EXHIBIT 10.56
SHELLS SEAFOOD RESTAURANTS, INC.
and its Subsidiaries
SECURITIES PURCHASE AGREEMENT
15% Senior Secured Notes due January 31, 2005
($2,000,000)
Detachable Common Stock Warrants
(Exercisable into 8,908,030 Shares of Common Stock)
Dated as of January 31, 2002
This SECURITIES PURCHASE AGREEMENT, dated as of January 31, 2002
(this "Agreement"), is entered into among, on the one hand,
SHELLS SEAFOOD RESTAURANTS, INC., a Delaware corporation
("Parent"), with an office located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and each of Parent's
Subsidiaries identified on the signature pages hereof (such
Subsidiaries, together with Parent, are referred to hereinafter
each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers") and, on
the other hand, SHELLS INVESTMENT PARTNERS, L.L.C., a Florida
limited liability company, with an office located at110 South
Ashley Drive, Suite 1650, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇., and BANYON
INVESTMENT, LLC, a Delaware limited liability company (each a
"Purchaser" and collectively the "Purchasers"), with an office
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
1. Description of the Purchaser Securities.
1.1 Authorization of Financing.
(a) Borrowers have authorized the issuance and delivery to the
Purchasers in the manner provided herein of secured senior
promissory notes substantially in the form of Exhibit 1.1(a) in
the aggregate principal amount of $2,000,000 (the "Notes"), to be
dated the date of issuance thereof and to mature no later than
January 31, 2005 (the "Maturity Date"). Each Note shall bear
interest, payable in cash, on the unpaid principal balances
thereof from the date thereof until the principal thereof shall
be paid in full at the rate of 8% per annum, based upon a 365-day
year for actual days elapsed, payable monthly in arrears, and,
from and after the occurrence of an Event of Default, and during
the continuance thereof, all amounts owing under each Note shall
bear interest at a rate 4 percentage points (that is, 400 basis
points) higher than the rate otherwise applicable thereto, based
upon a 365-day year for actual days elapsed. Each Note shall
bear additional interest (the "Deferred Interest") on the unpaid
balance thereof from the date thereof until the principal thereof
shall be paid in full at the Deferred Interest Rate, which
interest shall accrue monthly and shall be payable in cash
on the date on which the entire principal balance of such Note
and all interest thereunder is payable in full.
(b) Borrower has authorized the issuance and delivery to
Purchasers of Borrower's Common Stock warrants (the "Warrants")
for the purchase of an aggregate of 8,908,030 shares of
Borrower's Common Stock, par value $.01 per share, such Warrants
to have an exercise price of $0.16 per share. The Warrants shall
be substantially in the form of Exhibit 1.1(b). The Warrants
shall be issued to Purchasers on the Closing Date.
1.2 Purchase and Sale of Purchaser Securities. Borrowers
hereby agree to sell to the Purchasers, and, subject to the terms
and conditions herein set forth, the Purchasers hereby agree to
purchase from Borrowers the following securities:
(a) On the Closing Date, Notes in the aggregate principal amount
of $2,000,000 (the "Note Purchase Price") by making the Note
Purchase Price available to the Borrowers in immediately
available funds, to the Borrowers' Account, not later than 10:00
a.m. (Florida time).
(b) On the Closing Date, the Warrants, in the form of Exhibit
1.1(b) issued in the name of the Purchasers in the denominations
to be requested by the Purchasers in the aggregate amount of
8,908,030, in consideration of the purchase by the Purchasers of
the Notes.
2. Definitions; Construction.
2.1 Definitions. For the purpose of this Agreement, the
following terms shall have the meanings specified with respect
thereto below:
"Accounting Changes" means (a) changes in accounting principles
required by GAAP and implemented by any Borrower, and (b) changes
in accounting principles recommended by any Borrower's certified
public accountants.
"Administrative Borrower" shall mean and refer to Parent in its
capacity as agent for each Borrower pursuant to Section 11
hereof.
"Affiliate" means, when used with respect to a specified Person,
another Person that directly or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common
Control with the Person specified. No Purchaser shall, however,
be deemed to be an Affiliate of any Borrower or any of its
Affiliates.
"Agreement" has the meaning set forth in the preamble hereto.
"Investors Rights Agreement" means the Investors Rights
Agreement, dated as of January 31, 2002, in the form of Exhibit
A-1 attached hereto.
"Asset" means any interest in any kind of property or asset,
whether real, personal, or mixed, and whether tangible or
intangible.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
codified under Title 11 of the United States Code, and the
Bankruptcy Rules promulgated thereunder, as the same may be in
effect from time to time.
"Borrower" and "Borrowers" have the respective meanings set forth
in the preamble hereto.
"Business Day" means any day other than a Saturday, Sunday, or
any day that either is a legal holiday under the laws of the
State of Florida or is a day on which banking institutions
located in such State are authorized or required by law or other
governmental action to close.
"Capitalized Lease" means a lease under which any Borrower is the
lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the
balance sheet of such lessee or obligor in accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations issued
or unconditionally guaranteed by the United States Government or
issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within 1 year
from the date of acquisition thereof, (b) marketable direct
obligations issued by any state of the United States of America
or any political subdivision of any such state or any public
instrumentality thereof maturing within 1 year from the date of
acquisition thereof and, at the time of acquisition, having the
highest rating obtainable from either Standard & Poor's
Corporation ("S&P") or ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's"), (or, if at any time neither such rating service
shall be rating such obligations, then from such other nationally
recognized rating services reasonably acceptable to the
Purchasers), (c) commercial paper maturing no more than
1 year from the date of creation thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P
or Moody's (or, if at any time neither such rating service shall
be rating such obligations, then from such other nationally
recognized rating services reasonably acceptable to the
Purchasers), (d) certificates of deposit (domestic or
eurodollar), bankers' acceptances, or time deposits maturing
within 1 year from the date of acquisition thereof issued by
commercial banks organized under the laws of the United States of
America or any state thereof or the District of Columbia, each
having combined capital and surplus of not less than $500,000,000
("Qualifying Banks"), (e) repurchase agreements and reverse
repurchase agreements with Qualifying Banks, provided that the
terms of such agreements comply with the guidelines set forth in
the Federal Financial Institutions Examination Council
Supervisory Policy -- Repurchase Agreements of Depository
Institutions with Securities Dealers and Others as adopted by the
Comptroller of the Currency on October 31, 1985 (the "Supervisory
Policy"), and provided further that possession or control of the
underlying securities is established as provided in the
Supervisory Policy, and (f) investments in money market funds or
money market deposit accounts that invest solely in Cash
Equivalents described in clauses (a) through (e)
above.
"CERCLA" has the meaning set forth in the definition of
"Environmental Law."
"Closing" has the meaning set forth in Section 6 hereof.
"Closing Date" has the meaning set forth in Section 6 hereof.
"Closing Date Projections" has the meaning set forth in Section
7.12 hereof.
"Code" means the Internal Revenue Code of 1986, or any successor
statute thereto, as the same may be amended from time to time.
"Commission" means the United States Securities and Exchange
Commission and any successor federal agency having similar
powers.
"Common Stock" means a share of common stock of a Person that is
a corporation.
"Consolidated" or "consolidated" means, with reference to any
term defined herein, that term as applied to the accounts of
Parent and its Subsidiaries, consolidated in accordance with
GAAP.
"Contractual Obligation" as applied to any Person, means any
provision of any material security issued by that Person or of
any material indenture, loan agreement, credit agreement, lease,
mortgage, deed of trust, contract, undertaking, agreement, or
other material instrument to which that Person is a party or by
which it or any material amount of its Assets is bound or to
which it or any material amount of its Assets is subject.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms "Controlling"
and "Controlled" has meanings correlative thereto.
"Copyright Security Agreement" means the Copyright Security
Agreement, dated as of even date herewith, executed by each
Borrower and the Purchasers, substantially in the form set forth
in Exhibit C-1.
"Default" means any of the events specified in Section 10 hereof,
irrespective of whether any requirement for the giving of notice
or the lapse of time has been satisfied in connection with such
event.
"Deferred Interest" has the meaning set forth in Section 1.1(a)
hereof.
"Deferred Interest Rate" means 7% per annum, based upon a 365-day
year for actual days elapsed.
"Distribution" means, with respect to any Person, (a) the
declaration or payment of any dividend on or in respect of any
shares of any class of capital Stock of such Person, other than
dividends payable solely in shares of common stock, (b) the
purchase, redemption, or other retirement of any shares of any
class of capital Stock of such Person, directly or indirectly,
(c) the return of capital by such Person to its shareholders or
other interest holders, or (d) any other distribution on or in
respect of any shares of any class of capital Stock of such
Person.
"Environment" means ambient air, surface water, and groundwater
(including potable water, navigable water, and wetlands), the
land surface or subsurface strata, the workplace or as otherwise
defined in any Environmental Law.
"Environmental Claim" means any written accusation, allegation,
notice of violation, claim, demand, order, consent decree,
directive, cost recovery action, or other cause of action by, or
on behalf of, any Governmental Authority or any Person for
damages, injunctive, or equitable relief, personal injury
(including sickness, disease, or death), Remedial Action costs,
tangible or intangible property damage, natural resource damages,
nuisance, pollution, any adverse effect on the environment caused
by any Hazardous Material, or for fines, penalties, or
restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including
sudden or non-sudden, accidental or non-accidental Releases), (b)
exposure to any Hazardous Material, (c) the presence, use,
handling, transportation, storage, treatment, or disposal of
any Hazardous Material, or (d) the violation or alleged violation
of any Environmental Law or Environmental Permit.
"Environmental Law" means any and all applicable present and
future treaties, statutes, common law, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices, or
binding agreements issued, promulgated, or entered into by any
Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to
health and safety matters, including the Comprehensive
Environmental Response, Compensation and Liability Act
of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. 9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. 6901 et seq., the
Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1977, 33 U.S.C. 1251 et seq., the Clean Air Act of
1970, as amended, 42 U.S.C. 7401 et seq., the Toxic Substances
Control Act of 1976, 15 U.S.C. 2601 et seq., the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. 651 et seq.,
the Emergency Planning and Community Right-to-Know Act of 1986,
42 U.S.C. 11001 et seq., the Safe Drinking Water Act of 1974, as
amended, 42 U.S.C. 300(f) et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. 1801 et seq., and any similar or
implementing state or local law, and all amendments or
regulations promulgated thereunder.
"Environmental Permit" means any permit, approval, authorization,
certificate, license, variance, filing, or permission required by
or from any Governmental Authority pursuant to any Environmental
Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, or any successor statute, together with the regulations
thereunder, as the same may be amended from time to time.
"ERISA Affiliate" means any trade or business (whether
incorporated) that, together with any Borrower, is treated as a
single employee under Section 414(b) or (c) of the Code, or,
solely for purposes of Section 302 of ERISA and Section 412 of
the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with
respect to a Plan, (b) the adoption of any amendment to a Plan
that would require the provision of security pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, (c) the existence
with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA),
whether waived, (d) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan, (e) the
incurrence of any liability under Title IV of ERISA with respect
to the termination of any Plan or the withdrawal or partial
withdrawal of any Borrower or any ERISA Affiliate from any
Multiemployer Plan, (f) the receipt by any Borrower or any ERISA
Affiliate, or, to the knowledge of any Borrower or any ERISA
Affiliate, by a plan administrator of any Multiemployer Plan of
any notice from PBGC relating to the intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan, (g)
the receipt by any Borrower or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of
ERISA, and (h) the occurrence of a "prohibited transaction" with
respect to which any Borrower reasonably could be expected to be
liable.
"Event of Default" means any of the events set forth in Section
10 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
"Family Member" means, as to any individual, any other individual
having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"Financial Officer" of any corporation means the chief financial
officer, principal accounting officer, treasurer, or controller
of such corporation.
"Fiscal Quarter" means any fiscal quarter of Parent as such
fiscal quarter is set forth in Schedule F-1.
"Fiscal Year" means any fiscal year of Parent as such fiscal year
is set forth in Schedule F-1.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" means any federal, state, local, or
foreign court or governmental agency, authority, instrumentality
or regulatory body.
"Governmental Body" means any federal, state, local or foreign
Governmental Authority or regulatory body, any subdivision,
agency, commission or authority thereof or any quasi-governmental
or private body exercising any governmental regulatory authority
thereunder and any Person directly or indirectly owned by and
subject to the control of any of the foregoing, or any court,
arbitrator or other judicial or quasi-judicial tribunal.
