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EXECUTION COPY
NOTE PURCHASE AGREEMENT
This Agreement dated as of July 27, 1998 (this "Agreement"), is entered
into between CML Group, Inc., a Delaware corporation (the "Company"), and the
State of Wisconsin Investment Board, an independent agency of the State of
Wisconsin (the "Purchaser").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. AUTHORIZATION AND ISSUE OF NOTE.
1.1 AUTHORIZATION. The Company has, or before the Closing
(as defined in Section 2) will have, duly authorized the sale and issuance,
pursuant to the terms of this Agreement, of its Secured Convertible Redeemable
Subordinated Note (the "Note"), in the aggregate principal amount of Twenty
Million United States Dollars ($20,000,000), to be dated the Closing Date, to
mature July 27, 2003, to bear interest on the unpaid principal balance from the
date of issue until the principal shall have become due and payable at the rate
of fifteen percent (15%) per annum, payable semi-annually in arrears, and to
bear interest on overdue principal and, to the extent permitted by law, overdue
interest at the rate of sixteen and one-half percent (16.5%) per annum, and to
be substantially in the form attached hereto as EXHIBIT A.
1.2 PURCHASE AND SALE OF NOTE. Subject to the terms and
conditions of this Agreement, at the Closing the Company will sell and issue to
the Purchaser, and the Purchaser will purchase, the Note at a purchase price of
Twenty Million United States Dollars ($20,000,000).
2. THE CLOSING. The closing ("Closing") of the sale and purchase
of the Note shall take place at the offices of Xxxxxxx Xxxx LLP, 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, at 10:00 a.m. on July 27, 1998, or at such other
location or on such other date as the Company and the Purchaser may agree. At
the Closing the Company shall deliver to the Purchaser the Note against payment
to the Company of the purchase price therefor, by wire transfer, certified
check, or other method reasonably acceptable to the Company. The date of the
Closing is herein referred to as the "Closing Date."
3. REPRESENTATIONS OF THE COMPANY. The Company hereby represents
and warrants to the Purchaser as follows:
3.1 ORGANIZATION, ETC. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has full power and authority, corporate and otherwise, to own,
operate and lease its property and to carry on its business as now being
conducted. The Company has full power and authority, corporate or otherwise, to
execute and deliver, and to perform its obligations under, this Agreement, the
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Note, the Security Documents (as defined below) and each of the other
agreements, documents, instruments, certificates and notices contemplated hereby
or thereby (collectively, the "Transaction Documents"), and to issue and sell
the Note. This Agreement and each other Transaction Document have been duly
authorized by all necessary corporate action on the part of the Company, have
been duly executed and delivered by authorized officers of the Company, are the
legal, valid and binding obligations of the Company, and are enforceable against
the Company in accordance with their respective terms.
3.2 CAPITALIZATION. The authorized capital stock of the
Company (immediately prior to the Closing) consists of (a) 120,000,000 shares of
Common Stock, $0.10 par value per share (the "Common Stock"), of which
50,274,694 shares are issued and outstanding as of July 21, 1998, and (b)
2,000,000 shares of Preference Stock, $0.10 par value per share (the "Preference
Stock"), of which no shares are issued and outstanding as of the Closing Date.
All of the issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable.
3.3 ISSUANCE OF NOTE. The issuance, sale and delivery of
the Note in accordance with this Agreement have been, or will be on or prior to
the Closing, duly authorized by all necessary corporate action on the part of
the Company. The Note, when so issued, sold and delivered against payment
therefor, in accordance with the provisions of this Agreement, will be duly and
validly issued.
3.4 AUTHORITY FOR AGREEMENT. The execution, delivery and
performance by the Company of this Agreement and the other Transaction
Documents, and the consummation by the Company of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action.
This Agreement and each of the other Transaction Documents has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms. The
execution of and performance of the transactions contemplated by this Agreement
and the other Transaction Documents and compliance with its and their provisions
by the Company will not violate any provision of law and will not conflict with
or result in any breach of any of the terms, conditions or provisions of, or
constitute a default under, or require a consent or waiver under, its
Certificate of Incorporation or By-Laws (each as amended to date) or any
indenture, lease, agreement or other instrument to which the Company is a party
or by which it or any of its properties is bound, or any decree, judgment,
order, statute, rule or regulation applicable to the Company.
