Exhibit 10.18
Execution copy
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SENIOR SUBORDINATED LOAN AGREEMENT
Dated as of May 18, 2000
Between
SMTC CORPORATION
as Borrower,
and
THE LENDERS LISTED HEREIN
__________________________________________________________________
$5,000,000 IN AGGREGATE PRINCIPAL AMOUNT
OF
15% SENIOR SUBORDINATED NOTES DUE 2010
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS................................................... 1
SECTION 2. PURCHASE AND SALE OF NOTES.................................... 1
SECTION 3. TERMS OF THE NOTES............................................ 2
SECTION 4. REPRESENTATIONS AND WARRANTIES OF LENDERS..................... 4
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 6
SECTION 6. CLOSING CONDITIONS............................................ 8
SECTION 7. AFFIRMATIVE COVENANTS......................................... 10
SECTION 8. NEGATIVE COVENANT............................................. 10
SECTION 9. REPORTING COVENANTS........................................... 11
SECTION 10. EVENTS OF DEFAULT............................................ 11
SECTION 11. SUBORDINATION................................................ 13
SECTION 12. RESTRICTIONS ON TRANSFER; LEGENDS............................ 19
SECTION 13. MISCELLANEOUS................................................ 21
SCHEDULE I Lenders
APPENDIX I Definitions
EXHIBIT A Form of PIK Note
EXHIBIT A-1 Form of Interest Note
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SENIOR SUBORDINATED LOAN AGREEMENT
This SENIOR SUBORDINATED LOAN AGREEMENT is made as of May 18, 2000 by and
among SMTC Corporation, a Delaware corporation (the "Company") and each person
listed on Schedule I attached hereto (the "Lenders").
RECITAL
WHEREAS, on the Closing Date, (i) the Company shall issue to the Lenders
its 15% Senior Subordinated Notes due 2010 (the "PIK Notes" and, together with
the Interest Notes (as defined herein), the "Notes") in the aggregate principal
amount of $5,000,000 in the form attached hereto as Exhibit A, pursuant to this
Agreement and (ii) the Company shall issue to the Lenders warrants (the
"Subscription Warrants") to purchase, in the aggregate, 41,666.67 units, each
unit consisting of 9 shares of the Company's Class A-1 Common Stock, $0.001 per
share, and 1 share of the Company's Class L Common Stock, $0.001 per share,
pursuant to a Warrant Subscription Agreement dated as of May 18, 2000 among the
Company and the Lenders (the "Warrant Subscription Agreement").
AGREEMENT
In consideration of the foregoing, and the representations, warranties,
covenants and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:
SECTION 1. DEFINITIONS.
1.1. Certain Defined Terms. Capitalized terms used in this Agreement
shall have the meanings set forth in Appendix I hereto.
SECTION 2. PURCHASE AND SALE OF NOTES.
2.1. Purchase and Sale of Notes. Subject to the terms and conditions of
this Agreement and on the basis of the representations and warranties set forth
herein, the Company hereby agrees to sell to each Lender, and by its acceptance
hereof such Lender agrees to purchase from the Company for investment, at the
Closing, the principal amount of PIK Notes set forth opposite the name of such
Lender on Schedule I hereto.
2.2. Purchase Price for Notes. The purchase price to each Lender for the
PIK Notes purchased by it hereunder is the amount set forth opposite such
Lender's name on Schedule I hereto. The Company and the Lenders agree that, for
purposes of Sections 1271 through 1275 of the Code, the aggregate original
purchase price of the Notes is as set forth on Schedule I and
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such price will be appropriately used by the Company and each Lender for
financial reporting and income tax purposes.
2.3. The Closing. The purchase and sale of the Notes shall take place at
the offices of Ropes & Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, or such other location as the parties may agree, at 10:00 a.m. (Boston
time) on May 18, 2000, or such later time or date as the parties hereto may
mutually agree.
2.4. Payment of Purchase Price. At the Closing, against payment of the
purchase price to the Company by wire transfer of immediately available funds,
the Company will deliver PIK Notes registered in the names of the Lenders in
accordance with Schedule I.
2.5. Use of Proceeds. The proceeds of the sale by the Company of the PIK
Notes hereunder shall be used for general corporate purposes. No portion of the
proceeds of the sale of the PIK Notes hereunder shall be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of any regulation,
interpretation or ruling of the Board of Governors of the Federal Reserve
System, all as from time to time in effect, refunding of any indebtedness
incurred for such purpose, or making any investment prohibited by foreign trade
regulations. Without limiting the foregoing, the Company agrees that in no
event shall any proceeds of the sale of the PIK Notes hereunder be used in any
manner which might cause the PIK Notes or the application of such proceeds to
violate any of Regulations U or X of the Board of Governors of the Federal
Reserve System or any other regulation of the Board of Governors of the Federal
Reserve System, or to violate the Exchange Act, in each case as in effect as of
the Closing and as of such use of proceeds.
SECTION 3. TERMS OF THE NOTES
3.1. Interest on the Notes.
3.1.1. The PIK Notes and the Interest Notes (as defined herein) shall
bear interest at a rate equal to 15% per annum on the unpaid principal
amount thereof from and including the Closing Date or, in the case of an
Interest Note, from and including the interest payment date on which the
interest with respect to which such Interest Note is issued was due and
payable, until the principal amount shall become due and payable. The PIK
Notes and the Interest Notes (as defined herein) shall bear simple interest
at the rate of 17% per annum on any overdue principal (including any
overdue prepayment of principal, at the prepayment price specified for such
prepayment, and any principal due upon acceleration) and on any overdue
installment of interest (to the extent permitted by applicable law), in
each case without regard to whether such payment may then be made to the
Lenders under Section 11 hereof.
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3.1.2. Interest shall be paid with respect to the PIK Notes and the
Interest Notes on the last Business Day of each March and September,
commencing on the last Business Day of September 2000, through the issuance
of additional notes substantially in the form attached hereto as Exhibit X-
0 (the "Interest Notes"), each such Interest Note having a stated principal
amount equal to the amount of interest due and payable to the respective
Lender on such interest payment date.
3.1.3. Interest on the Notes shall be computed on the basis of a 360
day year of twelve 30 day months. In computing such interest, the date or
dates of the issuance of the Notes shall be included and the date or dates
of payment shall be excluded, it being understood that for federal income
tax purposes, the accrual period for the Notes (excluding the first accrual
period) shall be a semi-annual period ending on the last Business Day of
each March or September.
3.2. Voluntary Prepayments. The Notes may be prepaid, at the Company's
option, at any time and from time to time, in whole or in part.
3.3. Mandatory Prepayments.
3.3.1. Immediately upon (i) the consummation of the Company's Initial
Public Off.ering, or (ii) any Sale of the Company, the Company shall prepay
the entire outstanding principal amount of the Notes, together with any and
all accrued interest on the Notes so prepaid.
3.3.2. All prepayments (whether voluntary or mandatory) shall include
the payment of accrued and unpaid interest to, but not including, the date
of such prepayment on the principal amount of the Notes so prepaid.
3.4. Notes Prepaid in Part.
3.4.1. If fewer than all of the Notes are to be prepaid pursuant to
Section 3.2, the Company shall select the Notes to be prepaid on a pro rata
basis.
3.4.2. Upon surrender of a Note that is prepaid in part, the Company
shall promptly execute and deliver to the holder (at the Company's expense)
a new Note equal in principal amount to the unpaid portion of the Note
surrendered.
3.4.3. Each Lender agrees that before disposing of the Note held by
it, or any part thereof (other than by granting participations therein),
such Lender will make a notation thereon of all principal payments
previously made thereon and of the date to which interest thereon has been
paid and will notify the Company of the name and address of the transferee
of that Note; provided, that the failure to make (or any error in the
making of) a notation of the payments made under such Note or to notify the
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Company of the name and address of a transferee shall not limit or
otherwise affect the obligation of the Company hereunder or under such
Note.
3.5. Manner and Time of Payment.
3.5.1. All payments by the Company under the Notes of principal,
interest, premiums and fees hereunder shall be made without defense, set
off or counterclaim, and delivered to the holders of the Notes not later
than 2:00 p.m. (New York time) on the date such payment is due, with such
payment to be made by wire transfer or other same day funds to the
respective account designated in writing by each holder of the Notes;
provided that funds received by such holders after 2:00 p.m. (New York
time) shall be deemed to have been paid by the Company on the next
succeeding Business Day.
3.5.2. Whenever any payment to be made hereunder or under the Notes
shall be stated to be due on a day which is not a Business Day, the payment
shall be made on the next succeeding Business Day and such additional
period shall be included in the computation of the payment of interest
hereunder or under the Notes.
3.6. Payment of Notes. Without limiting any other provisions of this
Agreement or the Notes, the entire unpaid principal amount of the Notes plus all
accrued and unpaid interest thereon and all other amounts owed thereunder with
respect thereto shall be paid in full in cash on or before the Maturity Date.
Any and all payments by the Company under the Notes shall be made free and clear
of and without deduction for any and all present or future Taxes. If the
Company shall be required by law to deduct any taxes from or in respect of any
sum payable hereunder or under the Notes, (i) the sum payable shall be increased
as much as shall be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
3.6) the Lenders shall receive an amount equal to the sum they would have
received had no such deductions been made, (ii) the Company shall make such
deductions and (iii) the Company shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of Taxes, the Company shall
furnish to the Lenders the original or certified copy of a receipt evidencing
payment thereof. The Company shall indemnify and, within ten (10) days of demand
therefor, pay each Lender for the full amount of Taxes (including any Taxes
imposed by any jurisdiction on amounts payable under this Section 3.6) paid by
such Lender, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF LENDERS
Each Lender individually (but not on behalf of any other Lender) represents
and warrants that:
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4.1. Legal Capacity; Due Authorization. Such Lender has full legal
capacity, power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and that this Agreement has been duly executed
and delivered by such Lender and is the legal, valid and binding obligation of
such Lender enforceable against it in accordance with the terms hereof.