"Hazardous Materials" means all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes,
pollutants, solid, liquid or gaseous wastes, including petroleum
or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls ("PCBs") or PCB containing
materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Indebtedness" means, as applied to any Person, all obligations,
contingent and otherwise, that in accordance with GAAP should be
classified upon such Person's balance sheet as liabilities, or to
which reference should be made by footnotes thereto, including in
any event and whether so classified:
(a) all debt and similar monetary obligations, whether direct or
indirect, (b) all liabilities secured by any mortgage, pledge,
security interest, Lien, charge, or other encumbrance existing on
property owned or acquired subject thereto, irrespective of
whether the liability secured thereby shall have been assumed,
(c) all guarantees, endorsements, and other contingent
obligations whether direct or indirect in respect of indebtedness
of others, including any obligation to supply funds to or in any
manner to invest in, directly or indirectly, the debtor, to
purchase indebtedness, or to assure the owner of indebtedness
against loss, through an agreement to purchase goods, supplies,
or services for the purpose of enabling the debtor to make
payment of the indebtedness held by such owner or otherwise,
(d) the obligation to reimburse the issuer in respect of any
letter of credit, and (e) the obligations under an Interest Rate
Agreement.
"Insolvency Proceeding" means (a) any case, action, or proceeding
before any court or other Governmental Authority having
jurisdiction over the applicable Person or its Assets relating to
bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up, or relief of
debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of Assets for creditors, or
other similar arrangement in respect of its creditors generally
or any substantial portion of its creditors; in each case whether
undertaken under U.S. federal (including the Bankruptcy Code),
state, or foreign law.
"Interest Rate Agreement" means any interest rate protection or
hedge agreement, including any interest rate future, option,
swap, and cap agreements.
"Investment" as applied to any Person, means any direct or
indirect purchase or other acquisition by that Person of, or a
beneficial interest in, Stock, or other securities of any other
Person, or any direct or indirect loan or advance (other than
loans or advances to employees for moving and travel expenses,
drawing accounts, and similar expenditures in the ordinary course
of business), or capital contribution by that Person to any other
Person, including all accounts receivable from that other Person
that are not current assets and did not arise from sales to that
other Person in the ordinary course of business. The amount of
any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs, or
write-offs with respect to such Investments.
"Lien" means any mortgage, deed of trust, pledge, security
interest, charge, encumbrance, lien, easement, or exception of
any kind (including any conditional sale or other title retention
agreement and any agreement to give any security interest).
"Material Adverse Effect" means in the case of a Borrower or
Borrowers, a material adverse effect on the condition (financial
or otherwise), business, prospects, results of operations, or
Assets of Borrowers, taken as a whole.
"Maturity Date" has the meaning set forth in Section 1.1(a)
hereof.
"Multiemployer Plan" means a "multiemployer plan" (as defined in
Section 4001(a)(3) in ERISA) maintained or contributed to for
employees of any Borrower or any ERISA Affiliate.
"Note Purchase Price" has the meaning set forth in Section 1.2(a)
hereof.
"Notes" has the meaning set forth in Section 1.1(a) hereof.
"Officer's Certificate" means a certificate signed in the name of
Administrative Borrower, as appropriate under the circumstances,
by the Chief Executive Officer, the President, or the Chief
Financial Officer (or any comparable officer) of Administrative
Borrower.
"Operating Lease" means any lease (other than a Capitalized
Lease) by any Borrower of any Asset.
"Optional Prepayment Date" means the Business Day specified by
Administrative Borrower in compliance with the provisions of
Section 3.2 hereof, as the date on which all or a portion of the
Indebtedness evidenced by the Notes is to be prepaid pursuant to
Section 3.2 hereof.
"Optional Prepayment Notice" means a written notice from the
Parent to the Purchasers notifying the Purchasers of the
Borrowers intention to prepay the Notes.
"Parent" has the meaning set forth in the preamble hereto.
"Partner" means any partner of any of the Purchasers.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PCB" has the meaning ascribed thereto in the definition of
Hazardous Materials.
"Permitted Encumbrances" means the following types of Liens:
(a) Liens for taxes, assessments, or governmental charges or
claims the payment
of which is not at the time required by Section 8.3 hereof;
(b) Statutory Liens of landlords and depository institutions and
Liens of carriers, warehousemen, mechanics, materialmen, and
other Liens imposed by law incurred in the ordinary course of
business for sums not yet delinquent or being contested in good
faith by appropriate proceedings diligently pursued; provided,
however, that Parent shall have made such reserve or other
provisions therefor as may be required by GAAP;
(c) Liens (other than any Liens imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance, and other
types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts or permits, performance and return-
of-money bonds, and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(d) Easements, rights-of-way, zoning, and similar restrictions
and other encumbrances affecting real property that do not in any
case materially interfere with the ordinary conduct of the
business of Borrowers, taken as a whole;
(e) Leases, subleases, or licenses not otherwise prohibited by
this Agreement, granted to others not interfering in any material
respect with the business of Borrowers, taken as a whole;
(f) Liens arising from filing UCC financing statements regarding
Operating Leases;
(g) Any interest or title of a lessor under any lease permitted
by this Agreement (including any Lien granted by such lessor on
the Asset of such lessor) under which any Borrower is lessee;
(h) Any attachment or judgment Lien not constituting an Event of
Default under Section 10.1(h) hereof;
(i) Liens existing on the date hereof, that are set forth on
Schedule P-1 attached hereto and renewals, extensions, or
replacements thereof;
(j) Liens in the nature of the subordination of the leasehold
interest of any Borrower in any real property to a mortgage or
comparable Lien upon such real property;
(k) Liens securing Indebtedness under Interest Rate Agreements;
(l) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, or warranty requirements;
(n) Liens securing Indebtedness permitted under Section 9.1
hereof, subject to any and all limitations set forth in such
Section 9.1; and
(o) Liens on the Borrower's property of an immaterial nature.
"Person" means and includes natural persons, corporations,
limited liability companies, limited partnerships, general
partnerships, joint ventures, trusts, land trusts, business
trusts, or other organizations, irrespective of whether they are
legal entities, and Governmental Authorities and political
subdivisions thereof.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 307 of ERISA
maintained or contributed to by any Borrower or any ERISA
Affiliate and in respect of which any Borrower or any ERISA
Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Prepayment Amount" means 105% of the principal amount paid
during the twelve month period following the Closing Date and
100% of the principal amount paid thereafter, plus, in either
event, accrued and unpaid interest (including Deferred Interest)
thereon to the date of the prepayment.
"Preferred Stock" means, as applied to the capital Stock of any
Person that is a corporation, the capital Stock of any class or
classes (however designated) that is preferred as to the payment
of dividends, or as to the distribution of Assets upon any
voluntary or involuntary liquidation or dissolution of
such Person, over capital Stock of any other class of such
Person.
"Projections" means Parent's forecasted consolidated (a) balance
sheets, (b) statements of income, and (c) cash flow statements,
all prepared on a basis consistent with its historical financial
statements, together with appropriate supporting details and a
statement of underlying assumptions.
"Property" and "Properties" have the respective meanings set
forth in Section 4.15 hereof.
"Purchaser" and "Purchasers" have the respective meanings set
forth in the preamble hereto.
"Purchaser Securities" means the Warrants and the Notes.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping, disposing, depositing, dispersing, emanating, or
migrating of any Hazardous Material in, into, onto, or through
the environment.
"Remedial Action" means (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other
actions required by any Governmental Authority or voluntarily
undertaken to (i) cleanup, remove, treat, ▇▇▇▇▇ or in any other
way address any Hazardous Material in the environment, (ii)
prevent the Release or threat of Release, or minimize the further
Release of any Hazardous Material so it does not migrate or
endanger or threaten to endanger public health, welfare
or the environment, or (iii) perform studies and investigations
in connection with, or as a precondition to, (i) or (ii) above.
"Representative" means the agent, trustee, or other appointed
representative of a holder of Indebtedness.
"Responsible Officer" of any Person means any executive officer
or Financial Officer of such Person and any other officer or
similar official thereof responsible for the administration of
the obligations of such Person in respect of this Agreement.
"Restricted Junior Payment" means (a) any Distribution, or (b)
any payment or transfer of property by any Borrower to an
Affiliate of such Borrower (other than to such Borrower or any of
its Subsidiaries).
"Sale/Leaseback" has the meaning set forth in Section 9.6 hereof.
"Securities Act" means the Securities Act of 1933, as amended,
and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, and any successor statute.
"Security Agreement" means the Security Agreement, dated as of
even date herewith, executed by each Borrower and Purchasers,
substantially in the form set forth in Exhibit S-1.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how
designated) of or in a corporation, a limited liability company,
or equivalent entity, whether voting or nonvoting, including
common stock, preferred stock, common membership interests,
preferred membership interests, or any other "equity security"
(as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Commission under the Exchange
Act).
"Stock Pledge Agreement" means the Stock Pledge Agreement, dated
as of even date herewith, executed by Parent in favor of the
Purchasers, with respect to the pledge of the Stock of each
Subsidiary of Parent, substantially in the form set forth in
Exhibit S-2.
"Subsidiary" means any corporation, association, partnership,
limited liability company, or other business entity of which more
than 50% of the total voting power of shares of Stock entitled to
vote in the election of directors, managers, or trustees thereof
is at the time owned or controlled, directly or indirectly, by
any Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Total Debt" means, as of the last day of any Fiscal Quarter, the
consolidated balance sheet amount of Indebtedness (without
duplication) and letters of credit, whether or not drawn, and
banker's acceptances issued for the account of Parent and its
Subsidiaries.
"Trademark Security Agreement" means the Trademark Security
Agreement, dated as of even date herewith, executed by each
Borrower and Purchasers, substantially in the form set forth in
Exhibit T-1.
"Transaction Documents" means this Agreement, the Investors
Rights Agreement, the Warrant, the Security Agreement, the Notes,
the Stock Pledge Agreement, the Copyright Security Agreement and
the Trademark Security Agreement.
"Transfer" means the sale, pledge, assignment, or other transfer
of the Notes, in whole or in part, and of the rights of the
holder thereof with respect thereto and under this Agreement.
"Transferee" means any direct or indirect transferee of all or
any part of any Note permitted under Section 13.4(b) hereof.
"Voting Stock" means Stock or similar equity interest of a Person
pursuant to which the holders thereof have, at the time of
determination, the general voting power under ordinary
circumstances to vote for the election of directors (or
individuals performing similar functions), managers, trustees, or
general partners of such Person (irrespective of whether at the
time any other class or classes will have or might have voting
power by reason of the happening of any contingency).
"Warrant" has the meaning specified in Section 1.1(b) hereof.
"Withdrawal Liability" means liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
2.2 Accounting Principles
Where the character or amount of any Asset or liability or item
of income or expense is required to be determined or any
consolidation, combination, or other accounting computation is
required to be made for the purposes of this Agreement, the same
shall be done in accordance with GAAP, to the extent applicable,
except where such principles are inconsistent with the
requirements of this Agreement. No Accounting Changes shall
affect the financial covenants contained in this Agreement or
compliance therewith or the definitions of the terms used in
computing such covenants; provided, however, that Parent shall
prepare appropriate detailed footnotes to the financial
statements required to be delivered hereunder that show the
differences between the financial performance reflected in the
financial statements delivered (that employ the Accounting
Changes) and the basis for calculating the financial covenant
compliance (without employing the Accounting Changes).
2.3 Construction.
Unless the context of this Agreement clearly requires otherwise,
references to the plural include the singular and references to
the singular include the plural, the part includes the whole, the
terms "include" and "including" are not limiting, and the term
"or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or". The words "hereof,"
"herein," "hereby," "hereunder" and similar terms in this
Agreement refer to this Agreement as a whole and not to any
particular provision in this Agreement. Paragraph, section,
subsection, clause, exhibit, and schedule references are to this
Agreement unless otherwise specified. Any reference herein to
this Agreement or the other Transaction Documents includes any
and all alterations, amendments, changes, extensions,
modifications, renewals, or supplements thereto or thereof, as
applicable.
3.0 Repayments and Prepayments.
3.1 Repayment of Principal; Interest Payments.
(a) The unpaid principal balance of each Note, together with
any and all interest accrued and unpaid thereon (including
Deferred Interest), automatically and unconditionally shall be
due and payable in full on the Maturity Date, as applicable, of
the Note.
(b) Interest on the unpaid principal balance of each Note
(computed on the basis of a 365-day year for actual days elapsed)
shall be payable monthly in arrears at the rate of 8% per annum
from and including the date thereof until the entire principal
balance of such Note and all interest accrued thereunder is paid
in full. From and after the occurrence of an Event of Default,
and during the continuance thereof, all principal, interest, or
other amounts evidenced by and due under each Note (other than
Deferred Interest) shall bear interest at a rate 4 percentage
points (that is, 400 basis points) higher than the rate otherwise
applicable thereto. The Deferred Interest on the unpaid balance
of each Note shall accrue monthly and shall be payable on the
Maturity Date at the Deferred Interest Rate from the date thereof
until the entire principal balance of such Note and all interest
accrued thereunder is payable in full.