3.5 GOVERNMENTAL AND EXCHANGE CONSENTS. No consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority or the New
York Stock Exchange is required on the part of the Company in connection with
the execution and delivery of this Agreement and the other Transaction
Documents, and the offer, issuance, sale and delivery of Shares, except such
filings as shall have been made prior to and shall be effective on and as of the
Closing. Based on the representations made by the Purchaser in Section 4 of this
Agreement, the offer, issuance and sale of the Note to the Purchaser will be in
compliance with applicable Federal and state securities laws.
3.6 DISCLOSURES. None of this Agreement, any other
Transaction Document or
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any other document, certificate or statement furnished to the Purchaser by or on
behalf of the Company in connection herewith, or filed by or on behalf of the
Purchaser with the Securities and Exchange Commission, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein in light of the
circumstances under which they were made not misleading.
3.7 NO CONFLICT OF INTEREST. To the best of its
knowledge, no officer or employee of the Purchaser has or will receive, directly
or indirectly, a personal interest in the Company or its property or anything of
substantial economic value for his or her private benefit from the Company, or
anyone acting on its behalf, in connection with the investment made pursuant to
this Agreement.
3.8 NO BAD ACTOR. None of the Company, any of its
affiliates, or any directors or officers of the Company or any of its officers
is or has been the subject of, or a defendant in: (i) an enforcement action or
prosecution (or settlement in lieu thereof) brought by a governmental authority
relating to a violation of securities, tax, fiduciary or criminal laws, or (ii)
a civil action (or settlement in lieu thereof) brought by investors in a common
investment vehicle for violation of duties owed to the investors. The Company
will notify the Purchaser within five days in the event any such action or
prosecution is initiated during any period in which the Note is outstanding or
the Purchaser holds any equity securities of the Company or NordicTrack.
4. REPRESENTATIONS OF THE PURCHASER. The Purchaser represents and
warrants to the Company as follows:
4.1 INVESTMENT. The Purchaser is acquiring the Note for
its own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling the same; and the Purchaser has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof.
4.2 AUTHORITY. The Purchaser has the necessary power and
authority to enter into and to perform this Agreement and the other Transaction
Documents to which it is a party in accordance with their respective terms.
4.3 ACCREDITED INVESTOR. The Purchaser is an "accredited
investor," within the meaning of Regulation D promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligation
of the Purchaser to purchase the Note at the Closing is subject to the
fulfillment, or the waiver by the Purchaser, of each of the following conditions
on or before the Closing:
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in Section 3 shall be true on and as of
the Closing Date with the same effect as though such representation and warranty
had been made on and as of that date.
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5.2 PERFORMANCE. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by the Company prior to or at the Closing, and
the Company shall deliver to the Purchaser a certificate of a senior officer of
the Company to such effect.
5.3 OPINION OF COUNSEL. The Purchaser shall have received
an opinion from Xxxx and Xxxx LLP, counsel for the Company, dated the Closing
Date, addressed to the Purchaser, and satisfactory in form and substance to the
Purchaser, as to each of the matters set forth in Sections 3.1 through 3.5,
inclusive.
5.4 CREDIT FACILITY. The Company, NordicTrack (as defined
herein), Nordic Advantage, Inc. ("NA") and S&H (as defined herein) shall have
entered into a credit agreement (the "Credit Agreement") with B III Capital
Partners, L.P. ("B III"), General Motors Employees Domestic Group Pension Trust
("GM Trust"), and BankBoston, N.A., individually ("Bank Boston"; collectively
with B III and GM Trust, the "Working Capital Lenders") and as Administrative
Agent for the Working Capital Lenders (in such capacity, the "Administrative
Agent"), in form and substance satisfactory to the Purchaser, in its sole and
absolute discretion, wherein the Working Capital Lenders shall have committed to
extend up to $65,000,000 in credit facilities to the Company. The Company shall
have delivered a true, correct and complete copy of the Credit Agreement, and
each of the related agreements, instruments, documents, certificates and notices
completed thereby to the Purchaser.
