned subsidiary of RoweCom Inc.
The shares of The Xxxxx Company, Inc., Xxxxxx, Inc., XxXxxxxx Subscription
Service, Inc., Corporate Subscription Services Inc., Xxxxxx Subscription Agency,
Inc. and Xxxxxx Information Quest, Inc. are each subject to a first priority
lien in favor of the Agent of the holders of the Company's Floating Rate Senior
Secured Notes.
Schedule 4.4-1
Ownership of Foreign Subsidiaries
1. Xxxx Communications, Ltd, (Canada), 100% owned by RoweCom, Inc.
2. RoweCom Australia Pty. Ltd, (Australia) 100% owned by RoweCom France
SAS.
3. The RoweCom Xxxxx Korea Inc., (Korea) 100% owned by RoweCom France
SAS.
4. RoweCom Global, Limited, (Barbados) 100% owned by RoweCom, Inc.
5. RoweCom Global Holdings, Ltd., (British Virgin Islands) 100% owned
by RoweCom Global Ltd.
6. RoweCom ULC, (Canada) 100% owned by RoweCom Global Holdings, Ltd.
7. RoweCom France SAS (was previously RoweCom France SARL), (France)
100% owned by RoweCom REALA.
8. RoweCom UK Limited, (United Kingdom) 100% owned by RoweCom France
SAS.
9. XxxxXxx Xxxxxxxxxxxxxx Xxxxxx, X.X, (Xxxxx) 100% owned by RoweCom
France SAS.
10. RoweCom Communications B.V., (Netherlands) 100% owned RoweCom
Global Holdings, Ltd. (B.V.I.)
11. Xxxxx Australia Pty., Ltd., (Australia) 100% owned by The Xxxxx
Company, Inc.
12. Xxxxx Asia Pacific Co., Ltd., (Japan) 100% owned by The Xxxxx
Company, Inc.
13. Nihon Xxxxx Co. Ltd., (Japan) 100% owned by The Xxxxx Company, Inc.
14. Xxxxx Asia Pacific Information Services, (Hong Kong) 100% owned by
The Xxxxx Company, Inc
15. Xxxxx Informatics, not owned by RoweCom or any of its subsidiaries.
Schedule 4.4-2
SCHEDULE 4.5
DEBT
DEBT FOR MONEY BORROWED
-----------------------------------------------------------------------------------------------------------
LENDER/OBLIGOR/GUARANTORS AMOUNT/CURRENT MATURITY COLLATERAL
OUTSTANDING DATE
-----------------------------------------------------------------------------------------------------------
Bridge Note Holders(1)/ $ 6,175,000/ 5/26/02 all assets of the Company
RoweCom Inc./No guarantors $5,700,000 O/S (subordinate to the
Publishers)
-----------------------------------------------------------------------------------------------------------
Publisher Note $ 9,000,000/ 4/30/02 all assets of Company and
Holders/RoweCom Inc./ $ 9,000,000 O/S its U.S. Subsidiaries
Guaranteed by: divine, inc., Xxxxxx, including security interests
Inc., Xxxxxx Subscription Services, in all stock held by the
Inc., XxXxxxxx Subscription Service, Company in its U.S.
Inc., Corporate Subscription Services Subsidiaries.
Inc., Xxxxxx Information Quest, Inc.
and The Xxxxx Company, Inc.
-----------------------------------------------------------------------------------------------------------
BNP Paribas and Credit Lyonnais 7,625,000 11/06 stock pledge of (a) some
Loan/RoweCom REALA SAS/ Guaranteed by EURO/ percentage of capital stock
RoweCom Inc. 7,625,000 EURO of each RoweCom France SAS,
RoweCom Korea Inc., RoweCom
UK, Ltd., RoweCom Xxxxx
Taiwan-Hong Kong Ltd.,
RoweCom Australia Pty. Ltd.,
and RoweCom Communications
Espana, S.L. And (b)
-----------------------------------------------------------------------------------------------------------
-----------------
(1)/ The current Bridge Note holders (and the principal amounts owing them)
include: (a) Zero Stage Capital VI, L.P. ($2,350,000), (b) Xx. Xxxxxxx X. Xxxx
($1,000,000), (c) Xxxxxxxx Xxxxxxx ($1,350,000), and (d) Working Ventures
Canadian Fund, Inc. ($1,000,000)
Schedule 4.5-1
all asset liens on each of
the entities listed above.
-----------------------------------------------------------------------------------------------------------
Schedule 4.5-2
SCHEDULE 4.8
CERTAIN LITIGATION
1. Xxxxx Xxxxxx and Xxxxx Xxxxxxxxx initiated litigation against the
Company alleging that the Company breached its employment agreements
with them, resulting in the constructive termination of their
employment with the Company. Details of this litigation are disclosed
in the Company's SEC Reports.
2. Xxxx Sud, who is of Indian descent, filed a complaint with the
Massachusetts Commission Against Discrimination ("MCAD") on September
10, 2001, alleging national origin and gender discrimination.
Specifically, Ms. Sud claims the Company discriminatorily selected her
for lay-off and falsely claimed legitimate elimination of her position
as Treasury Manager of the Corporate Finance Department. Ms. Sud's
allegations focus on the conduct of her former co-worker, Xxxx
Xxxxxxxxx, and immediate supervisor, Xxxxxx Xxxxx. The Company received
a courtesy copy of the MCAD complaint from Ms. Sud's attorney. Once the
MCAD processes the charge, it will notify the Company, giving the
Company an opportunity to respond to the allegations in writing.
Because of the preliminary stage of this matter, no discovery has been
conducted concerning Ms. Sud's alleged damages or demand.
3. The Company has been served with several class action complaints that
were filed in the United States District Court for the Southern
District of New York against the Company and two of its officers,
directors (including Xx. Xxxxxxx X. Xxxx) and former officers and
directors, as well as against the lead underwriting firms that
underwrote the Company's March 1999, initial public offering of common
stock. The complaints were filed on behalf of persons who purchased the
Company's common stock during different time periods, all beginning on
or after March 9, 1999 and ending on or before December 6, 2000. The
complaints are similar to each other and to hundreds of other
complaints filed recently against other issuers and their underwriters,
and allege violations of the Securities Act of 1933 and the Securities
Exchange Act of 1934 based primarily on the assertion that there was
undisclosed compensation received by the issuers' underwriters in
connection with the initial public offering and undisclosed
arrangements with purchasers to make additional purchases in the
aftermarket.
4. The Company and The Xxxxx Company, Inc. are currently under
Massachusetts' sales and use tax audit for the periods 11/97 to current
and 9/98 to current, respectively. These examinations encompass only
use tax examinations of the expenses and asset additions. An extension
of the statute of limitations was agreed to for The Xxxxx Company for
an additional year. There is a potential liability of $50,000 per year
for a three year period resulting from this audit.
Schedule 4.8-1
5. Xxxx Communications Ltd. is currently under audit by the Canadian
Customs and Revenue Agency for the period ending 12/31/98.
6. The Xxxxx Company, Inc. is currently under examination by the Michigan
Department of Treasury for the periods ending 9/99, 10/99 and 12/99 for
Single Business Tax.
7. IRS Form 5500 relating to the Retirement Plan for Employees of The
Xxxxx Company, Inc. for the period ending March 31, 1999 is due. The
Xxxxx Company, Inc. is currently under IRS investigation for failure to
file this Form in a timely manner.
8. The Massachusetts Department of Revenue is currently conducting a sales
and use tax audit on both the Company and The Xxxxx Company, Inc. for
the period from 1997 to current. In addition, the North Carolina
Department of Revenue is currently conducting a sales and use tax audit
on both the Company and The Xxxxx Company, Inc. for the period from
1996 to current.
Schedule 4.8-2
SCHEDULE 4.10
CORPORATE NAMES
LEGAL NAME
RoweCom Inc.
The Xxxxx Company, Inc.
Xxxxxx, Inc.
The Xxxxxx Subscription Agency, Incorporated
XxXxxxxx Subscription Services, Inc.
Xxxxxx Information Quest, Inc.
Corporate Subscription Services Inc.
OTHER NAMES
Discount Magazine Subscriptions, Inc. (former name of Corporate Subscription
Services Inc.)
The Massachusetts Xxxxx Company, Inc (used in TX and CA)
Xxxxxx-Xxxxx, Inc. (used in MA)
ACQUIRED COMPANIES
MDLB Enterprises, L.L.C. d/b/a Xxxxx Publishing (The Company acquired certain
assets and assumed liabilities of this entity pursuant to an Asset Purchase
Agreement, dated as of September 5, 2001).
Schedule 4.10-1
SCHEDULE 4.11
BUSINESS LOCATIONS
COMPANY PRINCIPAL ADDRESS OTHER LOCATIONS
Xxxxxx, Inc. 00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
The Xxxxx Co. 00 Xxxxxxxxx Xxxx 000 Xxxx 00xx Xxxxxx
Xxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
0000-0000 Xxxx Xxxxx Xx
Xxxxxx, XX 61061(1)
Xxxxxx 00 Xxxxxxxxx Xxxx 0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxxxx Xxxxxxxx, XX 00000 Oregon, IL 61061(2)
Services, Inc.
XxXxxxxx 00 Xxxxxxxxx Xxxx 0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxxxx Xxxxxxxx, XX 00000 Oregon, IL 61061(3)
Services, Inc.
Xxxxxx 00 Xxxxxxxxx Xxxx 0000 Xxxxx Xxx
Information Quest, Xxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Inc.
Corporate 00 Xxxxxxxxx Xxxx
Xxxxxxxxxxxx Xxxxxxxx, XX 00000
Services Inc.
RoweCom Inc. 00 Xxxxxxxxx Xxxx 0000 X. Xxxx Xx.
Xxxxxxxx, XX 00000 Xxxxx 000
Xxx Xxxx, XX
-----------------------------
1/ The Company plans to close the Oregon, IL facility on or around
November 2, 2001.
2/ The Company plans to close the Oregon, IL facility on or around
November 2, 2001.
3/ The Company plans to close the Oregon, IL facility on or around
November 2, 2001.
Schedule 4.11-1
PREVIOUS LOCATIONS
Corporate Subscription 85 Chestnut Ridge Road,
Services Inc. Xxxxxxxx, XX 00000
Xxxxxx 0000 Xxxxxx Xxxxx
Xxxxxxxxxxx Xxxxx, Xxxxxxxx, XX
Inc.
The Xxxxx 4425 Brookfield Corporate
Company, Inc. Drive, Xxxxx 0000
Xxxxxxxxx, XX 00000
RoweCom Inc. 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 02138(4)
---------------------
4/ Although the company no longer operates from this location, it still
has certain pieces of office furniture in this facility, which it
rents to its sub-lessees.
Schedule 4.11-2
SCHEDULE 4.13
SURETY OBLIGATIONS
The domestic Subsidiaries of the Company guaranty the Company's Senior Secured
Floating Rate Notes to the publisher lenders.
RoweCom Inc. guarantees BNP/Credit Lyonnais.
Schedule 4.13-1
SCHEDULE 4.14
BROKER FEES
1. Fees and expenses are to be paid to Chatsworth Securities, LLC in
connection with the Acquisition in the full amount of 400,000 shares of
Class A Common Stock of divine, inc.