3.2 Optional Prepayments. The Notes shall be subject to
prepayment, at the option of Administrative Borrower, at any time
and from time to time in whole or in part. To exercise such
right of prepayment, Administrative Borrower must provide
Purchasers with an Optional Prepayment Notice at least 10
Business Days, but not more than 20 Business Days, prior to the
proposed Optional Prepayment Date, which Optional Prepayment
Notice shall specify the portion of the principal of such
Notes (which must be in a minimum aggregate amount of $100,000,
or the remaining unpaid balances, if less) ("Specified Principal
Amount"), to be prepaid. On the Optional Prepayment Date
specified, Administrative Borrower, on behalf of Borrowers, shall
pay each Note proportionately. Any such prepayment shall be made
by Borrower to each Purchaser in an amount reflecting such
Purchaser's ratable share by cashiers check or by wire transfer
of immediately available funds, in currency of the United States
of America as at the time of payment is legal tender for payment
of public and private debts, to an account or accounts designated
in writing by each such Purchaser.
3.3 Purchase of Notes. Borrowers will not and will not permit
any of its Affiliates to purchase, redeem, prepay, or otherwise
acquire, directly or indirectly, any of the outstanding Notes
except upon the payment or prepayment of the Notes in accordance
with the terms of this Agreement and the other Transaction
Documents. Borrowers promptly will cancel all Notes acquired by
them or any of their Affiliates pursuant to any payment,
prepayment, or purchase of Notes pursuant to any provision of
this Agreement.
4.0 Representations and Warranties. Except as otherwise
expressly set forth on the schedules attached to this Agreement
or expressly contained in the public filings of the Parent with
the Commission under the Securities Act or the Securities
Exchange Act, each Borrower represents and warrants to Purchasers
that, as of the date hereof, and the Closing Date:
4.1 Organization, Powers, Good Standing, and Subsidiaries.
(a) Organization and Powers. Such Borrower is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware or Florida (as applicable), and
has all requisite power and authority, to own and operate its
Assets, to carry on its business as now conducted and proposed to
be conducted, to enter into this Agreement, to issue the Notes,
to enter into the Transaction Documents, and to carry out the
transactions contemplated hereby and thereby.
(b) Good Standing. Such Borrower is in good standing wherever
necessary to carry on its present business and operations, except
in jurisdictions in which the failure to be in good standing has
not had and reasonably could not be expected to have a Material
Adverse Effect.
(c) Subsidiaries. As of the Closing Date, such Borrower has no
Subsidiaries other than as set forth on Schedule 4.1(c) attached
hereto.
(d) Capitalization. As of the Closing Date and after giving
effect to the transactions contemplated hereby, the authorized
capital Stock of such Borrower, and in the case of Borrowers
other than the Parent, the holders of such capital Stock is as
set forth on Schedule 4.1(d) hereof. The issuance and sale of
all such interests have been in compliance with all applicable
federal and state securities laws. Except as set forth on
Schedule 4.1(d), as of the Closing Date there are no
subscriptions, options, warrants, or calls relating to any units
of such Borrower's capital Stock, including any right of
conversion or exchange under any outstanding security or other
instrument. Such Borrower is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or
retire any units of its capital Stock or any security convertible
into or exchangeable for any of its capital Stock.
4.2 Authorization of Financing, etc.
(a) Authorization of Financing. The execution, delivery, and
performance of this Agreement and the other Transaction Documents
to which it is a party, the issuance and delivery by the Parent
of the Common Stock upon the exercise of the Warrants, the
issuance and delivery by the Parent of the Notes, and the
consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action by such
Borrower, as applicable.
(b) No Conflict. The execution, delivery, and performance by
such Borrower of this Agreement or any Transaction Document to
which it is a party, the issuance, delivery, and payment of
the Notes by the Parent, and the issuance and delivery of the
Warrants by the Parent, and in each case, the consummation of the
transactions contemplated hereby and thereby, will not
(i) violate the articles of incorporation or by-laws of such
Borrower, (ii) violate any order, judgment, or decree of any
court or other governmental agency binding on such Borrower or
any Assets of such Borrower except for violations which,
individually or in the aggregate, reasonably could not be
expected to have a Material Adverse Effect, (iii) violate any
provision of law or statute applicable to such Borrower except
for violations which, individually or in the aggregate,
reasonably could not be expected to have a Material Adverse
Effect, (iv) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
Contractual Obligation of such Borrower or pursuant to
which any of its Assets are bound, other than conflicts,
breaches, and defaults as to which waivers have been obtained on
or prior to the Closing Date or as to which there is no Material
Adverse Effect, (v) result in or require the creation or
imposition of any Lien (other than Permitted Encumbrances) upon
any of such Borrower's Assets, except as contemplated herein, or
(vi) require any approval or consent of any Person under any
Contractual Obligation of such Borrower, except for such
approvals or consents as have been or will be obtained on or
before the Closing Date or which, if not obtained will not have a
Material Adverse Effect.
(c) Governmental Consents. The execution, delivery, and
performance by such Borrower of the Transaction Documents to
which it is a party, the issuance, delivery, and payment of
the Notes by the Parent, and, in each case, the consummation of
the transactions contemplated hereby and thereby, do not and will
not require any registration or filing with, consent or approval
of, or notice to, or other action relating to, with or by, any
Governmental Authority except for filings, registrations,
consents, approvals, notices, and actions that have been or will
be obtained or taken on or before the Closing Date or which, if
not made or obtained will not have a Material Adverse Effect.
(d) Due Execution and Delivery; Binding Obligations. The
Transaction Documents to which it is a party have been duly
executed and delivered by such Borrower. Each of this Agreement
and the other Transaction Documents to which such Borrower is a
party is the legally valid and binding obligation of such
Borrower, enforceable against such Borrower in accordance with
its respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating
to or limiting creditors' rights generally and subject to the
availability of equitable remedies, whether considered
in a proceeding at law or in equity.
4.3 Financial Condition.
(a) Attached hereto as Schedule 4.3(a)(i) is the consolidated
balance sheet of Parent and its Subsidiaries as at December 31,
2000 and January 2, 2000, (including the notes thereto, the
"Balance Sheet"), and the related consolidated statements of
income, changes in stockholders' equity and cash flow for each of
the fiscal years then ended, together with the reports of
▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, P.A. and Deloitte & Touche, LLP,
independent certified public accountants. Attached hereto as
Schedule 4.3(a)(ii) is the unaudited consolidated balance sheet
of Parent and its Subsidiaries as at September 30, 2001 (the
"Interim Balance Sheet") and the related unaudited consolidated
statements of income, changes in stockholders' equity and cash
flow for the nine (9) months then ended. Such financial
statements and notes are true, complete and accurate and fairly
present the financial condition and the results of operations,
changes in stockholders' equity, and cash flow of the Parent and
its Subsidiaries as at the respective dates of and for the
periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of interim financial
statements, to normal recurring year end adjustments (the effect
of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes (that, if presented,
would not differ materially from those included in the Balance
Sheet).
(b) Since September 30, 2001, there has been no material adverse
change in the business, operations, properties, prospects, assets
or condition of the Borrowers, taken as a whole, and no event has
occurred or circumstance exists that may result in such a
material adverse change.
(c) The Borrowers have no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations
reflected or reserved against in the Balance Sheet or the Interim
Balance Sheet and current liabilities incurred in the ordinary
course of business since the respective dates thereof and
liabilities for legal fees and costs associated with this
transaction.
4.4 No Stock Payments. Since September 30, 2001, such Borrower
has not, directly or indirectly, declared, ordered, paid, or made
any Distribution except as set forth on Schedule 4.4 attached
hereto.
4.5 Title to Properties; Liens. Such Borrower has good and
valid record title to its real property owned in fee and a valid
leasehold interest to its leased real property and valid title to
or beneficial ownership of all its other Assets reflected in the
Interim Balance Sheet referred to in Section 4.3 hereof, except
for (a) Assets acquired or disposed of prior to the Closing Date
in the ordinary course of business, and (b) Permitted
Encumbrances. All such Assets are free and clear of Liens other
than Permitted Encumbrances. Such Borrower has quiet enjoyment
under all leases to which its is a lessee in the State of Florida
and all of such leases are valid and enforceable in accordance
with their terms except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating
to or limiting creditors' rights generally, and no monetary or
other material default exists under any of them that reasonably
could be expected to have a Material Adverse Effect.
4.6 Litigation; Adverse Facts. Except as set forth on Schedule
4.6, there is no (a) action, suit, proceeding, or arbitration at
law or in equity or before or by any Governmental Authority
or arbitrator pending, or to the knowledge of such Borrower after
reasonable investigation, threatened against or affecting such
Borrower, or any Asset of such Borrower that reasonably could,
individually or in the aggregate, be expected to result in a
Material Adverse Effect, or (b) judgment, decree, injunction, or
order of any Governmental Body or arbitrator against such
Borrower with respect to which any one of them is in default and
where such default reasonably could be expected to result in a
Material Adverse Effect. Except as set forth on Schedule 4.6,
during the previous 12 months, such Borrower has not received any
notice of termination of any material contract, lease, or other
agreement or suffered any material damage, destruction, or loss,
(whether or not covered by insurance) or had any employee strike,
work-stoppage, slow-down, or lock-out or any substantial, non-
frivolous threat directed to it of any imminent strike, work-
stoppage, slow-down, or lock-out, any of which remain pending,
that reasonably could be expected to have a Material Adverse
Effect after the date hereof.
Schedule 4.6 attached hereto contains a detailed description of
each material action, suit, proceeding, or arbitration that such
Borrower has brought and that, as of the Closing Date, is on-
going.
4.7 Payment of Taxes. Except to the extent permitted by Section
8.3 hereof and except as set forth on Schedule 4.7 attached
hereto, (a) all tax returns and reports of such Borrower required
to be filed by it have been duly and timely filed, and (b) all
taxes, assessments, fees, and other governmental charges upon
such Borrower, or upon its Assets, income, and franchises that
are due and payable have been paid when due and payable. There
is no actual or, to the knowledge of Parent, proposed tax
assessment against such Borrower that, in any of the foregoing
cases, has had or reasonably could be expected to have a Material
Adverse Effect.
4.8 Performance. Such Borrower is not in default in the
performance, observance, or fulfillment of any of the material
obligations, covenants, or conditions contained in any of its
Contractual Obligations (other than vendor obligations and leases
for real estate, in each case, outside the State of Florida with
the exception of three properties determined to be immaterial in
the State of Florida located in Jacksonville, Tallahassee and
Delray) and no condition exists that, with the giving of due
notice or the lapse of time or both, would constitute such a
default, except where the consequences, direct or indirect, of
such default or defaults, if any, have not had and reasonably
could not be expected to have a Material Adverse Effect.
4.9 Governmental Regulation. Such Borrower is not a "holding
company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company," as such terms are defined in
the Public Utility Holding Company Act of 1935; nor is it an
"investment company," or an "affiliated company" or a "principal
underwriter" of an "investment company," as such terms are
defined in the Investment Company Act of 1940.
4.10 Employee Benefit Plans.
(a) Each of such Borrower and its ERISA Affiliates is in
compliance in all material respects with ERISA and the provisions
of the Code applicable to employee benefit plans and the
regulations and published interpretations thereunder, except to
the extent such noncompliance reasonably could not be expected to
result in a Material Adverse Effect. No ERISA Event has occurred
or is reasonably expected to occur that, when taken together with
all other such ERISA Events, reasonably could be expected to
result in a Material Adverse Effect.
(b) The execution and delivery of this Agreement and the
issuance and sale of the Note hereunder will not involve any
transaction that is subject to the prohibitions of Section 406 of
ERISA or in connection with which a tax could be imposed pursuant
to Section 4975(c)(1)(A)-(D) of the Code for which no exemption
exists under Section 408 of ERISA or Section 4975(c)(7) of the
Code. The representation in the first sentence of this clause
(b) is made in reliance upon and subject to the accuracy of each
Purchaser's representation in Section 5(b) as to the sources of
the funds used to pay the purchase price of the Notes.
4.11 Certain Fees. No broker's or finder's fee or commission
will be payable by the Borrower with respect to the offer, issue,
and sale of the Notes, the Warrants or any of the other
transactions contemplated hereby or thereby.