5.5 INTERCREDITOR AGREEMENT. The Purchaser shall have
entered into an intercreditor agreement with the Company and the Administrative
Agent, in form and substance satisfactory to the Purchaser, in its sole and
absolute discretion, which conforms to that certain term sheet executed by DDJ
Capital Management, LLC, and the Purchaser.
5.6 COLLATERAL AGENCY AGREEMENT. The Purchaser shall have
entered into a collateral agency agreement (the "Collateral Agency Agreement")
with the Company, NordicTrack, NA, S&H and BankBoston, N.A., as collateral agent
for the Working Capital Lenders and the Purchaser (in such capacity, the
"Collateral Agent"), in form and substance satisfactory to the Purchaser, in its
sole and absolute discretion, wherein the Collateral Agent agrees to act as
collateral agent for and on behalf of the Administrative Agent and the Working
Capital Lenders, as senior secured parties, and the Purchaser, as junior secured
party.
5.7 SECURITY DOCUMENTS. The Company and each of its
subsidiaries (whether direct or indirect), to the extent a party thereto, shall
have executed and delivered each of the Security Documents, as defined in the
Collateral Agency Agreement (other than (x) the Life Insurance Collateral
Assignments and (y) that certain charge over securities dated as of April 29,
1996 between NordicTrack and the Administrative Agent, pledging the securities
of NordicTrack (U.K.) Ltd., as amended by the First Amendment to Securities
Documents (as defined in the Credit Agreement)) (collectively, all such Security
Documents are referred to herein as the "Security Documents"), and the Purchaser
shall have determined that the Collateral Agent, on behalf of the Working
Capital Lenders and the Purchaser, has a first priority perfected lien and
security interest in and to all assets and properties of the Company and such
subsidiaries covered by the Security Documents. The Company shall have delivered
a true, correct and complete
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copy of each of the Security Documents to the Purchaser.
5.8 GUARANTEES. Each of NordicTrack, NA, S&H, OCR, Inc.,
OBW, Inc., WFH Group, Inc., OTNC, Inc., BFPI, Inc., CML International (FSC),
Ltd., The Nature Company Limited, NordicTrack (U.K.) Ltd., NordicTrack GmbH, and
Nordic Advantage of Ontario, Inc. (each a "Guarantor", and collectively the
"Guarantors") shall have executed and delivered its Guaranty (each a "Guaranty",
and collectively the "Guarantees") of the Company's obligations to the
Purchaser.
6. CONDITION OF THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company under Section 1.2 of this Agreement are subject to fulfillment,
or the waiver, of the following condition on or before the Closing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchaser contained in Section 4 shall be
true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of that date.
7. COVENANTS OF THE COMPANY.
7.1 REGISTRATION OF NOTE AND CONVERSION SHARES. The
Company shall file on or before 60 days after the Closing Date registration
statements (the "Registration Statements") with the Securities and Exchange
Commission to register under the Securities Act of 1933, as amended, the Note
and the shares of Common Stock into which it is convertible pursuant to the Note
(the "Conversion Shares"). The Company shall use its best efforts to have the
Registration Statements declared effective as soon as practicable after filing.
Until the Registration Statements are declared effective, the Company shall not
file any registration statement with respect to its securities (other than on
Form S-8 or its equivalent) unless the Note and the Conversion Shares are
included therein.
7.2 FUTURE ISSUANCE OF SECURITIES.
(a) The Conversion Shares, the NordicTrack
Warrants and the NordicTrack Warrant Shares (as such terms are defined below),
when issued in accordance with this Agreement, will be validly issued, fully
paid and nonassessable with no personal liability attaching to the ownership
thereof and will be free and clear of all liens, charges, restrictions, claims
and encumbrances. Neither the issuance, sale or delivery of the Conversion
Shares, the NordicTrack Warrants or the NordicTrack Warrant Shares are subject
to any preemptive right, right of first refusal, or are subject to any other
similar rights (except as disclosed in the Credit Agreement) in favor of any
person or entity.