4.2. Restrictions on Transfer. Such Lender has been advised that the
Notes have not been registered under the Securities Act or any state securities
laws and, therefore, cannot be resold unless they are registered under the
Securities Act and applicable state securities laws or unless an exemption from
such registration requirements is available. Such Lender is aware that the
Company is under no obligation to effect any such registration with respect to
the Notes or to file for or comply with any exemption from registration. Such
Lender is purchasing the Notes to be acquired by such Lender hereunder for its
own account and not with a view to, or for resale in connection with, the
distribution thereof in violation of the Securities Act; provided, however, that
except as provided in Section 12 of this Agreement, the disposition of such
Lender's property shall at all times be and remain in its control.
4.3. Knowledge and Experience. Such Lender has such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of such investment, is able to incur a complete loss of
such investment and to bear the economic risk of such investment for an
indefinite period of time.
4.4. Qualified Institutional Buyer; Accredited Investor, etc. One of the
following is true:
4.4.1. Such Lender is either (i) a "qualified institutional buyer"
("QIB") as that term is defined in Rule 144A under the Securities Act or
(ii) an "accredited investor" as that term is defined in Regulation D under
the Securities Act, that is a "large institutional accredited investor" as
that term is used in the staff of the Securities Exchange Commission's
Squadron, Ellenoff, Pleasant & Xxxxxx no action letter (February 28, 1992)
in each case as set forth opposite the name of such Lender on Schedule I
hereto
; or
4.4.2. (i) such Subscriber is not a "U.S. person" (as such term is
defined in Rule 902(k) under the Securities Act) and is not acquiring any
Subscription Securities for the account or benefit of a U.S. person, (ii)
the offer and sale of Subscription Securities to such Subscriber has been
made in an "offshore transaction" (as such term is defined in Rule 902(k)
under the Securities Act), and (iii) such Subscriber agrees that he will
not (a) sell any Subscription Securities unless such sale is in accordance
with the provisions of Regulation S, pursuant to registration under the
Securities Act, or pursuant to an available
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exemption from registration or (b) engage in hedging transactions with
regard to such securities unless in compliance with the Securities Act.
4.5. Brokerage Fees, etc. Each Lender represents and warrants to each
other party to this Agreement that no broker's, finders's or placement fee or
commission will be payable to any Person alleged to have been retained by such
Lender with respect to the transactions contemplated by this Agreement or the
Warrant Subscription Agreement. Such Lender hereby indemnifies each such other
party against and agrees that it will hold each such party harmless from any
such claim, demand or liability, including reasonable attorneys' fees, for any
broker's, finder's or placement fee or commission alleged to have been incurred
by such indemnified party.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
In order to induce each Lender to enter into this Agreement and to purchase
the Notes to be purchased by such Lender hereunder, the Company represents,
warrants and agrees for the benefit of each Lender that as of the Closing Date:
5.1. Corporate Existence and Power. The Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (ii) is duly qualified to do business in each additional jurisdiction
where the failure to so qualify would have a Material Adverse Effect, and (iii)
has all requisite corporate power to own its Properties and to carry on its
business as now being conducted and as proposed to be conducted, and to execute,
deliver and perform its obligations under this Agreement and the Notes.
5.2. Corporate Authority. The execution, delivery and performance by the
Company of this Agreement and the Notes are within the corporate powers of the
Company and have been duly authorized by all necessary corporate action on the
part of the Board and stockholders of the Company.
5.3. Binding Effect. This Agreement and each Note is the legal, valid and
binding obligation of the Company, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relative to or affecting
the enforcement of creditors' rights generally in effect from time to time and
by general principles of equity.
5.4. Litigation. There are no actions, suits or proceedings pending or,
to the knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries or against any officer or director of the Company or any
of its Subsidiaries which are likely to have, individually or in the aggregate,
a Material Adverse Effect, or which seek to enjoin, or otherwise prevent the
consummation of, the transactions contemplated by this Agreement or the Warrant
Subscription Agreement or to recover any damages or obtain any
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relief as a result of any of the transactions contemplated by this Agreement or
the Warrant Subscription Agreement in any court or before any arbitrator of any
kind or by any Governmental Authority.
5.5. No Legal Obstacle to Agreements.
5.5.1. Neither the execution and delivery of this Agreement or any
other Note Document, nor the making of any borrowings hereunder, nor the
consummation of any transactions referred to in or contemplated by this
Agreement, the Warrant Subscription Agreement or any other Note Document,
nor the fulfillment of the terms hereof or thereof or of any other
agreement, instrument, deed or lease referred to in this Agreement, the
Warrant Subscription Agreement or any other Note Document, has constituted
or resulted in or will constitute or result in:
5.5.1.1. any breach or termination of the provisions of any
agreement, instrument, deed or lease to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound, or of the charter or by-laws of the Company;
5.5.1.2. the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to the Company or any of
its Subsidiaries;
5.5.1.3. except for the Liens created under or permitted by the Credit
Documents, the creation under any agreement, instrument, deed or lease of
any Lien upon any of the assets of the Company or any of its Subsidiaries;
or
5.5.1.4. any redemption, retirement or other repurchase obligation of
the Company or any of its Subsidiaries under any charter, by-law,
agreement, instrument, deed or lease.
5.5.2. No approval, authorization or other action by, or declaration
to or filing with, any governmental or administrative authority or any
other Person is required to be obtained or made by the Company or any of
its Subsidiaries in connection with the execution, delivery and performance
of this Agreement or the Notes, the transactions contemplated hereby or
thereby or the making of any borrowing hereunder except for such of the
foregoing as had been obtained or effected prior to the Closing Date.
5.6. No Default. No event has occurred and is continuing which constitutes
a Default or an Event of Default hereunder.
5.7. Brokerage Fees, etc. No broker's, finders's or placement fee or
commission will be payable to any Person alleged to have been retained by or on
behalf of the Company with respect to any of the transactions contemplated by
this Agreement or the Warrant Subscription
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Agreement. The Company hereby indemnifies each Lender against and agrees that it
will hold each such party harmless from any claim, demand or liability,
including reasonable attorneys' fees, for any broker's, finder's or placement
fee or commission alleged to have been incurred by such indemnifying party.
5.8. Private Offering. The Company has not, directly or indirectly,
offered any of the Notes or any similar security for sale to, or solicited
offers to buy any such security from, or otherwise approached or negotiated with
respect thereto with, any prospective lender, other than the Lenders, each of
whom was offered its Notes at private sale for investment. Assuming the accuracy
of each Lender's representations, the Company has not (nor has anyone acting on
its behalf) offered the Notes or any part thereof or any similar securities for
issue or sale to, or solicited any offer to acquire any of the same from, anyone
so as to bring the issuance and sale of any of the Notes within the provisions
of Section 5 of the Securities Act or the provisions of any securities or blue
sky law of any applicable jurisdiction.
5.9. Full Disclosure. No information contained in this Agreement, any of
the other Note Documents, any financial statements or other reports delivered
hereunder on or prior to the date hereof or any written statement furnished by
or on behalf of the Company or any of its Subsidiaries to any Lender on or prior
to the date hereof pursuant to the terms of this Agreement, taken as a whole,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made.
SECTION 6. CLOSING CONDITIONS
The obligation of each Lender to purchase and pay for the Notes provided
for hereunder is subject to the satisfaction of the following conditions, each
as of the Closing Date:
6.1. Representations and Warranties; No Default. All representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects, including, without limitation, that there shall exist
no Default or Event of Default as of the Closing Date, including after giving
effect to the borrowings contemplated herein.
6.2. Delivery of Documents. The Lenders shall have received the following
items, each of which shall be in form and substance reasonably satisfactory to
the Lenders and, unless otherwise noted, dated the Closing Date:
6.2.1. Executed copies of this Agreement and the Notes issued in the
names of the respective Lenders as set forth on Schedule I.
6.2.2. Resolutions of the Board approving and authorizing the
execution, delivery and performance of this Agreement and the issuance and
sale of the Notes and the execution, delivery and payment of the Notes, in
each case, certified as of the
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Closing Date by the secretary or an assistant secretary of the Company as
being in full force and effect without modification or amendment.
6.2.3. Copies of a certificate of the secretary of the State of
Delaware, dated a recent date prior to the Closing Date, listing the
charter of the Company and any amendments thereto on file in the office of
said secretary and certifying that (A) each such charter is a true and
correct copy thereof, (B) such amendments are the only amendments to each
such charter on file in his office, (C) the Company has paid all franchise
taxes to the date of such certificate and (D) the Company is duly
incorporated and in good standing under the laws of such state.
6.2.4. A certificate of the Company, signed on its behalf by an
officer duly authorized, dated the Closing Date (the statements made in
which certificate shall be true on and as of such date) certifying as to
(A) the absence of any amendment to the charter of the Company since the
date of the secretary of state's certificate referred to in Section 6.2.3
above), (B) a true and correct copy of the bylaws of the Company as in
effect on the Closing Date, (C) the due incorporation and good standing of
the Company as a corporation organized under the laws of the jurisdiction
of its incorporation and the absence of any proceeding for the dissolution
or liquidation of the Company, and (D) the completeness and accuracy of the
representations and warranties of the Company contained in this Agreement
as of the Closing Date, including the absence of any event occurring and
continuing, or resulting from the transactions contemplated by this
Agreement and the Warrant Subscription Agreement, that constitutes a
Default or an Event of Default.
6.2.5. Certificates of the secretary of the Company certifying the
names and true signatures of the officers of the Company executing the Note
Documents.