4.12 Disclosure. No representation or warranty of such Borrower
to any Purchaser contained in this Agreement contains an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in
which the same were made. The Closing Date Projections that have
been delivered to Purchasers were prepared in good faith, to the
knowledge of Parent there is a reasonable basis for such
projections, and such projections represents Borrowers' good
faith best estimates of their future performance.
4.13 Licenses, Permits, Franchises, and Authorizations. Such
Borrower has all required approvals, licenses, franchises, or
other permits with respect to its operations, facilities, Assets
and Properties, the absence of which, in the aggregate,
reasonably could be expected to result in a Material Adverse
Effect.
4.14 Intangible Property. Except as set forth on Schedule 4.14,
such Borrower possesses all franchises, patents, copyrights,
trademarks, trade names, licenses, and permits, and rights in
respect of the foregoing, adequate for the conduct of its
business substantially as now conducted without known conflict
with any rights of others.
4.15 Hazardous Materials. Except as set forth on Schedule 4.15
attached hereto, to the knowledge of such Borrower:
(a) such Borrower has obtained (or has applied for) all
Environmental Permits with respect to the facilities and
properties owned, leased, or operated by it (each, a "Property"
and collectively, the "Properties") and is in compliance with all
Environmental Laws and all Environmental Permits, except to the
extent that failure to obtain (or apply for) any such
Environmental Permits and any noncompliance with Environmental
Laws or Environmental Permits reasonably could not be expected to
result in a Material Adverse Effect;
(b) there have been no Releases by Borrower or to the knowledge
of Parent threatened Releases at, from, under or proximate to the
Properties, which Releases or threatened Releases reasonably
could be expected to result in a Material Adverse Effect;
(c) such Borrower has not received any notice of an
Environmental Claim in connection with (i) the Properties, or
(ii) liabilities for environmental matters that such Borrower has
retained or assumed, in whole or in part, contractually, by
operation of law, or otherwise that reasonably could be expected
to result in a Material Adverse Effect;
(d) Hazardous Materials have not been transported, generated,
treated, stored, or disposed of by Borrower from, at, on, or
under any of the Properties in violation of, or in any
manner or to a location that could give rise to liability of
Borrower under, any Environmental Law, except to the extent that
such violations or liabilities reasonably could not be expected
to result in a Material Adverse Effect; and
(e) there are no (i) underground or aboveground storage tanks,
(ii) PCBs in concentrations in excess of 50 parts per million, or
(iii) asbestos in friable condition or asbestos-containing
materials in friable condition present at any of the Properties.
4.16 Margin Regulation. Such Borrower does not own or intend to
acquire any "margin stock" within the meaning of Regulation U of
the Federal Reserve Board.
4.17 Offering of Securities. Neither such Borrower, nor any
agent acting on behalf of it has taken any action that (a) would
cause the issuance and sale of any of the Notes to be in
violation of the provisions of Section 5 of the Securities Act,
or (b) violates the provisions of any securities or blue sky
law of any applicable jurisdiction.
4.18 Solvency. No transfer of property is being made by such
Borrower and no obligation is being incurred by such Borrower in
connection with the transactions contemplated by the Transaction
Documents with the intent to hinder, delay, or defraud either
their present or future creditors.
4.19 Schedule of Partnerships. Schedule 4.19 attached hereto
sets forth a complete and accurate listing of each partnership to
which such Borrower is a party as of the Closing Date as well as
a detailed description of the Indebtedness of such partnerships
for which such Borrower is liable, whether severally, jointly,
jointly and severally, directly, or contingently.
4.20 Insurance. Schedule 4.20 hereto sets forth a true and
correct summary of all insurance, including title insurance,
carried by such Borrower. Such Borrower is adequately insured
for their benefit under policies issued by insurers of recognized
responsibility. No notice of any pending or threatened
cancellation or premium increase has been received by such
Borrower with respect to any of such insurance policies. Such
Borrower is in material compliance with all conditions contained
in such insurance policies.
4.21 Debt Instruments. Schedule 4.21 attached hereto contains a
complete list of all loan agreements, promissory notes, letters
of credit, security agreements, or other financing documents
(other than trade accounts payable) to which such Borrower is a
party as the debtor, account party, guarantor, or co-Borrower, as
the case may be, or by which such Borrower or any of its Assets
(including equipment subject to any equipment lease), is bound,
in each case, in respect of amounts owing in excess of $100,000.
After giving effect to the repayment of Indebtedness that is to
be repaid on the Closing Date, there are no existing defaults by
such Borrower under or with respect to any such debt instrument
set forth on Schedule 4.21 that is to remain outstanding, except
as waived, and no event has occurred with respect thereto which
(whether with notice, lapse of time, or both, or the happening or
occurrence of any other event) would constitute a default by such
Borrower under or with respect to any such debt instrument.
4.22 Representations Under Certain Documents. Each of the
representations and warranties made by such Borrower in any of
the Transaction Documents was true and correct in all material
respects when made and continues to be true and correct in all
material respects on the Closing Date, except to the extent that
any of such representations and warranties relate, by the express
terms thereof, solely to a date occurring prior to the Closing
Date, and except to the extent that any of such representations
and warranties may have been affected by the consummation of the
transactions contemplated and permitted or required by the
Transaction Documents.
4.23 Relationships with Related Persons. Except as set forth on
Schedule 4.23, neither the Borrower nor any Affiliate of the
Borrower is or owns (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in, a
Person that has (i) had business dealings or a material
financial interest in any transaction with such Borrower or (ii)
engaged in a business competing with such Borrower in any market
presently or proposed to be served by such Borrower, nor does any
such Borrower have knowledge of any transaction that is on terms
less favorable to such Borrower than are obtainable in an arms-
length transaction with a Person that is not an Affiliate of such
Borrower. Except as set forth on Schedule 4.23, no Affiliate of
such Borrower is a party to any contract, agreement, arrangement,
or understanding with, or has any claim or right against, such
Borrower.
4.24 Absence of Certain Changes and Events. Except as set forth
on Schedule 4.24, since the date of the Balance Sheet, the
Borrowers have conducted their businesses only in the ordinary
course of business and there has not been any: (a) change in any
Borrower's authorized or issued capital stock; grant of any stock
option or right to purchase shares of capital stock of any
Borrower; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by any Borrower of any shares of
any such capital stock; or declaration or payment of any dividend
or other distribution or payment in respect of shares of capital
stock; (b) amendment to the Articles of Incorporation or Bylaws
of any Borrower; (c) payment or increase by any Borrower of any
bonuses, salaries, or other compensation to any stockholder,
director, officer, or (except in the ordinary course of business)
employee or entry into any employment, severance, or similar
contract with any director, officer, or employee; (d) adoption
of, or increase in the payments to or benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with
any employees of any Borrower; (e) damage to or destruction or
loss of any asset or property of any Borrower, whether or not
covered by insurance, materially and adversely affecting the
properties, assets, business, financial condition, or prospects
of the Borrower, taken as a whole; (f) entry into, termination
of, or receipt of notice of termination of any license,
distributorship, dealer, sales representative, joint venture,
credit, or similar agreement; (g) sale , lease, or other
disposition of any asset or property of any Borrower or
mortgage, pledge, or imposition of any lien or other encumbrance
on any material asset or property of any Borrower; (h)
cancellation or waiver of any claims or rights with a value to
any Borrower in excess of $100,000; (i) material change in the
accounting methods used by any Borrower; or (j) agreement,
whether oral or written, by any Borrower to do any of the
foregoing.
5.0 Representations of Purchasers. Each Purchaser represents
and warrants to Borrowers that, as of the date hereof and as of
the Closing Date:
(a) Due Execution and Delivery; Binding Obligations. The
Transaction Documents to which each Purchaser is a party have
been duly executed and delivered by such Purchaser. Each of this
Agreement and the other Transaction Documents to which such
Purchaser is a party is the legally valid and binding obligation
of such Purchaser, enforceable against such Purchaser in
accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally and
subject to the availability of equitable remedies,
whether considered in a proceeding at law or in equity.
(b) The Purchaser is an "accredited investor" within the meaning
of Regulation D under the Securities Act, that it is acquiring
its Notes and Warrants for the purpose of investment and not with
a view to the distribution thereof, and that it has no present
intention of selling, negotiating, or otherwise disposing of the
Notes or Warrants; provided that the disposition of such
Purchaser's property shall at all times be and remain within its
control.
(c) It is a limited liability company, validly existing, and in
good standing under the laws of its jurisdiction of organization
and has all necessary powers, and all material governmental
licenses, authorizations, consents and approvals, required to
purchase the Purchaser Securities.
(d) Neither the execution and delivery of this Agreement and the
Transaction Documents nor the consummation or performance of the
subject transactions will, directly or indirectly (with or
without notice or lapse of time) contravene, conflict with or
result in a violation of any provision of the organizational
documents of such Purchaser.
(e) Purchaser represents to Borrower that it understands that
the Warrants are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired
from Borrower in a transaction not involving a public offering
and that under such laws and applicable regulations such
securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this
connection, Purchaser represents to Borrower that it is familiar
with SEC Rule 144, as currently in effect, and understands the
resale limitations imposed thereby and by the Securities Act.
Purchaser acknowledges that its investment in the Warrants may be
an illiquid investment requiring it to bear the economic risk
of the investment for an indefinite period and that Borrower may
not be able to comply with the requirements of Rule 144 in the
future. Purchaser acknowledges and consents to the inclusion
on the Warrants (or any certificates issued upon exercise of the
Warrants) of such legends as shall be warranted by applicable law
or required under the Investor Rights Agreement.
(f) It has incurred no obligation or liability for brokerage or
finders' fees or other similar payment in connection with the
transactions contemplated by this Agreement.
6.0 Closing Date. The purchase and delivery of the Notes and
Warrants shall take place in international waters, off the coast
of Tampa, Florida, at a closing (the "Closing") effective as of
January 31, 2002 or as soon as practicable thereafter (the actual
date of the Closing is the "Closing Date"). At the Closing,
Borrowers shall deliver to Purchasers the Notes and the Warrants,
against payment of the purchase price therefor, by wire transfer
of immediately available funds to such bank as the Borrower shall
designate in writing. If at the Closing, the Administrative
Borrower shall fail to tender to the Purchasers the Notes or the
Warrants as provided above in this Section 6, or any of the
conditions specified in Section 7 hereof shall not have been
satisfied (or waived, in writing, by Purchasers), the
Purchasers, at their election, shall be relieved of all further
obligations under this Agreement, without thereby waiving
any other respective rights that it may have by reason of such
failure or such non-fulfillment.
7.0 Conditions for Closing. The obligation of Purchasers, to
purchase and pay for the Notes and Warrants as of the Closing
Date is subject to the satisfaction, prior to or at the Closing,
of the following conditions (and Borrowers shall use their best
efforts to satisfy each such condition):
7.1 Opinions of Counsel. Purchasers shall have received from
counsel for Borrowers, an opinion or opinions substantially in
the form set forth in Exhibit 7.1 and covering such matters
incident to the transactions as Purchasers, reasonably may
request, addressed to Purchasers, dated the Closing Date and
otherwise satisfactory in substance and form to Purchasers and
their counsel.
7.2 Representations and Warranties; No Default. The
representations and warranties of each Borrower contained in this
Agreement shall be true, in all material respects, when made and
on the Closing Date, except as affected by the consummation of
the subject transactions and there shall exist on the Closing
Date and after giving effect to such transactions, no Event of
Default or Default. Administrative Borrower, on behalf of
Borrowers, shall have delivered to Purchasers an Officer's
Certificate, dated the Closing Date, to all such effects and to
the further effects specified in Sections 7.5, 7.6, 7.7, 7.8,
7.9, 7.10 and 7.11 hereof.
7.3 Investors Rights Agreement. Each of the parties to the
Investors Rights Agreement shall have executed and delivered to
the Purchasers, a fully executed counterpart of the Investors
Rights Agreement.
7.4 Stock Pledge Agreement. Each of the parties to the Stock
Pledge Agreement shall have executed and delivered to the
Purchasers, a fully-executed counterpart of the Stock Pledge
Agreement.
7.5 Purchase Permitted by Applicable Laws. The purchase and
payment for the Notes and Warrants by the Purchasers, shall not
be prohibited by any applicable law or governmental regulation
and shall not subject any Purchaser to any tax, penalty,
liability, or other onerous condition under or pursuant to any
applicable law or governmental regulation.
7.6 Compliance with Securities Laws. The offering, issuance,
and sale of the Notes and the Warrants under this Agreement
shall have complied with all applicable requirements of federal
and state securities laws, and the Purchasers shall have received
evidence of such compliance in form and substance satisfactory to
it.