(b) On or before the date of issuance of any
Conversion Shares, NordicTrack Warrants or NordicTrack Warrant Shares, the
Purchaser shall have received an opinion from Xxxx and Xxxx LLP, as counsel for
the Company (or other reputable counsel retained by the Company as is
satisfactory to the Purchaser) dated the date of issuance, addressed to the
Purchaser, and satisfactory in form and substance to the Purchaser, as to each
of the
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matters set forth in Sections 3.1 through 3.5, inclusive, except that
such opinions shall be given as of the date of issuance with respect to the
securities being issued rather than the Note, and that such securities are fully
paid and non-assessable (assuming, in the case of the NordicTrack Warrants, the
payment of $0.01 per NordicTrack Warrant Share).
7.3 ISSUANCE OF SHARES AND WARRANTS. The issuance, sale
and delivery of the Conversion Shares and the NordicTrack Warrants in accordance
with the Transaction Documents, and the NordicTrack Warrant Shares in accordance
with the NordicTrack Warrants, will be on or prior to the issuance thereof, duly
authorized by all necessary corporate action on the part of the Company or
NordicTrack, Inc., a Minnesota corporation or its successor ("NordicTrack"), as
the case may be. The Conversion Shares, NordicTrack Warrants and NordicTrack
Warrant Shares, when so issued, sold and delivered in accordance with the
provisions of this Agreement, will be duly and validly issued, fully paid and
non-assessable and will be subject to an effective registration statement under
the Securities Act of 1933, as amended, or will be issued pursuant to an
exemption therefrom.
7.4 XXXXX & HAWKEN. Upon the occurrence and during the
continuation of any default in the payment of any installment of principal or
interest on the Note, to the maximum extent consistent with the fiduciary duties
of the Company's Board of Directors, the Company shall use its best efforts to
sell all or substantially all of the assets or stock of Xxxxx & Xxxxxx, Ltd., a
Delaware corporation ("S&H"), or its successor, for the maximum consideration of
cash or securities (provided that such securities are subject to an effective
registration statement under the Securities Act of 1933, as amended, and listed
on a major United States stock exchange), obtainable on an arms-length basis
from an unaffiliated third party (the "S&H Sale"). To the maximum extent
consistent with the fiduciary duties of the Company's Board of Directors, the
Company shall use its best efforts to close the S&H Sale within 120 days after
the occurrence of any such default and, prior to S&H (i) making a composition or
an assignment for the benefit of creditors or trust mortgage, (ii) applying for,
consenting to, acquiescing in, filing a petition, seeking or admitting (by
answer, default or otherwise) the material allegations of a petition filed
against it seeking the appointment of a trustee, receiver or liquidator, in
bankruptcy or otherwise, of itself or of all or a substantial portion of its
assets, or a reorganization, arrangement with creditors or other remedy, relief
or adjudication available to or against a bankrupt or insolvent debtor under any
bankruptcy or insolvency law or any law affecting the rights of creditors
generally, or (iii) admitting in writing its inability to pay its debts
generally as they become due.
7.5 NORDICTRACK WARRANTS. In the event that the Company
shall distribute any of the capital stock of NordicTrack to the Company's
shareholders at any time prior to the full redemption or full conversion of the
Note, the Company shall cause to be issued to the Purchaser perpetual warrants,
exercisable in whole or in part, in form and substance satisfactory to the
Purchaser (the "NordicTrack Warrants"), to purchase, at a purchase price per
share equal to $0.01, that number of shares of NordicTrack capital stock which
the Purchaser would have been entitled to receive in such distribution if it had
converted the Note in full immediately prior to the record date for such
distribution (upon the exercise of the NordicTrack Warrants, the "NordicTrack
Warrant Shares").
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7.6 NO REPRICING OF OPTIONS. At all times while the Note
is outstanding or the Purchaser owns any shares of common stock of the Company,
the Company shall not reprice any options with respect to the Company's capital
stock.
7.7 CHAIRMAN OF BOARD OF DIRECTORS. At all times while
the Note is outstanding or the Purchaser owns any shares of common stock of the
Company, the Company shall cause Xxxx A.C. Pound ("Pound") to be Chairman of the
Board of Directors of the Company and, at all times after a distribution of the
capital stock of NordicTrack to the Company's shareholders, NordicTrack. In the
event that Pound is unable to serve as Chairman of the Board of Directors of
either the Company or NordicTrack, the Company shall cause only the Independent
Directors on the respective Boards of Directors of the Company and NordicTrack
to select the Chairman of the Board of Directors.