6.3. Corporate/Capital Structure. The Lenders shall be satisfied with the
ownership, corporate and legal structure and capitalization of the Company and
its Subsidiaries, including, without limitation, the terms and conditions of its
and their respective charter and bylaws, the terms of the Company's and its
Subsidiaries' capital stock, warrants or other securities issued by the Company
or its Subsidiaries and the management of the Company and its Subsidiaries shall
be acceptable to the Lenders.
6.4. No Material Adverse Change. Nothing shall have occurred (and the
Lenders shall not be aware of any facts or conditions not previously known)
which the Lenders shall determine has or reasonably could be expected to have, a
material adverse effect on the rights or remedies of the Lenders hereunder, or
on the ability of the Company to perform its obligations with respect to this
Agreement or the Notes or which has, or reasonably could be expected to have, a
Material Adverse Effect.
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6.5. Litigation. There shall exist no action, suit, investigation,
litigation or proceeding affecting the Company or any of its Subsidiaries or any
of their respective properties pending or threatened before any court,
governmental agency or arbitrator that (i) could have a Material Adverse Effect
or (ii) purports to affect the legality, validity or enforceability of this
Agreement, any Note, the Warrant Subscription Agreement or any Subscription
Warrant, or the consummation of the transactions contemplated hereby and
thereby. No order, judgment or decree of any court, arbitrator or governmental
authority shall enjoin or restrain the Lenders from making the loans evidenced
by the Notes.
6.6. No Violation of Regulations U or X. The issuance of the Notes shall
not violate Regulations U or X of the Board of Governors of the Federal Reserve
Board.
SECTION 7. AFFIRMATIVE COVENANTS
The Company covenants and agrees that so long as any Notes or Note
Obligations remain outstanding:
7.1. Payment of Note Obligations. The Company will duly and punctually pay
the principal, interest and any other amounts owing under this Agreement and the
Notes, in each case when due under the terms of this Agreement and the Notes.
7.2. Notice of Default. The Company will provide to the Lenders,
immediately upon receipt thereof, any notice of default received by it under any
Credit Document. The Company will also provide to the Lenders written notice of
an Event of Default.
7.3. Performance of Other Documents; etc. The Company will comply with all
of the covenants, agreements and conditions contained in this Agreement, the
Warrant Subscription Agreement and the Credit Documents to which it is party.
7.4. Further Assurances. The Company agrees that it shall, at the
Company's expense and upon request of the Required Lenders, duly execute and
deliver, or cause to be executed and delivered, to the Required Lenders, such
further instruments and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of the Required Lenders to carry
out more effectively the provisions and purposes of this Agreement.
SECTION 8. NEGATIVE COVENANT.
8.1. Amendments to Other Documents. The Company will not, and will not
permit any of its Subsidiaries to, consent to or request any amendment,
modification or supplement to or waiver of any provision of any of the Other
Documents (other than the Credit Documents) in a manner that would reasonably be
expected to affect the interests of the Lenders (each, in its capacity as a
holder of Notes hereunder) materially and adversely without in each case having
obtained the specific prior written consent of the Required Lenders. The Company
will
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not, and will not permit any of its Subsidiaries to, consent to or request
any amendment, modification or supplement to or waiver of any provision of the
Credit Documents if the effect of such amendment, supplement, modification or
waiver would be to (i) increase the aggregate principal amount of such
Indebtedness in excess of the amount permitted to be incurred pursuant to the
definition of Senior Indebtedness, or (ii) advance to an earlier date the
scheduled maturity date(s) or scheduled payment date(s) of, any scheduled
payment(s) of the principal of Senior Indebtedness.
SECTION 9. REPORTING COVENANTS.
The Company covenants and agrees that so long as any Notes or Note
Obligations remain outstanding:
9.1. Information Covenants. The Company will provide to the Lenders all of
the documents, financial statements, notices, certificates and other information
required to be provided to the Agents under Sections 10.1 and 10.2 of the Credit
Agreement as in effect on the date hereof.
9.2. Books, records and inspections. The Company will permit any Lender to
visit and inspect any of the Company's properties and the properties of each of
its Subsidiaries, to examine their books of account and records, to make copies
and extracts therefrom, to observe the taking of any physical inventories of
their properties by them or their accountants, to discuss their affairs,
finances and accounts with, and to be advised as to the same by, their officers
and employees, and their independent public accountants (whose reasonable fees
and expenses shall be paid by the Company), all upon reasonable prior notice (of
at least one Business Day) to the Company and at such reasonable times (during
normal business hours) and intervals as such Lender desires.
SECTION 10. EVENTS OF DEFAULT
If one or more of the following events (herein referred to as "Events of
Default") shall occur and be continuing:
10.1. Payment Default. The Company shall fail to pay (i) any principal of
the Notes when the same becomes due and payable, whether upon maturity,
prepayment, acceleration or otherwise or (ii) any other amount due hereunder
within 30 days after written demand therefor; or
10.2. Acceleration of Other Indebtedness. Any default or event of default
shall have occurred under any Indebtedness of the Company or any Subsidiary in
excess of U.S. Five Million Dollars (US$ 5,000,000) in the aggregate resulting
in the acceleration of such Indebtedness, whether by having become due and
payable by its terms or by having been declared due and payable prior to its
stated maturity; or
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10.3. Other Terms. The Company shall default in the performance or
observance of any covenant, agreement or condition of this Agreement (other than
those described or referred to in any other paragraph of this Section 10) and
such default shall continue for more than 30 days after the first to occur of
(i) the president, chief executive officer, chief financial officer, controller
or other authorized representative of the Company shall obtain actual knowledge
of such default or (ii) the Company's receipt of written notice of such default
from the Required Lenders; or
10.4. Breach of Representations or Warranties. Any representation or
warranty made by the Company in this Agreement or in any statement or
certificate at any time given by the Company in writing pursuant hereto or in
connection herewith or shall (taken as a whole) be false in any material respect
on the date as of when made; or
10.5. Involuntary Bankruptcy, Appointment of Receiver, etc. (a) A court
having jurisdiction in the premises shall enter a decree or order for relief in
respect of the Company or any Significant Subsidiary in an involuntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted and remain unstayed under any
applicable federal or state law; or (b) an involuntary case is commenced against
the Company or any of its Significant Subsidiaries under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect; or a
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Company or any of its Significant
Subsidiaries or over all or a substantial part of any of their respective
properties, shall have been entered, or an interim receiver, trustee or other
custodian of the Company or any of its Significant Subsidiaries for all or a
substantial part of their respective properties is involuntarily appointed; or a
warrant of attachment, execution or similar process is issued against any
substantial part of the property of the Company or any of its Significant
Subsidiaries, and the continuance of any such events in this clause (b) for 60
days unless dismissed, bonded, stayed, vacated or discharged; or
10.6. Voluntary Bankruptcy, Appointment of Receiver, etc. The Company or
any of its Significant Subsidiaries shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; the making by the Company or any of its Significant Subsidiaries of
any general assignment for the benefit of creditors; or the board of directors
of the Company or any of its Significant Subsidiaries (or any committee thereof)
adopts any resolution or otherwise authorizes any action to approve any of the
foregoing; or
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10.7. Judgments and Attachments. One or more judgments or decrees shall be
entered against the Company or any of its Subsidiaries involving a liability (to
the extent not paid or fully covered by insurance) in excess of U.S. Five
Million Dollars (US$ 5,000,000) for all such judgments and decrees and all such
judgments or decrees shall not have been vacated, discharged or stayed or bonded
pending appeal within 60 days from the entry thereof.
THEN, (i) upon the occurrence of any Event of Default described in the
foregoing Section 10.5 or 10.6 with respect to the Company, the unpaid principal
amount of all Notes, together with accrued interest thereon, shall automatically
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by the
Company, and (ii) upon the occurrence of any other Event of Default, the
Required Lenders may, upon 30 days prior written notice to the Senior Lenders,
and upon written notice to the Company, declare the Notes to be due and payable,
whereupon the principal amount of all Notes, together with accrued interest
thereon, shall automatically become immediately due and payable, such without
any other notice of any kind, and without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company. In the event of a declaration of acceleration because an Event of
Default pursuant to Section 10.2 above has occurred and is continuing, such
declaration shall be automatically rescinded and annulled if either (a) the
Senior Indebtedness is the subject of such Event of Default and the Senior
Lenders have rescinded the acceleration in respect of such Senior Indebtedness
or (b) the maturity of the Senior Indebtedness shall have been extended such
that it is not then due and payable, or the underlying default shall have been
cured.
SECTION 11. SUBORDINATION
11.1. Obligations Subordinate to Senior Indebtedness. The Company covenants
and agrees, and the Lenders by their acceptance of Notes, likewise covenant and
agree, that all Notes shall be issued and all Note Obligations incurred
hereunder subject to the provisions of this Section 11; and from and after the
date hereof and until the later of (i) the prior payment in full of all Senior
Indebtedness and (ii) the termination of all commitments to extend Senior
Indebtedness, each Lender and each Person holding any Note, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees that the payment of all Note Obligations shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
all Senior Indebtedness from time to time outstanding; that the subordination is
for the benefit of, and shall be enforceable directly by, each holder of such
Senior Indebtedness, and that each holder of such Senior Indebtedness, whether
now outstanding or hereafter created, assumed or guaranteed, shall be deemed to
have acquired its Senior Indebtedness in reliance upon the covenants and
provisions contained in this Agreement. For purposes of this Section 11 and any
other subordination provisions of this Agreement or the Notes, "paid in full" or
"payment in full", as such terms are used herein to describe the Senior
Indebtedness, shall mean payment in full in cash or cash equivalents
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acceptable to the holders of a majority in principal amount of the Senior
Indebtedness and cash collateralization or cancellation of all letter of credit
obligations.
11.2. Payment Over of Proceeds Upon Dissolution. In the event of (i) any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization, adjustment, composition or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as such, or
to its assets, or (ii) any liquidation, dissolution or other winding up of the
Company whether voluntary or involuntary and whether or not involving insolvency
or bankruptcy, or (iii) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of the Company (collectively, "Bankruptcy
Events"), then and in any such event:
11.2.1. (i) All Senior Indebtedness in such proceeding shall be paid
in full, or payment thereof in a form and manner satisfactory to the
holders of a majority in principal amount of Senior Indebtedness (including
securities issued to holders of Senior Indebtedness pursuant to such
proceeding) then outstanding shall have been provided for and (ii) the
Senior Lenders shall have no obligation to extend Senior Indebtedness
pursuant to any Forced Commitment, before the holders of the Notes are
entitled to receive any payment or distribution, whether in cash,
securities or other property, on account of the Note Obligations (except
for any such payment or distribution of equity or debt securities which are
subordinated to at least the same extent as such Note Obligations to the
payment of all Senior Indebtedness then outstanding and which, in any case,
do not mature prior to the maturity of the Note Obligations).
11.2.2. Any payment or distribution of assets of the Company or any of
its Subsidiaries of any kind or character, whether in cash, property or
securities, by set-off or otherwise, to which the holders of the Notes
would be entitled but for the provisions of this Section 11, including any
such payment or distribution which may be payable or deliverable by reason
of the payment of any other Indebtedness of the Company being subordinated
to the payment of the Note Obligations (but excluding any payment or
distribution which the Lenders are entitled to retain pursuant to the
second parenthetical clause in the foregoing paragraph 11.2.1) shall be
paid by the liquidating trustee or agent or other Person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the Agent (or if no Agent
exists, to the holders of such Senior Indebtedness or their representative
or representatives) or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid on
account of the principal of, and interest on, and other monetary
obligations in respect of, such Senior Indebtedness until (i) all such
Senior Indebtedness has been paid in full and (ii) the Senior Lenders shall
have no obligation to extend Senior Indebtedness pursuant to any Forced
Commitment. If any payment or distribution is paid over pursuant to the
provisions of
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the immediately preceding sentence at any time when there is no Senior
Indebtedness outstanding, such payment or distribution shall be held as
collateral for the repayment of any Senior Indebtedness required to be
funded pursuant to a Forced Commitment, and any remainder shall be paid to
the holders of the Notes promptly upon the expiration or termination of
such Forced Commitment.
11.2.3. In the event that, notwithstanding the foregoing provisions of
this Section 11.2, the holders of the Notes shall have received any such
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of any other
Indebtedness being subordinated to the payment of the Note Obligations (but
excluding any payment or distribution which the Lenders are entitled to
retain pursuant to the second parenthetical clause in the foregoing
paragraph 11.2.1) before (i) all such Senior Indebtedness is paid in full
or payment thereof in a form and manner satisfactory to the holders of at
least a majority in principal amount of Senior Indebtedness (including
securities issued to holders of Senior Indebtedness pursuant to such
proceeding) then outstanding shall have been provided for, and (ii) the
Senior Lenders shall have no obligation to extend Senior Indebtedness
pursuant to any Forced Commitment, then and in such event such payment or
distribution shall be held in trust by such Lender for the benefit of the
holders of Senior Indebtedness, and shall forthwith be paid over and
delivered forthwith to the Agent for application to the Senior Indebtedness
until (a) all such Senior Indebtedness is paid in full after giving effect
to any concurrent payment or distribution on account of such Senior
Indebtedness to or for the holders of such Senior Indebtedness and (b) the
Senior Lenders shall have no obligation to extend Senior Indebtedness
pursuant to any Forced Commitment. If any payment or distribution is paid
over pursuant to the provisions of the immediately preceding sentence at
any time when there is no Senior Indebtedness outstanding, such payment or
distribution shall be held as collateral for the repayment of any Senior
Indebtedness required to be funded pursuant to a Forced Commitment, and any
remainder shall be paid to the holders of the Notes immediately upon the
expiration or termination of such Forced Commitment.
11.2.4. The Agent (or, if none, the holders of a majority in principal
amount of Senior Indebtedness) under the Credit Agreement shall have the
right to request the holders of the Notes to file and, in the event a
Lender fails to do so within 10 days prior to any deadline fixed in such
proceeding for the filing of such a claim, is hereby authorized (but not
obligated) to file a proof of claim in the form required in any Bankruptcy
Event for and on behalf of that holder, to accept and receive any payment
or distribution which may be payable or deliverable at any time upon or in
respect of the Note Obligations (other than any payment or distribution
which the Lenders are entitled to retain pursuant to the second
parenthetical clause in the foregoing paragraph 11.2.1) until all the
Senior Indebtedness then outstanding has been paid in full and to take such
other action as may be reasonably necessary to effectuate the foregoing.
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Each Lender shall provide to the Agent (or such Senior Lenders) all
information and documents reasonably necessary to present claims or seek
enforcement as aforesaid.
11.2.5. If, notwithstanding the provisions of this Agreement, there
shall occur any consolidation of the Company with, or any merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following any conveyance, transfer or lease of its properties and
assets substantially as an entirety to another corporation, such
consolidation, merger or liquidation, to the extent permitted under the
terms of any outstanding Senior Indebtedness, or permitted by the holders
thereof, shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshaling of
assets and liabilities of the Company for the purposes of this Section
11.2.
11.3. No Payment in Certain Circumstances.
11.3.1. In the event that (i) the Company shall fail to pay when due,
upon acceleration or otherwise, any principal or interest or other monetary
obligation with respect to Senior Indebtedness of the Company (a "Payment
Default") which Payment Default shall not have been cured or waived, or
(ii) any Credit Party shall fail to comply with any of the other covenants
applicable to it contained in the Credit Documents, which default shall not
have been cured or waived (a "Covenant Default"), and the Company receives
written notice of such Covenant Default from the Agent which expressly
states that it is a "blockage notice" (a "Blockage Notice"), then no
payment or distribution (in cash, property, securities or otherwise) (other
than (a) the issuance of Interest Notes in respect of interest payable
under the PIK Notes or the Interest Notes and (b) the payment of any amount
that does not exceed the value of any cash, property or securities paid to
the Company to purchase additional equity subsequent to the date hereof)
shall be made by, or on behalf of, the Company on account of the Note
Obligations (x) in the case of any Payment Default, unless and until such
Senior Indebtedness shall have been paid in full or until such Payment
Default shall have been cured or waived, or (y) in the case of any such
Covenant Default, from the date the Company shall have received such
Blockage Notice until the earlier of (1) 179 days after such date and (2)
the date, if any, on which the Senior Indebtedness to which such Covenant
Default relates is paid in full and all commitments to extend Senior
Indebtedness have been terminated, or such Covenant Default is waived by
the required percentage of holders of such Senior Indebtedness or otherwise
cured (a "Blockage Period"); and, upon the termination of such Blockage
Period, any amounts which have become due and payable under the Notes or
under this Agreement with respect to the Note Obligations before or during
such Blockage Period (including, if applicable, interest at a default rate
from and after the date on which any payment of principal or interest would
have been payable if not for operation of this Section 11) shall be
immediately due and payable (subject to the provisions of this Section 11);
provided, that (A) only one Blockage Notice may be given in any 360-day
period, and
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(B) no Covenant Default that previously served as the basis for a Blockage
Notice or that was in existence during a prior Blockage Period may serve as
the basis for a Blockage Notice unless such Covenant Default was
subsequently cured or waived for a period of at least 90 consecutive days
(it being acknowledged that any subsequent action, or any breach of any
financial covenants for a period commencing after the date of commencement
of such Blockage Period that, in either case, would give rise to any event
of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of
default for this purpose).
11.3.2. In the event that any payment shall be received by any Lender
which is prohibited by the foregoing provisions of this Section 11.3, then
and in such event such payment shall be held in trust by such Lender for
the benefit of the holders of Senior Indebtedness, and shall forthwith be
paid over and delivered forthwith to the Agent for application to the
Senior Indebtedness. The provisions of this Section 11.3 shall not apply
to any payment with respect to which Section 11.2 would be applicable.
11.4. Payments Otherwise Permitted. Nothing contained in this Section 11 or
elsewhere in this Agreement or in the Notes shall prevent the Company, at any
time except as otherwise expressly provided in this Section 11 from making
payments at any time of principal of and interest on the Notes or any other
amount payable by the Company under the Notes or this Agreement with respect to
the Note Obligations.
11.5. Subrogation to Rights of Holders of Senior Indebtedness. Subject to
the prior payment in full of all Senior Indebtedness, the Lenders shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to such
Senior Indebtedness until the principal of and interest on the Notes shall be
paid in full. For purposes of such subrogation, no payments or distributions to
the holders of such Senior Indebtedness of any cash, property or securities to
which the Lenders would be entitled except for the provisions of this Section
11, and no payments over pursuant to the provisions of this Section 11 to the
holders of such Senior Indebtedness by the Lenders shall, as among the Company,
its creditors (other than holders of such Senior Indebtedness) and the Lenders
be deemed to be a payment or distribution by the Company to or on account of
such Senior Indebtedness.
11.6. Provisions Solely to Define Relative Rights. The provisions of this
Section 11 are and are intended solely for the purpose of defining the relative
rights of the holders of the Notes on the one hand and the holders of Senior
Indebtedness on the other hand. Nothing contained in this Section 11 or
elsewhere in this Agreement or in the Notes is intended to or shall (i) impair,
as among the Company, its creditors (other than holders of Senior Indebtedness)
and the Lenders, the obligation of the Company, which is absolute and
unconditional, to pay to the Lenders the principal of, and premium and interest
on, and any other amount payable by the Company under, the Notes or this
Agreement as and when the same shall become due and payable in accordance with
its terms; or (ii) affect the relative
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rights against the Company of the Lenders and its creditors (other than the
holders of Senior Indebtedness); or (iii) prevent the Lenders from accelerating
the Notes and exercising all other remedies otherwise permitted by applicable
law upon default under this Agreement, in each case subject to the 30 day notice
requirement provided in Section 10 hereof, and to the rights, if any, under this
Section 11 of the holders of Senior Indebtedness with respect to the turnover of
assets (whether in the form of cash, Property or securities) received upon the
exercise of any such remedy.
11.7. Effect of Failure to Pay Note Obligations. The fact that failure to
make any payment on account of the Note Obligations is by reason of the
operation of any provision of this Section 11 shall not be construed as
preventing the occurrence of an Event of Default under this Agreement.
11.8. No Waiver of Subordination Provisions. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Agreement, regardless of any knowledge
thereof any such holder may have or be otherwise charged with. Without in any
way limiting the generality of the foregoing, the holders of Senior Indebtedness
may at any time and from time to time, without the consent of or notice to the
Lenders, without incurring responsibility to the Lenders and without impairing
or releasing the subordination provided in this Section 11 or the obligations
hereunder of the Lenders to the holders of Senior Indebtedness, do any one or
more of the following: (i) (subject to the provisions of Section 8.19) change
the manner, place or terms of payment or extend the time of payment of, or
renew, amend, modify, supplement or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; and (iv)
exercise or refrain from exercising or waiving any rights, powers or remedies
against the Company or any other Person.
11.9. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon
any payment or distribution of assets of the Company referred to in this Section
11, the Lenders shall be entitled to rely upon any order or decree entered by
any court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Lenders for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Section 11.
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11.10. Reinstatement. The provisions of this Section 11 shall continue to
be effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Indebtedness is rescinded or must otherwise be returned by any
holder of Senior Indebtedness upon the occurrence of a Bankruptcy Event or
otherwise, all as though such payment had not been made.
11.11. Amendment. The subordination provisions of this Section 11
(including the definitions used in this Section 11) are solely for the benefit
of the holders of the Senior Indebtedness and may not be rescinded, canceled,
amended or modified in any way without the prior written consent of the holders
of at least a majority in principal amount of the Senior Indebtedness to be
affected by such rescission, cancellation, amendment or modification.
11.12. Remedies. The holders of Senior Indebtedness shall be entitled to
enforce their rights under this Section 11 specifically, to recover damages by
reason of any breach of any provision of this Section 11 and to exercise all
other rights existing in their favor. The Lenders acknowledge and agree that
money damages may not be an adequate remedy for any breach of the provisions of
this Section 11 and that holders of Senior Indebtedness may apply to any court
of law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting bond or other security) in order to enforce
or prevent any violation of the provisions of this Section 11.
SECTION 12. RESTRICTIONS ON TRANSFER; LEGENDS.
12. Assignments of Notes.
12.1.1. The Lenders shall have the right at any time, to sell,
assign, transfer or negotiate all or any part of its Notes to one or more
Persons, and may grant participations in all or any part of the Notes or
the loans evidenced thereby to one or more Persons; provided, however, that
no such assignment or sale of participations may be made if the effect of
such assignment is to subject the Company to tax withholding or payment
obligations pursuant to Section 3.6 hereof. In the case of any sale,
assignment, transfer or negotiation of all or part of the Notes authorized
under this Section 12.1 (but not in the case of a participation), the
assignee, transferee or recipient shall have, to the extent of such sale,
assignment, transfer or negotiation, the same rights, benefits and
obligations as it would if it were a Lender with respect to such Note or
the loans evidenced thereby.
12.1.2. The Company shall keep at its principal office a register in
which the Company shall provide for the registration of the Notes and for
the transfer of the same. Upon surrender for registration of transfer of
any such Notes at the principal office of the Company, the Company shall,
at its expense, promptly execute and deliver one or more new Notes of like
tenor and of a like principal amount, registered in the
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name of such transferee or transferees and, in the case of a transfer in
part, a new Note in the appropriate amount registered in the names of such
transferor.
12.1.3. In connection with any sales, assignments or transfers of any
Note, the transferor shall give notice to the Company and the Agent of the
identity of such parties and obtain agreements from the transferees that
all nonpublic information given to such parties pursuant to this Agreement
will be held in strict confidence pursuant to a confidentiality agreement
reasonably satisfactory to the Company.
12.1.4. While the Notes are "restricted securities" within the meaning
of Rule 144(a)(3) under the Securities Act, the Company will, during any
period in which it is not subject to Section 13 or 15(d) of the Exchange
Act, make available to the Lenders in connection with any sale thereof and,
subject to the provisions of Section 15(d) of the Exchange Act, any
prospective purchaser of Notes in each case as soon as is reasonably
practicable upon written request of such holder, the information specified
in, and meeting the requirements of Rule 144A under the Securities Act.
12.2. Restrictive Legend. Each Note shall bear legends in substantially the
following form:
"THIS NOTE WAS ISSUED IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT COVERING THE TRANSFER OR AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS
NOT REQUIRED."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
May 18, 2000 IN RELIANCE ON REGULATION S UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE ACT."
12.3. Termination of Restrictions. The restrictions imposed by Section 12.2
hereof upon the transferability of the Notes shall cease and terminate as to the
Notes (i) when, in the opinion of Ropes & Xxxx or other counsel reasonably
acceptable to the Company, such restrictions are no longer required in order to
assure compliance with the Securities Act or (ii) when such Notes shall have
been registered under the Securities Act or transferred pursuant to Rule 144
thereunder. Whenever such restrictions shall cease and terminate as to any Notes
or such Notes shall be transferable under paragraph (k) of Rule 144, the holder
thereof shall be entitled to receive from the Company, without expense,
replacement Notes not bearing the legend set forth in Section 12.2 hereof.
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12.4. Note Legend relating to Subordination. Each Note shall bear a legend
in substantially the following form:
"THIS NOTE IS SUBORDINATED TO AND JUNIOR IN RIGHT OF PAYMENT TO
PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS AS DEFINED IN THE SENIOR
SUBORDINATED LOAN AGREEMENT DATED AS OF May 18, 2000 AS THE SAME MAY
BE AMENDED, MODIFIED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME (THE
"AGREEMENT"). TO THE EXTENT, AND IN THE MANNER PROVIDED IN THE
AGREEMENT."
12.5. Note Legend relating to Original Issue Discount. Each Note shall bear
a legend in substantially the following form:
"THIS SECURITY BEARS ORIGINAL ISSUE DISCOUNT. UPON WRITTEN REQUEST TO
THE VICE PRESIDENT, FINANCE AND ADMINISTRATION, SMTC CORPORATION, 000
XXXX XXXX, XXXXXXX, XXXXXXX, XXXXXX, X0X 0X0, INFORMATION REGARDING
THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND
YIELD TO MATURITY WILL BE MADE AVAILABLE."
SECTION 13. MISCELLANEOUS
13.1 Expenses. Whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to promptly pay (i) all the actual and
reasonable costs and expenses of preparation of this Agreement and related
documents and all costs of furnishing all opinions by counsel for the Company
(including, without limitation, any opinions requested by the Lenders as to any
legal matters arising hereunder), and of the Company's performance of and
compliance with all agreements and conditions contained herein on its part to be
performed or complied with, and (ii) after the occurrence of an Event of
Default, all costs and expenses (including reasonable attorneys' fees) incurred
by the Lenders in enforcing any obligations of or in collecting any payments due
hereunder or under the Notes by reason of such Event of Default or in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a workout, or any insolvency or bankruptcy
proceedings. The fees, costs, expenses and disbursements set forth in Clause
(i) of this Section 13.1 shall be paid by the Company on the Closing Date.
13.2 Indemnity. In addition to the payment of expenses pursuant to Section
13.1, whether or not the transactions contemplated hereby shall be consummated,
the Company (as "Indemnitor") agrees to indemnify, pay and hold the Lenders, and
the officers, directors, employees, agents, and Affiliates of the Lenders
(collectively called the "Indemnitees") harmless from and against any and all
other liabilities, costs, expenses liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of one
21-
counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated a party thereto), which may be imposed on,
incurred by, or asserted against that Indemnitee, in any manner relating to or
arising out of this Agreement, the Notes or the other documents related to the
transactions, the Lenders' agreement to purchase the Notes or the use or
intended use of the proceeds of any of the proceeds thereof to the Company (the
"Indemnified Liabilities"); provided, that the Indemnitor shall not have any
obligation to an Indemnitee hereunder with respect to an Indemnified Liability
to the extent that such Indemnified Liability arises from the gross negligence
or willful misconduct of that Indemnitee. Each Indemnitee shall give the
Indemnitor prompt written notice of any claim that might give rise to
Indemnified Liabilities setting forth a description of those elements of such
claim of which such Indemnitee has knowledge; provided, that any failure to give
such notice shall not affect the obligations of the Indemnitor unless (and then
solely to the extent) such Indemnitor is prejudiced. The Indemnitor shall have
the right at any time during which such claim is pending to select counsel to
defend and control the defense thereof and settle any claims for which they are
responsible for indemnification hereunder (provided that the Indemnitor will not
settle any such claim without (i) the appropriate Indemnitee's prior written
consent which consent shall not be unreasonably withheld or (ii) obtaining an
unconditional release of the appropriate Indemnitee from all claims arising out
of or in any way relating to the circumstances involving such claim) so long as
in any such event the Indemnitor shall have stated in a writing delivered to the
Indemnitee that, as between the Indemnitor and the Indemnitee, the Indemnitor is
responsible to the Indemnitee with respect to such claim to the extent and
subject to the limitations set forth herein; provided, that the Indemnitor shall
not be entitled to control the defense of any claim in the event that in the
reasonable opinion of counsel for the Indemnitee there are one or more material
defenses available to the Indemnitee which are not available to the Indemnitor;
provided further, that with respect to any claim as to which the Indemnitee is
controlling the defense, the Indemnitor will not be liable to any Indemnitee for
any settlement of any claim pursuant to this Section 13.2 that is effected
without its prior written consent. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Company
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnities or any of them.