7.7 Approvals and Consents. Borrowers shall have received all
authorizations, consents, approvals, licenses, franchises,
permits, and certificates by or of all Governmental Bodies in
each case, necessary for the issuance of the Notes and Warrants,
and the execution and delivery of the Transaction Documents to
which they are parties and all of them shall be in full force and
effect on the Closing Date.
7.8 Proceedings. All proceedings taken by Borrowers in
connection with the transactions contemplated hereby and all
documents incident thereto shall be reasonably satisfactory in
form and substance to the Purchasers, and their counsel, and the
Purchasers, and their counsel shall have received all such
counterpart originals or certified or other copies of such
documents as they reasonably may request.
7.9 Issuance of Notes and Warrants. Concurrently with the
Closing, Borrowers shall have issued to Purchasers the Notes and
Warrants in accordance with the provisions hereof.
7.10 Certified Documents. Administrative Borrower shall have
delivered, or shall have caused to be delivered, to Purchasers
copies of the following documents, duly certified, or the
following certificates, as applicable:
(a) Resolutions of the Board of Directors of each Borrower
authorizing (i) the execution, delivery, and performance of the
Transaction Documents to which it is a party, (ii) the
consummation of the transactions contemplated by the Transaction
Documents to which it is a party, and (iii) all other actions to
be taken by such Borrower in connection with the Transaction
Documents to which it is a party;
(b) Certificates, signed by the Secretary or an Assistant
Secretary of each Borrower, dated as of the Closing Date, as to
(i) the incumbency, and containing the specimen signature or
signatures, of the Person or Persons authorized to execute the
Transaction Documents to which such Borrower is a party on behalf
of such Borrower, together with evidence of the incumbency of
such Secretary or Assistant Secretary, and (ii) the authenticity
of such Borrower's articles of incorporation and by-laws; and
(c) A certificate of status or good standing of the Parent from
the Secretary of State of Delaware.
7.11 Insurance. Administrative Borrower shall have furnished
evidence satisfactory to the Purchasers that Borrowers have the
insurance required by Section 8.4.
7.12 Closing Date Projections. Purchasers shall have received a
set of projections, a copy of which shall be attached hereto as
Schedule 7.12, dated as of January 31, 2002 (the "Closing Date
Projections").
7.13 Expenses. Borrowers shall have paid $25,000 of the fees,
costs, and expenses of Purchasers to the extent provided in
Section 13.2 hereof, including the reasonable legal fees of ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇, P.A., counsel to the Purchaser, in
connection with the transactions contemplated hereunder.
7.14 Use of Financing. Purchasers shall have received evidence
satisfactory to them that the proceeds of the sale of the Notes
are being used and applied in accordance with the provisions of
Section 8.11 hereof.
7.15 Due Diligence. Purchasers shall have completed its
financial and legal due diligence with respect to Borrowers, the
results of all of which shall be satisfactory to Purchasers.
7.16 Transaction Documents. Purchasers shall have received, in
form and substance satisfactory to Purchasers and their counsel,
this Agreement and the other Transaction Documents not
otherwise specified above, duly executed, and each such document
shall be in full force and effect.
7.17 Cancellation of Outstanding Warrants and Options. All
outstanding options and warrants to acquire shares of the
Borrower's Common and Preferred Stock shall be cancelled, other
than the options granted to employees and directors of the
Borrower set forth on Schedule 7.17 attached hereto.
7.18 Board of Directors of Parent. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall
resign as a member of the Board of Directors of the Parent and
the Board of Directors of the Parent shall have increased the
size of the Board of Directors of the Parent to seven members and
appointed ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ to
fill the vacancies created thereby, all effective at the Closing.
8.0 Affirmative Covenants. Each Borrower covenants and agrees
that, from and after the date of this Agreement, through the
Closing, and thereafter until payment in full of all of the
Notes, it will perform or will cause to be performed, all of the
covenants in this Section 8.
8.1 Financial Statements and Other Reports. Each Borrower will
maintain a system of accounting established and administered in
accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP. Such Borrower
will deliver to each Purchaser and to any Transferee (in each
case, so long as it continues to hold a Note):
(a) as soon as practicable, but in any event within 30 days
after the end of (i) each month in each Fiscal Year of Parent,
unaudited monthly consolidated and consolidating financial
statements of Parent and its Subsidiaries for such month prepared
in accordance with GAAP, and setting forth, in comparative form,
the Consolidated figures for the comparable corresponding month
of the previous Fiscal Year together with a certification by the
principal financial or accounting officer of Parent that
the information contained in such financial statements fairly
presents the financial condition of Parent and its
Subsidiaries as of the date thereof (subject to year-end
adjustments); and (ii) each of the first eleven months in each
Fiscal Year, and for the period from the beginning of then
current Fiscal Year to the end of such month, a comparison
setting forth the corresponding figures from the budgeted or
projected figures set forth in the Projections described in
Section 8.1(g) below for such period, all in reasonable detail
and being prepared in accordance with GAAP;
(b) as soon as practicable and in any event within 45 days after
the end of (i) each of the first three Fiscal Quarters in each
Fiscal Year, consolidated balance sheets of Parent and its
Subsidiaries as at the end of such period and for the year-to-
date and the related consolidated and consolidating statements of
income and cash flows of Parent and its Subsidiaries for such
Fiscal Quarter and for the year-to-date and setting forth, in
comparative form, the Consolidated figures for the comparable
corresponding Fiscal Quarter of the previous Fiscal Year; and
(ii) the first three Fiscal Quarters in each Fiscal Year, and for
the period from the beginning of then current Fiscal Year to the
end of such Fiscal Quarter, a comparison setting forth the
corresponding figures from the budgeted or projected figures set
forth in the Projections described in Section 8.1(g) below for
such period, all in reasonable detail and being prepared in
accordance with GAAP, together with a certification by the chief
financial or accounting officer of Parent that the information
contained in such financial statements fairly presents the
financial position of Parent and its Subsidiaries as of the date
thereof (subject to year-end adjustments). Notwithstanding the
foregoing, the Parent's obligation under Section 8(b)(i) will be
satisfied if the Parent continues to be a reporting company under
the Securities Exchange Act and timely files its quarterly
reports on Form 10-Q thereunder.
(c) as soon as available and in any event within 120 days after
the end of each Fiscal Year, a copy of the annual audit report
for such year for Parent and its Subsidiaries, including therein
a consolidated balance sheet of Parent and its Subsidiaries as of
the end of such Fiscal Year, a consolidated statement of income
and a consolidated statement of cash flows of Parent and its
Subsidiaries for such Fiscal Year, setting forth in each case (i)
in comparative form the corresponding figures for the preceding
Fiscal Year, and (ii) in comparative form the corresponding
projected figures for such Fiscal Year as set forth in the
Projections covering such Fiscal Year previously delivered to
Purchasers, in each case accompanied by an opinion of audit of
independent public accountants of recognized standing,
together with a certificate of such accounting firm to Purchasers
stating that in the course of the regular audit of the business
of Parent and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with generally accepted auditing
standards, such accounting firm has obtained no knowledge
that a Default has occurred and is continuing, or if, in the
opinion of such accounting firm, a Default has occurred and is
continuing, a statement as to the nature thereof. Notwithstanding
the foregoing, the Parent's obligation under Section 8(c)(i) will
be satisfied if the Parent continues to be a reporting company
under the Securities Exchange Act and timely files its annual
report on Form 10-K thereunder.;
(d) together with each delivery of financial statements of Parent
and its Subsidiaries pursuant to Sections 8.1(b) and 8.1(c)
above, an Officers' Certificate setting forth, if applicable,
reconciliations to reflect changes in GAAP since September 30,
2001, and stating that (y) as of the date of such certificate,
there exists no Default or Event of Default or condition that
would, with either or both the giving of notice or the lapse of
time, result in a Default or Event of Default, and (z) the
financial statements delivered herewith were prepared in
accordance with GAAP applied on a basis consistent with prior
periods (except, in the case of quarterly statements, for
provisions for footnotes and being subject to year-end audit
adjustments and, in all cases, except as disclosed therein);
(e) contemporaneously with the filing or mailing thereof, copies
of all material of a financial nature filed with the Commission
or sent to the Shareholders of Parent;
(f) promptly, but in no event later than 5 business days, upon
any officer of any Borrower obtaining actual knowledge, written
notice: (i) of any condition or event that constitutes an
Event of Default or Default or that any holder of a Note has
given any notice or taken any other action with respect to a
claimed Default or Event of Default under this Agreement, (ii) of
any Person that has given any notice to such Borrower or taken
any other action with respect to a claimed default or event or
condition of the type referred to in Section 8.1(b) which could
reasonably be expected to have a Material Adverse Effect, or
(iii) any pending or threatened condemnation proceedings by any
Governmental Authority affecting any Properties or Assets of such
Borrower, the condemnation of which reasonably could be expected
to have a Material Adverse Effect;
(g) as soon as they are available, but in any event within 60
days prior to the beginning of each Fiscal Year, Projections for
such Fiscal Year. Such Projections shall be in form and
substance consistent with Parent's past practices and shall be
certified by the chief financial or accounting officer of Parent
as being such officer's good faith estimate of the financial
performance of Parent and its Subsidiaries during such period;
(h) promptly upon receipt thereof, copies of all accountant's
management letters delivered to Parent or any of its
Subsidiaries;
(i) during the following week, in each week of each Fiscal Year
a report for the previous week setting forth data relating to the
month-to-date sales and a cash report of the Parent and its
Subsidiaries for such period; and
(j) with reasonable promptness, such other information and data
with respect to any Borrower as from time to time may be
reasonably requested by the Purchasers, including information
regarding the business, assets, financial condition, income or
prospects of such Borrower;.
8.2 Corporate Existence, etc. Each Borrower will at all times
preserve and keep in full force and effect its corporate
existence and rights material to the business of such Borrower.
8.3 Payment of Taxes; Tax Consolidation.
(a) Each Borrower will duly and timely file all tax returns and
reports required to be filed in compliance with all applicable
laws, regulations, rules, and procedures and pay all taxes,
assessments, and other governmental charges imposed upon such
Borrower, or any of the Assets of such Borrower or in respect of
any franchises, business, income, or Assets of such Borrower
before any material penalty or interest in a material amount
accrues thereon; provided, however, that no such tax, assessment,
or other charge need be paid if it is being contested in good
faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
(b) Parent will not file or consent to the filing of any
consolidated income tax return with any Person (other than Parent
and its Subsidiaries).
8.4 Maintenance of Properties; Insurance. Each Borrower will
maintain or cause to be maintained in good repair, working order,
and condition all material Assets used or useful in the
business of such Borrower and from time to time, to the extent
determined by Borrower in good faith to be necessary or
appropriate, will make or cause to be made all appropriate
repairs, renewals, and replacement thereof, ordinary wear and
tear excepted. Each Borrower will maintain or cause to be
maintained, with reputable insurers, insurance with respect to
its Assets and business against loss or damage of the kinds, and
of such types and in such amounts, as shall be reasonably
determined from time to time by such Borrower on a basis not
inconsistent with the customary practices of entities of
established reputation engaged in the same or similar businesses
and similarly situated.
8.5 Inspection. Each Borrower shall permit any authorized
representatives designated in writing by Purchasers to visit and
inspect any of the Assets of such Borrower, including its
financial and accounting records, and to make copies and take
extracts therefrom, and to discuss its affairs, finances, and
accounts with its officers and independent and certified public
accountants, all upon reasonable prior written notice and at such
reasonable times during business hours as often as may be
reasonably requested.
8.6 Compliance with Laws, etc. Each Borrower shall comply, in
all material respects, with all applicable laws, rules,
regulations, and orders, and such Borrower shall duly observe in
all material respects, all valid requirements of applicable
Governmental Authorities and all applicable statutes, rules, and
regulations, including all applicable statutes, rules and
regulations relating to public and employee health and safety
except where failure so to comply or observe reasonably could not
be expected to have a Material Adverse Effect.
8.7 Waiver of Stay, Extension, or Usury Laws; Intent to Limit
Charges to Maximum Lawful Rate. Each Borrower covenants (to the
extent that it may lawfully do so) that it will not at any time
insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of any stay or extension law or any usury
law or other law which would prohibit or forgive it from paying
all or any portion of the principal of, or interest, on the Notes
as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the
performance of this Agreement; and (to the extent that it may
lawfully do so) such Borrower hereby expressly waives all benefit
or advantage of any such law and covenants that it will not
hinder, delay, or impede the execution of any power herein
granted to the holders of the Notes, but will suffer and permit
the execution of every such power as though no such law had been
enacted. In no event shall the interest rate or rates payable
under this Agreement plus any other amounts paid or consideration
received in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable. Borrowers and
Purchasers, in executing this Agreement, intend expressly and
legally to agree upon the rate of interest and manner of payment
stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of
interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto as of the date of this
Agreement, Borrowers shall be liable only for the payment of such
maximum as allowed by law, and payment received from Borrowers in
excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Notes, on a pro rata
basis, to the extent of such excess.