7.8 OUTSIDE AND INDEPENDENT DIRECTORS. At all times while
the Note is outstanding or the Purchaser owns any shares of common stock of the
Company, the Company shall cause a majority of the members of the Board of
Directors of the Company and, at all times after a distribution of the capital
stock of NordicTrack to the Company's shareholders, NordicTrack, to be comprised
of outside and "independent directors," as such term is defined by the Council
of Institutional Investors ("Independent Directors").
7.9 NO BACKSTOPPED RIGHTS OFFERING. At all times while
the Note is outstanding or the Purchaser owns any shares of common stock of the
Company, the Company shall not conduct any "backstopped" rights offering without
the consent of the Purchaser or any other rights offering in which any person or
entity facilitating such transaction will receive securities of the Company or
any of its subsidiaries for consideration less than the purchase price therefor
offered to all shareholders of the Company.
7.10 NO DIVIDENDS DURING DEFAULT. At all times while the
Note is outstanding, the Company shall not declare or pay any dividend on any
capital stock of the Company, or make any other distribution to holders of
capital stock of the Company (other than a distribution of the capital stock of
NordicTrack to the Company's shareholders), following the occurrence and during
the continuation of any default under the Note or this Agreement.
7.11 RIGHTS OFFERING. In the event that the Company
undertakes a rights offering with respect to the holders of any of its capital
stock at any time while the Note is outstanding, the Company shall grant the
Purchaser the right to be issued its pro rata percentage of such rights based on
the number of shares of capital stock into which the Note is then convertible.
7.12 NO DIRECTORS ELECTED BY WORKING CAPITAL LENDERS. At
all times prior to the earlier of (a) August 1, 1999 or (b) the indefeasible
payment in full of any loans or other extensions of credit and the termination
of any commitments to extend credit (collectively, "Working Capital Credit
Facilities") by the Working Capital Lenders, the Company shall not permit any
Working Capital Lender to elect, directly or by proxy, any members of the Board
of Directors of the Company, unless prior to such election the Working Capital
Lenders have converted all or a portion (but not less than $20,000,000 of
outstanding indebtedness) of the
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Working Capital Credit Facilities into common stock of the Company.
7.13 INDEBTEDNESS; LIENS. At all times while the Note is
outstanding, the Company shall not incur any Indebtedness, or grant any Liens,
with senior or pari passu rights in payment or collateral, except as permitted
under the Note or the Working Capital Credit Facilities. As used herein,
"Indebtedness" shall have the meaning ascribed thereto in the Credit Agreement.
As used herein, "Lien" means any lien (statutory or other), security interest,
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, capitalized lease or other title
retention agreement).
7.14 WORKING CAPITAL CREDIT FACILITIES. The Company shall
give the Purchaser written notice as soon as practicable (but prior to the
effectiveness) of any amendment of, waiver or consent, and any request therefor,
under the Working Capital Credit Facilities.
7.15 DEFAULTS. The Company shall give the Purchaser
written notice as soon as practicable after it becomes aware of any default,
event of default or similar event (or any event or occurrence which, with the
passage of time and/or notice would become a default, event of default or
similar event) under this Agreement, any other Transaction Document, the Working
Capital Credit Facilities or any indenture, lease, agreement or other instrument
to which the Company is a party or by which it or any of its properties is
bound, or any decree, judgment, order, statute, rule or regulation applicable to
the Company. Upon the request of the Purchaser, the Company shall promptly
provide the Purchaser with all such information, documentation and inspection
rights provided to the Administrative Agent, the Working Capital Lenders, or any
other person or entity in connection with such default, event of default or
similar event and such other information, documentation and inspection rights as
may be requested by the Purchaser.