Schedule 4.14-1
SCHEDULE 4.15
INTELLECTUAL PROPERTY
The Xxxxx Company
BENELUX
Registered Trade Xxxxx
Xxxx Registration No: Date Registered
---- ---------------- ---------------
Xxxxx (and Design) 476148 05/11/90
CANADA
Trade Marks
Serials Management Systems
Intemedia
Bibliodata
Bibliorama
Periodica
Periodica Audio
Periodica Video
Xxxxx (and Design) TMA391638 13/12/91
Domain Names
xxx.xxxxx.xx
xxx.xxxxx.xx
xxxxx.xxxxx.xx
xxxxxxxxx.xx.xx
xxxxxxx.xxxxx
Trade Names
Xxxxx Quebec
Schedule 4.15-1
FRANCE
Registered Trade Xxxxx
Xxxx Registration No: Date Registered
---- ---------------- ---------------
Interpresse Service (I.P.S.) 657216 03/08/83
Xxxxx (and Design) 1,588,672 20/04/90
Schedule 4.15-2
SINGAPORE
Registered Trade Xxxxx
Xxxx Registration No: Date Registered
---- ---------------- ---------------
Xxxxx (and Design) 2797/90 19/04/90
SOUTH KOREA
Registered Trade Xxxxx
Xxxx Registration No: Date Registered
---- ---------------- ---------------
Xxxxx (and Design) 14768 23/08/91
SPAIN
None registered by Xxxxxx Spain which could be transferred. The registered
domain name is "LCI".
TAIWAN
Registered Trade Xxxxx
Xxxx Registration No: Date Registered
---- ---------------- ---------------
Xxxxx 94609 01/11/97
Xxxxx (and Design) 94608 16/10/96
Xxxxx (in Chinese characters) 84895 16/09/96
Xxxxx Finder 732101 16/10/96
Xxxxx logo 50123 16/02/91
UK
Domain Names
xxxxxxxxxxxxxxxxxxxx.xx.xx
xxxxxxxxxxxxxxxxxxxx.xxx
xxxxxxxxx.xx.xx
xxxxxxxxx.xxx
xxxxxxxxx.xxx
xxxxxxxxx.xx.xx
xxxxxxxxxxxxxx.xx.xx
xxxxxxxxx-xxxxx.xxx
xxxxxxxxx-xxxxx.xxx
xxxxxx.xx.xx
Schedule 4.15-3
xxxxxxxxxxxxx.xx.xx
xxxxxxxxxxxxx.xxx
xxxxx.xx.xx
xxxxx.xxx
xxxxxxxxxxxxxxx.xx.xx
xxxxxxxxx-xxxxxx.xxx
xxxxxxxxxxxxxxx.xxx
xxxxxxx.xx.xx
xxxxxxx.xxx
xxxxxxxxxxxxxxxx.xx.xx
xxxxxxxxxxxxxxxx.xxx
xxxxxxxxxxxxxxxx.xxx
xxxxxxxx.xx.xx
xxxxxxxx.xxx
xxxxxxxx.xxx
xxxxxxxxxxxxxx.xx.xx
xxxxxxxxx-xxxxx.xxx
xxxxxxxxxxxxxx.xxx
xxxxxx.xx.xx
xxxxxx.xxx
xxxxxx.xxx
xxxxxxxxxxxxxxxxx.xx.xx
xxxxxxxxxxxxxxxxx.xxx
xxxxxxxxx.xxx xxxxxxxxx.xx.xx
Registered Trade Marks
Xxxxxx Xxxx Registration No. Date Registered
------ ---- ---------------- ---------------
The Xxxxx Company, Inc. Xxxxx (stylised) GB1420524 19/04/91
USA
A. Registered copyrights
Holder Registration No. Date Registered
------ ---------------- ---------------
The Xxxxx Company, Inc. PA604330 23/12/92
The Xxxxx Company, Inc. Txu579343 16/04/93
The Xxxxx Company, Inc. TX678661 17/09/93
The Xxxxx Company, Inc. TX669116 15/04/81
The Xxxxx Company, Inc. TX574871 03/11/80
The Xxxxx Company, Inc. TX351111 20/08/79
The Xxxxx Company, Inc. TX178469 23/01/79
Schedule 4.15-4
The Xxxxx Company, Inc. TX24666 14/04/78
The Xxxxx Company, Inc. TX23640 11/04/78
The Xxxxx Company, Inc. TX743123 23/06/81
The Xxxxx Company, Inc. TX843514 04/02/82
The Xxxxx Company, Inc. TX666602 25/03/81
The Xxxxx Company, Inc. TX675817 06/04/81
The Xxxxx Company, Inc. TX675818 17/03/81
The Xxxxx Company, Inc. TX511149 13/05/80
The Xxxxx Company, Inc. TX437206 18/03/80
The Xxxxx Company, Inc. TX98366 04/11/81
The Xxxxx Company, Inc. TX654705 23/02/81
The Xxxxx Company, Inc. TX710473 10/06/81
The Xxxxx Company, Inc. TX510481 01/07/80
The Xxxxx Company, Inc. TX546662 27/08/80
The Xxxxx Company, Inc. TX589016 20/11/80
The Xxxxx Company, Inc. TX475148 12/03/80
The Xxxxx Company, Inc. TX290776 09/07/79
The Xxxxx Company, Inc. TX317026 29/08/79
The Xxxxx Company, Inc. TX260315 01/06/79
The Xxxxx Company, Inc. TX74147 10/07/78
The Xxxxx Company, Inc. TX74146 13/06/78
The Xxxxx Company, Inc. TX105572 15/09/78
The Xxxxx Company, Inc. TX201639 22/01/79
The Xxxxx Company, Inc. TX16003 17/03/78
The Xxxxx Company, Inc. TX82253 04/08/78
The Xxxxx Company, Inc. TX130804 25/08/78
The Xxxxx Company, Inc. TX145011 07/11/78
The Xxxxx Company, Inc. TX49387 31/03/78
The Xxxxx Company, Inc. TX25298 27/02/78
The Xxxxx Company, Inc. TX758060 08/09/81
The Xxxxx Company, Inc. TX273624 14/02/79
Xxxxx Research Services, Inc. TX3678661 17/09/93
B. Registered trademarks
1. Held by The Xxxxx Company, Inc.
Xxxx Registration No. Date Registered
---- ---------------- ---------------
DataLinx 1,365,993 15/10/85
EASI 1,826,824 15/03/94
Xxxxx 1,359,618 10/09/85
Xxxxx (stylised letters) 1,359,619 10/09/85
InfoServ 1,376,205 17/12/85
Schedule 4.15-5
LINX 1,367,114 22/10/85
MicroLinx 1,400,965 15/07/86
Sc-10 1,365,994 15/10/85
Xxxxx Source (Words Only) 2,104,829 14/10/97
Xxxxx Source (stylised) 2,104,830 14/10/97
PubLinx 1,403,441 29/07/86
Xxxxx Finder 1,839,715 14/06/94
Xxxxx Research Services, Inc. 1,853,905 13/09/94
Domain Names
xxxxxxx.xxx
xxxxxxx-xxxxxx.xxx
xxxxxxxxxx.xxx
xxxxx.xxx
RoweCom
USA
Trademarks
A. Registered Trademarks Owned by RoweCom
Xxxx Registration No. Date Registered
---- ---------------- ---------------
R RoweCom (and Design) 2,133,000 27/01/98
RoweCom 2,124,141 23/12/97
Subscribe 2,124,143 23/12/97
Xxxxx* 1,823,994
Xxxxx'x Star Ratings
(service xxxx)* 2,415,343
Xxxxx'x Review Service (service
xxxx)* 2,403,693
*Indicates those marks that were acquired in connection with the asset
acquisition of Xxxxx Publishing.
Schedule 4.15-6
B. RoweCom Trademarks Pending
Xxxx Application No. Filing Date
---- --------------- -----------
Klibrary 75/714,383 26/05/99
Kstore (Opposed by Jstore) (Published) 75/555,944 21/09/98
Kworld (Allowed) 75/529,685 03/08/98
Kcentral 76/287,852 18/07/01
Xxxxx'x* 75/731,999
*Indicates xxxx acquired in connection with the asset acquisition of Xxxxx
Publishing.
C. RoweCom Copyrights (acquired in the acquisition of certain assets of Xxxxx
Publishing)
XXXXX'X HEALTH SCIENCES BOOK REVIEW JOURNAL--Certificates of Copyright received
for (publication dates are in parentheses):
Vol. 1, No. 1 (10/1/93)
Vol. 1, No. 2 (12/1/93)
Vol. 2, No. 1 (2/1/94)
Vol. 2, No. 2 (4/1/94)
Vol. 2, No. 3 (6/1/94)
Vol. 2, No. 4 (8/1/94)
Vol. 2, No. 5 (10/1/94)
Vol. 2, No. 6 (12/1/94)
Vol. 3, No. 1 (2/1/95)
Vol. 3, No. 2 (4/1/95)
Vol. 3, No. 3 (6/1/95)
Vol. 3, No. 4 (8/1/95)
Vol. 3, No. 5 (10/1/95)
Vol. 3, No. 6 (12/1/95)
Vol. 4, No. 1 (2/1/96)
Vol. 4, No. 2 (4/1/96)
Vol. 4, No. 3 (6/1/96)
Vol. 4, No. 4 (8/1/96)
Vol. 4, No. 5 (10/1/96)
Vol. 4, No. 6 (12/1/96)
Vol. 5, No. 1 (2/1/97)
Schedule 4.15-7
Vol. 5, No. 2 (4/1/97)
Vol. 5, No. 3 (6/2/97)
Vol. 5, No. 4 (8/4/97)
Vol. 5, No. 5 (10/6/97)
Vol. 5, No. 6 (12/1/97)
Vol. 6, No. 1 (2/6/98)
Vol. 6, No. 2 (4/10/98)
Vol. 6, No. 3 (6/5/98)
Vol. 6, No. 4 (8/7/98)
Vol. 6, No. 5 (10/9/98)
Vol. 6, No. 6 (12/11/98)
Vol. 7, No. 1 (2/5/99)
Vol. 7, No. 2 (4/9/99)
Vol. 7, No. 3 (6/6/99)
Vol. 7, No. 4 (8/27/99)
Vol. 7, No. 5 (10/8/99)
Vol. 7, No. 6 (1/10/00)
Certificates of Copyright have been applied for:
Vol. 8, Issues 1-6; and
Vol. 9, Issues 1-2.
XXXXX'X NURSING AND ALLIED HEALTH BOOK REVIEW QUARTERLY--Certificates of
Copyright received for (publication dates are in parentheses):
Vol. 1, No. 1 (12/1/95)
Vol. 2, No. 1 (Spring, 1996)
Vol. 2, No. 2 (7/1/96)
Vol. 2, No. 3 (9/1/96)
Vol. 2, No. 4 (12/1/96)
Vol. 3, No. 1 (3/31/97)
Vol. 3, No. 2 (6/30/97)
Vol. 3, No. 3 (9/29/97)
Vol. 3, No. 4 (12/20/97)
Vol. 4, No. 1 (3/27/98)
Vol. 4, No. 2 (6/26/98)
Vol. 4, No. 3 (9/28/98)
Vol. 4, No. 4 (12/28/98)
Schedule 4.15-8
Vol. 5, No. 1 (3/26/99)
Vol. 5, No. 2 (6/25/99)
Vol. 5, No. 3 (9/24/99)
Vol. 5, No. 4 (1/31/00)
Xxxxxx Information Quest
X. Xxxxxx Information Quest Trademarks Pending
Xxxx Application No. Filing Date
---- --------------- -----------
The License Depot (Words Only) 75/622419 19/01/99
Schedule 4.15-9
SCHEDULE 4.17
RESTRICTIVE AGREEMENTS
Agreement and Plan of Merger, dated as of July 6, 2001, by and among Parent, the
Company and Knowledge Resources Acquisition Corp. (restricts ability to issue
capital stock).