8.8 Notice to Purchasers.
(a) Defaults. If any Person shall give any notice or take any
other action in respect of a claimed material default (whether or
not constituting an Event of Default) under this Agreement or any
other material note, evidence of Indebtedness, indenture, or
other Contractual Obligation to which or with respect to which
any Borrower is a party then such Borrower, whether as principal,
guarantor, surety, or otherwise, immediately shall give written
notice thereof to Purchasers describing the notice of action and
the nature of the claimed default.
(b) Environmental Events. Each Borrower will promptly give
notice to Purchasers (i) of any violation of any Environmental
Law that any Borrower reports in writing or is reportable by such
Person in writing (or for which any written report supplemental
to any oral report is made) to any federal, state, or local
environmental agency, and (ii) upon becoming aware thereof, of
any inquiry, proceeding, investigation, or other action including
a notice from any agency of potential environmental liability, or
any federal, state, or local environmental agency or board, that,
in either case, reasonably could be expected to have a Material
Adverse Effect.
(c) Notice of Litigation and Judgments. Each Borrower will give
notice to Purchasers in writing within 10 days of becoming aware
of any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting such Borrower or to
which such Borrower is or becomes a party involving an uninsured
claim of more than $100,000 against such Borrower or reasonably
could be expected to have a Material Adverse Effect. Each
Borrower will give notice to Purchasers, in writing, in
form and detail satisfactory to Purchasers, within 10 days of any
judgment not covered by insurance, final or otherwise, against
such Borrower in an amount in excess of $250,000.
8.9 Margin Regulations. No Borrower will, directly or
indirectly, use any of the proceeds of the issue and sale of the
Notes for the purpose, whether immediate, incidental, or
ultimate, of maintaining, purchasing, or carrying any stock that
is currently a "margin stock" within the meaning of Regulation U
of the Federal Reserve Board, or otherwise take or permit to be
taken any action that would result in the issuance of the Notes
or the carrying out of any of the other transactions contemplated
hereby or thereby, being violative of Regulation U or any other
regulation of the Federal Reserve Board. No Borrower owns or
intends to acquire any "margin stock" within the meaning of such
Regulation U.
8.10 Proceeds of Financing. The proceeds of the issuance and
sale of the Notes shall be used by Borrower for working capital.
8.11 ERISA. Each Borrower shall (a) comply in all material
respects with the applicable provisions of ERISA and the Code
with respect to the Plans of such Borrower, and (b) furnish to
Purchasers (i) as soon as possible, and in any event within 30
days after any Responsible Officer of such Borrower or any ERISA
Affiliate either knows or has reason to know that any ERISA Event
has occurred that, alone or together with any other ERISA Events
that have occurred, reasonably could be expected to result in
liability of such Borrower or any ERISA Affiliate to the PBGC in
an aggregate amount exceeding $50,000 or require payments
exceeding $100,000 in any year, a statement of a Financial
Officer of such Borrower setting forth details as to such ERISA
Event and the action, if any, that such Borrower proposes to take
with respect thereto.
9. Negative Covenants. Each Borrower covenants and agrees
that, from and after the date of this Agreement, through the
Closing, and thereafter until payment in full of all of the
Notes, it will perform all of the following covenants:
9.1 Indebtedness. Such Borrower will not, directly or
indirectly, create, incur, assume, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness
for borrowed money, except:
(a) Indebtedness for borrowed money created under or evidenced
hereby or by the Notes and the other Transaction Documents;
(b) Indebtedness for borrowed money for purchased money secured
financing, including without limitation, such items as equipment
financing; provided, however, that such Liens shall secure only
the purchase price of the Asset being purchased, and provided
further, in the case of Indebtedness for new restaurants, only if
the Board of Directors of the Parent has approved the incurrence
of such Indebtedness;
(c) Indebtedness incurred to refinance existing indebtedness,
provided that such refinancing does not increase the Borrower's
debt service obligations beyond the debt refinanced, unless
approved by the Board of Directors of the Parent;
(d) Indebtedness incurred to terminate the obligations of the
Parent under leases in Illinois, Kentucky and Ohio, provided such
Indebtedness is approved by the Parent's Board of Directors
of the Parent; and
(e) Indebtedness to finance annual insurance premiums.
Anything contained in this Section 9.1 to the contrary
notwithstanding, in no event shall any Borrower incur
Indebtedness under Section 9.1(b), if an Event of Default exists
or would exist after giving effect to the incurrence of such
additional Indebtedness.
9.2 Liens. Such Borrower will not, directly or indirectly,
create, incur, assume, agree to provide, or permit to exist any
Lien, or file, execute, or agree to the execution of any
financing statement, on or with respect to any Asset of such
Borrower, whether now owned or hereafter acquired, or any income
or profits therefrom, except for Permitted Encumbrances.
9.3 Investments. Such Borrower will not directly or indirectly,
make or own any Investment in any Person except: (a) cash and
Cash Equivalents; (b) Investments existing as of the Closing Date
and identified on Schedule 9.3 hereto; (c) Investments made by
such Borrower in its Subsidiaries; (d) Investments by such
Borrower to the extent made in compliance with Section 9.5; (e)
such Borrower may make loans or advances to officers or employees
of Borrower or its Subsidiaries in an aggregate principal amount
outstanding at any one time not to exceed $10,000; and (f)
Investments by such Borrower consisting of Restricted Junior
Payments made in compliance with Section 9.4 hereof.
9.4 Distributions and Restricted Junior Payments. Such Borrower
will not, directly or indirectly, declare, order, pay, make, or
set apart any sum for any Restricted Junior Payment, except for
Restricted Junior Payments by (i) Subsidiaries of such Borrower
to such Borrower, and (ii) wholly owned Subsidiaries of such
Borrower to any other wholly owned Subsidiary of such Borrower.
At the time of the delivery of each Officer's Certificate
pursuant to Section 8.1(d) hereof, such Borrower shall
deliver to the holders of the Notes an Officer's Certificate
setting forth the computation by which the amount available for
Restricted Junior Payments was determined.
9.5 Restriction on Fundamental Changes. Such Borrower will not
enter into any transaction of merger or consolidation, or
liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution) or convey, sell, lease, transfer, or otherwise
dispose of, in one transaction or a series of related
transactions, any significant Assets, directly or through the
sale of capital Stock, whether now owned or hereafter acquired,
or agree to or effect any Asset acquisition or Stock acquisition
(other than the acquisition of Assets in the ordinary course of
business consistent with past practices) except for: (a) the
merger, liquidation, or consolidation of one or more of the
Subsidiaries of such Borrower with and into Borrower or a wholly-
owned Subsidiary of such Borrower; (b) Sale/Leasebacks permitted
by Section 9.6 hereof; (c) Investments permitted by Section 9.3
hereof; and (d) so long as no Event of Default has occurred and
is continuing any purchase or other acquisition of Assets, Stock,
or other evidence of beneficial ownership of any other Person
engaged in the same or similar business operations to those
conducted by such Borrower as of the Closing Date (each, a
"Permitted Acquisition").
9.6 Sales and Lease-Backs. Such Borrower will not, directly or
indirectly, become or remain liable as lessee or as guarantor or
other surety with respect to any lease, whether an Operating
Lease or a Capitalized Lease, of any Asset whether now owned or
hereafter acquired that such Borrower has sold or transferred or
is to sell or transfer to any other Person (a "Sale/Leaseback"),
unless the Indebtedness, if any, incurred in connection with such
transaction is permitted under Section 9.1 hereof or is otherwise
approved by the Board of Directors of the Parent.
9.7 Transactions with Affiliates. Such Borrower will not enter
into, or cause, suffer, or permit to exist any transaction,
arrangement, or contract with any of its Affiliates that would
not be entered into by a prudent Person in the position of such
Borrower, and which is on terms less favorable to such Borrower
than would be obtainable from any Person that is not one of its
Affiliates; provided, however, that the foregoing restrictions
shall not apply to (a) any transaction between Parent and any of
its wholly-owned Subsidiaries or between any of its wholly-owned
Subsidiaries, (b) Restricted Junior Payments permitted by Section
9.4 hereof, (c) the Transaction Documents and those agreements
described on Schedule 9.7 attached hereto, and (d) Investments
permitted by Section 9.3 hereof. Any transaction, arrangement or
contract involving such Borrower and any of its Affiliates
approved by Purchasers' designees to the Board of Directors of
such Borrower shall be deemed in compliance with the requirements
of this Section 9.7. In the event that such Borrower or any of
its Subsidiaries enters into any transaction, arrangement or
contract with an Affiliate, Borrower shall promptly (and in no
event later than 5 days from the date of such transaction,
arrangement or contract) deliver written notice of same to
the Purchasers, which notice shall contain detailed information
regarding the terms and conditions of such transaction,
arrangement or contract.
9.8 Conduct of Business. Such Borrower will not engage in any
business other than the business currently conducted by them as
of the Closing Date and other lines of business reasonably
incidental or related thereto.
9.9 Guarantees of Indebtedness. No Borrower will (a) permit any
of its Subsidiaries to guarantee or secure the payment of any of
its Indebtedness or (b) pledge any intercompany notes
representing obligations of any Subsidiary of such Borrower to
secure the payment of any of its Indebtedness unless, in either
case, the payment of the Notes also is guaranteed in full by
such Subsidiary.
9.10 Upstream Limitations. No Borrower will enter into any
agreement, contract, or arrangement (other than the Transaction
Documents) restricting the ability of any Subsidiary to pay or
make dividends or distributions in cash or kind, to make loans,
advances, or other payments of whatsoever nature or to make
transfers or distributions of all or any part of its Assets to
such Borrower or to any Subsidiary of a Subsidiary.
9.11 Environmental Matters. Except as set forth in Schedule
4.15, no Borrower will: (a) use any real property owned or leased
by it or any portion thereof for the handling, processing,
storage, or disposal of Hazardous Substances in violation of any
Environmental Law the noncompliance with which reasonably could
be expected to have a Material Adverse Effect, (b) cause or
permit to be located on any such real property any underground
tank or other underground storage receptacle for Hazardous
Substances in violation of any Environmental Law the
noncompliance with which reasonably could be expected to have a
Material Adverse Effect, (c) generate any Hazardous Substances on
any such real property in violation of any Environmental Law the
noncompliance with which reasonably could be expected to have a
Material Adverse Effect, (d) conduct any activity at such real
property or use any such real property in any manner so as to
cause a release (i.e., releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing, or dumping) or threatened release of
Hazardous Substances on, upon or into such real property, or (e)
otherwise conduct any activity at such real property or use such
real property in any manner that would violate any Environmental
Law or bring such real property in violation of any Environmental
Law in each case if such violation reasonably could be expected
to have a Material Adverse Effect.
9.12 Change of Fiscal Years. No Borrower will change its Fiscal
Year.
10. Events of Default.
10.1 Default; Acceleration. If any of the following events shall
occur and be continuing 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) Borrowers, (i) fail to pay any installment of principal of
any Note when due, whether at stated maturity, by acceleration,
by virtue of a required prepayment, or otherwise, (ii) fail to
pay any interest on any of the Notes within five (5) days of the
date when due, or (iii) fail to pay any other amount due under
this Agreement on the date within (10) days after notice of such
failure to pay is sent to the Borrowers;
(b) (i) Borrowers default in any payment of principal of, or
interest on, any other obligation for money borrowed or credit
received or in respect of any Capitalized Leases, other than
those obligations set forth on Schedule 10.1(b)(i), that in any
case or in the aggregate is outstanding in an amount of $150,000,
or more, beyond any period of grace provided with respect
thereto, or (ii) any Borrower defaults in the performance or
observance of any other agreement, term, or condition contained
in any agreement under which any such obligation of the type
described in clause (i) above is created (or if any other event
of default thereunder or under any such agreement shall occur and
be continuing) and, as a result thereof, the holder of such
Indebtedness has caused such Indebtedness to become due prior to
its stated maturity, unless and to the extent any thereof are
being actively contested in good faith and by appropriate
proceedings, and Borrowers maintains reasonable reserves on their
books therefor; or
(c) any representation or warranty made to any Purchaser by or on
behalf of any Borrower in this Agreement or in any writing or
instrument furnished in compliance with this Agreement or
otherwise furnished in connection with the transactions
contemplated by this Agreement shall be false or misleading when
made or deemed made, in any material respect;
(d) any Borrower defaults in the performance or observance of
any agreement contained in Section 8.1(f)(i), Section 8.2, or
Section 9 unless such Default or failure of performance (i) was
not caused by intentional action by or on behalf of such
borrower, (ii) has not occurred on another occasion within 90
days before such Default or failure of performance, (iii) is
capable of being timely cured, (iv) does not have a Material
Adverse Effect, and (v) is cured within 10 days of the date
Borrower knew of such Default, or is cured within 10 days after
Administrative Borrower received notice of such Default
(regardless of the source of such notice);
(e)(i) any Borrower defaults in the performance or observance of
Section 8.1(g) and any such default shall not have been remedied
within 30 days after the date on which notice thereof
(whether written, telephonic, or otherwise) was received by
Administrative Borrower (regardless of the source of such
notice), or (ii) any Borrower defaults in the performance or
observance of any agreement, term, or condition contained in this
Agreement (other than one described in clause (d), (c), or (e)(i)
above) and any such default shall not have been remedied within
30 days after the earlier of (y) the date on which written notice
thereof was received by Administrative Borrower (regardless of
the source of such notice), or (z) actual knowledge thereof by
such Borrower;
(f) any Borrower (i) generally fails to pay, or admits in writing
its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity
or otherwise; (ii) voluntarily liquidates, dissolves, or ceases
to conduct its business in the ordinary course; (iii) commences
any Insolvency Proceeding with respect to itself; (iv) makes an
assignment for the benefit of creditors; or (v) takes any
affirmative action to effectuate or authorize any of the
foregoing (other than the discussion of the advisability or
inadvisability of authorizing the foregoing);
(g) (i) any involuntary Insolvency Proceeding is commenced or
filed against any Borrower, or any writ, judgment, warrant of
attachment, execution, or similar process, is issued or levied
against a substantial part of any Borrower's Assets and any such
proceeding or petition shall not be dismissed, or such writ,
judgment, warrant of attachment, execution, or similar process
shall not be released, vacated, or fully bonded within 60 days
after commencement, filing, or levy; (ii) any Borrower admits the
material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-
U.S. law) is ordered in any Insolvency Proceeding; (iii) any
Borrower acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or
agent therefor), or other similar Person for itself or a
substantial portion of its Assets or business; (iv) any Borrower
shall have an order for relief entered with respect to it or
shall consent to the entry of an order for relief in an
involuntary case commenced under any Bankruptcy Law, or
shall consent to the conversion of an involuntary case to a
voluntary case under any such law; or (v) any Borrower shall
consent to the appointment of or taking possession by a receiver,
trustee, or other custodian for all or a substantial part of its
or their Assets; or
(h) any money judgment, writ, or warrant of attachment, or
similar process involving an amount in excess of $250,000 in any
individual case or in excess of $350,000 in the aggregate
(exclusive of any portion which is covered by insurance and with
respect to which the insurer has not disputed coverage) shall be
entered or filed against any Borrower, or any of its Assets and
shall remain undischarged, unvacated, unbonded, or unstayed for a
period of 30 days or in any event later than 5 days prior to the
date of any proposed sale thereunder;
then, and in any such case (x) upon the occurrence of any Event
of Default described in subsection (f) or (g) of this Section
10.1, the unpaid principal amount of and accrued interest on the
Notes automatically shall become due and payable, and (y) upon
the occurrence and during the continuance of any other Event of
Default under Section 10.1, the Purchaser, may, at its option and
in addition to any right, power, or remedy permitted by law or in
equity, by 5 days prior written notice to Administrative
Borrower, declare all of the Notes to be, and all of such Notes
shall thereupon be and become, forthwith due and payable together
with interest accrued thereon, without presentment, demand,
protest, or other notice of any kind, all of which are hereby
waived by Borrowers.
10.2 Rescission of Acceleration. In the event a declaration of
acceleration in respect of the Notes because of an Event of
Default specified in Section 10.1(b) shall have occurred and be
continuing, such declaration of acceleration automatically shall
be annulled if the Indebtedness that is subject of such Event of
Default has been discharged, cured, waived, paid in full, or the
holders thereof have rescinded their declaration of acceleration
in respect of such Indebtedness, and written notice of such
discharge, cure, waiver, payment, or rescission, as the case may
be, shall have been given to Borrowers by the holders of such
Indebtedness or a Representative of such holders, and no other
Default or Event of Default has occurred that has not been cured
or waived during such period. No rescission or annulment
referred to above shall affect any subsequent Default or any
right, power, or remedy arising out of such subsequent Default or
Event of Default.
10.3 Other Remedies. If any Default or Event of Default shall
occur and be continuing, the holder of any Note may proceed to
protect and enforce its rights under this Agreement and such Note
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 covenant or other agreement contained in this Agreement or in
aid of the exercise of any power granted in this Agreement. No
remedy conferred in this Agreement upon a Purchaser or any other
holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and
shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute
or otherwise.
11. Administrative Borrower.
11.1 Appointment. Each Borrower hereby irrevocably appoints
Parent as the borrowing agent and attorney-in-fact Borrower (the
"Administrative Borrower"), which appointment shall remain in
full force and effect unless and until Purchasers shall have
received prior written notice signed by each Borrower that such
appointment has been revoked and that another Borrower has been
appointed Administrative Borrower, and authorizes the
Administrative Borrower (i) to provide Purchasers with all
notices and instructions under this Agreement, and (ii) to take
such action as the Administrative Borrower deems appropriate on
its behalf to exercise such other powers as are reasonably
incidental thereto to carry out the purposes of this Agreement.
11.2 Indemnification. It is understood that the handling of
Borrowers in a combined fashion, as more fully set forth herein,
is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most
efficient and economical manner and at their request, and that
Purchasers shall not incur liability to Borrowers as a result
thereof. Each Borrower expects to derive benefit, directly or
indirectly, from the handling of Borrowers in a combined fashion
since the successful operation of each Borrower is dependent on
the continued successful performance of the integrated group. To
induce Purchasers to do so, and in consideration thereof, each
Borrower hereby jointly and severally agrees to indemnify the
Purchasers and hold the Purchasers harmless against any and
all liability, expense, loss, or claim of damage or injury, made
against the Purchasers by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling
of the Notes as herein provided, (b) Purchaser's relying on any
instructions of the Administrative Borrower, or (c) any other
action taken by Purchasers hereunder or under the other
Transaction Documents in accordance with the terms and conditions
provided for herein, except that Borrowers will have no liability
to the Purchasers under this Section 11 with respect to any
liability that has been finally determined by a court
of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of the Purchasers.
11.3 Disclosure. Administrative Borrower, on behalf of itself
and the other Borrowers, hereby authorizes the disclosure to
Purchasers of any information received by the Purchasers, their
employees or their representatives who are directors of any
Borrower.
12. Dispute Resolution - Binding Arbitration..
12.1 Binding Arbitration. Any controversy or claim between the
parties directly or indirectly arising out of or relating to this
Agreement or any Transaction Document, including any claim based
on or arising from an alleged tort shall at the request of any
party be determined by arbitration. The arbitration shall be
conducted in accordance with Commercial Arbitration Rules of the
American Arbitration Association ("AAA") then in effect, except
where modified by this Agreement. Notwithstanding any choice of
law provision in this Agreement, the United States Arbitration
Act (Title 9, U.S. Code) shall govern the interpretation and
enforcement of this arbitration provision.
12.2 Selection of Arbitrators. The arbitration shall be
conducted by three arbitrators. The choice of the arbitrators
shall be governed by the following procedure. Each party shall
submit to the other party within ten (10) days of the submission
of a request for arbitration a person with knowledge in the area
of the subject matter of the dispute and who is not in any way
associated with either party. The parties' two candidates shall
together mutually select and agree upon an impartial third
arbitrator to conduct such arbitration proceedings. If such
candidates are unable to agree, the third arbitrator shall be
selected by the AAA. The parties agree that arbitration
proceedings will take place in Tampa, Florida.
12.3 Procedural Issues. Each party may serve a single request
for production of documents. If disputes arise concerning these
requests, the arbitrators shall have sole and complete discretion
to determine the disputes. The arbitrators shall give effect to
applicable law, including statutes of limitation, in determining
any claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrators.
12.4 Damages. The arbitrators are empowered to award all damages
otherwise available under the terms of this Agreement, except
punitive damages, and each party hereby waives any right to
punitive damages. The arbitrators shall deliver a written
opinion setting forth the proposed award and supporting findings
of fact, conclusions of law and the rationale for the decision.
The award shall become final thirty (30) days after service of
the opinion on the parties if no motion for reconsideration is
filed as provided below. The arbitrators shall reconsider the
decision once upon the motion and at the expense of
the moving party. Any such motion shall be filed within twenty
(20) days of service of the opinion on the parties, and a
response may be filed by the other party within twenty (20) days
of service of the motion. The arbitrators shall render a
decision within sixty (60) days of service of the motion. Any
alteration of the proposed award shall be accompanied by a
revised opinion setting forth the findings of fact, conclusions
of law and rationale supporting the revised award. The award
shall be final when the decision on the motion for
reconsideration, including any revised opinion, is served on the
parties. Judgment upon the decision rendered by the arbitrators
may be entered in any court having jurisdiction as provided in
the United States Arbitration Act. The institution and
maintenance of an action for judicial relief or pursuit of
a provisional or ancillary remedy shall not constitute a waiver
of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if another party contests
such action for judicial relief.
12.5 Ancillary Remedies. No provision of this Section 12 shall
limit the right of a party to this Agreement to obtain
provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any
arbitration. The exercise of a remedy does not waive the right
of any party to resort to arbitration. The parties acknowledge
that for the purposes of this Agreement (a) preliminary
injunctions, appointments of receivers, attachments, temporary
protective orders, and writs of possession constitute
"provisional remedies," and (b) judicial actions to enforce a
decision reached pursuant to this Section constitute "ancillary
remedies."
12.6 Consent to Jurisdiction. Subject to Section 12.1, each
Borrower irrevocably submits to the non-exclusive jurisdiction of
any Florida state or United States federal court sitting in
Hillsborough County over any suit, action, or proceeding arising
out of or relating to this Agreement, the other Transaction
Documents, or the Notes, including any action at law or in
equity, whether sounding in tort or in contract, and whether
related to any "workout," "troubled debt restructuring," or
otherwise. To the fullest extent they may effectively do so
under applicable law, such Borrower irrevocably waives and
agrees not to assert, by way of motion, as a defense, or
otherwise, any claim that it is not subject to the jurisdiction
of any such court, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action, or
proceeding brought in any such court, and any claim that any such
suit, action, or proceeding brought in any such court has been
brought in an inconvenient forum.
12.7 Enforcement of Judgments. Each Borrower agrees, to the
fullest extent it may effectively do so under applicable law,
that a judgment in any suit, action, or proceeding of the nature
referred to in Section 12.6 brought in any such court shall be
conclusive and binding upon such Borrower subject to rights of
appeal, as the case may be, and may be enforced in the courts of
the United States of America or the State of Florida (or any
other courts to the jurisdiction of which Borrower is or may be
subject) by a suit upon such judgment.
12.8 Waiver of Jury Trial. EACH BORROWER AND EACH PURCHASER
HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE TRANSACTION DOCUMENTS, THE NOTES, OR ANY
OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON
LAW OR STATUTORY CLAIMS. EACH BORROWER AND EACH PURCHASER
REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
12.9 No Limitation on Service or Suit. Except as otherwise set
forth in Section 12.1, nothing in this Section 12 shall affect
the right of any Purchaser to serve process in any manner
permitted by law, or limit any right that the holders of any of
the Notes may have to bring proceedings against Borrowers in the
courts of any jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.
13. Miscellaneous.
13.1 Payments. Each Borrower agrees that, so long as any
Purchaser shall hold any Notes, such Borrower will make payments
of principal of, and interest on, the Notes which comply with the
terms of this Agreement, by wire transfer of immediately
available funds for credit to the account or accounts as
specified by any such Purchaser, or to such other account or
accounts in the United States as any such Purchaser may designate
in writing, notwithstanding any contrary provision herein or in
any Note with respect to the place of payment. Each Purchaser
agrees that, before disposing of any Note, such Purchaser will
make a notation thereon (or on a schedule attached thereto) of
all payments of principal previously made thereon and of the date
to which interest thereon has been paid. Borrowers agree
to afford the benefits of this Section 13.1 to any institutional
Transferee which has made the same agreements relating to such
Notes as Purchasers have made in this Section 13.1. The Notes
may not be assigned to a competitor of the Borrower.