7.16 RIGHT OF FIRST REFUSAL. The Company agrees that it
will not issue (other than through (a) conversion of currently outstanding
warrants, debentures and stock options, as disclosed on SCHEDULE 7.16 attached
hereto or (b) the Company's stock plans existing on the date hereof or as
subsequently approved by the Company's stockholders) any shares of its Common
Stock, or any convertible securities, exchangeable or exercisable for shares of
Common Stock ("Convertible Securities") unless the Company shall first have
offered all of such Common Stock or Convertible Securities to the Purchaser, on
terms and conditions, including without limitation with respect to price and
method of payment, at least as favorable to the Purchaser as are proposed to be
offered to any other person or entity. Any such offer shall be made in writing
and shall remain open for a period of not less than 10 days after the receipt of
such offer by the Purchaser. The Purchaser may accept the Company's offer as to
the full amount of securities offered, but not any lesser number, by written
notice thereof given by it to the Company prior to the expiration of the 10 day
period, in which event the Company shall promptly sell and the Purchaser shall
buy, upon the terms specified, such securities offered by the Company.
7.17 INFORMATION REQUIRED BY RULE 144A. The Company will,
upon the request of the Purchaser or any transferee, provide the Purchaser or
any transferee, and any qualified institutional buyer (as defined in Rule 144A
promulgated by the Securities and Exchange
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Commission under the Securities Act of 1933, as amended) designated by the
Purchaser or any transferee, such financial and other information as the
Purchaser or any transferee may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A in connection
with a resale or proposed resale of the Note, the Conversion Shares, the
NordicTrack Warrants or the NordicTrack Warrant Shares.
7.18 CREDIT AGREEMENT COVENANTS. The Company will comply
with each of the covenants set forth in Sections 9.1, 9.2, 9.3, 9.6, 9.7, 9.8,
9.10, 9.11, 9.13, 9.14, 10.7, 10.9, 10.11 and 10.13 of the Credit Agreement (the
"Incorporated Covenants"), which are incorporated in this Agreement by reference
by the terms set forth below. The Company and the Purchaser hereby agree that
the Incorporated Covenants, and, to the extent they apply to such covenants, the
definitions and other definitional provisions set forth in Section 1 of the
Credit Agreement, together with the other sections of the Credit Agreement to
which reference is made therein, are incorporated in this Agreement by reference
as though specifically set forth herein, and they shall continue in full force
and effect with respect to this Agreement notwithstanding the termination of the
Credit Agreement and the payment of all indebtedness and obligations thereunder.
8. COVENANTS OF THE PURCHASER.
8.1 TERMINATION OF SECURITY INTEREST. Provided that no
Event of Default (as defined under the Note), and no default, event of default
or similar event hereunder, under the Note, any Guaranty or Security Document,
has occurred and is continuing, the Purchaser agrees that upon the request of
the Company it shall execute such documents and take such reasonable steps (in
each case at the sole expense of the Company) to terminate any interest the
Purchaser has in the liens and security interests held by the Collateral Agent
(a) upon receiving satisfactory evidence that the Company has received gross
proceeds of $30,000,000 or more from the sale of equity securities of the
Company, other than pursuant to conversion of the Note, or (b) on August 1,
1999, upon receiving satisfactory evidence that the Company has received gross
proceeds of $25,000,000 or more (but less than $30,000,000) from the sale of
equity securities of the Company prior to August 1, 1999, other than pursuant to
conversion of the Note.
8.2 RELEASE OF FOREIGN PLEDGE AND GUARANTY. If the
Company has demonstrated to the reasonable satisfaction of the Purchaser that
the pledge of stock of any foreign subsidiary of the Company to the Collateral
Agent (to the extent greater than sixty-five percent (65%) of the outstanding
stock of such foreign subsidiary) or any Guaranty given by a foreign Guarantor
will result in material tax obligations for the Company and its subsidiaries,
which tax obligations would not arise if such pledge or Guaranty were released
by the Purchaser, the Purchaser, upon ten (10) days' prior written request of
the Company delivered to the Purchaser, shall consent to the Collateral Agent's
release of such pledge (to the extent applicable to greater than sixty-five
percent (65%) of the outstanding stock of the relevant foreign subsidiary of the
Company) or release such Guaranty, as applicable; PROVIDED that no such release
shall be required if any Default (as defined in the Note) or any breach or
violations of the provisions hereof or any Security Document or Guaranty has
occurred and is continuing.
9. MISCELLANEOUS.
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9.1 ENTIRE AGREEMENT. This Agreement and Exhibits hereto
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
9.2 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which shall be one and the same document.