13.3. Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Agreement, shall in any event be effective
without the written consent of the Required Lenders and the Company; provided
that no amendment, modification, waiver or consent shall, unless in writing and
signed by each Lender, do any of the following: (a) increase the Lenders'
obligations hereunder or subject the Lenders to any additional obligations; or
(b) reduce the principal of, or interest on the Notes or any fees, premiums or
other amounts payable hereunder; or (C) postpone any date fixed for any payment
of principal of, or premium or interest on, the Notes or any fees or other
amounts payable hereunder (other than as a result of waiving a prepayment
required under Section 3.3 or a Default or Event of
22-
Default giving rise to a right of acceleration, which shall each be by written
consent of the Required Lenders), or (d) amend this Section 13.3. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on the Company in any
case shall entitle the Company to any further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 13.3 shall be binding upon each holder
of the Notes at the time outstanding and each future holder thereof.
13.4. Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant shall not avoid
the occurrence of an Event of Default or Default if such action is taken or
condition exists.
13.5. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and delivered personally, mailed by certified or registered mail, return
receipt requested and postage prepaid, sent via a nationally recognized
overnight courier, or via facsimile. Such notices, demands and other
communications will be sent to the address indicated below:
If to the Company:
SMTC Corporation
c/o SMTC Manufacturing Corporation of Colorado
00000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: President
Telecopier No.: (000) 000-0000
With a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopier No.: (000) 000-0000
23-
If to Lenders, to the address
set forth in Schedule I
With a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopier No.: (000) 000-0000
With copies to:
--------------
Xx. Xxxxxxx X. Xxxx Partners
Xxxxx Court
32 Duke Street St. James's
London SW1Y 6DF
England
Attention: Xxxxxx Xxxx, Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxx
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
Barnard & Co., LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Xxxxxxxxx Traurig, LLP
The Xxxxx Center
0000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 303-572-6540
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party;
provided that the failure to deliver copies of notices as indicated above shall
not affect the validity of any notice. Any such
24-
communication shall be deemed to have been received when delivered or refused,
if personally delivered, sent by nationally recognized overnight courier, sent
via facsimile, or sent by certified or registered mail. Unless and until
otherwise directed in writing by the Agent (or, if no Agent exists, by a
majority of the Senior Lenders), all notices to the Senior Lenders shall be
delivered in writing as follows:
Xxxxxx Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Xxxxxxx X'Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
With a copy to:
The Bank of Nova Scotia
International Banking Division
Loan Administration and Agency Services
00 Xxxx Xxxxxx Xxxx
14/th/ Floor
Toronto, Ontario
Canada M5H 1H1
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
13.6. Survival of Warranties and Certain Agreements.
13.6.1. All agreements, representations and warranties made herein
shall survive the execution and delivery of this Agreement and the
execution and delivery of the Notes, and shall continue (but, with respect
to representations and warranties, such representations and warranties are
made only as of the Closing Date) until the repayment of the Notes and the
Note Obligations in full; provided, that if all or any part of such payment
is set aside, the representations and warranties contained herein shall
continue as if no such payment had been made.
13.6.2. Notwithstanding anything in this Agreement or implied by law
to the contrary, the agreements of the Company set forth in Sections 13.1
and 13.2 shall survive the payment of the Notes and the termination of this
Agreement.
13.7. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any Lender in the exercise of any power, right or privilege
hereunder or under the Notes shall impair such power, right or privilege or be
construed to be a waiver of any
25-
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing under this
Agreement or the Notes are cumulative to and not exclusive of, any rights or
remedies otherwise available.
13.8. Severability. If and to the extent that any provision in this
Agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions of this Agreement or of the other obligations of the Company under
such provisions, or of such provision or obligation in any other jurisdiction,
or of such provision to the extent not invalid, illegal or unenforceable shall
not in any way be affected or impaired thereby.
13.9. Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
13.10. Applicable Law. This Agreement shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of Delaware
without regard to the principles of conflicts of laws.
13.11. Successors and Assigns. Subsequent Holders. This Agreement shall be
binding upon the parties hereto and their respective successors and assigns and
shall inure to the benefit of the parties hereto and the successors and assigns
of the Lenders. The terms and provisions of this Agreement and all certificates
delivered pursuant hereto shall inure to the benefit of any assignee or
transferee of the Notes, to the extent the assignment is permitted hereunder,
and in the event of such transfer or assignment, the rights and privileges
herein conferred upon the Lenders shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein or hereunder may not be assigned
without the written consent of the Required Lenders.
13.12. Consent to Jurisdiction and Service of Process. All judicial
proceedings brought against the Company with respect to this Agreement or any
Notes may be brought in any State or Federal Court of competent jurisdiction in
the State of Delaware and by execution and delivery of this Agreement the
Company accepts for itself and in connection with its properties, generally and
unconditionally, the jurisdiction of the aforesaid courts, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement subject, however, to rights of appeal. The Company hereby designates
and appoints Corporation Service Company, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxx
of Xxx Xxxxxx, Xxxxxxxx 00000, and such other persons as may hereafter be
selected by the Company irrevocably agreeing in writing to serve as its agent to
receive on its behalf, service of all process in any such proceedings in any
such court, such service being hereby acknowledged by the Company to be
effective and binding service in every respect. A copy of such process so
served shall be sent by air courier to the Company at its address provided in
Section 13.6,
26-
except that unless otherwise provided by applicable law, any failure to mail
such copy shall not affect the validity of service of process. If any agent
appointed by the Company refuses to accept service, the Company hereby agrees
that service upon it by mail shall constitute sufficient notice. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of any Lender to bring proceedings against the Company in
the courts of any other jurisdiction.
13.13. Waiver of Jury Trial. The Company hereby waives, to the full extent
permitted by applicable law, trial by jury in any litigation in any court with
respect to, in connection with, or arising out of this Agreement or any other
document or the validity, protection, interpretation, collection or enforcement
thereof. Notwithstanding anything contained in this Agreement to the contrary,
no claim may be made by the Company against any Lender for any lost profits or
any special, indirect or consequential damages in respect of any breach or
wrongful conduct (other than willful misconduct constituting actual fraud) in
connection with, arising out of or in any way related to the transactions
contemplated hereunder or under the other documents, or any act, omission or
event occurring in connection therewith; the Company hereby waives, releases and
agrees not to xxx upon any such claim for any such damages. The Company agrees
that this Section 13.13 is a specific and material aspect of this Agreement and
acknowledges that the Lenders would not extend to the Company any monies
hereunder if this Section 13.13 were not part of this Agreement.
13.14. Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. This Agreement shall
become effective upon the execution of a counterpart hereof by each of the
parties hereto, and written or telephonic notification of such execution and
authorization of delivery thereof has been received by the Company and the
Lenders.
13.15. Entirety. This Agreement and the Other Documents embody the entire
agreement among the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof and thereof.
27-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the respective duly authorized officers of the undersigned and by
the undersigned as of the date first written above.
SMTC CORPORATION
/s/ Xxxxxxx Xxxxx
By:________________________________
Name: Xxxxxxx Xxxxx
Title: Vice President, Finance and
Administration
XXXX CAPITAL FUND, VI L. P.
By: Xxxx Capital Partners VI, L. P..,
its general partner
By: Xxxx Capital Investors VI, Inc.
its general partner
/s/ Xxxx X. Xxxxxxxx
By: ______________________________
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
BCIP ASSOCIATES II
BCIP ASSOCIATES II-B
BCIP ASSOCIATES II-C
By: Xxxx Capital, Inc.
their Managing Partner
/s/ Xxxx X. Xxxxxxxx
By: ______________________________
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
28-
GENERAL ELECTRIC CAPITAL CORPORATION
/s/ Xxxx Xxxxxxx
By: ____________________________________
Name: Xxxx Xxxxxxx
Title: Duly Authorized Signatory
CELERITY PARTNERS III, L. P.
By: Celerity Management Co., Inc.
their Attorney-in-Fact
/s/ Xxxxxxx X. Xxxxxxx
By: _________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
VENTEURA LIMITED
/s/ Xxxxx X. Xxxxxx
By: ________________________________
Name: Xxxxx X. Johann
Title: Director
X. X. XXXXXX CONSULTING, INC.
/s/ Xxxx Xxxxxx
By: __________________________________
Name: Xxxx Xxxxxx
Title: President
XXXXXX INC.
/s/ Xxxxx X'Xxxxxxx
By: __________________________________
Name: Xxxxx X'Xxxxxxx
Title: President
/s/ Xxxxxx Xxxxxxx
_____________________________________
Xxxxxx Xxxxxxx
29-
XXXXXX ELECTRONICS GROUP LIMITED
/s/ Xxxxxxx Xxxxxxxxx
By: ____________________________________
Name: X. Xxxxxxxxx
Title: Secretary-Treasurer
30-
SCHEDULE I
----------
LENDERS
-------
----------------------------------------------------------------------------------------------------
LENDER PRINCIPAL PURCHASE QIB, LARGE INSTITUTIONAL
------ AMOUNT PRICE ACCREDITED INVESTOR, OR
------ ----- NON-U.S. PERSON
---------------
----------------------------------------------------------------------------------------------------
Xxxx Capital Fund VI, L.P. $1,081,051.79 $1,081,051.79 Qualified Institutional Buyer
Xxxx Capital, Inc.
Two Xxxxxx Xxxxx, 0/xx/ Xxxxx
Xxxxxx, XX 00000
Attn:
----------------------------------------------------------------------------------------------------
BCIP Associates II $ 394,345.75 $ 394,345.75 Qualified Institutional Buyer
Xxxx Capital, Inc.
Two Xxxxxx Xxxxx, 0/xx/ Xxxxx
Xxxxxx, XX 00000
Attn:
----------------------------------------------------------------------------------------------------
BCIP Associates II-B $ 66,054.32 $ 66,054.32 Large Institutional
Xxxx Capital, Inc. Accredited
Two Xxxxxx Place, 0/xx/ Xxxxx Xxxxxxxx
Xxxxxx, XX 00000
Attn:
----------------------------------------------------------------------------------------------------
BCIP Associates II-C $ 48,330.24 $ 48,330.24 Large Institutional
Xxxx Capital, Inc. Accredited
Two Xxxxxx Place, 0/xx/ Xxxxx Xxxxxxxx
Xxxxxx, XX 00000
Attn:
----------------------------------------------------------------------------------------------------
Celerity Partners III, L.P. $ 958,520.55 $ 958,520.55 Large Institutional
Celerity Management Co., Inc. Accredited
00000 Xxxxx Xxxxxx Xxxxxxxxx Xxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
----------------------------------------------------------------------------------------------------
Venteura Limited
c/o Jura Trust $ 309,860.77 $ 309,860.77 Non-U.S. Person
Mitteldorf 1
Vaduz, Liechtenstein, FL-9490
Attention: Xxxxx X. Xxxxxx
Telephone: 00-00-000-0000
Facsimile: 00-00-000-0000
----------------------------------------------------------------------------------------------------
31-
----------------------------------------------------------------------------------------------------
LENDER PRINCIPAL PURCHASE QIB, LARGE INSTITUTIONAL
------ AMOUNT PRICE ACCREDITED INVESTOR, OR
------ ----- NON-U.S. PERSON
---------------
----------------------------------------------------------------------------------------------------
Xxxxxx Electronics Group Limited $ 909,605.75 $ 909,605.75 Non-U.S. Person
Xxxxxx Xxx Xxxxxxxx Co. Limited
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxxxxxx
----------------------------------------------------------------------------------------------------
X. X. Xxxxxx Consulting $ 529,190.68 $ 529,190.68 Non-U.S. Person
c/o SMTC Corporation
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
----------------------------------------------------------------------------------------------------
Xxxxxx Inc. $ 529,190.68 $ 529,190.68 Non-U.S. Person
c/o SMTC Corporation
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
----------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx $ 101,694.84 $ 101,694.84 Non-U.S. Person
c/o SMTC Corporation
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
----------------------------------------------------------------------------------------------------
General Electric Capital Corporation $ 72,154.62 $ 72,154.62 Qualified Institutional Buyer
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: SMTC Account Manager
----------------------------------------------------------------------------------------------------
Lenders' Total Principal Amount: $5,000,000.00
Lenders' Total Purchase Price: $5,000,000.00
32-
APPENDIX I
TO SENIOR SUBORDINATED LOAN AGREEMENT
"Affiliate" means as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Agreement" means the Senior Subordinated Loan Agreement dated as of May
18, 2000 between the Company and the Lenders party thereto, as from time to time
in effect, of which this Appendix is a part.
"Agent" means any Person named, appointed or otherwise acting as agent or
representative of the Senior Lenders pursuant to the Credit Agreement.
"Bankruptcy Code" means the United States Bankruptcy Code and any successor
statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
"Bankruptcy Events" has the meaning set forth in Section 11.2 of the
Agreement.
"Blockage Notice" has the meaning set forth in Section 11.3.1 of the
Agreement.
"Blockage Period" has the meaning set forth in Section 11.3.1 of the
Agreement.
"Board" means the Board of Directors of the Company.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in New York, New York are authorized or required by
law or other governmental action to close.
"Closing" has the meaning set forth in Section 2.3 of the Agreement.
"Closing Date" means the date upon which the conditions precedent to the
purchase and sale of the Notes from the Company shall have been satisfied and
the Notes have been purchased by the Lenders in accordance with the Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" has the meaning set forth in the preamble to the Agreement.
"Covenant Default" has the meaning set forth in Section 11.3.1 of the
Agreement.
"Credit Agreement" means the Credit and Guarantee Agreement, dated as of
July 28, 1999, among the Company, HTM Holdings, Inc., a Delaware corporation,
The Surface Mount Technology Centre, Inc., a corporation organized under the
laws of the Province of Ontario, Canada, the Lenders (as defined therein),
Xxxxxx Brothers Inc., The Bank of Nova Scotia, Xxxxxx Commercial Paper Inc.
33-
and General Electric Capital Corporation, together with any schedules, exhibits,
appendices or other attachments thereto, all as the same may be amended,
restated, extended, renewed, supplemented, refinanced, replaced or otherwise
modified from time to time (including, without limitation, by increasing the
amount of available borrowings thereunder or adding any direct or indirect
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
and whether by the same or any other agent, lender or group of lenders.
"Credit Documents" means, collectively, the Credit Agreement, the related
security agreements, guarantees, pledge agreements, notes and the other
documents at any time executed in connection therewith, and each other document
or instrument executed by the Company, or any other obligor under any such
documents, including any schedules, exhibits, appendices or other attachments
thereto.
"Default" means any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
"Documents" means the Credit Documents, the Note Documents, the Warrant
Subscription Agreement, the Subscription Warrants, and all documents,
certificates and agreements delivered with respect thereto, in each case,
together with any schedules, exhibits, appendices or other attachments thereto.
"Event of Default" has the meaning set forth in Section 10 of the
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended (and
any successor statute).
"Forced Commitment" means any obligation of the Senior Lenders to make
loans pursuant to any commitment under the Credit Agreement as in effect
immediately prior to any Bankruptcy Event which is imposed involuntarily on the
Senior Lenders by the court exercising jurisdiction over any proceeding in
connection with any Bankruptcy Event notwithstanding any provisions of the
Credit Agreement which provide that all commitments of the Senior Lenders to
make any loans under the Credit Agreement may terminate upon the occurrence of a
Bankruptcy Event.
"Governmental Authority" means any federal, state, provincial, municipal,
local or foreign government, authority, instrumentality, department commission,
board, bureau, agency or court.
"Indemnified Liabilities" has the meaning set forth in Section 13.2 of the
Agreement.
"Indebtedness" means for any Person, all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business and
consistent with past custom and practice including with respect to quantity,
frequency and timing), (iv) under capital leases or (v) in the nature of
guarantees of the obligations described in clauses (i) through (iv) above of any
other Person.
"Indemnitees" has the meaning set forth in Section 13.2 of the Agreement.
34-
"Indemnitor" has the meaning set forth in Section 13.2 of the Agreement.
"Initial Public Offering" means the initial public offering and sale of the
Company's common stock for cash pursuant to an effective registration statement
on Form S-1 under the Securities Act (or any successor form under the Securities
Act).
"Interest Notes" has the meaning set forth in Section 3.1.2 of the
Agreement.
"Lenders" has the meaning set forth in the preamble to the Agreement, and
shall mean and include the Lenders and any assignees of the Notes pursuant to
Section 12 of the Agreement. "Lender" shall mean any of the Lenders,
individually.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest of any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, in each case, for the purpose of
securing any obligation of any Person (including, without limitation, any
conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, prospects or financial or other condition of the Company
and its Subsidiaries, (b) the Company's ability to pay any of the Notes in
accordance with the terms of the Note Documents, or (c) the Lenders' rights and
remedies under the Note Documents.
"Maturity Date" means May 18, 2010 with respect to the PIK Notes and the
Interest Notes.
"Maximum Accrual" has the meaning set forth in Section 3.3.3 of the
Agreement.
"Note" and "Notes" has the meaning set forth in the recitals to this
Agreement and shall mean and include any Notes issued pursuant to Section 3.1.2
or 12.1 of the Agreement.
"Note Documents" shall mean, collectively, the Agreement and the Notes.
"Note Obligations" mean any and all obligations of the Company under or in
connection with the Agreement or the Notes, including, without limitation, the
obligation to pay principal, interest, expenses, attorneys' fees and
disbursements, indemnities and other amounts payable thereunder or in connection
therewith or related thereto, as well as any claim for rescission, restitution
or other damages in connection therewith.
"Other Documents" means the Documents other than the Note Documents.
"Payment Default" has the meaning set forth in Section 11.3.1 of the
Agreement.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity.
35-
"PIK Notes" has the meaning set forth in the recitals to the Agreement.
"Post-Petition Interest" means interest accruing in respect of Senior
Indebtedness after commencement of any bankruptcy, insolvency, receivership or
similar proceeding by or against the Company at the rate applicable to such
Senior Indebtedness pursuant to the terms of the Credit Documents or other
applicable documents, whether or not such interest is allowed as a claim
enforceable against the Company in any such proceeding.
"Property" means all types of real, personal, mixed, tangible and
intangible property.
"Required Lenders" means the holders of more than 50% of the aggregate
principal amount of the Notes then outstanding.
"Revolving Credit Commitment" has the meaning set forth in the Credit
Agreement.
"Sale of the Company" means (a) any change in the ownership of the capital
stock of the Company if, immediately after giving effect thereto, any Person (or
group of Persons acting in concert) other than the stockholders of the Company
as of the date hereof (and their Permitted Transferees, as defined in the
Stockholders Agreement) will have the direct or indirect power to elect a
majority of the members of the Board, (b) any change in the ownership of the
capital stock of the Company if, immediately after giving effect thereto, the
stockholders of the Company as of the date hereof (and their Permitted
Transferees, as defined in the Stockholders Agreement) shall own less than 25%
of the Company's common stock on a fully diluted basis (assuming the exercise of
all outstanding options and warrants and the conversion of all outstanding
convertible securities), or (c) the acquisition of all or substantially all of
the Company's assets by any Person, unless immediately after giving effect
thereto the stockholders of the Company as of the date hereof (and their
Permitted Transferees, as defined in the Stockholders Agreement) will have the
direct or indirect power to elect a majority of the members of such acquiring
Person's board of directors.
"Securities Act" means the Securities Act of 1933, as amended (and any
successor statute).
"Senior Indebtedness" means all obligations of the Company now or hereafter
incurred pursuant to the Credit Documents (including, without limitation, any
refinancing, refunding, renewal, extension or replacement thereof), including,
without limitation, for principal, letter of credit obligations, premium (if
any), interest (at the default rate or otherwise, and including Post-Petition
Interest), fees or expenses payable thereon or pursuant thereto; provided that
the aggregate principal amount of Senior Indebtedness at any time outstanding
shall not exceed an amount equal to (x) $162.5 million minus (y) the total
amount of any principal payments and prepayments made on or before such date on
the Term Loans or made on the Revolving Credit Commitments which, with respect
to the Revolving Credit Commitments, would permanently reduce the commitments of
the holders of Senior Indebtedness under the terms of the Credit Documents as in
effect on the date hereof.
"Senior Lenders" means the lenders (together with their successors and
assigns) signatory to the Credit Agreement from time to time, together with any
other holder of Senior Indebtedness.
36-
"Significant Subsidiary" means any Subsidiary of the Company whose assets
or revenues, respectively, constitute 10% or more of the aggregate assets or
revenues, as applicable, of the Company and its Subsidiaries, taken as a whole.
"Stockholders Agreement" means the Stockholders Agreement dated as of July
30, 1999 among the Company and certain holders of the Company's outstanding
capital stock, and as such Stockholders Agreement may hereafter from time to
time be amended, modified or supplemented in accordance with its terms.
"Subscription Warrants" has the meaning set forth in the recitals to the
Agreement.
"Subsidiary" means as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.
"Taxes" means any United States or Canadian federal, state, provincial,
local or any other foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental
(pursuant to Section 59A of the Code or otherwise), custom duties, capital
stock, franchise, employee's income withholding, foreign withholding, social
security (or its equivalent), unemployment, disability, real property, personal
property, sales, use, transfer, value added, registration, capital, employment,
employer health, goods and services, land transfer, Canada Pension Plan,
alternative or add-on minimum, estimated or other tax or government charge,
including any interest, penalties or additions to tax or government charge in
respect of the foregoing, whether disputed or not, and any obligation to
indemnify, assume or succeed to the liability of any other person in respect of
the foregoing.
"Term Loans" has the meaning set forth in the Credit Agreement.
"Unpaid Accrued OID" has the meaning set forth in Section 3.3.3 of the
Agreement.
"Warrant Subscription Agreement" has the meaning set forth in the recitals
to the Agreement.
37-
EXHIBIT A
---------
FORM OF 15% SENIOR SUBORDINATED NOTE DUE 2010
SMTC CORPORATION
THIS SECURITY BEARS ORIGINAL ISSUE DISCOUNT. UPON WRITTEN REQUEST TO THE
VICE PRESIDENT, FINANCE AND ADMINISTRATION, SMTC CORPORATION, 000 XXXX
XXXX, XXXXXXX, XXXXXXX, XXXXXX X0X 0X0, INFORMATION REGARDING THE ISSUE
PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY
WILL BE MADE AVAILABLE.
THIS NOTE WAS ISSUED IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT COVERING THE TRANSFER OR AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS
NOT REQUIRED.
THIS NOTE IS SUBORDINATED TO AND JUNIOR IN RIGHT OF PAYMENT TO PAYMENT IN
FULL OF ALL SENIOR INDEBTEDNESS AS DEFINED IN THE SENIOR SUBORDINATED LOAN
AGREEMENT DATED AS OF MAY __, 2000, AS THE SAME MAY BE AMENDED, MODIFIED,
RESTATED OR SUPPLEMENTED FROM TIME TO TIME (THE "AGREEMENT") TO THE EXTENT,
AND IN THE MANNER PROVIDED IN THE AGREEMENT.
$_________ May __, 2000
FOR VALUE RECEIVED, the undersigned SMTC Corporation, a Delaware
corporation (the "Company"), hereby promises to pay to ______________________ or
its registered assigns (the "Payee"), at 11:00 a.m. (New York time) on the
Maturity Date (as defined in the Agreement), the principal sum of
______________________ United States Dollars (US $_________) or such lesser
principal amount thereof as may remain outstanding, in lawful money of the
United States of America in immediately available funds, and to pay interest
from the date hereof on the principal amount hereof from time to time
outstanding at a rate or rates per annum, and payable on such dates, as
determined pursuant to the terms of the Agreement, through the issuance to the
Payee of additional notes substantially in the form attached hereto as Exhibit
A-1 (the "Interest Notes"), each such Interest Note having a stated principal
amount equal to the amount of interest due and payable to the Payee on such
interest payment date and each such Interest Note to be delivered to the Payee
as specified in the Agreement.
A-1
The Company promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at a
rate or rates determined as set forth in the Agreement.
The Company hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever, other than as expressly required by the
Agreement. The nonexercise by the holder of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
Prior to any transfer of this Note, all payments and prepayments of the
principal hereof shall be endorsed by the holder on the schedule attached hereto
or any continuation thereof; provided, however, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not in any
manner affect the obligations of the Company to make payments of principal and
interest in accordance with the terms of this Note and the Agreement.
This Note and all obligations of the Company hereunder are subordinated to
and junior in right of payment to the prior payment in full of all Senior
Indebtedness (as defined in the Agreement) on the terms and subject to the
provisions set forth in the Agreement.
This Note is one of the PIK Notes referred to in the Agreement, which,
among other things, contains provisions for the acceleration of the maturity
hereof upon the happening of certain events, for optional and mandatory
prepayment of the principal hereof prior to the maturity hereof and prepayment
premiums thereon and for the amendment or waiver of certain provisions of the
Agreement, all upon the terms and conditions therein specified. This Note shall
be construed in accordance with and governed by the laws of the State of
Delaware without giving effect to principles of conflicts of laws.
SMTC CORPORATION
By:_______________________________
Name:
Title:
X-0
XXXXXXX X-0
-----------
FORM OF 15% SENIOR SUBORDINATED NOTE DUE 2010
SMTC CORPORATION
THIS SECURITY BEARS ORIGINAL ISSUE DISCOUNT. UPON WRITTEN REQUEST TO THE
VICE PRESIDENT, FINANCE AND ADMINISTRATION, SMTC CORPORATION, 000 XXXX
XXXX, XXXXXXX, XXXXXXX, XXXXXX X0X 0X0, INFORMATION REGARDING THE ISSUE
PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY
WILL BE MADE AVAILABLE.
THIS NOTE WAS ISSUED IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT COVERING THE TRANSFER OR AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS
NOT REQUIRED.
THIS NOTE IS SUBORDINATED TO AND JUNIOR IN RIGHT OF PAYMENT TO PAYMENT IN
FULL OF ALL SENIOR INDEBTEDNESS AS DEFINED IN THE SENIOR SUBORDINATED LOAN
AGREEMENT DATED AS OF MAY __, 2000 AS THE SAME MAY BE AMENDED, MODIFIED,
RESTATED OR SUPPLEMENTED FROM TIME TO TIME (THE "AGREEMENT") TO THE EXTENT,
AND IN THE MANNER PROVIDED IN THE AGREEMENT.
$_________ May __, 2000
FOR VALUE RECEIVED, the undersigned SMTC Corporation, a Delaware
corporation (the "Company"), hereby promises to pay to _____________________ or
its registered assigns (the "Payee"), at 11:00 a.m. (New York time) on the
Maturity Date (as defined in the Agreement), the principal sum of
______________________ United States Dollars (US $_________) or such lesser
principal amount thereof as may remain outstanding in lawful money of the United
States of America in immediately available funds, and to pay interest from the
date hereof on the principal amount hereof from time to time outstanding at a
rate or rates per annum and payable on such dates as determined pursuant to the
terms of the Agreement through the issuance to the Payee of additional Interest
Notes substantially in the form hereof, each such Interest Note having a stated
principal amount equal to the amount of interest due and payable to the Payee on
such interest payment date and each such Interest Note to be delivered to the
Payee as specified in the Agreement.
A-1-1
The Company promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at a
rate or rates determined as set forth in the Agreement.
The Company hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever, other than as expressly required by the
Agreement. The nonexercise by the holder of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
Prior to any transfer of this Note, all payments and prepayments of the
principal hereof shall be endorsed by the holder on the schedule attached hereto
or any continuation thereof; provided, however, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not in any
manner affect the obligations of the Company to make payments of principal and
interest in accordance with the terms of this Note and the Agreement.
This Note and all obligations of the Company hereunder are subordinated to
and junior in right of payment to the prior payment in full of all Senior
Indebtedness (as defined in the Agreement) on the terms and subject to the
provisions set forth in the Agreement.
This Note is one of the Interest Notes referred to in the Agreement, which,
among other things, contains provisions for the acceleration of the maturity
hereof upon the happening of certain events, for optional and mandatory
prepayment of the principal hereof prior to the maturity hereof and prepayment
premiums thereon and for the amendment or waiver of certain provisions of the
Agreement, all upon the terms and conditions therein specified. This Note shall
be construed in accordance with and governed by the laws of the State of
Delaware without giving effect to principles of conflicts of laws.
SMTC CORPORATION
By:_______________________________
Name:
Title:
A-1-2