13.2 Expenses. Administrative Borrower, on behalf of Borrowers,
agrees, upon the consummation of the transactions contemplated
herein, to pay the Purchaser's reasonable out-of-pocket costs and
expenses incurred in connection with the negotiation and
preparation of this Agreement and the Transaction Documents, up
to a maximum of $25,000, including the reasonable legal fees of
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇, P.A. In addition,
Administrative Borrower, on behalf of Borrowers, agrees to pay,
and defend and save Purchasers harmless against liability for the
payment of all actual out-of-pocket expenses (including
reasonable attorneys fees), in each case upon the presentation of
reasonably detailed statements, incurred with respect to the
enforcement, attempted enforcement, or workout of any provision
of this Agreement, the Notes, or any of the other Transaction
Documents, or any amendments or waivers requested by
Administrative Borrower (whether the same become effective)
under or in respect of any such agreement or instrument, and all
expenses incurred in connection with the preparation of such
agreements and instruments and all transfer taxes which may be
payable in respect of the execution and delivery of such
agreements or instruments, or the issuance, delivery, or purchase
by the Purchasers of the Notes, and the reasonable fees and
expenses of counsel to the Purchasers retained in connection with
such agreements and instruments, and the transactions hereby and
thereby contemplated, including the enforcement of any provision
hereof or thereof, and any such amendments or waivers and the
costs and expenses of the Purchasers incurred in connection with
any aspect of any bankruptcy case of any Borrower, whether
voluntary or involuntary, and whether seeking reorganization
or liquidation.
13.3 Consent to Amendments. This Agreement may be amended and
Borrowers may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if
Administrative Borrower shall have obtained the written consent
to such amendment, action, or omission to act, of the
Purchasers, and each holder of any Note at the time or thereafter
outstanding shall be bound by any consent authorized by this
Section 13.3, whether such Note shall have been marked to
indicate such consent. Administrative Borrower promptly shall
send copies of any amendment, consent, or waiver (and any request
for any such amendment, consent, or waiver) relating to this
Agreement or the Notes to each holder of a Note and, to the
extent practicable, shall consult with Purchasers in connection
with each such amendment, consent, or waiver. No course of
dealing between any Borrower or the holder of the Notes 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.
13.4 Form, Registration, Transfer and Exchange of Notes; Lost
Notes.
(a) Generally. Administrative Borrower shall keep at its
principal office a register in which Administrative Borrower
shall provide for the registration of Notes and of Transfers of
Notes. Upon surrender for registration of Transfer of any Note
at the principal office of Administrative Borrower,
Administrative Borrower shall, at Borrowers' expense, execute and
deliver one or more new Notes of like tenor and of a like
aggregate principal amount, which Notes shall be registered in
the name of such Transferee or Transferees. At the option of
Purchasers, such Note may be exchanged for Notes of like
tenor and of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Note to be exchanged at
the principal office of Administrative Borrower. Whenever any
Notes are so surrendered for exchange, Administrative Borrower
shall, at Borrowers' expense, execute and deliver the Notes which
the holder making the exchange is entitled to receive. Every
Note surrendered for registration of Transfer or exchange shall
be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes
issued in exchange for any Note or upon Transfer thereof shall
carry the rights to unpaid interest and interest to accrue which
were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such
transfer or exchange. Upon receipt of written notice from
the holder of any Note and, in the case of any such loss, theft,
or destruction, upon receipt of an unsecured indemnity agreement,
or other indemnity reasonably satisfactory to Borrower from such
holder, or in the case of any such mutilation, upon surrender and
cancellation of such Note, Administrative Borrower will make and
deliver a new Note, of like tenor, in lieu of the lost, stolen,
destroyed, or mutilated Note.
(b) Other Transfers. Each Purchaser may make a Transfer to any
Person provided that (i) such Transfer is made in compliance, if
and to the extent applicable, with the Securities Act and any
applicable state securities laws, (ii) such Purchaser has
provided Administrative Borrower with such information as to such
holder's compliance with applicable securities laws as reasonably
may be requested by Administrative Borrower (including, if
requested, an opinion of counsel regarding compliance with
applicable securities laws), (iii) such Transfer is in compliance
with subsection (a) above, (iv) such Transfer shall be in a
principal amount of not less than $100,000 (or such lesser amount
as shall be the then outstanding principal balance of the
applicable Note), (v) there shall not be more than 10 holders of
Notes at any one time; treating a Person and each of its
Affiliates, Members and Partners as one Person for purposes of
the foregoing, and (vi) such proposed Transferee is not a direct
competitor of any Borrower and the Transferee is of good moral
character. Borrowers shall cooperate in connection with any such
Transfer including providing such information to any holder of a
Note or such holder's proposed Transferee as, in the reasonable
opinion of counsel to the transferor, may be necessary to satisfy
the requirements of Rule 144A of the Securities Act in connection
with any Transfer to a "Qualified Institutional Buyer" under such
rule or such other person as shall be approved by Administrative
Borrower. Upon any Transfer, the Transferee shall, to the extent
of such Transfer, be entitled to exercise the rights of the
Purchaser making such Transfer and shall thereafter be deemed a
"Purchaser" under this Agreement.
(c) Further Assurances. Each Borrower shall, from time to time
at the request of Purchasers, execute and deliver to Purchasers
or to such party or parties as Purchasers may designate, all
further instruments as may in Purchasers' reasonable opinion be
necessary or advisable to give full force and effect to any
Transfer and shall provide to Purchasers or to such party or
parties as Purchasers may designate all such information as
Purchasers reasonably may request.
13.5 Persons Deemed Owners; Participations. Prior to due
presentment for registration of Transfer, Borrowers may treat the
Person in whose name any Note is registered as the owner and
holder of such Note for the purpose of receiving payment of
principal of, and interest and premium, if any, on, such Note and
for all other purposes whatsoever, whether such Note shall be
overdue, and Borrowers shall not be affected by notice to the
contrary. Subject to the preceding sentence, the holder of
any Note may from time to time grant participations in all or any
part of such Note to any Person on such terms and conditions as
may be determined by such holder in its sole and absolute
discretion, but a holder of any such participation interest shall
not be a "Purchaser" for any purpose under this Agreement.
13.6 Survival of Representations and Warranties; Entire
Agreement. All representations and warranties contained herein
shall be deemed made as of the Closing Date, and survive the
closing under this Agreement and the purchase and sale of the
Notes until all amounts due under the Notes are paid in
full, and may be relied upon regardless of any investigation made
at any time by or on behalf of Purchasers. This Agreement, the
Notes, and the other Transaction Documents embody the entire
agreement and understanding between the parties hereto and
supersede all prior agreements and understandings, if any,
relating to the subject matter hereof.
13.7 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, that:
(a) no Borrower may assign or transfer its rights or obligations
hereunder without the prior written consent of the Purchasers
holding two-thirds of the outstanding principal amount of the
Notes; and (b) the rights of sale, assignment, and transfer of
the Notes are subject to Section 13.4.
13.8 Disclosure to Other Persons.
(a) Each Borrower acknowledges that the holder of any Note may
deliver copies of any financial statements and other documents
delivered to such holder, and disclose any other information
disclosed to such holder, by or on behalf of Borrowers in
connection with or pursuant to this Agreement to (i) such
holder's directors, officers, employees, agents, and professional
consultants, (ii) any other holder of any Notes, (iii) any Person
to which such holder offers to sell such Notes or any part
thereof, so long as such potential purchaser agrees, in writing,
to preserve the confidentiality of such information (except that
such potential purchaser may disclose such information in
accordance with this Section 13.9); provided, however, that such
disclosure will not be made to any potential purchaser which is
known to be a direct competitor, or an Affiliate of a direct
competitor, of any Borrower without the prior written consent of
such Borrower, (iv) any Person to which such holder sells or
offers to sell a participation in all or any part of such Notes,
so long as such potential purchaser agrees, in writing, to
preserve the confidentiality of such information (except that
such potential purchaser may disclose such information in
accordance with this Section 13.9); provided, however, that such
disclosure will not be made to any potential purchaser which is
known to be a direct competitor, or an affiliate of a direct
competitor, of any Borrower without the prior written consent of
such Borrower, (v) any federal or state regulatory authority
having jurisdiction over such holder, or (vi) any other Person to
which such delivery or disclosure may be necessary or advisable
to avoid material prejudice (x) in compliance with any law,
rule, regulation, or order applicable to such holder, (y) in
response to any subpoena or other legal process, or (z) in
connection with any litigation to which such holder is a party.
Nothing in this Section 13.9 shall be construed to create or give
rise to any fiduciary duty on the part of any holder to
Borrowers.
(b) Each Purchaser agrees to keep confidential any information
delivered by Borrower hereunder; provided, however, that subject
to the provisos contained in Section 13.9(a)(iii) and (iv)
hereof, nothing herein shall prevent such Purchaser from
disclosing such information: (i) to any Affiliate of, or
investor in, such Purchaser or, any actual or potential
purchaser, participant, assignee, or transferee of such
Purchaser's rights under any Note that agrees to be bound by this
Section 13.9, (ii) upon order of any court or administrative
agency, (iii) upon the request or demand of any regulatory agency
or authority having jurisdiction over such party, (iv) which has
been publicly disclosed, (v) which has been obtained from any
Person that is not a party hereto or an Affiliate of any
such party, unless such Purchaser knows that such information is
required by such Person to be kept confidential, (vi) in
connection with the exercise of any remedy hereunder, (vii) to
the independent and certified public accountants for such
Purchaser, (viii) as otherwise expressly contemplated by this
Agreement, (ix) to counsel for and other advisors, accountants,
and auditors to such Purchaser, or (x) as may be required by
statute, decision, or judicial or administrative order, rule, or
regulation.
13.9 Notices. Unless otherwise provided in this Agreement, all
notices or demands by any party relating to this Agreement shall
be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail,
postage prepaid) shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt
requested, or by prepaid overnight courier service or
telefacsimile (with messenger delivery specified) to Borrowers or
Purchasers, as the case may be, at their respective addresses set
forth below:
If to Borrowers:
SHELLS SEAFOOD RESTAURANTS, INC.
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
FULBRIGHT & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser:
SHELLS INVESTMENT PARTNERS, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
BANYON INVESTMENT, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.:(▇▇▇)- ▇▇▇ ▇▇▇▇
in each case, with
copies to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing
manner given to the other parties hereto. All notices or demands
sent in accordance with this Section 13.10 shall be deemed
received on the earlier of the date of actual receipt or
three (3) days after the deposit thereof in the mail, with the
courier service, or the time of the sending by means of
facsimile.
13.10 Descriptive Headings. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
13.11 Satisfaction Requirement. If any agreement,
certificate, or other writing, or any action taken or to be
taken, is by the terms of this Agreement required to be
satisfactory to any party, the determination of such satisfaction
shall be made by such party in its reasonable judgment exercised
in good faith.
13.12 Governing Law. This Agreement and each of the
Transaction Documents and any suit, action, or proceeding arising
out of or relating to this Agreement and each of the Transaction
Documents, including any action at law or in equity, whether
sounding in tort or in contract, and whether related to any
"workout," "troubled debt restructuring," or otherwise, shall be
construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of Florida.
This Agreement and each of the Transaction Documents may not be
changed orally, but (subject to the provisions of Section 13.3)
only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, or
discharge is sought.
13.13 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one
such counterpart.
13.14 Telefacsimile Execution. Delivery of an executed
counterpart of the signature pages to this Agreement by
telefacsimile shall be equally as effective as delivery of a
manually executed counterpart of the signature pages to this
Agreement. Any party delivering an executed counterpart of the
signature pages to this Agreement by telefacsimile shall
thereafter also promptly deliver a manually executed counterpart
of this Agreement but the failure to deliver such manually
executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed and delivered
in counterparts by their respective officers thereunto duly
authorized as of the date first written above.
SHELLS SEAFOOD RESTAURANTS, INC.,
a Delaware corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF MELBOURNE, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF COUNTRYSIDE SQUARE, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF STUART, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF ST. ▇▇▇▇ BEACH, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF NEW SMYRNA BEACH, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF FORT ▇▇▇▇▇, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF KISSIMMEE, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF ORLANDO, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS ON THE BEACH, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF CASSELBERRY, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF ▇▇▇▇▇▇ BEACH, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
AMERICA'S FAVORITE SEAFOOD, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF ▇▇▇▇▇▇▇, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF 4TH STREET, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF DADE, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF BROWARD, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS OF ALTAMONTE SPRINGS, INC.,
a Florida corporation
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
SHELLS INVESTMENT PARTNERS, L.L.C., a Florida limited liability
company
By: /S/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Managing Member
BANYON INVESTMENT, L.L.C., a Delaware limited liability company
By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Co-Managing Member
By: /s/
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Co-Managing Member