See Schedule 4.5(b) indicating those agreements, pursuant to which, the Company
and/or a Subsidiary of the Company has granted a lien as to certain assets.
Schedule 4.17-1
SCHEDULE 4.18
WAIVED DEFAULTS AND EVENTS OF DEFAULT
1. See Defaults and Events of Default listed in that certain Waiver and
Amendment Letter Agreement, dated October 24, 2001, by and among the
holders of the Company's Floating Rate Senior Secured Notes having an
aggregate principal amount of $9 million and the Company.
2. RoweCom France SAS may be in default of its credit arrangement by
consummating the Merger without the consent of BNP Paribas and Credit
Lyonnais. In addition, RoweCom France SAS did not obtain waivers of
certain covenants from BNP Paribas and Credit Lyonnais listed in
Exhibit G of the Merger Agreement.
3. Failure to enter into this Amended Note Purchase Agreement by November
9, 2001, under Section 9.22 of the Original Note Purchase Agreement.
4. Failure of divine, inc. to enter into a guaranty agreement by November
9, 2001, under Section 11 (q) of the Original Note Purchase Agreement.
Schedule 4.18-1
SCHEDULE 4.19
LEASES
(a) MATERIAL CAPITALIZED LEASES OF THE COMPANY & ITS DOMESTIC SUBSIDIARIES:
A. LESSEE RoweCom Inc. (and Sub-Lessor as to portion
subleased to Celarix, Inc. and Publicom)
LEASED PROPERTY 00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
TERM May 2006
RENT RATE $26 per square foot
SQ. FOOTAGE 40,076 square feet
SUB-LESSEE Celarix, Inc. (as to part of the property)
SUB-LESSEE Publicom (as to 12,000 s.f. of the property)
LESSOR Western Properties
XXXXXXX Xxxx Xxxxx
XX Xxx 000000
Xxxxxxxxx, XX 00000
B. LESSEE RoweCom Inc.
LEASED PROPERTY 00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
TERM December 31 2007
RENT RATE $14 per square foot for first 3 years
$14.25 per square foot for 4th and 5th years
$14.50 per square foot for 6th and 7th years
SQ. FOOTAGE 41,122 square feet
LESSOR 00 Xxxxxxxxx Xxxx, LLC
Xxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
C. LESSEE RoweCom Inc.
LEASED PROPERTY 0000 Xxxxx Xxx
Xxxxxxxxx, XX
TERM May 31, 2002
RENT RATE $1,023 per month
SQ. FOOTAGE Approximately 660 square feet
LESSOR Xxxxxxx Xxxxx & Xxxxx Xxxxxxx d/b/a Oceanview
Plaza and X. Xxxxxxx & Associates
X.X. Xxx 000000
Xxxxxxxxx, XX 00000
Schedule 4.19-1
D. LESSEE RoweCom Korea Inc.
LEASED PROPERTY 00000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
TERM November 30, 2003
RENT RATE $1.90 per square foot per month ($1,839.20 per
month)
SQ. FOOTAGE Approximately 1,000 square feet
LESSOR Xxxxxx Enterprises
X.X. Xxx 0000
Xx. Xxx Xxxxxxxxx, XX 00000
OPERATING LEASES:
Automobiles
Data Processing System
Copiers
Fax Machine
Pitney Xxxxx Mailing Systems, Machines, and Equipment
Computer Equipment
SCHEDULE 4.20
PENSION PLANS
1. RoweCom UK Pension Fund
2. RoweCom UK Money Purchase Scheme
3. RoweCom Group Benefits Plan (includes all Subsidiaries, except Xxxxxx
Information Quest, Inc.), which Benefits include:
a. Health Insurance
b. Dental Insurance
c. Disability Insurance
d. Life Insurance
e. Accidental Death & Dismemberment Insurance
4. RoweCom Inc. Flexible Benefits Plan, which Benefits include:
a. Dependent Care Spending Account
b. Health Care Spending Account
c. Premium Conversion Plan
5. RoweCom 401(k) Plan
6. Employee Stock Purchase Plan
7. RoweCom Inc. Paid Time Off Policy
8. RoweCom Canada Defined Contribution Plan
9. RoweCom Inc. Severance Plan
10. Corporate Subscription Services Inc. Reduction-In-Force Severance Plan
11. Retirement Plan for Employees of The Xxxxx Company, Inc.
12. Employment Agreements entered pursuant to the Agreement and Plan of
Merger and Reorganization, dated as of July 6, 2001, by and among
Parent, the Company and Knowledge Resources Acquisition Corp., with the
following individuals:
a. Xxxxxxx X. Xxxx
b. Xxx Kryzwicki
c. Xxxxxxx Xxxxxxx
d. Xxx Xxxx
e. Xxxxxx Xxxxx
13. The Company had Employment Agreements with Xxxxx Xxxxxx and Xxxxx
Xxxxxxxxx. The employment of these two individuals was terminated. Xx.
Xxxxxx and Xx. Xxxxxxxxx initiated litigation against the Company. See
Schedule 4.8 for further detail as to the litigation.
14. Noncompetition Agreements were entered by and between the Company and
each of the individuals listed below:
a. Xx. Xxxxxxx X. Xxxx
b. Xxxxxx Xxxxx
Schedule 4.20-1
S
15. All employees are subject to Confidentiality, Developments, and
Non-Competition Agreements. Material Confidentiality, Developments and
Non-Competition Agreements were entered by and between the Company and
each of the individuals listed below:
a. Xxxx Xxxxx, dated November 5, 1999
b. Xxxxxx X. Xxxxx, dated May 17, 1999
c. Xxxxx Xxxxxxxxx, dated October 7, 1999
16. The Company plans to close its Oregon, IL facility on or around
November 2, 2001. In connection with the closure of this facility, the
Company has laid off 60 of its 65 employees who worked in this
facility. The 60 terminated employees will receive the Company's
standard severance plan, which includes five (5) weeks pay.
Schedule 4.20-2
SCHEDULE 4.22
LABOR RELATIONS
None
Schedule 4.22-1
SCHEDULE 8.5
AFFILIATE TRANSACTIONS
I. International Subscription Agency Lease
- Lessor: Xxxxxx Xxxxx Xxxx, Managing Director RoweCom Australia
Pty. Ltd.
- Lessee: RoweCom Inc.
- Location: 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx, Xxxxxxxxx
- Amount: Approximately $130,000 per year
II. Debt Issuance
1. Promissory note dated on November 6, 2001 executed by RoweCom Inc. in favor
of Zero Stage Capital VI, L.P. in the principal amount of $2,350,000.
2. Promissory note dated on November 6, 2001 executed by RoweCom Inc. in favor
of Xx. Xxxxxxx X. Xxxx in the principal amount of $1,000,000.
3. Promissory note dated on November 6, 2001 executed by RoweCom Inc. in favor
of Xxxxxxxx Xxxxxxx in the principal amount of $1,350,000.
4. Promissory note dated on November 6, 2001 executed by RoweCom Inc. in favor
of Working Ventures Canadian Fund, Inc. in the principal amount of $1,000,000.
III. Warrants
1. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Zero
Stage Capital VI, L.P. for 1,192, 884 shares.
2. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Xxxxxxxx
Xxxxxxx for 697,274 shares.
3. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Working
Venture Canadian Fund, Inc. for 507,610 shares.
4. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Dr.
Xxxxxxx Xxxx for 507,610 shares.
5. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Xxxxxx
Xxxxxxxxxxx for 12,296 shares.
6. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Brizio
Xxxxxx for 12,296 shares.
Schedule 8.5-1
7. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Xxxxxxx
Xxxxxxxx for 9,225 shares.
8. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Xxxx
Xxxxxxx for 7,995 shares.
9. Warrant, dated November 6, 2001 executed by divine, inc. in favor of
Xxxxxxxxx Xxxxxxx for 6,150 shares.
10. Warrant, dated November 6, 2001 executed by divine, inc. in favor of the
Xxxxxxx Xxxxxxx Trust for 4,304 shares.
11. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Xxxx
Xxxxxxx for 1,230 shares.
12. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Xxxxxx
Xxxxx for 750 shares.
13. Warrant, dated November 6, 2001 executed by divine, inc. in favor of Xxxx
Xxxxx for 750 shares.
14. Warrant, dated November 6, 2001 executed by divine, inc. in favor of HFTP
Investment L.L.C. for 350,000 shares.
15. Warrant, dated November 6, 2001 executed by divine, inc. in favor of
Xxxxxxxx, L.P. for 350,000 shares.
16. Warrant, dated November 6, 2001 executed by divine, inc. in favor of
Montrose Investments Ltd. for 76,476 shares.
III. Foreign Subsidiary Restructuring:
The Company restructured the ownership of certain intellectual property through
an inter-company sale involving RoweCom France SAS, RoweCom Global Holdings,
Ltd. and RoweCom UK, Ltd. Subsequent to this arrangement, certain subsidiaries
now perform services on behalf of other subsidiaries.
Schedule 8.5-2
SCHEDULE 8.6
LIENS
ROWECOM
1. Blanket lien in favor of Zero Stage Capital VI Limited Partnership, as Agent
for holders of indebtedness listed in Schedule 7.5(II).
2. Blanket lien in favor of Wilmington Trust Company, as Agent for holders of
indebtedness listed in Schedule 7.5(II).
CORPORATE SUBSCRIPTION
1. Filing on certain leased property filed with the Secretary of State of New
Jersey #1805279 on 12/02/97--Secured Parties are National Marketing Network,
Inc., and Colonial Pacific Leasing Corp.
2. Blanket lien in favor of Wilmington Trust Company, as Agent for holders of
indebtedness listed in Schedule 7.5(II).
XXXXX
1. Filing on certain leased property filed with the Secretary of the
Commonwealth #389474 on 5/13/96--Secured Party is Computer Sales International,
Inc.
2. Filing on certain leased property filed with the Secretary of the
Commonwealth #421421 on 10/07/96--Secured Party is Computer Sales International,
Inc.
3. Filing on certain leased property filed with the Secretary of the
Commonwealth #429616 on 11/14/96--Secured Party is Computer Sales International,
Inc.
4. Filing on certain leased property filed with the Secretary of the
Commonwealth #577955 on 9/17/98--Secured Party is Computer Sales International,
Inc.
5. Filing on certain leased property filed with the Secretary of the
Commonwealth #584627 on 10/19/98--Computer Sales International, Inc. assigned
its interest to Xxxxxx Financial, Inc.
Schedule 8.6-1
6. Filing on certain leased property filed with the Westwood Town Clerk #98-66A
on 9/17/98--Secured Party is Computer Sales International, Inc.
7. Filing on certain leased property filed with the Westwood Town Clerk #98-66B
on 10/19/98--Secured Party is Computer Sales International, Inc.
8. Filing on certain leased property filed with the Westwood Town Clerk #97-22
on 2/25/97, #97-22A on 4/30/97, #97-22B on 6/10/97--Secured Party is Computer
Sales International, Inc.
9. Filing on certain leased property filed with the Westwood Town Clerk #96-64
on 4/12/96
10. Filing on certain leased property filed with the Westwood Town Clerk #01-39
on 2/9/01--Secured Party is Wilmington Trust Company, as Agent.
11. Filing on certain leased property filed with the Secretary of State of New
York #241233 --Secured Party Citicorp USA, Inc..
12. Filing on certain leased property filed with the Secretary of State of New
York #028426 --Secured Party is Wilmington Trust Company, as Agent.
13. Filing on certain leased property filed with the Virginia State Corporation
Commission #0000000000 --Secured Party is Wilmington Trust Company, as Agent.
14. Filing on certain leased property filed with Virginia, Fairfax County
#01-001625--Secured Party is Wilmington Trust Company, as Agent.
15. Filing on certain leased property filed with the Secretary of State of
Illinois #4230561--Secured Party is Old Kent Bank.
16. Filing on certain leased property filed with the Secretary of State of
Illinois #4337835--Secured Party is Wilmington Trust Company, as Agent.
17. Filing on certain leased property filed with the Secretary of State of
Illinois #4377159--Secured Party is Old Kent Bank.
Schedule 8.6-2
EXHIBIT 1
[FORM OF NOTE]
ROWECOM INC.
AMENDED AND RESTATED FLOATING RATE SENIOR SECURED
CONVERTIBLE NOTE DUE APRIL 30, 2002
No. [_____] [DATE]
$[_______]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. NO TRANSFER, SALE, OR OTHER DISPOSITION OF
THIS NOTE MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
FILED PURSUANT TO THE SECURITIES ACT OR UNLESS THE HOLDER HEREOF SHALL HAVE
DELIVERED TO ROWECOM INC. A WRITTEN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
SCOPE REASONABLY ACCEPTABLE TO ROWECOM INC. THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS IS AVAILABLE FOR SUCH TRANSFER, SALE OR OTHER DISPOSITION.
FOR VALUE RECEIVED, the undersigned, ROWECOM INC. (herein
called the "COMPANY"), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to [___________________________],
or registered assigns, the principal sum of [___________________________]
DOLLARS on April 30, 2002, with interest (computed on the basis of a 360-day
year of twelve 30-day months) (a) on the unpaid balance thereof at the Floating
Rate from the date hereof, payable on the next succeeding date of the Prepayment
Date and April 30, 2002, and (b) to the extent permitted by law on any overdue
payment (including any overdue prepayment) of principal and any overdue payment
of interest payable as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum equal to the lesser of the (i) Maximum
Legal Rate of Interest or (ii) the Default Rate.
Payments of principal of and interest on this Note are to be
made in lawful money of the United States of America at such place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreements referred to below.
Exhibit 1-1
This Note is one of a series of Senior Secured Convertible
Notes (herein called the "NOTES") issued pursuant to separate Amended and
Restated Note Purchase Agreements, each dated as of December 14, 2001 (as from
time to time amended, the "NOTE PURCHASE AGREEMENTS"), between the Company and
the respective Current Holders named therein which amended and restated those
separate Note Purchase Agreements each dated as of January 31, 2001 whereby the
Company, among other things, issued its Senior Secured Notes originally due
December 28, 2001. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 18 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 5 of the Note Purchase Agreements.
Capitalized terms used herein and not otherwise defined have the meanings
specified in the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements. This Note is
also subject to certain conversion rights as specified in the Note Purchase
Agreements.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price and with the
effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced as an instrument
under seal in accordance with, and the rights of the parties shall be governed
by, the law of the State of Massachusetts excluding choice-of-law principles of
the law of such State that would require the application of the laws of a
jurisdiction other than such State.
RoweCom Inc.
By_________________________
Name
Title:
Exhibit 1-2
EXHIBIT 3.3(b)
[FORM OF COMPANY SECRETARY'S CERTIFICATE]
ROWECOM INC.
COMPANY [ASSISTANT] SECRETARY CERTIFICATE
The undersigned hereby certifies that [s]he is the duly elected,
qualified and acting [Assistant] Secretary of ROWECOM, INC., a Delaware
corporation (the "CORPORATION"), and further certifies, on behalf of the
Corporation as follows:
1. This certificate is being delivered pursuant to Section 3.3(b) of
the several Amended and Restated Note Purchase Agreements (collectively, the
"NOTE PURCHASE AGREEMENT"), dated as of December __, 2001, by and among the
Corporation, divine, inc., a Delaware corporation (the "PARENT") and
respectively, Elsevier Science, Inc., a New York corporation ("ELSEVIER"), Xxxx
Xxxxx & Sons, Inc., a New York corporation ("Xxxx Wiley"), Harcourt, Inc., a
Delaware corporation ("HARCOURT"), and Lippincott, Xxxxxxxx & Xxxxxxx, Inc., a
Delaware corporation ("LIPPINCOTT", and together with Elsevier, Xxxx Wiley, and
Harcourt, the "CURRENT HOLDERS"). Capitalized terms used herein without
definition shall have the meaning specified for such terms in the Note Purchase
Agreement.
2. Attached hereto as Exhibit A are true, correct, and complete copies
of resolutions duly adopted by the duly elected Board of Directors of the
Corporation, which resolutions have not been amended, modified or rescinded
since the day of adoption thereof, are in full force and effect on and as of the
date hereof and are the only resolutions that have been adopted by the Board of
Directors of the Corporation with respect to the subject matter thereof.
3. Since January 31, 2001, there have been no changes with respect to
the Certificate of Incorporation or By-laws of the Corporation delivered in
connection with the Original Note Purchase Agreement.
4. Set forth below are the names and titles of certain duly elected,
qualified and acting officers of the Corporation, each such person holds the
office set forth opposite his or her name, and the signature appearing opposite
their respective names of those officers are genuine signatures of such
officers:
Exhibit 3.3(b)-1
Exhibit 3.3(b)-2
Name Title Signature
------------------------
------------------------
------------------------
IN WITNESS THEREOF, I have affixed my signature this ___ day of
December, 2001.
-----------------------------------
[Name], Secretary
Exhibit 3.3(b)-3
Exhibit A
Resolutions
[To be provided by the Company]
Exhibit 3.3(b)-4
EXHIBIT 3.3(c)
[FORM OF PARENT SECRETARY'S CERTIFICATE]
DIVINE, INC.
CERTIFICATE OF [ASSISTANT] SECRETARY
The undersigned hereby certifies that [s]he is the duly elected,
qualified and acting [Assistant] Secretary of DIVINE, INC., a Delaware
corporation, (the "COMPANY"), and further certifies, on behalf of the Company as
follows:
1. This certificate is being delivered pursuant to Section 3.3(c) of
the several Amended and Restated Note Purchase Agreements (collectively, the
"NOTE PURCHASE AGREEMENT"), dated as of December __, 2001, by and among the
Company, RoweCom, Inc., a Delaware corporation, ("ROWECOM") and respectively,
Elsevier Science, Inc., a New York corporation ("ELSEVIER"), Xxxx Xxxxx & Sons,
Inc., a New York corporation ("XXXX WILEY"), Harcourt, Inc., a Delaware
corporation ("HARCOURT"), and Lippincott, Xxxxxxxx & Xxxxxxx, Inc., a Delaware
corporation ("LIPPINCOTT", and together with Elsevier, Xxxx Wiley, and Harcourt,
the "CURRENT HOLDERS"). Capitalized terms used herein without definition shall
have the meaning specified for such terms in the Note Purchase Agreement.
2. Attached hereto as Exhibit A are true, correct, and complete copies
of resolutions duly adopted by the duly elected Board of Directors of the
Company, which resolutions have not been amended, modified or rescinded since
the day of adoption thereof, are in full force and effect on and as of the date
hereof and are the only resolutions that have been adopted by the Board of
Directors of the Company with respect to the subject matter thereof.
3. Attached hereto as Exhibit B is a true, correct and complete copy of
the By-laws of the Company as in full force and effect on and as of the date
hereof, and after giving effect to any amendment thereof on the date hereof,
which By-laws have not been amended, modified or rescinded and remain in full
force and effect.
4. Set forth below are the names and titles of certain duly elected,
qualified and acting officers of the Company, each such person holds the office
set forth opposite his or her name, and the signature appearing opposite their
respective names of those officers are genuine signatures of such officers:
Name Title Signature
------------------------
------------------------
------------------------
Exhibit 3.3(c)-1
7. Attached hereto as Exhibit C is a copy of the Certificate of
Incorporation of the Company with any amendments thereto, filed with the
Secretary of State of the State of Delaware, as in effect on the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on December ___, 2001.
By:____________________________________
[Name, [Assistant] Secretary]
Exhibit 3.3(c)-2
Attachment A
Resolutions of the Board of Directors of the Company
[To be provided by the Company]
Exhibit 3.3(c)-3
Attachment B
Bylaws of the Company
[To be provided by the Company]
Exhibit 3.3(c)-4
Attachment C
Certificate of Incorporation
[To be provided by the Company]
Exhibit 3.3(c)-5
EXHIBIT 3.3(d)
[FORM OF SUBSIDIARY GUARANTOR SECRETARY'S CERTIFICATE]
[NAME OF GUARANTOR]
CERTIFICATE OF [ASSISTANT] SECRETARY
The undersigned hereby certifies that [s]he is the duly elected,
qualified and acting [Assistant] Secretary of [NAME OF GUARANTOR], a
[__________] [___________] (the "CORPORATION"), and further certifies, on behalf
of the Corporation as follows:
1. This certificate is being delivered pursuant to Section 3.3(d) of
the several Amended and Restated Note Purchase Agreements (collectively, the
"NOTE PURCHASE AGREEMENT"), dated as of December 14, 2001, by and among RoweCom,
Inc., a Delaware corporation ("ROWECOM"), divine, inc., a Delaware corporation
(the "PARENT") and respectively, Elsevier Science, Inc., a New York corporation
("ELSEVIER"), Xxxx Xxxxx & Sons, Inc., a New York corporation ("XXXX WILEY"),
Harcourt, Inc., a Delaware corporation ("HARCOURT"), and Lippincott, Xxxxxxxx &
Xxxxxxx, Inc., a Delaware corporation ("LIPPINCOTT", and together with Elsevier,
Xxxx Wiley, and Harcourt, the "CURRENT HOLDERS"). Capitalized terms used herein
without definition shall have the meaning specified for such terms in the Note
Purchase Agreement.
2. Attached hereto as Exhibit A are true, correct and complete copies
of resolutions, adopted by the duly elected Board of Directors of the
Corporation, which resolutions have not been amended, modified or rescinded
since the date of adoption thereof, are in full force and effect on the date
hereof and are the only resolutions that have been adopted by the Board of
Directors of the Corporation with respect to the subject matter thereof.
3. Since January 31, 2001, there have been no changes with respect to
the Certificate of Incorporation or By-laws of the Corporation delivered in
connection with the Original Note Purchase Agreement.
4. Set forth below are the names and titles of certain duly elected,
qualified and acting officers of the Corporation, each such person holds the
office set forth opposite his or her name, and the signature appearing opposite
their respective names of those officers are genuine signatures of such
officers:
Name Title Signature
------------------------
------------------------
------------------------
Exhibit 3.3(d)-1
IN WITNESS THEREOF, I have affixed my signature this ___ day of
December, 2001.
___________________________________
[Name], Secretary
I, _______________, _________________ of the Corporation, do hereby
certify that _____________, is the acting Secretary of the Corporation and that
the signature of ____________ set forth above is his genuine signature.
___________________________________
[Name, Title]
Exhibit 3.3(d)-2
Exhibit A
Resolutions
[To be provided by the Company]
Exhibit 3.3(d)-3
EXHIBIT 3.4(a)
[FORM OF OBLIGORS' COUNSEL OPINION]
December 14, 2001
To each of the Current Holders listed on Schedule I hereto
RE: divine, inc., RoweCom Inc. and the Subsidiary Guarantors
(defined below) - Restructuring of $9,000,000 Senior Secured
Convertible Notes
Ladies and Gentlemen:
We have acted as special counsel to divine, inc., a Delaware
corporation (the "PARENT"), RoweCom Inc., a Delaware corporation (the
"COMPANY"), Xxxxxx, Inc., a Delaware corporation ("XXXXXX"), The Xxxxx Company,
Inc., a Massachusetts corporation ("XXXXX"), XxXxxxxx Subscription Service,
Inc., an Illinois corporation ("XXXXXXXX"), The Xxxxxx Subscription Agency,
Incorporated, a Delaware corporation ("XXXXXX"), Corporation Subscription
Services, Inc., a New Jersey corporation ("CSS"), and Xxxxxx Information Quest,
Inc., a California corporation ("INFORMATION QUEST"; Dawson, Faxon, McGregor,
Turner, CSS and Information Quest are each individually sometime referred to
herein as a "GUARANTOR" and collectively, the "SUBSIDIARY GUARANTORS", and
together with Parent and the Company, the "OBLIGORS") in connection with the
preparation, execution and delivery of those separate Amended and Restated Note
Purchase Agreements, each dated as of December 14, 2001 (the "NOTE PURCHASE
AGREEMENTS"), among Parent, the Company and each Current Holder named therein
(each a "CURRENT HOLDER" and together with each other Current Holder, the
"CURRENT HOLDERS"). This opinion is being delivered pursuant to the Note
Purchase Agreements. Capitalized terms used herein and not otherwise defined
herein shall have the same meanings herein as ascribed thereto in the Note
Purchase Agreements.
In our examination we have assumed the accuracy and completeness of all
documents and records that we have reviewed, the genuineness of all signatures
(including endorsements), the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies, and the authenticity of the originals of such copies. As to any facts
material to this opinion which we did not independently establish or verify, we
have relied upon the representations and warranties set forth in the Note
Purchase Agreements and statements and representations of the Obligors and their
respective officers and
Exhibit 3.4(a)-1
other representatives, and of public officials, including the facts set forth in
the Certificates and the Collateral Certificates (each as defined below).
In rendering the opinions set forth herein, we have examined and relied
on originals or copies of the following:
(a) the Note Purchase Agreements;
(b) the Notes ("NOTES");
(c) the Reaffirmation Letter;
(d) the Collateral Certificates of each Obligor, dated the
date hereof, delivered to the Current Holders (the "COLLATERAL
CERTIFICATES");
(e) the Secretary Certificates of each Obligor, dated the date
hereof, delivered to the Current Holders (the "CERTIFICATES");
(f) the Certificate or Articles of Incorporation, as the case
may be, of each Obligor, certified by the Secretary of State of its
jurisdiction of incorporation (the "ARTICLES");
(g) the Certificate from the Secretary of State of the
applicable jurisdiction of incorporation or qualification as to the
good standing of each Obligor;
(h) the By-Laws of each Obligor (the "BY-LAWS");
(i) the resolutions of each Obligor approving the transactions
contemplated by the Transaction Documents; and
(j) such other documents as we have deemed necessary or
appropriate as a basis for the opinions set forth below.
The documents referred to in clauses (a) through (c) above shall
hereinafter be referred to collectively as the "TRANSACTION DOCUMENTS." Wherever
we indicate our opinion with respect to the existence or absence of facts is
based on our knowledge, our opinion is based solely on the current actual
knowledge of the attorneys in this firm who have represented the Obligors in
connection with the Transaction Documents, and we have conducted no special
investigation of factual matters in connection with this opinion.
Members of our firm are admitted to the bar of the State of Illinois.
We express no opinion as to the laws of any jurisdiction other than: (i) the
laws of the State of Illinois, (ii) the General Corporation Law of the State of
Delaware, and (iii) the federal laws of the United States of America to the
extent specifically referred to
Exhibit 3.4(a)-2
herein. We have assumed (without investigation) for the purposes of this opinion
that the laws of the Commonwealth of Massachusetts are identical to the laws of
the State of Illinois. In addition, we express no opinion herein concerning any
statutes, ordinances, administrative decisions, rules or regulations of any
county, town, municipality or special political subdivision (whether created or
enabled through legislative action at the federal, state or regional level).
The opinions set forth below are subject to the effects of applicable
bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in equity or at law). We express no opinion to the effect of (i) any
federal or state securities laws (except to the extent expressly set forth in
paragraphs 10 and 11 hereof) or antitrust laws, (ii) as to the creation,
perfection, priority or enforcement of any security interest granted under the
Transaction Documents, (iii) pension and employment benefit laws and regulations
or (iv) construction, environmental, subdivision, zoning, health, safety, tax or
land use laws or regulations.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. Parent is a corporation validly existing and in good standing under
the laws of the State of Delaware. The Company is a corporation validly existing
and in good standing under the laws of the State of Delaware. Each Subsidiary
Guarantor is a corporation validly existing and in good standing under the laws
of its jurisdiction of incorporation. Each Obligor has all requisite corporate
power and authority to own its property and to carry on its business as
presently conducted.
2. Each Obligor is duly qualified or licensed as a foreign corporation
and in good standing in each jurisdiction listed next to such Obligor's name on
Schedule II.
3. Each Obligor has the requisite corporate power and authority to
execute and deliver each of the Transaction Documents to which it is a party and
to perform its obligations under each such Transaction Document.
4. Each of the Transaction Documents to which Parent is a party has
been duly authorized by all necessary corporate action on the part of the Parent
and has been executed and delivered by a duly authorized officer of the Parent.
Each of the Transaction Documents to which Parent is a party constitutes a
legal, valid and binding obligation of the Parent, enforceable against the
Parent in accordance with its respective terms.
5. Each of the Transaction Documents to which the Company is a party
has been duly authorized by all necessary corporate action on the part of the
Exhibit 3.4(a)-3
Company and has been executed and delivered by a duly authorized officer of the
Company. Each of the Transaction Documents to which the Company is a party
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its respective terms.
6. The Reaffirmation Letter has been duly authorized by all necessary
corporate action on the part of each Subsidiary Guarantor and has been executed
and delivered by a duly authorized officer of each Subsidiary Guarantor. The
Reaffirmation Letter constitutes a legal, valid and binding obligation of each
Subsidiary Guarantor, enforceable against each Subsidiary Guarantor in
accordance with its terms.
7. None of the execution and delivery by the Parent of the Transaction
Documents to which the Parent is a party, or the performance by the Parent of
its obligations under such Transaction Documents, or the issuance of the
Conversion Shares upon conversion of the Notes constitutes a violation of,
results in a breach of any provision of, or constitutes a default under, (a) the
certificate of incorporation or bylaws of the Parent, (b) any Applicable Law (as
hereinafter defined), or (c) any Material Contract to which the Parent is a
party. "Applicable Law" shall mean those laws, rules and regulations of the
State of Illinois and the United States of America which, in our experience, are
normally applicable to transactions of the type contemplated by the Transaction
Documents and "Material Contract" shall mean an agreement to which such Obligor
is a party (other than the Financing Documents) which has been filed as a
"Material Contract" as provided in Regulation S-K promulgated by the SEC under
the Securities Act.
8. Neither the execution and delivery by the Company of the Transaction
Documents to which the Company is a party, nor the performance by the Company of
its obligations under such Transaction Documents, constitutes a violation of,
results in a breach of any provision of, constitutes a default under, gives rise
to any right of termination, cancellation or acceleration under, or results in
the creation or imposition of any Lien or encumbrance (other than Permitted
Liens) upon any of the Property of the Company pursuant to, (a) the certificate
of incorporation or bylaws of the Company, (b) any Applicable Law, or (c) any
Material Contract to which the Company is a party.
9. Neither the execution and delivery by any Subsidiary Guarantor of
the Reaffirmation Letter, nor the performance by any Subsidiary Guarantor of its
obligations thereunder, constitutes a violation of, results in a breach of any
provision of, constitutes a default under, gives rise to any right of
termination, cancellation or acceleration under, or results in the creation or
imposition of any Lien or encumbrance (other than Permitted Liens) upon any of
the Property of such Subsidiary Guarantor, pursuant to, (a) any Applicable Law,
or (b) any Material Contract to which such Subsidiary Guarantor is a party.
Exhibit 3.4(a)-4
10. Assuming the accuracy of the representations and warranties of the
Current Holders in the Note Purchase Agreement, the offer, issuance, sale and
delivery of the Notes, and the Conversion Shares upon conversion of the Notes,
are exempt from the registration requirements of Section 5 of the Securities Act
and of Section 5 of the Illinois Securities Law of 1953, as amended.
11. Neither the Parent nor the Company is:
(a) an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended, or
(b) a "holding company" or an "affiliate" of a "holding
company," or a "subsidiary company" of a "holding company," or a
"public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
12. There are (i) no preemptive or similar rights to purchase or
otherwise acquire shares of capital stock of the Parent applicable to the
issuance of the Conversion Shares upon conversion of the Notes pursuant to any
provision of the certificate of incorporation or the By-Laws of the Parent, any
Applicable Law or any Material Contract to which Parent is a party and (ii) no
restrictions on the transfer of the Conversion Shares imposed by the Certificate
of Incorporation or the By-Laws of the Parent.
13. The authorized capital stock of the Parent consists of (i)
2,500,000,000 shares of Class A Common Stock, par value $.001 per share, (ii)
100,000,000 shares of Class C Common Stock, par value $0.001 per share, and
(iii) 50,000,000 shares of Preferred Stock, par value $0.001 per share.
14. The Conversion Shares have been duly reserved and, when issued upon
conversion of the Notes in accordance with the terms of the Note Purchase
Agreements, will have been validly issued and will be fully paid and
nonassessable.
15. Except for consents, approvals, authorizations, designations,
declarations, filings and qualifications that may be required under Federal and
state securities laws, any consent, approval or authorization of or by, or any
designation, declaration, filing, or qualification with, any governmental
authority that is required under Applicable Law in connection with the
execution, delivery and performance of Parent's obligations under the Note
Purchase Agreements or any of the Transaction Documents, and the offer,
issuance, sale and delivery of the Conversion Shares upon conversion of the
Notes in accordance with the Note Purchase Agreements, has been obtained and, to
the best of our knowledge, is effective, and we are not aware of any proceedings
by any such governmental authority that question the validity thereof.
Exhibit 3.4(a)-5
Our opinions are also subject to the following assumptions and
qualifications:
(a) We have assumed each of the Transaction Documents
constitutes the legal, valid and binding obligation of each party to
such Transaction Document (other than the Obligors), enforceable
against such party in accordance with its terms.
(b) We express no opinion as to the applicable laws or choice
of law that govern the Transaction Documents.
(c) We have assumed that: (i) the conduct of the parties to
the Transaction Documents complies with any requirement of good faith,
fair dealing and conscionability; (ii) there has not been any mutual
mistake of fact or misunderstanding, fraud, duress or undue influence;
(iii) each of the Subsidiary Guarantors and the Company hold requisite
title and rights to any property subject to the Note Purchase
Agreements or the Reaffirmation Letter, and (iv) all statutes, judicial
and administrative decisions, and rules and regulations of governmental
agencies applicable to this opinion are generally available to lawyers
practicing in the State of Illinois and are in a format that makes
legal research feasible.
(d) We express no opinion as to the effect on the opinions
expressed herein of: (i) the compliance or non-compliance of any party
(other than the Obligors) to the Transaction Documents with any state,
Federal or other laws or regulations applicable to it; or (ii) the
legal or regulatory status or the nature of the business of any such
parties.
(e) Certain of the remedial provisions, including waivers,
contained in the Transaction Documents may be unenforceable in whole or
in part, but the inclusion of such provisions does not affect the
validity of any such Transaction Document, taken as a whole, and each
such Transaction Document, taken as a whole, together with Applicable
Law, contains adequate provisions for the practical realization of the
benefits thereof.
(f) We express no opinion as to the enforceability of any of
the following provisions:
(i) waivers or advance consents in the Transaction
Documents that have the effect of waiving statutes of
limitation, marshalling of assets or similar requirements or
as to the jurisdiction of courts, the venue of actions, or, in
certain cases, notices;
(ii) provisions in the Transaction Documents
permitting modifications of an agreement only in writing;
Exhibit 3.4(a)-6
(iii) provisions in the Agreements that enumerated
remedies are not exclusive or that a party has the right to
pursue multiple remedies without regard to other remedies
elected or that all remedies are cumulative, and the effect of
procedural requirements which may not be reflected in the
agreement but compliance with which may be a prerequisite to
the exercise of remedies;
(iv) self-help and non-judicial remedies in the
Transaction Documents, such as the right, without judicial
process, to enter upon, to take possession of, to collect,
retain, use and enjoy rents, issues and profits from or to
manage, property;
(v) provisions in the Transaction Documents
respecting sale or disposal of collateral or property
otherwise than in compliance with Applicable Law;
(vi) provisions in the Transaction Documents imposing
increased interest rates and/or late payment charges upon
delinquency in payment or default or for liquidated damages or
prepayment premiums to the extent they are deemed to be
penalties or forfeitures;
(vii) provisions in the Transaction Documents
requiring indemnification or exculpation as to liability for
action or inaction, to the extent contrary to public policy;
(viii) provisions in the Transaction Documents that
determinations by a party are conclusive;
(ix) provisions in the Transaction Documents as to
rights of set off otherwise than in accordance with Applicable
Law; and
(x) provisions in the Transaction Documents as to
indemnification or contribution in connection with
registration rights.
(g) If and to the extent any of the Transaction Documents are
construed to provide for the compounding of interest or interest
charged on interest, such provisions may be unenforceable under Xxxxxx
x. Xxxxx, 151 Ill. 37 (1994) and other cases to the same effect.
Accordingly, we express no opinion with respect thereto.
(h) Enforcement of your rights and remedies may be limited by
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law, and in this regard we
have assumed that you will exercise your rights and remedies under the
Exhibit 3.4(a)-7
Transaction Documents in good faith and in circumstances and a manner
which are commercially reasonable.
(i) The representations of each Current Holder set forth in
the Note Purchase Agreements are true and are not materially
misleading.
(j) Any court or agency ruling upon the exemption from the
registration requirements of Section 5 of the Securities Act would
firmly apply the five factor "facts and circumstances" test set forth
in Securities Act Release No. 33-4552 (Nov. 6, 1962) such that no other
offering of securities by Parent would be integrated with the offer,
issuance, sale and delivery of the Notes and Conversion Shares.
(k) No form of general solicitation or general advertising,
including seminars whose attendees were invited by any general
solicitation or any general advertising, was or will be used by Parent
or the Company in connection with any offering, issuance or sale of the
Notes or the Conversion Shares.
(l) The certificates or other documents which evidence the
Notes and the Conversion Shares that have not been issued as of the
date hereof will bear a restrictive legend stating that the Notes or
Conversion Shares have not been registered under the Securities Act and
setting forth or referring to the restrictions on their transferability
and sale, and a notation in the Company's or Parent's, as applicable,
appropriate records equivalent to a stop-transfer order will be made.
(m) The additional notice(s) required by Rule 503 of
Regulation D and under the Illinois blue sky laws have or will be
timely and properly filed.
(n) The offer, issuance sale and delivery of the Original
Notes was exempt from any registration requirements of the Securities
Act and under Illinois blue sky laws.
We confirm that, based solely on a review of our litigation docket, and
the Collateral Certificates, there are no actions or proceedings against any
Obligor pending or overtly threatened in writing, before any Governmental
Authority, which seek to affect the enforceability of the Transaction Documents.
The opinions expressed in the first three sentences of Paragraph 1 is
based solely on our review of copies of the Articles and certificates of good
standing of each Obligor issued by the Secretary of State of the jurisdiction of
incorporation. The opinions expressed in the final sentence of Paragraph 1 is
based solely on our review of copies of the Articles and the By-Laws. The
opinions expressed in
Exhibit 3.4(a)-8
Paragraph 2 are based solely on our review of certificates of good standing for
each Obligor issued by the Secretaries of State of the states set forth opposite
each Obligor on Schedule II hereto. The opinions expressed in Paragraph 3 and
the first sentence of Paragraphs 4, 5 and 6 are based solely on our review of
the Certificates, the Articles and the By-Laws.
This opinion is given as of the date hereof and we assume no obligation
to advise you of changes that may hereafter be brought to our attention. This
opinion is being furnished only to the addressees listed on Schedule I and is
solely for their benefit in connection with transactions contemplated by the
Transaction Documents and is not to be used, circulated, quoted (in whole or in
part), relied upon or otherwise referred to by any other Person or for any other
purpose, nor is it to be filed with any Governmental Authority or other Persons,
without our prior written consent.
Very truly yours,
XXXXXX XXXXXX XXXXX
Exhibit 3.4(a)-9
SCHEDULE I
ADDRESSEES
Elsevier Science, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Xxxx Wiley & Sons, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Harcourt, Inc.
c/o Elsevier Science division (Academic Press)
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Lippincott Xxxxxxxx & Xxxxxxx, Inc.
c/o Wolters Kluwer US Corporation
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Exhibit 3.4(a)-10
SCHEDULE II
SCHEDULE OF GOOD STANDINGS
-------------------------------------------------------------------------------------------------------------------
ENTITY STATES
-------------------------------------------------------------------------------------------------------------------
divine, inc. Texas
Illinois
Connecticut
-------------------------------------------------------------------------------------------------------------------
RoweCom Inc. Massachusetts
-------------------------------------------------------------------------------------------------------------------
Xxxxxx, Inc. Massachusetts
-------------------------------------------------------------------------------------------------------------------
Corporate Subscription Service, Inc. Massachusetts
New Jersey
-------------------------------------------------------------------------------------------------------------------
The Xxxxx Company, Inc. California New York
Illinois South Carolina
Maryland Texas
New Jersey Virginia
Massachusetts
-------------------------------------------------------------------------------------------------------------------
The Xxxxxx Subscription Agency, Incorporated Illinois
-------------------------------------------------------------------------------------------------------------------
XxXxxxxx Subscription Services, Inc. None
-------------------------------------------------------------------------------------------------------------------
Xxxxxx Information Quest, Inc. Massachusetts
California
-------------------------------------------------------------------------------------------------------------------
Exhibit 3.4(a)-11
EXHIBIT 3.4(b)
[FORM OF XXXXXXX XXXX'X COUNSEL OPINION]
December 14, 2001
Each of the Current Holders
Party to the Note Purchase
Agreement Referred to Below
Re: Xx. Xxxxxxx X. Xxxx
Ladies and Gentlemen:
We have acted as special counsel to Dr. Xxxxxxx Xxxx, an individual residing in
the Commonwealth of Massachusetts (the "Pledgor") in connection with the Amended
and Restated Stock Pledge Agreement (Xxxxxxx Xxxx), dated as of the date hereof
(the "Pledge Agreement") between the Pledgor and Wilmington Trust Company, in
its capacity as agent (the "Agent") for the benefit of the Current Holders (as
hereinafter defined) and the transactions contemplated thereby, which Pledge
Agreement is required to be delivered pursuant to the terms of the several
separate Amended and Restated Note Purchase Agreements, dated as of December 14,
2001 (the "Note Purchase Agreements"), between RoweCom Inc. (the "Borrower") and
each of the Current Holders named therein (the "Current Holders"). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
given such terms in the Note Purchase Agreements. This opinion is rendered to
you pursuant to Section 3.4 of the Note Purchase Agreements.
We have acted as special counsel to the Pledgor in connection with the Pledge
Agreement and the transactions contemplated thereby.
As to all matters of fact (including factual conclusions and characterizations
and descriptions of purpose, intention or other state of mind), we have relied,
with your permission, entirely upon the representations and warranties of the
Pledgor set forth in the Pledge Agreement and have assumed, without independent
inquiry, the accuracy of those representations and warranties.
This opinion is based entirely on our review of the Pledge Agreement and we have
made no other documentary review or investigation of any kind whatsoever for
purposes of this opinion.
We have assumed the genuineness of all signatures, the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all
Exhibit 3.4(b)-1
original documents reviewed by us in original or copy form and the legal
competence of each individual executing any document.
As used in this opinion, the "UCC" means the Uniform Commercial Code as adopted
and in effect in the Commonwealth of Massachusetts.
For purposes of this opinion, we have made such examination of law as we have
deemed necessary. This opinion is limited solely to the internal substantive
laws of the Commonwealth of Massachusetts, as applied by courts located in
Massachusetts without regard to choice of law, and the federal laws of the
United States of America (except for Federal and state tax, antitrust,
securities or blue sky laws, as to which we express no opinion in this letter),
and we express no opinion as to the laws of any other jurisdiction. No opinion
is given herein as to any contractual choice of law provision, or otherwise as
to the choice of law or internal substantive rules that any court or other
tribunal may apply to the transactions contemplated by the Pledge Agreement. No
opinion is given herein as to the underlying obligations under the Note Purchase
Agreements or any other underlying obligations purported to be secured by the
Pledge Agreement, and we assume that such obligations are valid, binding and
enforceable and remain outstanding.
Our opinion is further subject to the following exceptions, qualifications and
assumptions, all of which we understand to be acceptable to you:
(a) We have assumed without any independent investigation that
(i) each party to the Pledge Agreement that is not a natural person, at
all times relevant thereto, is validly existing and in good standing
under the laws of the jurisdiction in which it is organized, and is
qualified to do business and in good standing under the laws of each
jurisdiction where such qualification is required generally or
necessary in order for such party to enforce its rights under the
Pledge Agreement, (ii) each party to the Pledge Agreement that is not a
natural person, at all times relevant thereto, had and has the full
power, authority and legal right under its certificate of
incorporation, partnership agreement, by-laws, and other governing
organizational documents, and the applicable corporate, partnership, or
other enterprise legislation and other applicable laws, as the case may
be, to execute, deliver and perform its obligations under the Pledge
Agreement, and (iii) each party to the Pledge Agreement, other than the
Pledgor, has duly authorized, executed and delivered the Pledge
Agreement.
(b) We have assumed without any independent investigation (i)
that the Pledgor has received the agreed to and stated consideration
for the incurrence of the obligations applicable to him under the terms
of the Pledge Agreement, and accordingly has received "value" (as such
term is used in Article 9 of the UCC) in respect thereof, (ii) that the
Pledge Agreement is a valid and binding obligation of each party
thereto other than the Pledgor, and (iii) that the Pledge Agreement is
a
Exhibit 3.4(b)-2
valid and binding obligation of the Pledgor to the extent that laws
other than those of the Commonwealth of Massachusetts are relevant
thereto (other than the laws of the United States of America, but only
to the limited extent the same may be applicable to the Pledgor and
relevant to our opinions expressed below).
(c) The enforcement of any obligations of, or any security
interest granted by, the Pledgor or of any other Person, whether under
the Pledge Agreement or otherwise, may be limited by bankruptcy,
insolvency, reorganization, moratorium, marshaling or other laws and
rules of law affecting the enforcement generally of creditors' rights
and remedies (including such as may deny giving effect to waivers of
debtors' or guarantors' rights); and we express no opinion as to the
status under any fraudulent conveyance laws or fraudulent transfer laws
of any of the obligations of, or any security interest granted by, the
Pledgor or any other Person, whether under the Pledge Agreement or
otherwise.
(d) We express no opinion as to the enforceability of any
particular provision of the Pledge Agreement relating to remedies after
default. However, notwithstanding the qualification set forth in this
paragraph (d), in our judgment, subject to the effect of applicable
securities laws, the other exceptions, qualifications and limitations
set forth in this opinion, and the fact that there may be economic
consequences arising out of any procedural or other delay, the possible
unenforceability of any particular provisions of the Pledge Agreement
as to remedies after default does not render the provisions of the
Pledge Agreement, taken as a whole, inadequate for the practical
realization of the principal legal rights and benefits contemplated by
the Pledge Agreement.
(e) We express no opinion as to the availability of any
specific or equitable relief of any kind.
(f) The enforcement of any of your or the Agent's rights may
in all cases be subject to an implied duty of good faith and fair
dealing and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and,
as to any of your or the Agent's rights to collateral security, will be
subject to a duty to act in a commercially reasonable manner.
(g) We express no opinion as to the enforceability of any
particular provision of the Pledge Agreement relating to or
constituting (i) waivers of rights to object to jurisdiction or venue,
or consents to jurisdiction or venue, (ii) waivers of rights to (or
methods of) service of process, or rights to trial
Exhibit 3.4(b)-3
by jury, or other rights or benefits bestowed by operation of law,
(iii) waivers of any applicable defenses, setoffs, recoupments, or
counterclaims, (iv) waivers or variations of provisions which are not
capable of waiver or variation under Sections 1-102, 9-602, 9-603, or
other applicable provisions of the UCC, (v) provisions in the Pledge
Agreement rendered ineffective or unenforceable by Sections 2A-303,
9-405, 9-406, or 9-407 of the UCC, as applicable, (vi) the grant of
powers of attorney or proxies to the Agent or any Current Holder, (vii)
exculpation or exoneration clauses, indemnity clauses, and clauses
relating to releases or waivers of unmatured claims or rights, (viii)
submission to binding arbitration, or (viii) the imposition or
collection of interest on overdue interest or providing for a penalty
rate of interest or late charges on overdue or defaulted obligations,
or the payment of any premium, liquidated damages, or other amount
which may be held by any court to be a "penalty" or a "forfeiture". We
express no opinion as to the effect of suretyship defenses, or defenses
in the nature thereof, with respect to the obligations of the Pledgor
or any other applicable guarantor, joint obligor, surety, accommodation
party, or other secondary obligor.
(h) No opinion is given herein as to the effect of so-called
"usury savings clauses" or other provisions of the Pledge Agreement
purporting to specify methods of, or otherwise assure, compliance with
usury laws or other laws relating to limitations on the amount of
interest or other similar charges which lenders may make or receive in
connection with lending transactions; further, if the Agent or any
Current Holder neither (i) has given an effective notice to the Office
of the Attorney General of the Commonwealth of Massachusetts pursuant
to (and is otherwise in compliance with) Massachusetts General Laws
Chapter 271, Section 49(d), nor (ii) is exempted from the application
of Massachusetts General Laws Chapter 271, Section 49 pursuant to
paragraph (e) thereof, we express no opinion as to the effect as to the
Agent or such Current Holder of such usury laws and other laws of the
Commonwealth of Massachusetts referred to above in this paragraph (h)
on the validity or enforceability of the Pledge Agreement.
(i) We note that, under the laws of the Commonwealth of
Massachusetts, the remedies available in the Commonwealth of
Massachusetts for the enforcement of the Pledge Agreement could be
affected by any failure of the Agent or any Current Holder, if not
organized in Massachusetts (i) to file, pursuant to Massachusetts
General Laws Chapter 181, Section 4, the certificates and reports with
the Secretary of State of the Commonwealth of Massachusetts required of
every foreign corporation doing business in the Commonwealth or (ii) to
comply with the provisions of Massachusetts General Laws Chapter 167,
Sections 37 and 38, prohibiting (with certain limited exceptions not
relevant here) out-of-state banking associations or corporations from
transacting banking business in the
Exhibit 3.4(b)-4
Commonwealth. Further, no opinion is given herein as to any other
similar laws or requirements in any other jurisdiction.
(j) When any opinion set forth below is given to our
knowledge, or to the best of our knowledge, or with reference to
matters of which we are aware or which are known to us, or with a
similar qualification, that knowledge is limited to the actual
knowledge of the individual lawyers in this firm who have participated
directly and substantively in the specific transactions to which this
opinion relates and without any special or additional investigation
undertaken for the purposes of this opinion.
(k) We express no opinion as to the effect of events
occurring, circumstances arising, or changes of law becoming effective
or occurring, after the date hereof on the matters addressed in this
opinion letter, and we assume no responsibility to inform you of
additional or changed facts, or changes in law, of which we may become
aware.
(l) We have made no examination of, and no opinion is given herein as
to, the Pledgor's title to or other ownership rights in, the accuracy or
sufficiency of the descriptions of, or the existence of any liens, charges,
encumbrances, restrictions or limitations on, or adverse claims against, any of
the Collateral (as defined in the Pledge Agreement). We have assumed without any
independent investigation that the Pledgor has rights in the Collateral and any
other assets in which it purports to grant a security interest under the Pledge
Agreement, and that the Pledge Agreement creates a valid security interest in
such portion of the Collateral and any such other assets in which a security
interest may be created by contract to secure the obligations of the Borrower to
the extent that laws other than those of the Commonwealth of Massachusetts are
relevant thereto. We express no opinion as to the priority or (except to the
extent specifically set forth in paragraph 3 below) the attachment, validity, or
perfection of any security interest, mortgage, or other lien in any of the
Collateral. Further, we express no opinion as to any security interest in any
Collateral or any other assets excluded from, or not governed by, Article 9 of
the UCC. We call your attention to the following:
(i) there exist certain limitations, resulting from the operation of
Section 9-315 of the UCC on the attachment and perfection of any security
interest in proceeds of collateral, such that further action (in or out of
Massachusetts) may be necessary to maintain perfection of such interests;
(ii) under Section 9-331 of the UCC, certain holders or purchasers of
certain types of collateral may take the same free of a perfected security
interest;
(iii) Section 552 of the federal Bankruptcy Code limits the extent to
which property acquired by a debtor after the commencement of a case under the
Exhibit 3.4(b)-5
Bankruptcy Code may be subject to a security interest resulting from any
security agreement entered into by the debtor before the commencement of the
case; and under Section 547 of the Bankruptcy Code, a security interest that is
deemed transferred within the relevant period set forth in Section 547(b)(4) of
the Bankruptcy Code may be avoidable under certain circumstances;
(iv) under Section 8-303 of the UCC, a "protected purchaser" (as defined in such
Section 8-303) of a security, or of an interest therein, may acquire its
interest in such security free of any adverse claim thereto; we express no
opinion herein as to whether the Agent, or any other person or entity, may be a
protected purchaser with respect to the Pledged Shares and the Pledged Warrants
(each as defined in paragraph 3 below) or any other securities included within
the Collateral; and we point out that, under Section 8-110(c) of the UCC, the
local law of the jurisdiction in which the security certificates evidencing the
Pledged Shares and the Pledged Warrants are delivered to the Agent governs
whether an adverse claim with respect thereto may be asserted against the Agent;
(v) we assume that the Pledged Shares and the Pledged Warrants each constitute
"certificated securities" (within the meaning given such terms in the applicable
UCC);
(vi) we point out that a security interest may not attach or become enforceable
or be perfected as to any rights, interests, or benefits which are not
assignable under applicable law, or are not assignable by their terms, or which
are assignable only with the consent of governmental agencies or officers,
except to the extent provided in Part 4 of Article 9 of the applicable UCC;
(vii) we call to your attention that the priority of security interests provided
for in the Pledge Agreement may be affected by actions taken before July 1,
2001, in or out of Massachusetts, which may have perfected a security interest
of another party in Collateral described in the Pledge Agreement; and
(viii) we call to your attention that different versions of Article 9 of the
Uniform Commercial Code may currently be in effect in other jurisdictions (other
than Massachusetts), under which other or further action may be required under
the laws of other jurisdictions for the Agent and the Current Holders with
respect to the attachment, perfection and priority of their security interests
provided for in the Pledge Agreement; we have not analyzed in this transaction,
and express no opinion herein as to, what further actions, if any, may be so
required.
Based upon the foregoing, and subject to the limitations and qualifications set
forth below, we are of the opinion that:
Exhibit 3.4(b)-6
1. The Pledgor has duly executed and delivered the Pledge Agreement;
and the Pledge Agreement constitutes a valid and binding agreement of the
Pledgor, enforceable against the Pledgor in accordance with its terms.
2. The execution and delivery by the Pledgor of the Pledge Agreement
and the consummation of the transactions contemplated thereby and compliance by
the Pledgor with the provisions thereof (i) will not violate any law, statute,
rule or regulation of the Commonwealth of Massachusetts, or, to the best of our
knowledge, (x) any material agreement binding upon the Pledgor of which we are
aware, or (y) any judgment, order, writ, injunction or decree of any court or
other tribunal located in the Commonwealth of Massachusetts of which we are
aware, applicable to the Pledgor, and (ii) to the best of our knowledge, will
not result in the creation or imposition of any security interest or other lien
(other than security interests and liens evidenced by the Pledge Agreement in
favor of the Agent and the Current Holders) on any asset of the Pledgor. Except
for filings or recordings that may be necessary to create, record or perfect, or
maintain the perfection of, or (with respect to pledged securities) to enforce,
the security interests or other liens created by the Pledge Agreement, to the
best of our knowledge, no consent or approval by, or any notification of or
filing with, any court, public body or authority of the Commonwealth of
Massachusetts is required to be obtained or effected by the Pledgor in
connection with the execution, delivery and performance by the Pledgor of the
Pledge Agreement or the consummation by the Pledgor of the transactions
contemplated thereby.
3. After giving effect to the delivery (within the meaning given such
term by the UCC) by the Pledgor to the Agent in pledge, within the Commonwealth
of Massachusetts, pursuant to the Pledge Agreement, of (a) each of the stock
certificates representing the shares of capital stock of divine, inc. pledged to
the Agent by the Pledgor as pledgor thereunder (the "Pledged Shares"), together
with properly completed and effective stock powers endorsing the Pledged Shares
and duly executed by the Pledgor in blank, and assuming the continued possession
of such Pledged Shares and of such stock powers by the Agent within the
Commonwealth of Massachusetts, and (b) each of the warrant certificates
representing the right to purchase shares of capital stock of divine, inc.
pledged to the Agent by the Pledgor as the pledgor thereunder (the "Pledged
Warrants"), together with properly completed and effective warrant transfer
powers endorsing the Pledged Warrants and duly executed by the Pledgor in blank,
and assuming the continued possession of such Pledged Warrants and of such
warrant powers by the Agent within the Commonwealth of Massachusetts, the Agent
shall acquire a valid security interest, in all right, title and interest of the
Pledgor in such Pledged Shares and Pledged Warrants pursuant to the Pledge
Agreement, to the extent that a security interest therein may be created
pursuant to Article 9 of the UCC, and such security interest will be perfected,
with the consequences of perfection by
Exhibit 3.4(b)-7
control with respect to such Pledged Shares and Pledged Warrants accorded by the
UCC.
This opinion is delivered solely to you and for your benefit in connection with
the Note Purchase Agreements and may not be relied upon by you for any other
purpose or furnished or referred to, or relied upon, by any other person or
entity (other than your permitted successors and assigns under the Note Purchase
Agreements) for any reason without our prior written consent.
Very truly yours,
XXXXXXX XXXX LLP
Exhibit 3.4(b)-8
EXHIBIT 3.12
[FORM OF REAFFIRMATION LETTER]
as of December 14, 2001
To the Current Holders
listed on Schedule A attached hereto
(the "Current Holders" and their
successors, assigns or transferees, the "Holders")
RE: REAFFIRMATION OF FINANCING DOCUMENTS
Ladies and Gentlemen:
Please refer to:
1. The following Subsidiary Guaranties:
(a) The Subsidiary Guaranty dated as of January 31, 2001 by
Xxxxxx, Inc. in favor of Wilmington Trust Company, as Agent for the
various corporations now or hereafter parties to the Note Purchase
Agreement;
(b) The Subsidiary Guaranty dated as of January 31, 2001 by
Xxxxxx Information Quest, Inc. in favor of Wilmington Trust Company, as
Agent for the various corporations now or hereafter parties to the Note
Purchase Agreement;
(c) The Subsidiary Guaranty dated as of January 31, 2001 by
The Xxxxx Company, Inc. in favor of Wilmington Trust Company, as Agent
for the various corporations now or hereafter parties to the Note
Purchase Agreement;
(d) The Subsidiary Guaranty dated as of January 31, 2001 by
The Xxxxxx Subscription Agency, Incorporated in favor of Wilmington
Trust Company, as Agent for the various corporations now or hereafter
parties to the Note Purchase Agreement;
(e) The Subsidiary Guaranty dated as of January 31, 2001 by
Corporate Subscription Services, Inc. in favor of Wilmington Trust
Company, as Agent for the various corporations now or hereafter parties
to the Note Purchase Agreement; and
(f) The Subsidiary Guaranty dated as of January 31, 2001 by
XxXxxxxx Subscription Service, Inc. in favor of Wilmington Trust
Company, as Agent for the various corporations now or hereafter parties
to the Note Purchase Agreement,
Exhibit 3.12-1
(all of the foregoing Subsidiary Guaranties being collectively referred to
herein as the "Subsidiary Guaranties")
2. The Collateral Agency Agreement dated as of January 31, 2001 (the
"Collateral Agency Agreement") among Wilmington Trust Company, as Collateral
Agent, Elsevier Science, Inc.; Xxxx Xxxxx & Sons, Inc., Harcourt, Inc.,
Lippincott Xxxxxxxx & Xxxxxxx, Inc., RoweCom Inc., Xxxxxxx Xxxx, Xxxxxx, Inc.,
Xxxxxx Information Quest, Inc., The Xxxxx Company, Inc., The Xxxxxx Subscription
Agency, Incorporated, Corporate Subscription Services, Inc. and XxXxxxxx
Subscription Service, Inc.
3. The Security Agreement dated as of January 31, 2001 by RoweCom Inc.
in favor of Wilmington Trust Company, as Agent for each of the Purchasers (the
"Company Security Agreement").
4. The Security Agreement dated as of January 31, 2001 by Xxxxxx, Inc.,
Xxxxxx Information Quest, Inc., The Xxxxx Company, Inc., The Xxxxxx Subscription
Agency, Incorporated, Corporate Subscription Services, Inc. and XxXxxxxx
Subscription Service, Inc. in favor of Wilmington Trust Company, as Agent for
each of the Purchasers (the "Subsidiary Security Agreement").
5. The Stock Pledge Agreement and related Irrevocable Stock Powers each
dated as of January 31, 2001 between RoweCom Inc. and Wilmington Trust Company,
as Collateral Agent for each of the corporations from time to time party to the
Note Purchase Agreement (the "Company Stock Pledge Agreement").
6. The Stock Pledge Agreement and related Irrevocable Stock Powers each
dated as of January 31, 2001 among Xxxxxx, Inc., Corporate Subscription
Services, Inc. and Wilmington Trust Company, as Collateral Agent for the various
corporations from time to time party to the Note Purchase Agreement (the
"Subsidiary Stock Pledge Agreement").
7. The Stock Pledge Agreement and related Irrevocable Stock Powers each
dated as of January 31, 2001 between Xxxxxxx Xxxx and Wilmington Trust Company,
as Collateral Agent for the various corporations from time to time party to the
Note Purchase Agreement (the "Xxxxxxx Xxxx Stock Pledge Agreement").
8. The Intellectual Property Security Agreement among RoweCom Inc.,
Xxxxxx, Inc., Xxxxxx Information Quest, Inc., The Xxxxx Company, Inc., The
Xxxxxx Subscription Agency, Incorporated, Corporate Subscription Services, Inc.,
XxXxxxxx Subscription Service, Inc. and Wilmington Trust Company, as Agent for
the Purchasers (the "IP Security Agreement").
9. Assignment of Monies Due And To Become Due dated January 31, 2001
executed by The Xxxxx Company, Inc. in favor of the Holders (regarding monies
due and owing from the United States of America through The Library of Congress
Contracts and Logistics Service) (the "Federal Assignment of Claims").
Exhibit 3.12-2
10. Each other Financing Document (including all UCC Financing
Statements filed prior to the date hereof) (as defined in the Amended and
Restated Note Purchase Agreement referred to below).
The Subsidiary Guaranties, the Collateral Agency Agreement, the Company
Security Agreement, the Subsidiary Security Agreement, the Company Stock Pledge
Agreement, the Subsidiary Stock Pledge Agreement, the Xxxxxxx Xxxx Stock Pledge
Agreement, the IP Security Agreement, the Federal Assignment of Claims and the
other Financing Documents referred to above, in each case as heretofore amended,
are collectively referred to herein as the "Documents". Capitalized terms not
otherwise defined herein will have the meanings given in the Amended and
Restated Note Purchase Agreement referred to below.
Each of the undersigned acknowledges that divine, inc., a Delaware
corporation, the Company and the Holders have executed those separate
Amended and Restated Note Purchase Agreements, each dated as of
December 14, 2001 (as amended, supplemented or otherwise modified from
time to time, the "Amended and Restated Note Purchase Agreements")
which Amended and Restated Note Purchase Agreements amend and restate
those certain Note Purchase Agreements, each dated as of January 31,
2001 (the "Note Purchase Agreements").
Each of the undersigned hereby (a) agrees that Section 2(e) of each of
the Company Security Agreement and the Subsidiary Security Agreement is hereby
amended by adding the following text to the end of such section to read as
follows: "and, so long as no Event of Default has occurred and is continuing,
sales or other dispositions of Collateral permitted by the Note Purchase
Agreement", (b) agrees that Section 6(i) of the IP Security Agreement is hereby
amended by adding the following text to the end of such section to read as
follows: "except as permitted by the Note Purchase Agreement and so long as no
Event of Default has occurred and is continuing", (c) agrees that Section 4.8 of
the Collateral Agency Agreement is hereby amended by deleting the reference to
"Section 17" therein and substituting therefor "Section 15", (d) confirms that
each Document to which such undersigned is a party remains in full force and
effect after giving effect to the effectiveness of the Amended and Restated Note
Purchase Agreements and that, upon such effectiveness, (i) all references in
such Document to the "Note Purchase Agreement" shall be references to the
Amended and Restated Note Purchase Agreement and (ii) the amendments in the
immediately preceding clauses (a), (b) and (c) shall be operative, (e)
acknowledges and agrees that its obligations under the Documents are absolute
and unconditional, and there exists no right of setoff or recoupment,
counterclaim or defense of any nature whatsoever thereto and (f) VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES THE HOLDERS AND THE AGENT'S AND
HOLDERS' PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS, ASSIGNS AND TRANSFEREES,
FROM ALL CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, OR
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THE
FOREGOING AMENDED AND
Exhibit 3.12-3
RESTATED NOTE PURCHASE AGREEMENTS ARE EXECUTED, WHICH IT HAS OR MAY HAVE AGAINST
ANY HOLDER, THE AGENT OR SUCH HOLDER'S PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS, ASSIGNS AND TRANSFEREES, IF ANY, AND IRRESPECTIVE OF WHETHER ANY
SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATION, OR
OTHERWISE, WHICH CLAIMS arisE out of or relate in any way to the Note Purchase
Agreements and the other Financing Documents and any action, inaction, omission
OR EXERCISE OF ANY RIGHT OR REMEDY by any of the HOLDERS or THE AGENT'S AND
HOLDERS' PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS, ASSIGNS AND TRANSFEREES in
connection with the Note Purchase Agreements and the other Financing Documents
or the administration thereof.
Exhibit 3.12-4
The letter agreement may be signed in counterparts and by the various
parties herein on separate counterpart signature pages. This letter agreement
shall be deemed to be a contract under seal of the laws of the Commonwealth of
Massachusetts.
XXXXXX, INC.
By:
---------------------------------
Name:
Title:
XXXXXX INFORMATION QUEST, INC.
By:
---------------------------------
Name:
Title:
THE XXXXX COMPANY, INC.
By:
---------------------------------
Name:
Title:
THE XXXXXX SUBSCRIPTION
AGENCY, INCORPORATED
By:
---------------------------------
Name:
Title:
CORPORATE SUBSCRIPTION
SERVICES, INC.
By:
---------------------------------
Name:
Title:
Exhibit 3.12-5
XXXXXXXX SUBSCRIPTION
SERVICE, INC.
By:
---------------------------------
Name:
Title:
ROWECOM INC.
By:
---------------------------------
Name:
Title:
------------------------------------
XXXXXXX XXXX
WILMINGTON TRUST COMPANY, as
Collateral Agent
By:
---------------------------------
Name:
Title:
Exhibit 3.12-6
ACKNOWLEDGED AND AGREED
as of the date first written above
ELSEVIER SCIENCE, INC.
By:
-----------------------------------------
Name:
Title:
XXXX WILEY & SONS, INC.
By:
-----------------------------------------
Name:
Title:
HARCOURT, INC.
By:
-----------------------------------------
Name:
Title:
LIPPINCOTT XXXXXXXX & XXXXXXX, INC.
By:
-----------------------------------------
Name:
Title:
Exhibit 3.12-7
SCHEDULE A
Elsevier Science, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Xxxx Wiley & Sons, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Harcourt, Inc.
c/o Elsevier Science division (Academic Press)
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Lippincott Xxxxxxxx & Xxxxxxx, Inc.
c/o Wolters Kluwer US Corporation
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Exhibit 3.12-8
ANNEX 1
ADDRESS OF PARENT, COMPANY AND AGENT
PARENT:
divine, inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
COMPANY:
RoweCom Inc.
c/o divine, inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
AGENT:
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Administration
Telecopy No.: (000) 000-0000