9.3 SECTION HEADINGS. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
9.4 SEVERABILITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
9.5 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
9.6 EXPENSES. The Company agrees, whether or not the
transaction provided for hereby shall be consummated, to pay on demand, and save
the Purchaser and its transferees harmless against liability for the payment of,
all out-of-pocket expenses arising in connection with such transactions
("Expenses"), including (i) all document production and duplication charges and
the reasonable fees and expenses of Xxxxxxx Xxxx & Xxxxxxxxx LLP, its special
transaction counsel, and its agents and of any other special or local counsel or
other special advisers engaged by the Purchaser in connection with the
transactions contemplated by this Agreement and with any subsequent proposed
modification of, or proposed waiver or consent, requested by the Company under
the Transaction Documents, whether or not such transactions are consummated or
proposed modification shall be effected or proposed waiver or consent granted,
(ii) the costs (other than underwriting discounts and commissions) of issuance
and obtaining an effective registration statement with respect to the Note, the
Conversion Shares and the NordicTrack Shares under the Securities Act of 1933,
as amended, and such state securities and blue sky laws as the Purchaser may
reasonably request, and (iii) the costs and expenses, including reasonable
attorneys' fees and the fees of any other special advisers, incurred by the
Purchaser or any of its transferees in evaluating, monitoring or enforcing any
rights under the Transaction Documents (including, without limitation, any
costs, expenses or fees incurred in connection with perfecting or maintaining
perfection of any lien now or hereafter existing in favor of the Purchaser or
any of its transferees securing any of the obligations of the Company under the
Transaction Documents or maintaining or protecting the collateral which is the
subject of such lien) or in responding to any subpoena or other legal process
issued in connection with the Transaction Documents or the transactions provided
for hereby or thereby or by reason of the Purchaser or any transferee having
acquire the Note or any of the Conversion Shares, NordicTrack Warrants or
NordicTrack Warrant Shares, including without limitation costs and expenses
incurred in connection with any bankruptcy or insolvency of any of the Company
or any of its Subsidiaries or in connection with any workout or restructuring of
any of the transactions contemplated by the Transaction Documents. The
obligations of the Company under
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this Section 9.6 shall survive the transfer of any Note, any of the Conversion
Shares, NordicTrack Warrants or NordicTrack Warrant Shares or portion of any of
the Shares thereof or interest therein by the Purchaser or any transferee and
the payment of the Note.
9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained in any Transaction
Document or made in any other writing by or on behalf of the Company in
connection herewith shall survive the execution and delivery of such Transaction
Document or other writing, the transfer by the purchaser of the Note or any
Conversion Shares, NordicTrack Warrants and NordicTrack Warrant Shares, or any
portion thereof or interest therein and the payment of the Note and any
redemption of Conversion Shares, NordicTrack Warrants and Nordic Track Shares
and may be relied upon by any transferee, regardless of any investigation made
at any time by or on behalf of the Purchase or any transferee. The Transaction
Documents embody the entire agreement and understanding between the purchaser
and the Company and supersede all prior agreements and understandings relating
to the subject matter hereof and thereof.
9.8 SUCCESSOR AND ASSIGNS. All covenants and other
agreements in this Agreement contained by or on behalf of either of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto (including, without limitation, any transferee)
whether so expressed or not; provided the Company may not assign any of its
obligations hereunder.
9.9 NOTICES. All notices and other written communications
provided for hereunder shall be given in writing and sent by overnight delivery
service (with charges prepaid) or by facsimile transmission with the original of
such transmission being sent by overnight delivery service (with charges
prepaid) by the next succeeding Business Day and addressed to such party as
follows:
If to the Company: CML Group, Inc.
000 Xxxx Xxxxxx
Xxxxx, Xxxxxxxxxxxxx 00000
Attn: President
Facsimile: (000) 000-0000
If to the Purchaser: State of Wisconsin Investment Board
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attn: Investment Director, Small Cap Stocks
Facsimile: (000) 000-0000
or at such other address or fax number as such party shall have specified to the
other party in writing. Notice given in accordance with this Section 9.9 shall
be effective upon the earlier of the date of delivery or the second Business Day
at the place of delivery after dispatch.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CML GROUP, INC.
By:
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Name:
Title:
STATE OF WISCONSIN INVESTMENT BOARD
By:
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Name:
Title:
