Exhibit 10.6
SECURITIES PURCHASE AGREEMENT (NOTES AND WARRANTS)
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of November 8,
2006, by and among Maritime Logistics US Holdings Inc., a Delaware corporation,
with headquarters located at 000 Xxxxxxxxx, Xxxxxxxxxx, Xxx Xxxxxx ("XXX" or the
"COMPANY"), and the investors listed on the Schedule of Buyers attached hereto
(individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and each Buyer is executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 ACT"), and Rule 506 of
Regulation D ("REGULATION D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the 1933 Act.
B. Prior to the Closing (as defined below) and immediately following the
consummation of the Share Exchange (as defined below), the Company will cause
ShellCo (as defined below) to authorize a new series of its senior secured
convertible notes, which notes shall be convertible into ShellCo's common stock,
par value $0.001 per share (the "COMMON STOCK") in accordance with the terms of
such notes. "SHELLCO" is a corporation organized under the laws of the state of
Delaware which has made a filing with the SEC on Form 10-SB, a subsidiary of
which ("MERGER SUB") will be merged effective prior to Closing with and into the
Company, with the Company continuing as the surviving entity, pursuant to the
terms of Section 6(o) (the "MERGER"). ShellCo has indicated its intention to
change its name to Summit Global Logistics, Inc. after the Merger and to effect
a reverse split in respect of its Common Stock in which each 11.226 shares of
Common Stock prior to such reverse split shall be exchanged for one share of
Common Stock after such reverse split (the "REVERSE SPLIT").
C. The Buyers, severally, and not jointly, wish to purchase, and the
Company wishes ShellCo to sell, upon the terms and conditions stated in this
Agreement, (i) secured convertible notes, in the form attached hereto as EXHIBIT
A, in an aggregate original principal amount of $65,000,000 (as amended,
restated, supplemented and/or modified from time to time in accordance with the
provisions thereof, collectively, the "NOTES") and (ii) warrants, in
substantially the form attached hereto as EXHIBIT B (as amended, restated,
supplemented and/or modified from time to time in accordance with the provisions
thereof, the "WARRANTS"), to acquire up to that number of shares of Common Stock
equal to the quotient of (a) 40% of the original aggregate principal amount of
the Notes purchased by the Buyers at Closing (as defined in Section 1(a))
divided by the Conversion Price (as defined in the Notes) as of the Closing (the
shares of Common Stock issuable upon exercise of the Warrants, the "WARRANT
SHARES").
D. Contemporaneously with the Closing (as defined below), the Buyers and
ShellCo will execute and deliver a Registration Rights Agreement, substantially
in the form attached hereto as EXHIBIT C (as amended, restated, supplemented
and/or modified from time to time in accordance with the provisions thereof, the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to
which ShellCo shall agree to provide certain registration rights in respect of
the shares of Common Stock into which the Notes are convertible (the "CONVERSION
SHARES") and the Warrant Shares under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
E. The Notes, the Conversion Shares, the Warrants and the Warrant Shares
collectively are referred to herein as the "Securities".
F. The Notes will rank senior to all outstanding and future indebtedness
of ShellCo, subject to Permitted Indebtedness (as defined in the Notes) and will
be secured by a second priority perfected security interest in substantially all
of the assets of ShellCo and the Company and in substantially all of the shares
of capital stock and all the assets of each of ShellCo's and the Company's
current and future Subsidiaries (as defined below) other than the escrowed funds
referenced in subsection (x) of the definition of Permitted Indebtedness set
forth in Section 28 of the Note and the Subsidiaries organized outside the
United States of America, any of the States thereof or the District of Columbia
(collectively, the "FOREIGN SUBSIDIARIES"), as evidenced by the Pledge Agreement
in the form attached hereto as EXHIBIT D (as the same may be amended, restated,
supplemented and/or modified from time to time in accordance with the provisions
thereof, the "PLEDGE AGREEMENT") and the Security Agreement in the form attached
hereto as EXHIBIT E (as the same may be amended, restated, supplemented and/or
modified from time to time in accordance with the provisions thereof, the
"SECURITY AGREEMENT") and the Guaranty from the Company and each Subsidiary
(other than Foreign Subsidiaries) in the form attached hereto as EXHIBIT F (as
the same may be amended, restated, supplemented and/or modified from time to
time in accordance with the provisions thereof, the "GUARANTY", and together
with the Pledge Agreement and the Security Agreement, as each may be amended,
restated, supplemented and/or modified from time to time in accordance with the
provisions thereof, collectively the "SECURITY DOCUMENTS").
G. In connection with the Merger and the Acquisitions (as defined below),
(i) ShellCo shall issue shares of Common Stock (the "MANAGEMENT RESTRICTED
STOCK") to certain members of management of ShellCo, the Company, Targets (as
defined below) and their Subsidiaries (the "MANAGEMENT MEMBERS"), and (ii) each
Management Member will execute and deliver a lockup agreement, the form of which
is attached hereto as Exhibits G-1, G-2 and G-3 (as the same may be amended,
restated, supplemented and/or modified from time to time in accordance with the
provisions thereof, the "LOCKUP AGREEMENTS"), pursuant to which the resale of
the Management Restricted Stock shall be limited.
H. Contemporaneously herewith, the Company is entering into a securities
purchase agreement, by and among the Company and the buyers listed on the
Schedule of Buyers attached thereto (the "COMMON PIPE BUYERS"), (the "COMMON
PIPE SECURITIES PURCHASE Agreement"), wherein the Company agrees, upon the terms
and subject to the conditions of the Common PIPE Securities Purchase Agreement,
to cause ShellCo to issue and sell to the Common PIPE Buyers (i) no less than
30,000 shares (after giving effect to the Reverse Split ) of Common Stock of
ShellCo (the "COMMON PIPE COMMON SHARES"), and (ii) certain warrants (the
"COMMON PIPE WARRANTS"), which will be exercisable to purchase additional shares
of Common Stock (as exercised, the "COMMON PIPE WARRANT SHARES") in accordance
with the terms of the Common PIPE Warrants.
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I. Contemporaneously with the Closing, the Common PIPE Buyers and ShellCo
will execute and deliver a Registration Rights Agreement (as amended, restated,
supplemented and/or modified from time to time in accordance with the provisions
thereof, the "COMMON PIPE REGISTRATION RIGHTS AGREEMENT"), pursuant to which
ShellCo will agree to provide certain registration rights in respect of the
Common PIPE Common Shares and Common PIPE Warrant Shares under the 1933 Act and
the rules and regulations promulgated thereunder, and applicable state
securities laws.
J. The Common PIPE Common Shares, Common PIPE Warrants and Common PIPE
Warrant Shares collectively are referred to herein as the "COMMON PIPE
SECURITIES", and the offering thereof, the "COMMON PIPE OFFERING".
K. Immediately prior to the Closing, ShellCo shall enter into a joinder
agreement, pursuant to which ShellCo shall, among other things, join this
Agreement, affirm the representations and warranties hereunder and agree to
perform the obligations and covenants of the Company hereunder in the form
attached hereto as EXHIBIT H (as the same may be amended, restated, supplemented
and/or modified from time to time in accordance with the provisions thereof, the
"JOINDER AGREEMENT"). The Company's obligations hereunder, are subject to the
satisfaction of the condition that ShellCo enter into the Joinder Agreement.
L. Contemporaneously with the Closing, ShellCo will enter into a loan
agreement, by and among ShellCo, the Company, Seamaster Logistics, Inc.,
Amerussia Shipping Company Inc., Fashion Marketing Inc., FMI International LLC,
FMI International Corp. (West), FMI International Corp., Freight Management LLC,
FMI Trucking, Inc., FMI Express Corp., Clare Freight, Los Angeles, Inc., Tug New
York, Inc., Summit Global Logistics, Inc., TUG USA, Inc., AMR Investments Inc.
and FMI Holdco I, LLC and the lenders listed on the schedule of lenders thereto
and Fortress Credit Corp. as administrative agent (as the same may be amended,
restated, supplemented and/or modified from time to time in accordance with the
provisions thereof, the "SENIOR LOAN AGREEMENT"; such loans evidenced thereby,
the "SENIOR LOAN") under which ShellCo and certain of its subsidiaries shall
have the ability to obtain term loans up to the maximum principal amount of
$55,000,000 and revolving loans up to a maximum principal amount which shall not
exceed $10,000,000 at any one time, in each case, upon the terms and subject to
the conditions set forth in the Senior Loan Agreement. The Senior Loan and the
obligations related thereto shall rank senior to the Notes and shall be secured
by a first priority perfected security interest in substantially all of the
assets of ShellCo and substantially all of the assets of each of ShellCo's
subsidiaries (other than Foreign Subsidiaries), including, without limitation
the stock of each Subsidiary that is not a Foreign Subsidiary and 65% of the
voting stock and each first-tier Foreign Subsidiary. The respective priorities
and preferences of the Notes and the Senior Loan in respect of the Collateral
(as defined in the Security Documents (as defined below)) are set forth in
detail in that certain Intercreditor and Subordination Agreement by and between
Fortress Credit Corp., as collateral agent for the lenders under the Senior Loan
Agreement, and the Collateral Agent (as defined below) to be dated as of the
Closing Date, substantially in the form attached hereto as Exhibit I (as the
same may be amended, restated, supplemented and/or modified from time to time in
accordance with the provisions thereof, the "INTERCREDITOR AGREEMENT").
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M. Contemporaneously with, and as a condition, to the Closing, and with
certain of the proceeds of the transactions contemplated hereby, ShellCo shall
acquire, directly or indirectly, all (or substantially all) of the equity of
each of (i) FMI Holdco I, LLC, a Delaware limited liability company
headquartered at 000 Xxxxxxx Xxxx., Xxxxxxxx, Xxx Xxxxxx 00000 and certain of
its parent companies (collectively, "FMI"), (ii) Clare Freight, Los Angeles,
Inc. a California corporation headquartered at 00000 Xxxxxx Xxx., Xxxx xx
Xxxxxxxx, XX 00000, and (iii) TUG New York, Inc., a New York corporation
headquartered at 00 Xxxxxxxxxxx Xxx., Xxxxxxxx, XX 00000 (together with Clare
Freight, Los Angeles, Inc., the "TUG COMPANIES" and together with FMI, the
"TARGETS") and substantially all of the assets of the TUG Logistics group of
companies, including TUG Logistics, Inc., a California corporation headquartered
at 00000 Xxxxxx Xxx., Xxxx xx Xxxxxxxx, XX 00000, TUG Logistics (Miami), Inc. a
Florida corporation headquartered at 0000 XX 00 Xxx., Xxxxx 000, Xxxxx, XX
00000, and Glare Logistics, Inc., a California corporation headquartered at
00000 Xxxxx Xxxxxx Xxx., Xxxxxx, Xxx Xxxxxxx, XX 00000 (collectively, the "TUG
ASSETS", and the acquisition of the TUG Assets and the Targets, collectively,
the "ACQUISITIONS").
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) PURCHASE NOTES AND WARRANTS. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
cause ShellCo to issue and sell to each Buyer, and each Buyer severally, but not
jointly, agrees to purchase from ShellCo on the Closing Date (as defined below),
(x) the principal amount of Notes set forth opposite such Buyer's name in column
(3) on the Schedule of Buyers and (y) the related Warrants to acquire up to that
number of Warrant Shares set forth opposite such Buyer's name in column (4) on
the Schedule of Buyers (the "CLOSING").
(b) CLOSING. The date and time of the Closing (the "CLOSING DATE")
shall be 10:00 a.m., New York City time, on the first day other than Saturday,
Sunday or other day on which commercial banks in the City of New York are
authorized or required by law to remain closed (a "BUSINESS DAY") following the
satisfaction (or waiver) and notification of the Company of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6 and 7 below (or
such later or earlier date as is mutually agreed to by the Company and Buyers
holding the right to purchase at least 80% of the aggregate principal amount of
the Notes). The Closing shall occur on the Closing Date at the offices of
Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(c) PURCHASE PRICE. The aggregate purchase price for the Notes and
the Warrants to be purchased by each such Buyer at the Closing (the "PURCHASE
PRICE") shall be the amount set forth opposite such Buyer's name in column (5)
of the Schedule of Buyers. Each Buyer shall pay $1,000 for each $1,000 of
principal amount of Notes and related Warrants to be purchased by such Buyer at
the Closing.
(d) FORM OF PAYMENT. On the Closing Date, (i) each Buyer shall pay
its respective Purchase Price to ShellCo and/or to one or more designees of
ShellCo for the Notes and Warrants to be issued and sold to such Buyer at the
Closing, by wire transfer of immediately
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available funds in accordance with the Company's or ShellCo's written wire
instructions, less any amount withheld pursuant to Section 4(f), and (ii) the
Company shall cause ShellCo to deliver to each Buyer the Notes (allocated in the
principal amounts as such Buyer shall request) representing such principal
amount of the Notes which such Buyer is then purchasing hereunder along with
warrants representing the Warrants (allocated in the amounts as such Buyer shall
request) which such Buyer is purchasing, in each case duly executed on behalf of
ShellCo and registered in the name of such Buyer or, subject to compliance with
applicable securities laws, its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES. Each Buyer represents and
warrants, severally and not jointly, as of the date of this Agreement and on the
Closing Date, with respect to only itself that:
(a) NO PUBLIC SALE OR DISTRIBUTION. Such Buyer is acquiring the
Notes, and the Warrants, and upon conversion of the Notes and exercise of the
Warrants will acquire the Conversion Shares issuable upon conversion of the
Notes and the Warrant Shares issuable upon exercise thereof, in the ordinary
course of business, for its own account and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act and such Buyer does
not have a present arrangement to effect any distribution of the Securities to
or through any person or entity; PROVIDED, HOWEVER, that by making the
representations herein, such Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act and pursuant to the applicable
terms of the Transaction Documents (as defined in Section 3(b)). Such Buyer is
acquiring the Securities hereunder in the ordinary course of its business. Such
Buyer does not presently have any agreement or understanding, directly or
indirectly, with any Person (as defined in Section 3(p)) to distribute any of
the Securities.
(b) ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
(c) RELIANCE ON EXEMPTIONS. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying, and ShellCo will rely, upon, among other
things, the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the Securities.
(d) INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and the Targets and materials relating to the offer and sale of
the Securities which have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its representatives shall
modify, amend or affect such Buyer's right to rely on the Company's
representations and warranties contained
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herein. Such Buyer understands that its investment in the Securities involves a
high degree of risk and is able to afford a complete loss of such investment.
Such Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision in respect of its acquisition
of the Securities.
(e) NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) TRANSFER OR RESALE. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to
ShellCo an opinion of counsel, in a form reasonably acceptable to ShellCo, to
the effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C)
such Buyer provides ShellCo with assurance reasonably acceptable to ShellCo that
such Securities can be sold, assigned or transferred pursuant to Rule 144 or
Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule
thereto) (collectively, "RULE 144"); (ii) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the Person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) none of ShellCo, the Company or any
other Person is under any obligation to register the Securities under the 1933
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder. Notwithstanding the foregoing, and subject to
compliance with applicable securities laws, the Securities may be pledged in
connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities and such pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, unless
required by law, and no Buyer effecting a pledge of Securities shall be required
to provide ShellCo with any notice thereof or otherwise make any delivery to
ShellCo or the Company pursuant to this Agreement or any other Transaction
Document, including without limitation, this Section 2(f).
(g) LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Notes and the Warrants and the stock certificates
representing the Conversion Shares and the Warrant Shares, except as set forth
below, shall bear any legend as required by the "blue sky" laws of any state and
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE] [EXERCISABLE] HAVE BEEN] THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
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THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO, AND IN ACCORDANCE WITH, RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, SUBJECT TO COMPLIANCE WITH
APPLICABLE SECURITIES LAWS, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES. THIS INSTRUMENT IS
SUBJECT TO THE TERMS OF A SECURITIES PURCHASE AGREEMENT (NOTES AND
WARRANTS), DATED AS OF NOVEMBER 8, 2006, BY AND AMONG MARITIME
LOGISTICS US HOLDINGS INC., THE BUYERS LISTED THEREIN AND AEROBIC
CREATIONS, INC. PURSUANT TO THAT CERTAIN JOINDER AGREEMENT, DATED AS
OF NOVEMBER 8, 2006, AND AN INTERCREDITOR AGREEMENT BY AND BETWEEN
LAW DEBENTURE TRUST COMPANY OF NEW YORK, ON BEHALF OF THE HOLDER OF
THIS NOTE AND OF THE OTHER NOTES, AND FORTRESS CREDIT CORP. AS AGENT
(OR ANY SUCCESSOR OR REPLACEMENT AGENT), DATED AS OF NOVEMBER 8,
2006 (AS THE SAME MAY BE AMENDED, SUPPLEMENTED, RESTATED, NOVATED OR
REPLACED (INCLUDING IN CONNECTION WITH REPLACEMENT SENIOR FINANCING)
FROM TIME TO TIME, THE "INTERCREDITOR AGREEMENT").
The legend set forth above shall be removed and ShellCo shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped or, in the case of Conversion Shares or Warrant Shares, issue to such
holder by electronic delivery at the applicable balance account at The
Depository Trust Company ("DTC"), if, unless otherwise required by state
securities laws, (i) such Securities are registered for resale under the 1933
Act, provided that (A) upon receipt of notice from ShellCo that the applicable
registration statement is not, or no longer is effective in respect of the
resale of such Securities, the Holder will not transfer such Securities (other
than pursuant to clauses 2(g)(ii) or 2(g)(iii) below) until ShellCo notifies the
Holder that the applicable registration statement becomes effective (again), and
(B) the Holder hereby agrees to indemnify severally and not jointly and hold
ShellCo harmless against any claim of securities laws violations in respect of
any such transfer (from and after the date the Holder receives the first notice
described in Section 2(g)(i)(A) above through the date on which such Holder
receives the second notice described in Section 2(g)(i)(A) above) by such Holder
of any Security as to which such legend has been removed, (ii) in connection
with a sale, assignment or other transfer,
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such holder provides ShellCo with an opinion of counsel reasonably satisfactory
to ShellCo, in a generally acceptable form, to the effect that such sale,
assignment or transfer of the Securities may be made without registration under
the applicable requirements of the 1933 Act and that such legend is no longer
required, or (iii) such holder provides ShellCo with assurances reasonably
acceptable to ShellCo that the Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A, and such Holder delivers the legended
Securities to ShellCo or ShellCo's transfer agent.
(h) VALIDITY; ENFORCEMENT. This Agreement has been, and, when the
other Transaction Documents (as defined below) to which such Buyer is a party
are executed and delivered in accordance with the terms and conditions
contemplated hereby and thereby, such documents shall have been duly and validly
authorized, executed and delivered on behalf of such Buyer and shall constitute
the legal, valid and binding obligations of such Buyer enforceable against such
Buyer in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
(i) NO CONFLICTS. The execution, delivery and performance by such
Buyer of this Agreement and the other Transaction Documents to which such Buyer
is a party and the consummation by such Buyer of the transactions contemplated
hereby and thereby will not (i) result in a violation of any organizational
documents of such Buyer or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Buyer is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
such Buyer or by which any property or asset of the Buyer is bound or affected,
except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of such Buyer to perform its obligations hereunder or under any of the
other Transaction Documents. Each Buyer agrees that it has independently, based
on such documents and information it deemed appropriate, made its decision to
enter into this Agreement and purchase the Notes and Warrants.
(j) RESIDENCY. Such Buyer is a resident of that jurisdiction
specified below its address on the Schedule of Buyers.
(k) PLACEMENT AGENT. Such Buyer understands that Xxxxxx & Xxxxxxx,
LLC (the "AGENT") has acted solely as the agent of the Company in this placement
of the Securities, and that the Agent makes no representation or warranty with
regard to the merits of this transaction or as to the accuracy of any
information such Buyer may have received in connection therewith. Such Buyer
acknowledges that it has not relied on any information prepared by the Agent or
advice furnished by or on behalf of the Agent. Such Buyer agrees that it has,
independently and without reliance on Agent, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
ShellCo, the Company and the Targets and has made its own decision to enter into
this Agreement and purchase the applicable Securities.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each of the Buyers on the date hereof and on the Closing Date
that:
(a) ORGANIZATION AND QUALIFICATION. Set forth on SCHEDULE 3(A) is a
true and correct list of the entities in which the Company or any Target,
directly or indirectly, owns capital stock or holds an equity or similar
interest, together with their respective jurisdictions of organization and the
percentage of the outstanding capital stock or other equity interests of such
entity that is held by the Company or such Target or any of their respective
Subsidiaries. SCHEDULE 3(A) also sets forth a true and correct corporate
structure of ShellCo and its Subsidiaries immediately following the Closing,
giving pro forma effect to the Acquisitions. Other than with respect to the
entities listed on SCHEDULE 3(A), neither the Company or any Target, directly or
indirectly, owns any securities or beneficial ownership interests in any other
Person (including through joint ventures or partnership arrangements) or has any
investment in any other Person. The Company and its "SUBSIDIARIES" (which for
purposes of this Agreement means any entity in which the Company or ShellCo,
directly or indirectly, owns any of the capital stock, equity or similar
interests or voting power of such entity at the date of this Agreement or any
time hereafter, and each of the Targets and their respective subsidiaries) other
than the Foreign Subsidiaries are entities duly organized and validly existing
and in good standing under the laws of the jurisdiction in which they are
formed, and have the requisite power and authority to own their properties and
to carry on their business as now being conducted. To the knowledge of the
Company, each of the Foreign Subsidiaries are entities duly organized and
validly existing and, to the extent legally applicable, in good standing under
the laws of the jurisdiction in which they are formed, and have the requisite
power and authority to own their properties and to carry on their business as
now being conducted, except where failure to be so organized, existing, in good
standing, and/or have such requisite power and authority would not, individually
or in the aggregate, have a Material Adverse Effect. Each of the Company and the
Subsidiaries is duly qualified as a foreign entity to do business and, to the
extent legally applicable, is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the business, properties, assets, operations, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole, or on the transactions contemplated hereby and the other Transaction
Documents or by the agreements and instruments to be entered into in connection
herewith or therewith, or on the authority or ability of the Company or any
Subsidiary to perform its obligations under the Transaction Documents (as
defined below). Except as set forth in SCHEDULE 3(A), the Company and each
Target holds all right, title and interest in and to 100% of the capital stock,
equity or similar interests of each of its respective Subsidiaries, in each
case, free and clear of any Liens (as defined below) other than Permitted Liens
(as defined in the Notes) including any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of free and
clear ownership by a current holder other than as set forth in the Intercreditor
Agreement, and no such Subsidiary owns capital stock or holds an equity or
similar interest in any other Person. As used in this Agreement, "LIEN" means,
with respect of any asset, any mortgage, lien, pledge, hypothecation, charge,
security interest, encumbrance or adverse claim of any kind and any restrictive
covenant, condition,
9
restriction or exception of any kind that has the practical effect of creating a
mortgage, lien, pledge, hypothecation, charge, security interest, encumbrance or
adverse claim of any kind (including any of the foregoing created by, arising
under or evidenced by any conditional sale or other title retention agreement,
the interest of a lessor with respect to a "Capital Lease" (in accordance with
generally accepted accounting principles), or any financing lease having
substantially the same economic effect as any of the foregoing).
(b) AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under (i) this Agreement, the Guaranty and each of the other
agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement to which it is a party (such
documents, and together with the Notes, the Warrants, the Registration Rights
Agreement, the Security Documents, the Transfer Agent Instructions, the
Intercreditor Agreement and each of the other agreements to be entered into in
connection with the transactions contemplated by this Agreement, as amended,
restated, supplemented and/or modified from time to time in accordance with the
provisions thereof, collectively, the "TRANSACTION DOCUMENTS") and (ii) the
Acquisition Documents (as defined in Section 3(ii)) and to consummate the
transactions contemplated herein and therein in accordance with the terms hereof
and thereof. The execution and delivery of the Transaction Documents and the
Acquisition Documents (to which the Company is a party) by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
have been duly authorized by the board of directors of the Company (the "BOARD
OF DIRECTORS") and other than as set forth in Section 3(e) hereof, no further
filing, consent or authorization is required by the Company, its stockholders or
the Board of Directors. To the extent that a person that is a Subsidiary of the
Company on the date hereof is a party to or bound by a Transaction Document or
an Acquisition Document, such Subsidiary has the requisite power and authority
to enter into and perform its obligations under such Transaction Document or
Acquisition Document and the execution and delivery of such Transaction Document
by such Subsidiary and the consummation by such Subsidiary of the transactions
contemplated thereby have been duly authorized by the board of directors or
equivalent body of such Subsidiary and no further consent or authorization is
required by such Subsidiary, its equity holders or its board of directors or
equivalent body. This Agreement, the other Transaction Documents and the
Acquisition Documents to which the Company and, if applicable, its Subsidiaries
(existing on the date hereof) is a party have been duly executed and delivered
by the Company, and constitute the legal, valid and binding obligations of such
parties enforceable against such parties in accordance with their respective
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies. As of the Closing, the Transaction Documents and the Acquisition
Documents dated after the date of this Agreement and on or prior to the date of
the Closing shall have been duly executed and delivered by the Company and, if
applicable, those Persons who are Subsidiaries of the Company on the date
hereof, and shall constitute the valid and binding obligations of such parties,
enforceable against such parties in accordance with their terms except as
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.
10
(c) OFFER OF SECURITIES. Subject to the accuracy of Buyer's
representations and warranties hereunder, the offer by the Company and ShellCo
of the Securities is exempt from registration under the 1933 Act.
(d) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company, and if applicable its Subsidiaries, and
the consummation by such parties of the transactions contemplated hereby and
thereby and the granting of a security interest in the Collateral will not (i)
result in a violation of any certificate of incorporation, certificate of
formation, any certificate of designations or other constituent documents of the
Company or any of the Subsidiaries, any capital stock of the Company or any of
the Subsidiaries or bylaws of the Company or any of the Subsidiaries or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) in any respect under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or other
remedy in respect of, any agreement, indenture or instrument to which the
Company or any of the Subsidiaries is a party, or (iii) result in a violation of
any Requirements of Law, except in the case of clauses (i) (in respect of the
Foreign Subsidiaries), (ii) and (iii) of this Section 3(d), for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, have a Material Adverse Effect. As used in this Agreement, (A)
"REQUIREMENTS OF LAW" means, as to any Person, any United States or foreign law,
statute, treaty, rule, regulation, right, privilege, qualification, license or
franchise or determination of an arbitrator or a court or other Governmental
Entity, in each case applicable or binding upon such Person or any of its
property or to which such Person or any of its property is subject or pertaining
to any or all of the transactions contemplated or referred to herein and (B)
"GOVERNMENTAL ENTITY" means the government of any nation, state, city, locality
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
(e) CONSENTS. Neither the Company nor any of the Subsidiaries is
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction
Documents to which it is a party, in each case in accordance with the terms
hereof or thereof, except for the following consents, authorizations, orders,
filings and registrations: (i) the filing of appropriate UCC financing
statements with the appropriate states and other authorities pursuant to the
Pledge Agreement and the Security Agreement; (ii) the Perfection Requirements
(as defined in the Security Agreement); (iii) the current report on Form 8-K
required to be filed after Closing by ShellCo pursuant to Section 4(h) of this
Agreement; (iv) the filing of the Schedule 14C relating to the Reverse Split
among other things; (v) the Form D filing required to be made following the
Closing by ShellCo with the SEC; (vi) filings required by applicable state
securities laws; and (vii) the registration statement and related state
securities law filings required by the Registration Rights Agreement. All
consents, authorizations, orders, filings and registrations which the Company is
required to have obtained prior to the date hereof pursuant to the preceding
sentence have been obtained or effected. Notwithstanding the first two sentences
of this Section 3(e), to the extent that any Foreign Subsidiary is required to
obtain any consent, authorization or order, or make any filing or registration,
but has not done so, such failure shall
11
not constitute a default hereunder or under the other Transaction Documents if
such failure(s), individually or in the aggregate, would not have a Material
Adverse Effect.
(f) ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm's length purchaser in respect of the Transaction Documents and the
transactions contemplated hereby and thereby and that, except as set forth on
SCHEDULE 3(F), no Buyer is (i) an officer or director of the Company, (ii) an
"affiliate" of the Company (as defined in Rule 144) or (iii) to the knowledge of
the Company, a "beneficial owner" of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the "1934 Act")). The Company further acknowledges that, except as
set forth on SCHEDULE 3(F), to the knowledge of the Company, no Buyer is acting
as a financial advisor or fiduciary of any of ShellCo, the Company or any
Subsidiary (or in any similar capacity) in respect of the Transaction Documents
and the transactions contemplated hereby and thereby, and any advice given by a
Buyer or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to such Buyer's purchase of the Securities. The Company further
represents to each Buyer that the decision of the Company and each of the
Subsidiaries to enter into the Transaction Documents to which such Person is a
party has been based solely on the independent evaluation by the Company, such
Subsidiaries and their respective representatives.
(g) NO GENERAL SOLICITATION; PLACEMENT AGENT'S FEES. None of the
Company, any of its Affiliates, or to the knowledge of the Company, any Person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with
the offer or sale of the Securities. The Company shall be responsible for the
payment of any placement agent's fees, financial advisory fees, or brokers'
commissions (other than for persons engaged by any Buyer or its investment
advisor) relating to or arising out of the transactions contemplated hereby. The
Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, attorneys' fees and out-of-pocket
expenses) arising in connection with any such claim. The Company acknowledges
that it has engaged the Agent as placement agent in connection with the sale of
the Securities. Other than the Agent, the fees and expenses of whom shall be
borne by the Company or ShellCo (pursuant to that certain Placement Agent
Agreement between Agent and the Company dated August 22, 2006), the Company has
not engaged any placement agent or other agent in connection with the sale of
the Securities.
(h) NO INTEGRATED OFFERING. None of the Company, the Subsidiaries,
any of their Affiliates, nor, to the knowledge of the Company, any Person acting
on their behalf has made, directly or indirectly, any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior or concurrent
offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated other than the Common
PIPE Offering and the Acquisitions, which Common PIPE Offering and the
Acquisitions have been undertaken only in such a manner as to not adversely
12
affect the exemption from registration enjoyed by the sale of the Securities
pursuant to this Agreement. None of the Company, the Subsidiaries, their
Affiliates or any Person acting on their behalf will take any action or steps
referred to in the preceding sentence that would require registration of any of
the Securities under the 1933 Act or cause the offering of the Securities to be
integrated with other offerings. As used in this Agreement, "AFFILIATE" means
any Person who is an "AFFILIATE" as defined in Rule 12b-2 of the General Rules
and Regulations under the 1934 Act.
(i) APPLICATION OF TAKEOVER PROTECTIONS; RIGHTS AGREEMENT. The
Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
(as defined in Section 3(o)) or the laws of Delaware which is or could become
applicable to any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, ShellCo's issuance of the Securities
and any Buyer's ownership of the Securities. The Company has not adopted a
stockholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of its Common Stock or a change in control of the Company.
(j) FINANCIAL STATEMENTS. The consolidated financial statements of
the Company and each of the Targets have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company, or such Target, as applicable, as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments that, to the Company's knowledge, are not material, individually or
in the aggregate. Except for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice, liabilities and
obligations reflected on or reserved against in the June 30, 2006 interim
consolidated balance sheets of the Company or in the June 30, 2006 interim
consolidated balance sheets of any Target, as applicable, prepared in accordance
with GAAP delivered pursuant to Section 7(q) (the "BALANCE SHEETS") and as
otherwise contemplated hereby or disclosed herein or in the disclosure schedules
to this Agreement (the "DISCLOSURE SCHEDULES"), since July 1, 2006, inclusive of
such date, none of the Company or any Target has incurred any liabilities or
obligations that would be required to be reflected or reserved against in a
balance sheet of the Company or such Target, as applicable, prepared in
accordance with the principles used in the preparation of the Balance Sheets.
None of the Company or, to the Company's knowledge, any stockholder, officer or
director of the Company has issued any press release or made any other public
statement or communication on behalf of the Company or otherwise relating to the
Company or any of its Subsidiaries that contains any untrue statement of a
material fact or omits any statement of material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
13
(k) ABSENCE OF CERTAIN CHANGES. Since June 30, 2006, there has been
no change or development in the business, properties, operations, condition
(financial or otherwise) results of operations or prospects of the Company or
any Subsidiary that has had or could reasonably be expected to have a Material
Adverse Effect. Except as set forth on SCHEDULE 3(K), since June 30, 2006, (and
before giving effect to the transactions contemplated under the Transaction
Documents) none of the Company or any Target has (i) declared or paid any
dividends other than as would have been permitted under the Notes, (ii) sold any
assets, individually or in the aggregate, in excess of $300,000 outside of the
ordinary course of business, (iii) had capital expenditures, individually or in
the aggregate, in excess of $300,000 or (iv) waived any material rights in
respect of any Indebtedness or other rights in excess of $300,000 owed to it.
None of the Company or any Target has taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason
to believe that its creditors or the creditors of any Target intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so. Neither the Company nor any
Subsidiary of the Company is as of the date hereof, and after giving effect to
the transactions contemplated hereby to occur at the Closing will be, Insolvent
(as defined below). For purposes of this Section 3(k), "INSOLVENT" means, in
respect of any Person, (i) the present fair saleable value of such Person's
assets (and including as assets for this purpose at a fair valuation all rights
of subrogation, contribution or indemnification arising pursuant to any
guarantees given by such Person) is less than the amount required to pay such
Person's (after giving effect to the Acquisitions) total Indebtedness (as
defined in Section 3(p)), (ii) such Person is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) such Person intends at any time
to incur or believes that it will at any time incur debts that would be beyond
its ability to pay as such debts mature or (iv) such Person has unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.
(l) CONDUCT OF BUSINESS; REGULATORY PERMITS. None of the Company or
any Subsidiary is in violation of any term of or in default under its
certificate of incorporation, certificate of formation, any certificate of
designations of any outstanding series of preferred stock of such company or
Bylaws or their organizational charter or other constituent documents or bylaws,
respectively except for such violations or defaults in the case of Foreign
Subsidiaries which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. None of the Company or any
Subsidiary is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to such entity, and none of the Company
or any Subsidiary will conduct its respective business in violation of any of
the foregoing, except for such violations and/or possible violations which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company and each Subsidiary possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and none of the
Company or any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
except where such proceedings, revocation or modification would not have a
Material Adverse Effect.
14
(m) FOREIGN CORRUPT PRACTICES. None of the Company or any
Subsidiary, nor any director, officer, agent, employee or other Person acting on
behalf of any of them has, in the course of its actions for, or on behalf of,
such entity (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee; except for such actions referred to in clauses (i) through
(iv) which, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
(n) TRANSACTIONS WITH AFFILIATES. Except as set forth in SCHEDULE
3(N) hereto, other than the issuance of restricted stock and the other
arrangements disclosed on SCHEDULE 3(N), none of the officers, directors or
employees of any of the Company or any Subsidiary is presently a party to any
transaction with any of the Company or any Subsidiary (other than for ordinary
course services as employees, officers or directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner.
(o) EQUITY CAPITALIZATION. As of the date hereof and before giving
effect to the Merger, the Acquisitions, and the financings contemplated in the
Transaction Documents, the authorized capital stock of the Company consists of
one million shares of Common Stock, all of which, as of the date hereof, are
issued and outstanding. All of such outstanding shares of Common Stock of the
Company have been validly issued and are fully paid and nonassessable. Except as
disclosed in SCHEDULE 3(O): (i) none of the Company's capital stock is subject
to preemptive rights or any other similar rights or any Liens suffered or
permitted by the Company; (ii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its Subsidiaries,
or contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional capital
stock of the Company or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its Subsidiaries;
(iii) there are no outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing Indebtedness
of the Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound except for such Indebtedness which (x) will
be paid or satisfied in full substantially concurrently with the Closing with
the proceeds of the purchase of securities hereunder, of the Common PIPE
Offering, and under the Senior Loan Agreement or (y) constitutes Permitted
Indebtedness (as defined in the Notes); (iv) there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company or any of its
15
Subsidiaries other than financing statements evidencing Permitted Liens; (v)
there are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except pursuant to the Registration Rights Agreement and the
Common PIPE Registration Rights Agreement and registration rights the Company
has agreed to provide to the Agent, the existing shareholders listed on Schedule
2(b) to the Registration Rights Agreement, certain members of management and the
current holders of ShellCo Common Stock); (vi) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of such Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement; (ix)
all the Company's outstanding options and warrants shall be cancelled at
Closing; and (x) no securities of the Company or any Subsidiary are listed or
quoted on any stock exchange or automated quotation system. All of the Company's
outstanding options and warrants shall be canceled at Closing. Immediately after
giving effect to the Merger, (i) all of the Company's issued and outstanding
stock shall be owned by ShellCo and (ii) all other securities issued by the
Company (including, without limitation, any securities disclosed in Schedule
3(o)) shall have been exchanged for shares of ShellCo's Common Stock. The
Company has made available to the Buyers true, correct and complete copies of
the Company's Certificate of Incorporation, as amended and as in effect on the
date hereof (the "CERTIFICATE OF INCORPORATION"), and the Company's Bylaws, as
amended and as in effect on the date hereof (the "BYLAWS"), and all agreements
relating to securities convertible into, or exercisable or exchangeable for,
shares of Common Stock and the material rights of the holders thereof in respect
thereof.
(p) INDEBTEDNESS AND OTHER CONTRACTS. Except as disclosed in
SCHEDULE 3(P), none of the Company or any Subsidiary (i) has any outstanding
Indebtedness (as defined below) except for Permitted Indebtedness and such
Indebtedness which will be paid or satisfied in full substantially concurrently
with Closing with the proceeds of the purchase of securities hereunder, of the
Common PIPE Offering, and under the Senior Loan Agreement, (ii) is a party to
any contract, agreement or instrument, the violation of which, or default under
which, by the other party(ies) to such contract, agreement or instrument could
reasonably be expected to result in a Material Adverse Effect, (iii) is in
violation of any term of or in default under any contract, agreement or
instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material
Adverse Effect, or (iv) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the
Company's officers, could be reasonably expected to have a Material Adverse
Effect. Immediately after giving effect to the Merger, none of ShellCo, the
Company, any Target, or Subsidiary shall have any outstanding Indebtedness,
other than the Notes, the Permitted Senior Indebtedness (as defined in the
Notes) and the Permitted Indebtedness (as defined in the Notes). For purposes of
this Agreement: (x) "INDEBTEDNESS" of any Person means, without duplication (A)
all indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services, including
(without limitation) "capital leases" in accordance with generally accepted
accounting principles (other
16
than trade payables entered into in the ordinary course of business), (C) all
reimbursement or payment obligations in respect of letters of credit, surety
bonds and other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case in respect
of any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) "CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person in respect of any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss in respect thereof; and (z)
"PERSON" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization or a
government or any department or agency thereof.
(q) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation that if adversely determined, individually or in the
aggregate, would have a Material Adverse Effect before or by, any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company, any
Subsidiary, any of their respective officers or directors, or the Common Stock.
(r) INSURANCE. The Company and each Subsidiary is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which such entities are engaged. None of the
Company or any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.
(s) EMPLOYEE RELATIONS.
(i) None of the Company or any Subsidiary is a party to any
collective bargaining agreement or employs any member of a union. The Company
and its Subsidiaries believe that the Company's relations with its employees and
the relations of its Subsidiaries with
17
their respective Subsidiaries are good. No executive officer (as defined in Rule
3b-7 promulgated under the 0000 Xxx) of the Company or any Subsidiary has
notified the Company or such Subsidiary that such officer intends to leave the
Company or Subsidiary, as applicable, or otherwise intends to terminate such
officer's employment with the Company or Subsidiary. To the knowledge of the
Company, no executive officer of the Company or any Subsidiary is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant and the continued employment of each such executive officer does not
subject the Company or any Subsidiary to any liability in respect of any of the
foregoing matters except such violations and/or liabilities that would not
individually or in the aggregate be reasonably expected to have a Material
Adverse Effect.
(ii) The Company and the Subsidiaries are in compliance with
all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance
therewith would not result, either individually or in the aggregate, in a
Material Adverse Effect.
(t) TITLE. The Company and the Subsidiaries (other than the Foreign
Subsidiaries) have good and marketable title in fee simple to all real property
and good and valid title to all personal property owned by them which is
material to the business of the Company or Subsidiary, as applicable, in each
case free and clear of all Liens except for Permitted Liens (as defined in the
Notes). To the knowledge of the Company, (i) none of the Foreign Subsidiaries
owns fee simple interest in any real property (or the equivalent thereof under
applicable law) and (ii) each of the Foreign Subsidiaries has good and valid
title to all personal property owned by them which is material to the business
of such Subsidiary, except where failure to have good and valid title,
individually or in the aggregate, would not be reasonably expected to have a
Material Adverse Effect, free and clear of all Liens other than Permitted Liens.
Except as set forth on SCHEDULE 3(T), any real property and facilities held
under lease by the Company or any of the Subsidiaries are held by the applicable
entity under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and such Subsidiaries. Where
failures to have such valid, subsisting and enforceable lease(s) exist, such
failures, in the aggregate, would not have a Material Adverse Effect.
(u) INTELLECTUAL PROPERTY RIGHTS. The Company and the Subsidiaries
(other than Foreign Subsidiaries) own or possess and, to the knowledge of the
Company, the Foreign Subsidiaries own or possess, adequate rights or licenses to
use all trademarks, trade names, service marks and all applications and
registrations therefor, patents, patent rights, copyrights, original works of
authorship, inventions, licenses, approvals, governmental authorizations, trade
secrets and other intellectual property rights ("INTELLECTUAL PROPERTY RIGHTS")
necessary to conduct their respective businesses as now conducted. Except as set
forth on SCHEDULE 3(U), none of the Company's or the Subsidiaries' registered,
or applied for, Intellectual Property Rights have expired or terminated or have
been abandoned, or are expected to expire or terminate or expected to be
abandoned, within three years from the date of this Agreement. The terminations,
expirations or abandonments of such registered, or applied for, Intellectual
Property Rights
18
would not, in the aggregate, have a Material Adverse Effect. The Company does
not have any knowledge of any infringement by the Company or any of the
Subsidiaries of Intellectual Property Rights of others except of such
infringement that would not have a Material Adverse Effect. Except as set forth
on SCHEDULE 3(U), there is no claim, action or proceeding being made or brought,
or to the knowledge of the Company, being threatened, against the Company or any
Subsidiary regarding their respective Intellectual Property Rights and any such
claims, actions and proceedings being made, brought or threatened would not in
the aggregate, have a Material Adverse Effect. The Company is unaware of any
facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings which would, individually or in
the aggregate, have a Material Adverse Effect. The Company and the Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their Intellectual Property Rights.
(v) ENVIRONMENTAL LAWS. The Company and the Subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses, (iii) are
in compliance with all terms and conditions of any such permit, license or
approval and (iv) to the Company's knowledge, there are no events, conditions or
circumstances reasonably likely to result in liability of the Company or any
Subsidiary pursuant to Environmental Laws, except where, in the foregoing
clauses (i) through (iv) the failure to so comply with such Environmental Laws,
permits, licenses or other approvals or to obtain such permits, licenses or
approvals would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. The term "ENVIRONMENTAL LAWS" means all
federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
(w) SUBSIDIARY RIGHTS. The Company or one of its Subsidiaries has
the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital
securities of its Subsidiaries owned by the Company or such Subsidiary,
respectively, subject to the Transaction Documents and the Senior Loan
Documents. Each Target or one of their respective Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by such Target or such Subsidiary, subject to the
Transaction Documents and the Senior Loan Documents.
(x) TAX STATUS. Except as set forth on SCHEDULE 3(X), the Company
and each Subsidiary (i) has made or filed all foreign, federal, state and local
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
19
determined to be due on such returns, reports and declarations, except those
being contested in good faith and for which the Company has made appropriate
reserves on its books and (iii) has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. Except as set forth on
SCHEDULE 3(X), there are no material unpaid taxes claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim. Each of the claims set forth on SCHEDULE 3(X) is being
contested in good faith or would not be expected, individually or in the
aggregate, to have a Material Adverse Effect. Except as set forth on SCHEDULE
3(X), no liens have been filed securing taxes and other governmental assessments
and charges and no claims are being asserted by or against the Company or any of
the Subsidiaries in respect of any taxes (other than liens for taxes not yet due
and payable) or other governmental assessments or charges. Except as set forth
on SCHEDULE 3(X), none of the Company or any of the Subsidiaries has received
notice of assessment or proposed assessment of any taxes claimed to be owed by
it or any other Person on its behalf. Except as disclosed on SCHEDULE 3(X), none
of the Company or any of the Subsidiaries is a party to any tax sharing or tax
indemnity agreement or any other agreement of a similar nature that remains in
effect. None of the items set forth on SCHEDULE 3(X) would, individually or in
the aggregate, have a Material Adverse Effect. Each of the Company and the
Subsidiaries has complied in all material respects with all applicable legal
requirements relating to the payment and withholding of taxes and, within the
time and in the manner prescribed by law, has withheld from wages, fees and
other payments and paid over to the proper governmental or regulatory
authorities all amounts required.
(y) INTERNAL ACCOUNTING CONTROLS. The Company and each of the
Subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of consolidated financial statements
in conformity with GAAP and to maintain asset and liability accountability,
(iii) access to assets or incurrence of liabilities is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets and liabilities is compared with the existing
assets and liabilities at reasonable intervals and appropriate action is taken
in respect of any difference.
(z) DISCLOSURE. Each of this Agreement (including the Schedules
hereto), the other Transaction Documents and that certain Private Placement
Memorandum dated October 23, 2006 (including the various attachments thereto),
furnished by or on behalf of the Company regarding the Company, the Targets,
their respective businesses and the transactions contemplated hereby is true and
correct in all material respects and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each press release issued by the Company or its
Subsidiaries (other than the Foreign Subsidiaries) during the twelve (12) months
preceding the date of this Agreement did not at the time of release contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. To the
knowledge of the Company, no press release issued by any Foreign Subsidiary
during the twelve (12) months
20
preceding the date of this Agreement at the time of release contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. No event
or circumstance has occurred or information exists in respect of the Company or
any of its Subsidiaries (other than the Foreign Subsidiaries) or its or their
business, properties, operations or financial condition, which, under applicable
law, rule or regulation, requires public disclosure or announcement by the
Company but which has not been so publicly announced or disclosed. To the
knowledge of the Company, no event or circumstance has occurred or information
exists in respect of any of the Foreign Subsidiaries or its business,
properties, operations or financial condition, which, under applicable
Requirements of Law, requires public disclosure or announcement by such Person
or its parent company but which has not been so publicly announced or disclosed
except where such failure would not reasonably be expected to have a Material
Adverse Effect.
(aa) OTC BULLETIN BOARD. The Common Stock is designated for
quotation on the National Association of Securities Dealers Inc.'s OTC Bulletin
Board (the "INITIAL PRINCIPAL MARKET"). At all times since such designation,
ShellCo has complied with the rules of the Initial Principal Market.
(bb) U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not, nor
has it ever been, a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon any Buyer's request.
(cc) NO OTHER AGREEMENTS. As of the Closing Date, the Company has
not, directly or indirectly, made any agreements with any Buyers relating to the
terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents.
(dd) ACQUISITION DOCUMENTS. To the Company's best knowledge, the
representations and warranties of each Target in the transaction documents
applicable to such Target in connection with the Acquisitions (the "ACQUISITION
DOCUMENTS"), are true and correct in all material respects (except for those
representations and warranties that are qualified by materiality, which are true
and correct in all respects) as of the date when made (except for
representations and warranties that speak as of a specific date, each of are
true and correct as of such date). The Company does not have any reason to
believe that such representations and warranties shall not be true and correct
in all material respects (except for those representations and warranties that
are qualified by materiality, which are expected to continue to be true and
correct in all respects) as of the Closing Date as though made at that time.
(ee) REGULATIONS T, U AND X. Neither the Company nor any other
Subsidiary is and will be engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
T, U or X of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect), and no proceeds of any Note will be used
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
21
(ff) ERISA.
(i) Except as listed on SCHEDULE (EE) hereto, none of the
Company, ShellCo or any of their respective Subsidiaries or any of their
ERISA Affiliates maintains or contributes to, or within the preceding six
(6) years has maintained or contributed to, any Employee Benefit Plan.
Neither the Company, ShellCo nor any of their respective Subsidiaries have
any current labor problems or disputes that have resulted in, or which
such Person reasonably believes could be expected to have, a Material
Adverse Effect on the Company or ShellCo. No Employee Benefit Plan has an
accumulated or waived funding deficiency or permitted decrease which would
create a deficiency in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of
the Internal Revenue Code of 1986, as amended (or any successor statute
thereto) and the regulations thereunder (the "CODE") as of the date
hereof, and no Lien imposed under the Code or ERISA exists or is likely to
arise on account of any Employee Benefit Plan within the meaning of
Section 412 of the Code.
(ii) Liabilities under any Employee Benefit Plan of ShellCo or
any of its Subsidiaries have been appropriately reflected on the financial
statements of ShellCo and its Subsidiaries in accordance with GAAP.
(iii) All of the Employee Benefit Plans are and have been
established and administered in all respects in accordance with all
applicable laws, regulations or orders with respect thereto, no such
failure to comply therewith has, or could be reasonably expected to have,
a Material Adverse Effect on ShellCo or the Company. To the extent that
any Employee Benefit Plan maintained by ShellCo or any of its Subsidiaries
is intended to qualify for favorable tax treatment under any applicable
law, regulation or order, to the knowledge of the ShellCo and the
Subsidiaries, no fact or circumstance exists that could reasonably be
expected to adversely affect the tax-exempt status of such Employee
Benefit Plan.
(iv) All obligations regarding the Employee Benefit Plans have
been satisfied to the extent due and owing on the date hereof, there are
no outstanding defaults or violations by any party to any Employee Benefit
Plan and no taxes, penalties or fees are owing under any of the Employee
Benefit Plans where such obligations, defaults, violations, unpaid taxes,
unpaid penalties or unpaid fees have or could reasonably be expected to
have a Material Adverse Effect on ShellCo or the Company. Except as set
forth on SCHEDULE (EE), neither the Company, ShellCo or any ERISA
Affiliate has incurred any withdrawal liability under ERISA with respect
to any Multiemployer Plan, or is aware of any facts indicating that it or
any of its ERISA Affiliates may in the future incur any such withdrawal
liability, that has, or could reasonably be expected to have, a Material
Adverse Effect on ShellCo or the Company.
(v) ShellCo and each of its Subsidiaries have made available
to the Buyers true, correct and complete copies of all material Employee
Benefit Plans as amended as of the date hereof, as requested by any Buyer.
22
(vi) Each Employee Benefit Plan is fully funded to the extent
required by any applicable law, regulation or order.
(vii) Except as disclosed in SCHEDULE (EE) or as required by
any applicable law, including, without limitation, the Consolidated
Omnibus Budget Reconciliation Act of 1986 or any similar state law,
regulation or order, none of the Employee Benefit Plans provides health
and welfare benefits to retired employees or to the beneficiaries or
dependents of retired employees.
(viii) As used in this Agreement, "EMPLOYEE BENEFIT PLAN"
means an employee benefit plan (other than a Multiemployer Plan) covered
by Title IV of ERISA and maintained (or that was maintained at any time
during the six (6) calendar years preceding the date of any borrowing
hereunder) for employees of any Loan Party or any of its ERISA Affiliates;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case, as in effect from time to time. References to
sections of ERISA shall be construed also to refer to any successor
sections; and "ERISA AFFILIATE" means (a) any Person subject to ERISA
whose employees are treated as employed by the same employer as the
employees of Parent or any of its Subsidiaries under Code Section 414(b),
(b) any trade or business subject to ERISA whose employees are treated as
employed by the same employer as the employees of Parent or any of its
Subsidiaries under Code Section 414(c), (c) solely for purposes of Section
302 of ERISA and Section 412 of the Code, any organization subject to
ERISA that is a member of an affiliated service group of which Parent or
any of its Subsidiaries is a member under Code Section 414(m), or (d)
solely for purposes of Section 302 of ERISA and Section 412 of the Code,
any Person subject to ERISA that is a party to an arrangement with Parent
or any of its Subsidiaries and whose employees are aggregated with the
employees of Parent or any of its Subsidiaries under Code Section 414(o).
(gg) ANTI-TERRORISM LAWS AND ANTI-MONEY LAUNDERING LAWS.
(i) None of the Company or its Subsidiaries is, and after
making due inquiry no Person who owns a controlling interest in or
otherwise controls the Company or any of its Subsidiaries is or is
anticipated to be, (i) listed on the Specially Designated Nationals and
Blocked Persons List maintained by the Office of Foreign Assets Control
("OFAC"), Department of the Treasury, and/or on any other similar list
(collectively, the "LISTS") maintained by the OFAC pursuant to any
authorizing statute, Executive Order or regulation (collectively, "OFAC
LAWS AND REGULATIONS"); or (ii) a Person (a "DESIGNATED PERSON") either
(A) included within the term "designated national" as defined in the Cuban
Assets Control Regulations, 31 C.F.R. Part 515, or (B) designated under
Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed.
Reg. 49079 (published September 25, 2001) or similarly designated under
any related enabling legislation or any other similar Executive Orders
(collectively, the "EXECUTIVE ORDERS").
(ii) None of the Company or its Subsidiaries (x) is a Person
or entity with which any Buyer is prohibited from dealing or otherwise
engaging in any
23
transaction by any OFAC Laws and Regulations and the Executive Orders
(collectively, the "ANTI-TERRORISM LAW") or (ii) is a Person or entity
that commits, threatens or conspires to commit or supports "terrorism" as
defined in the Executive Orders or (y) is affiliated or associated with a
Person or entity listed in the preceding clause (x) or clause (y). To the
knowledge of the Company, none of the Company or its Subsidiaries or
Affiliates, nor any brokers or other agents acting in any capacity in
connection with the securities being offered in connection herewith (A)
deals in, or otherwise engages in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Orders
or (B) engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in any Anti-Terrorism Law.
(iii) To the knowledge of the Company after due inquiry, none
of the Company or its Subsidiaries nor any holder of a direct or indirect
interest in the Company or any of its Subsidiaries (x) is under
investigation by any governmental authority for, or has been charged with,
or convicted of, money laundering under 18 U.S.C. xx.xx. 1956 and 1957,
drug trafficking, terrorist-related activities or other money laundering
predicate crimes, or any violation of the Bank Secrecy Act (31 U.S.C.
Section 5311 et. seq.), and its implementing regulations, Title 31 Part
103 of the U.S. Code of Federal Regulations (the "BSA"), (y) has been
assessed civil penalties under any all applicable laws, regulations and
government guidance on the prevention and detection of money laundering,
including 18 U.S.C. Section 1956 and 1957, (the "ANTI-MONEY LAUNDERING
LAWS"), or (z) has had any of its funds seized or forfeited in an action
under any Anti-Money Laundering Laws.
4. COVENANTS.
(a) BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the covenants and the conditions to be satisfied by it as
provided in Sections 5, 6 and 7 of this Agreement.
(b) FORM D AND BLUE SKY. The Company agrees to cause ShellCo to
timely file a Form D in respect of the Securities as required under Regulation D
and to provide a copy thereof to each Buyer promptly upon request after such
filing. The Company shall, on or before the Closing Date, take such action, or
cause ShellCo to take such action, as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Securities for
sale to the Buyers at the Closing pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States (or to obtain
an exemption from such qualification), and shall upon request provide evidence
of any such action so taken to the Buyers on or prior to the Closing Date.
(c) REPORTING STATUS. Until the later of the date on which (i) the
Investors (as defined in the Registration Rights Agreement) shall have sold all
the Conversion Shares and Warrant Shares and (ii) none of the Notes or Warrants
is outstanding (the "REPORTING PERIOD"), the Company shall cause ShellCo to
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, provided that prior to the filing of the registration statement with the
SEC as required by the Registration Rights Agreement, compliance with the
current public
24
information requirements of Rule 144(c) thereunder shall be sufficient. The
Company shall not permit ShellCo to terminate its status as an issuer required
to file reports under the 1934 Act, even if the 1934 Act or the rules and
regulations thereunder would permit such termination.
(d) USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Securities for general corporate purposes, including general and
administrative expenses and for the purposes set forth on SCHEDULE 4(D) (and not
for the redemption or repurchase of any of its or its Subsidiaries' equity
securities). For clarification purposes only, the acquisition of securities in a
Permitted Acquisition (as defined in the Notes) pursuant to which the applicable
acquisition target becomes a Subsidiary (or a joint venture partner) shall not
be prohibited by this Section 4(d).
(e) FINANCIAL INFORMATION. The Company agrees to cause ShellCo to
send the following to each Investor during the Reporting Period (i) unless the
following are filed with the SEC through XXXXX and are promptly (and in any
event, within two business hours) available to the public through the XXXXX
system, within three (3) Business Days after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K or 10KSB, its Quarterly Reports on Form
10-Q or 10-QSB or any other interim reports or any consolidated balance sheets,
income statements, stockholders' equity statements and/or cash flow statements
filed with the SEC for any period other than annual, any Current Reports on Form
8-K and any registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act, (ii) promptly and in any event, within one (1)
Business Day after the release thereof (unless such press release is available
on PR Newswire or Business Wire), facsimile or e-mailed copies of all press
releases issued by ShellCo, the Company or any of their respective Subsidiaries,
and (iii) copies of any notices and other information made available or given to
the stockholders of ShellCo or the Company generally, contemporaneously with the
making available or giving thereof to the stockholders.
(f) FEES. Subject to Section 8 below, at Closing, the Company shall
pay an expense allowance to Xxxxxx Xxxxxx & Co., L.P. (a Buyer) or its
designee(s) (in addition to any other expense amounts paid to any Buyer prior to
the date of this Agreement) for all reasonable costs and expenses incurred in
connection with the transactions contemplated by the Transaction Documents
(including all reasonable legal fees and disbursements in connection therewith,
documentation and implementation of the transactions contemplated by the
Transaction Documents and due diligence in connection therewith), in an amount
not to exceed $100,000 (in addition to any other expense amounts paid to any
Buyer prior to the date of this Agreement), which amount shall be withheld by
such Buyer from its Purchase Price at the Closing. The Company and ShellCo, as
applicable, shall pay any placement agent's fees, financial advisory fees, or
broker's commissions (other than for Persons engaged by any Buyer) relating to
or arising out of the transactions contemplated hereby, including, without
limitation, any fees or commissions payable to the Agent. The Company shall pay,
or cause ShellCo to pay, and hold, or cause ShellCo to hold, each Buyer harmless
against, any liability, loss or expense (including, without limitation,
reasonable attorney's fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment. Except as otherwise set forth in
the Transaction Documents, each party to this Agreement shall bear its own
expenses in connection with the sale of the Securities to the Buyers.
25
(g) PLEDGE OF SECURITIES. The Company on behalf of itself and
ShellCo acknowledges and agrees, subject to compliance with applicable
securities laws, that the Securities may be pledged by an Investor in connection
with a bona fide margin agreement or other loan or financing arrangement that is
secured by the Securities. Except as otherwise required by applicable securities
laws, the pledge of Securities shall not be deemed to be a transfer, sale or
assignment of the Securities hereunder, and no Investor effecting a pledge of
Securities shall be required to provide the Company or ShellCo with any notice
thereof or otherwise make any delivery to the Company or ShellCo pursuant to
this Agreement or any other Transaction Document, including, without limitation,
Section 2(f); provided that an Investor and its pledgee shall be required to
comply with the provisions of Section 2(f) in order to effect a sale, transfer
or assignment of Securities to such pledgee. The Company hereby agrees to
execute and deliver, and to cause ShellCo to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor.
(h) DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION. On or
before 8:30 a.m., New York City time, on the first Business Day following the
Closing Date, the Company shall cause ShellCo to file a press release (the
"PRESS RELEASE") describing the material terms of the transactions contemplated
by the Transaction Documents. The Company shall cause ShellCo to file, as a
"small business issuer" (as defined in Item 10(a) of Regulation SB under the
1934 Act), a Current Report on Form 8-K describing the terms of the transactions
contemplated by the Transaction Documents on or prior to the date required by
the 1934 Act and attaching the material Transaction Documents (including,
without limitation, this Agreement (and all schedules to this Agreement), the
form of the Notes, the form of the Warrants, the Registration Rights Agreement
and the Security Documents) as exhibits to such filing, if and to the extent
required by the 1934 Act (including all attachments, the "8-K FILING"). From and
after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession
of any material, nonpublic information received from ShellCo, the Company, any
of their respective Subsidiaries or any of its respective officers, directors,
employees or agents, that is not disclosed in a 8-K Filing. The Company shall
not, and shall cause ShellCo and each of their Subsidiaries and each of their
respective officers, directors, employees and agents, not to, provide any Buyer
with any material, nonpublic information regarding ShellCo, the Company or any
of their Subsidiaries from and after the filing of the 8-K Filing with the SEC
without the express written consent of such Buyer. If a Buyer has, or believes
it has, received from the Company or ShellCo any such material, nonpublic
information regarding ShellCo, the Company or any of the Subsidiaries, it shall
provide ShellCo and the Company with written notice thereof. The Company shall,
or shall cause ShellCo to, within four (4) Trading Days (as defined in the
Notes) of receipt of such notice, make public disclosure of such material,
nonpublic information unless the Company has in good faith determined that the
matters relating to such notice do not constitute material non-public
information about the Company. In the event of a breach of the foregoing
covenant by ShellCo, the Company, any of their Subsidiaries, or any of their
respective officers, directors, employees and agents, in addition to any other
remedy provided herein or in the Transaction Documents, a Buyer shall have the
right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information with the
prior approval by ShellCo or the Company. No Buyer shall have any liability to
ShellCo, the Company, any of their Subsidiaries, or any of their respective
officers, directors, employees,
26
stockholders or agents for any such disclosure. Subject to the foregoing, none
of ShellCo, the Company, any of their Subsidiaries or any Buyer shall issue any
press releases or any other public statements in respect of the transactions
contemplated hereby; PROVIDED, HOWEVER, that ShellCo and the Company shall be
entitled, without the prior approval of any Buyer, to make any press release or
other public disclosure in respect of such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable Requirements of Law.
(i) TRANSACTIONS WITH AFFILIATES. From the date of this Agreement
until the first date following the Closing Date on which no Notes or Warrants
are outstanding, the Company shall not, and shall cause each of its Subsidiaries
not to, without the prior written consent of the Holders representing a majority
of the aggregate amount of the Notes then outstanding (the "REQUIRED HOLDERS");
PROVIDED, HOWEVER, that any Note that is held by an Affiliate of the Company
shall not be deemed to be outstanding for the purposes of the determination of
Required Holders enter into, amend, modify or supplement any material
transaction, contract, agreement, instrument, commitment, understanding or other
arrangement with any of its or any Subsidiary's officers, directors, Persons who
were officers or directors at any time during the previous two years,
stockholders, or Affiliates of the Company or any of its Subsidiaries, or with
any individual related by blood, marriage or adoption to any such individual or
with any entity in which any such entity or individual owns a beneficial
interest, unless such agreement, amendment, modification or supplement is (A)
entered into pursuant to arm's length negotiation no (B) customary employment
arrangements and benefit programs on reasonable terms.
(j) ADDITIONAL NOTES; VARIABLE SECURITIES; DILUTIVE ISSUANCES. For
so long as any Buyer beneficially owns any Securities, the Company shall cause
ShellCo not to issue any Notes or other securities that would cause a breach or
default under the Notes. For so long as any Notes or Warrants remain
outstanding, the Company shall cause ShellCo not to, in any manner, issue or
sell any rights, warrants or options to subscribe for or purchase Common Stock
or directly or indirectly convertible into or exchangeable or exercisable for
Common Stock at a price which varies or may vary with the market price of the
Common Stock, including by way of one or more reset(s) to any fixed price,
unless the conversion, exchange or exercise price of any such security cannot be
less than the then applicable Conversion Price (as defined in the Notes) in
respect of the Common Stock into which any Note is convertible or the then
applicable Exercise Price (as defined in the Warrants) in respect of the Common
Stock into which any Warrant is exercisable. Notwithstanding the foregoing
sentence, ShellCo is permitted hereby to issue the Notes and Warrants provided
for hereby and the Warrants under the Common PIPE, which provide in certain
circumstances for adjustments to their exercise and conversion prices, as
applicable. For so long as any Notes or Warrants remain outstanding or until
such time as Stockholder Approval has been obtained, the Company shall cause
ShellCo not to, in any manner, enter into or affect any Dilutive Issuances (as
defined in the Notes) if the effect of such Dilutive Issuance is to cause
ShellCo to be required to issue upon conversion of any Note or exercise of any
Warrant any shares of Common Stock in excess of that number of shares of Common
Stock which ShellCo may issue upon conversion of the Notes and exercise of the
Warrants without breaching ShellCo's obligations under the rules or regulations
of the Principal Market or the stock exchange or automated quotation system upon
which ShellCo's shares of
27
Common Stock are traded, including, without limitation, any and all discounted
issuance rules, if applicable. As used herein, "STOCKHOLDER APPROVAL" shall mean
the affirmative vote by stockholders holding no less than a majority of the
voting power of the Common Stock approving resolutions providing for the
Company's issuance of all of the Securities as described in the Transaction
Documents in accordance with applicable law and the rules and regulations of the
Principal Market. "PRINCIPAL MARKET" shall mean the Initial Principal Market or
other Eligible Market on which the Common Stock is designated for quotation or
listed and principally trades.
(k) CORPORATE EXISTENCE. So long as any Buyer beneficially owns any
Notes or Warrants, as applicable, the Company shall cause ShellCo not to be
party to any Fundamental Transaction (as defined in the Notes) unless ShellCo is
in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Notes and the Warrants.
(l) RESERVATION OF SHARES. For as long as any Buyer owns any Notes
or Warrants, and contingent on the effectiveness of the Reverse Split, the
Company shall cause ShellCo to take all actions necessary to at all times after
the Closing Date have authorized, and reserved for the purpose of issuance, no
less than 130% of the sum of (i) the number of shares of Common Stock issuable
upon conversion of all of the Notes issued at Closing, (ii) the number of shares
of Common Stock issuable upon exercise of the Warrants issued at the Closing,
and (iii) the number of shares of Common Stock issuable upon exercise of the
Common PIPE Warrants (without taking into account any limitations on the
conversion of the Notes or exercise of the Warrants or Common PIPE Warrants set
forth in the Notes, Warrants and Common PIPE Warrants, respectively).
(m) CONDUCT OF BUSINESS. The business of ShellCo, the Company and
their Subsidiaries shall not be conducted in violation of Requirements of Law,
except where such violations would not result, either individually or in the
aggregate, in a Material Adverse Effect.
(n) COMPLIANCE WITH NOTES COVENANTS. From the date of this Agreement
until the first date following the Closing Date on which no Notes are
outstanding, the Company shall comply with and not violate or breach, and shall
cause the Subsidiaries, as applicable, to comply with and not violate or breach,
the covenants and agreements set forth in Section 14 of the Notes as the same
may hereafter be amended, being incorporated herein and made a part hereof.
(o) NO ADDITIONAL REGISTERED SECURITIES. From the Closing Date until
the date that is ninety (90) Trading Days following the Effective Date (as
defined in the Registration Rights Agreement), neither ShellCo nor the Company
will file a registration statement under the 1933 Act, or allow any such
registration statement to become effective, in respect of any securities other
than the Registration Statement contemplated by the Registration Rights
Agreement and the registration rights agreement in respect of the Common PIPE
Offering and/or a registration statement on Form S-8.
(p) INTEGRATION. None of ShellCo, the Company, any of their
affiliates (as defined in Rule 501(b) under the 0000 Xxx) or any person acting
on behalf of ShellCo, the Company or such affiliate will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the 1933 Act) including the Common PIPE Securities
28
which will be integrated with the sale of the Securities or the Conversion
Shares in a manner which would require the registration under the 1933 Act of
the Securities or require stockholder approval under the rules and regulations
of the applicable Principal Market and the Company will take all action that is
appropriate or necessary to assure that its offerings of other securities (other
than the Common PIPE Securities) will not be integrated for purposes of the 1933
Act or the rules and regulations of the applicable Principal Market with the
issuance of Securities contemplated hereby.
(q) NO INCONSISTENT AGREEMENT OR ACTIONS. From the date of this
Agreement until the first date following the Closing Date on which no Notes are
outstanding, the Company and its Subsidiaries shall not enter into any contract,
agreement or understanding (other than the Senior Loan Documents) which limit or
restrict the Company's or any of its Subsidiaries' ability to perform under, or
take any other voluntary action to avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed by it under, this
Agreement or any of the other Transaction Documents.
(r) COLLATERAL AGENT.
(i) Each Buyer hereby (x) appoints Law Debenture Trust Company
of New York, as the collateral agent for such Buyer hereunder (the "COLLATERAL
AGENT"), and (y) each Buyer hereby authorizes the Collateral Agent (and its
officers, directors, employees and agents) in such capacity to take any and all
such actions on its behalf with respect to the Collateral (as defined in the
Security Documents) and the Obligations in accordance with the terms of this
Agreement, the Guaranty, the Security Agreement and the Pledge Agreement. The
Collateral Agent shall not have, by reason hereof or any of the other
Transaction Documents, a fiduciary relationship in respect of any Buyer. Neither
the Collateral Agent nor any of its officers, directors, employees and agents
shall have any liability to any Buyer for any action taken or omitted to be
taken in connection herewith or therewith except to the extent caused by its own
gross negligence or willful misconduct, and each Buyer agrees to defend,
protect, indemnify and hold harmless the Collateral Agent and all of its
officers, directors, employees and agents (collectively, the "CA INDEMNITEES")
from and against any losses, damages, liabilities, obligations, penalties,
actions, judgments, suits, fees, costs and expenses (including, without
limitation, reasonable attorneys' fees, costs and expenses) incurred by such CA
Indemnitee, whether direct, indirect or consequential, arising from or in
connection with the performance by such CA Indemnitee of the duties and
obligations of Collateral Agent pursuant hereto, to the Guaranty, to the
Security Agreement and/or to the Pledge Agreement.
(ii) The Collateral Agent may resign from the performance of
all its functions and duties hereunder at any time by giving at least fifteen
(15) Business Days' prior written notice to the Company and each holder of the
Notes. Such resignation shall take effect upon the acceptance by a successor
Collateral Agent of appointment as provided below. Upon any such notice of
resignation, the holders of a majority of the outstanding principal under the
Notes shall appoint a successor Collateral Agent. Upon the acceptance of the
appointment as Collateral Agent, such successor Collateral Agent shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Collateral Agent, and the retiring Collateral Agent shall be discharged
from its duties and obligations under this Agreement. After any Collateral
Agent's resignation hereunder, the provisions of this Section 4(r) shall inure
to its
29
benefit. If a successor Collateral Agent shall not have been so appointed within
said fifteen (15) Business Day period, the retiring Collateral Agent shall then
appoint a successor Collateral Agent who shall serve until such time, if any, as
the holders of a majority of the outstanding principal under the Notes appoint a
successor Collateral Agent as provided above.
(iii) Without limiting the generality of the foregoing, each
Buyer hereby irrevocably appoints and authorizes Collateral Agent to execute and
deliver the Intercreditor Agreement, the Security Agreement and the Pledge
Agreement (on substantially the terms set forth in the forms of such documents
attached as exhibits hereto) for and on behalf of such Buyer and to perform all
of the obligations and duties of Collateral Agent provided for therein and under
the Guaranty, and each Buyer shall be bound by the terms of the Intercreditor
Agreement, the Guaranty, the Security Agreement and the Pledge Agreement as if
such Buyer were an original signatory thereto. As to (x) any matters not
expressly provided for by this Agreement and the other Transaction Documents
(including, without limitation, enforcement of any security interests) and (y)
any amendments, consents or waivers of any Transaction Document, the Collateral
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Holders, and such instructions of the Required Holders shall be binding upon all
Holders.
(iv) The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
other Transaction Documents. The duties of the Collateral Agent shall be
mechanical and administrative in nature. The Collateral Agent shall not have by
reason of this Agreement or any other Transaction Document a fiduciary
relationship in respect of any Holder. Nothing in this Agreement or any other
Transaction Document, express or implied, is intended to or shall be construed
to impose upon the Collateral Agent any obligations in respect of this Agreement
or any other Transaction Document except as expressly set forth herein or
therein.
(v) If ShellCo or Fortress Credit Corp. (or any successor or
replacement agent under the Senior Loan Agreement) seeks the consent or approval
of the Required Holders to the taking or refraining from taking any action
hereunder, ShellCo shall send notice thereof to each Holder. Any such consents
shall be solicited and tabulated by ShellCo, or a solicitation and/or tabulation
agent engaged by ShellCo, subject to the Collateral Agent's right to receive all
such consents and satisfy itself as to (x) the authenticity of such consents (y)
receipt of such consents from Holders representing a sufficient principal amount
of Notes, and (z) any other matters that the Collateral Agent, in its sole
discretion deems necessary or advisable. It shall not be necessary for such
Holders to approve the particular form of any proposed amendment or waiver, but
it shall be sufficient if the written consents of the Required Holders reflect
the approval of the substance thereof. ShellCo shall provide the Collateral
Agent, and is permitted hereby to provide Fortress Credit Corp. (or any
successor or replacement agent under the Senior Loan Agreement), with copies of
any such written consent(s).
(vi) The Collateral Agent shall promptly notify each Holder
any time that the Required Holders have instructed the Collateral Agent to act
or refrain from acting pursuant hereto. ShellCo or Fortress Credit Corp. (or any
successor or replacement agent under the Senior Loan Agreement) or the
Collateral Agent may at any time request instructions from
30
the Holders in respect of any actions or approvals which by the terms of this
Agreement or of any of the other Transaction Documents the Collateral Agent is
permitted or required to take or to grant, and if such instructions are promptly
requested, the Collateral Agent shall be absolutely entitled to refrain from
taking any action or to withhold any approval under any of the Transaction
Documents until it shall have received such instructions from the Required
Holders. Without limiting the foregoing, no Holder shall have any right of
action whatsoever against the Collateral Agent as a result of the Collateral
Agent acting or refraining from acting under this Agreement or any of the other
Transaction Documents in accordance with the instructions of the Required
Holders unless consent of all Holders is required by the terms of such document.
(s) OTC BULLETIN BOARD. The Company shall cause ShellCo to use best
efforts to comply with the rules of the Principal Market and to cause all of the
Registrable Securities (as defined in the Registration Rights Agreement) covered
by a Registration Statement (as defined in the Registration Rights Agreement) to
be quoted thereon, unless listed or quoted on another Eligible Market. The
Company shall cause ShellCo to promptly secure the listing of all of the
Registrable Securities upon each national securities exchange and automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall cause ShellCo to maintain, so
long as any other shares of Common Stock shall be so listed, such listing of all
Registrable Securities from time to time issuable under the terms of the
Transaction Documents. The Company shall cause ShellCo and its Subsidiaries not
to take any action which would be reasonably expected to result in the
suspension or termination of trading of the Common Stock on the Principal
Market. The Company shall cause ShellCo to pay all fees and expenses in
connection with satisfying its obligations under this Section 4(s).
(t) GUARANTY. On or prior to the Closing, the Company and each
Subsidiary (other than any Foreign Subsidiary) shall execute a Guaranty in the
form attached hereto as EXHIBIT F and shall execute and deliver the Pledge
Agreement and the Security Agreement, in the form attached hereto as EXHIBIT D
and EXHIBIT E, respectively. In addition, if ShellCo, the Company or any other
Grantor (as defined in the Security Documents) shall hereafter own, create or
acquire any other Subsidiary that is not a Grantor hereunder or a party to a
Guaranty, then the Company, ShellCo or such other Grantor shall promptly notify
the Collateral Agent thereof and ShellCo, the Company or such other such Grantor
shall cause such Subsidiary (other than any Foreign Subsidiary) to become a
party to a Guaranty and a party to the Pledge Agreement and the Security
Agreement and to duly execute and/or deliver resolutions, incumbency
certificates, opinions of counsel and other documents, in form and substance
reasonably acceptable to the Collateral Agent or as the Collateral Agent shall
reasonably request in respect thereof.
(u) REGULATION M. The Company will not take any action prohibited by
Regulation M under the 1934 Act, in connection with the distribution of the
Securities contemplated hereby.
(v) GENERAL SOLICITATION. None of the Company, any of its Affiliates
or any person acting within the scope of their delegated authority on behalf of
the Company or such affiliate will solicit any offer to buy or offer or sell the
Securities by means of any form of general solicitation or general advertising
within the meaning of Regulation D, including: (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or
31
similar medium or broadcast over television or radio; and (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.
(w) LIEN SEARCHES. Prior to the Closing Date, the Company shall have
delivered or caused to be delivered to each Buyer (A) copies of UCC financing
statement search results listing any and all effective financing statements
filed in any applicable jurisdiction (in which a secured party required to file
a financing statement to perfect its security interest in the assets of the
Company, ShellCo or any Subsidiary (other than Foreign Subsidiaries) that name
the Company, ShellCo, Merger Sub, or any such Subsidiary as a debtor to perfect
an interest in any of the assets thereof, together with copies of such financing
statements, none of which financing statements, except for any financing
statements filed in respect of the escrowed funds referenced in subsection (xiv)
of the definition of Permitted Indebtedness set forth in Section 28 of the Note,
Permitted Senior Indebtedness, Permitted Priority Indebtedness, the Permitted
Liens (as defined in the Notes), and as otherwise agreed to in writing by the
Buyers, shall cover any of the Collateral, and the results of searches for any
effective tax liens and judgment liens filed against any such Person or its
property in any applicable jurisdiction, which results, except as otherwise
agreed to in writing by the Buyers, shall not show any such effective tax liens
(other than those permitted to exist under the Note) or judgment liens other
than as set forth in SCHEDULE 4(W); and (B) a perfection certificate, duly
completed and executed by the Company and each of the Subsidiaries (other than
the Foreign Subsidiaries), in form and substance reasonably satisfactory to the
Buyers.
5. REGISTERS; TRANSFER AGENT INSTRUCTIONS.
(a) REGISTERS. The Company shall cause ShellCo to maintain at its
principal executive offices (or such other office or agency of ShellCo as it may
designate), a register for the Notes and a register for the Warrants, in which
ShellCo shall record the name and address of the Person in whose name the Notes
or the Warrants, respectively, have been issued (including the name and address
of each transferee), the principal amount of Notes held by such Person, the
number of Conversion Shares issuable upon conversion of the Notes, and Warrant
Shares issuable upon exercise of the Warrants held by such Person. The Company
shall cause ShellCo to keep the registers open and available at all times during
business hours for inspection of any Buyer or its legal representatives.
(b) TRANSFER AGENT INSTRUCTIONS. The Company shall cause ShellCo to
issue instructions to its transfer agent in the form attached hereto as EXHIBIT
J, and any subsequent transfer agent, to issue certificates or credit shares to
the applicable balance accounts at DTC, registered in the name of each Buyer or
its respective nominee(s), for the Conversion Shares and the Warrant Shares
issued at the Closing or upon conversion of the Notes or exercise of the
Warrants in such amounts as specified from time to time by each Buyer to ShellCo
upon conversion of the Notes or exercise of the Warrants in the form of EXHIBIT
J attached hereto (the "TRANSFER AGENT INSTRUCTIONS"). The Company warrants that
no instruction other than the Irrevocable Transfer Agent Instructions referred
to in this Section 5(b), and stop transfer instructions to give effect to
Section 2(g) including in the event that the Registration Statement ceases to be
effective under the Securities Act of 1933, will be given by ShellCo to its
transfer agent, and that the Securities shall otherwise be freely transferable
on the books and records of ShellCo, subject to compliance with applicable
securities law, as and to the extent provided in
32
this Agreement and the other Transaction Documents. If a Buyer effects a sale,
assignment or transfer of the Securities in accordance with Section 2(f), the
Company shall cause ShellCo to permit the transfer and shall promptly instruct
its transfer agent to issue one or more certificates or credit shares to the
applicable balance accounts at DTC in such name and in such denominations as
specified by such Buyer to effect such sale, transfer or assignment. In the
event that such sale, assignment or transfer involves Conversion Shares or
Warrant Shares sold, assigned or transferred pursuant to an effective
registration statement or pursuant to Rule 144, and Buyer provides evidence of
compliance with Rule 144 reasonably acceptable to ShellCo, the transfer agent
shall, subject to compliance with applicable securities laws, issue such
Securities to the Buyer, assignee or transferee, as the case may be, without any
restrictive legend. The Company acknowledges on behalf of itself and ShellCo
that a breach by it of its obligations hereunder will cause irreparable harm to
affected Buyers. Accordingly, the Company acknowledges on behalf of itself and
ShellCo that the remedy at law for a breach of its obligations under this
Section 5(b) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company or ShellCo of the provisions of this Section
5(b), that any affected Buyers shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S AND SHELLCO'S OBLIGATION TO SELL. The
obligation of the Company and ShellCo hereunder to issue and sell the Notes and
the related Warrants to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, reasonably satisfactory to the Company and ShellCo, provided that
these conditions are for the Company's and ShellCo's benefit and may be waived
by the Company and ShellCo at any time in their sole discretion by providing
each Buyer with prior written notice thereof:
(a) Each Buyer and Collateral Agent shall have executed each of the
Transaction Documents to which it is a party and delivered the same to the
Company, and/or ShellCo, as applicable.
(b) Each Buyer shall have delivered to ShellCo or its designee(s)
the Purchase Price (less the amounts withheld pursuant to Section 4(f)) for the
Notes and the related Warrants being purchased by such Buyer at the Closing by
wire transfer of immediately available funds pursuant to the wire instructions
provided by ShellCo.
(c) The representations and warranties of such Buyer shall be true
and correct in all material respects (except for those representations and
warranties that are qualified by materiality or Material Adverse Effect, which
shall be true and correct in all respects) as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, each of which shall be true and
correct as of such date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Closing Date. For clarification purposes only, the
conditions set forth in Sections 6(a) and (b) must be satisfied in all respects,
or waived as provided for in this Section 6.
33
(d) ShellCo shall have executed and delivered the Joinder Agreement.
(e) The Merger shall have been consummated.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The obligation of
each Buyer hereunder to purchase the Notes and the related Warrants at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion
by providing the Company and ShellCo with prior written notice thereof:
(a) Each of the Company, ShellCo and each of their Subsidiaries, to
the extent each is a party thereto, shall have executed and delivered to such
Buyer (i) each of the Transaction Documents, (ii) the Notes (in such principal
amounts as such Buyer shall request) being purchased by such Buyer at the
Closing pursuant to this Agreement and (iii) the Warrants (in such denominations
as such Buyer shall request) being purchased by such Buyer at the Closing
pursuant to this Agreement.
(b) ShellCo shall have delivered to such Buyer a copy of the
Transfer Agent Instructions, in the form of EXHIBIT J attached hereto, which
instructions shall have been delivered to and acknowledged in writing by
ShellCo's transfer agent.
(c) Such Buyer shall have received the opinions of Xxxxx Xxxxxxx
Xxxxxxx Israels LLP, the Company's and ShellCo's outside counsel, Xxxxxxxxxx,
Hyatt & Xxxxxx, FMI International Inc.'s outside counsel and the Law Offices of
Xxxxxxx X. Xx & Associates, the Tug Companies' outside counsel, each dated as of
the Closing Date, in substantially the form of EXHIBIT K attached hereto.
(d) The Company and ShellCo shall have delivered to such Buyer a
copy of a certificate evidencing incorporation, partnership or the formation, as
applicable, and good standing of the Company, ShellCo and each of the
Subsidiaries (other than the Foreign Subsidiaries) in such entity's jurisdiction
of formation issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within the 30 days prior to the Closing Date, which
in the case of the Company and ShellCo shall be certified by the Secretary of
State of the State of Delaware.
(e) The Company and ShellCo shall have delivered to such Buyer a
certificate evidencing the Company's, each Target's and ShellCo's qualification
as a foreign entity and good standing issued by the Secretary of State of the
State (or comparable office) of each jurisdiction in which ShellCo, the Company
or such Target is required to qualify as a foreign entity, each as of a date
within 30 days prior to the Closing Date.
(f) The Board of Directors shall have adopted resolutions consistent
with Section 3(b) above and in a form reasonably acceptable to such Buyer (the
"RESOLUTIONS").
(g) The Company, ShellCo and each entity which is a Subsidiary of
the Company immediately prior to the Closing shall have delivered to deliver to
such Buyer a
34
secretary's certificate in the form attached hereto as EXHIBIT L, executed by
the secretary of such Person and dated as of the Closing Date, certifying (A)
that the attached resolutions adopted by the board of directors of such Person
in connection with the Transaction Documents are true, complete and correct and
remain unamended and in full force and effect, (B) that the attached certificate
of incorporation or certificate of formation of such Person, certified as of a
date within 30 days of the Closing Date, by the secretary of state of the state
of the jurisdiction of its organization, is true, complete and correct and
remains unamended and in full force and effect, (C) that the attached bylaws or
limited liability company agreement or operating agreement of such Person are
true, complete and correct and remain unamended and in full force and effect and
(D) as to the incumbency and specimen signature of each officer of such Person
executing this Agreement, the other Transaction Documents and any other document
delivered in connection herewith on behalf of such Person.
(h) The representations and warranties of the Company, ShellCo and
any Subsidiary set forth in this Agreement or any other Transaction Document
shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality or Material
Adverse Effect, which shall be true and correct in all respects) as of the date
when made and as of the Closing Date as though made at that time (except for
representations and warranties which speak as of a specific date, each of which
shall be true and correct as of such date) and the Company, ShellCo or each
Subsidiary, as applicable, shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by such entity
at or prior to the Closing Date. Such Buyer shall have received a certificate
delivered and executed by the President of each of the Company and ShellCo,
dated as of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by such Buyer in the form attached hereto
as EXHIBIT M.
(i) ShellCo shall have delivered to such Buyer a copy of a letter
from ShellCo's transfer agent certifying the number of shares of Common Stock
outstanding as of a date within the five (5) Business Days prior to the Closing
Date.
(j) The Company and ShellCo shall have (i) obtained all
governmental, regulatory or third party consents and approvals, if any, and (ii)
made all filings under all applicable federal and state securities laws (to the
extent such filings must be made on or prior to the Closing Date in each case)
necessary to consummate the issuance and the sale of the Securities.
(k) On or prior to Closing ShellCo, Fortress Credit Corp., the
Company and certain Subsidiaries party to the Senior Loan Agreement shall have
entered into the Senior Loan Agreement on the terms set forth on EXHIBIT O, and
Fortress Credit Corp., the Company, ShellCo and the Collateral Agent shall have
entered into and delivered the Intercreditor Agreement in the form of EXHIBIT I,
and each Buyer shall have received copies of each Senior Lien Creditor Agreement
(as defined in the Intercreditor Agreement) in effect on the Closing Date,
certified by the Company as being true, correct and complete.
(l) The Company shall have filed such financing statements and other
documents in such offices as the Collateral Agent may request to perfect the
security interests
35
granted under the Security Agreement and the Pledge Agreement (it being
understood that the Collateral Agent shall not file a financing statement in
respect of ShellCo until the Security Agreement has been fully executed).
(m) The Company shall have delivered or caused to be delivered to
such Buyer (A) a perfection certificate, duly completed and executed by the
Company and each of its Subsidiaries, in form and substance reasonably
satisfactory to the Buyers and (B) copies of UCC financing statement search
results listing any and all effective financing statements filed in any
applicable jurisdiction (in which a secured party is required to have filed a
financing statement to perfect its security interest in the assets of Company,
ShellCo, any Target or any of their Subsidiaries, other than the Foreign
Subsidiaries that name the Company, ShellCo, any Target or any of their
respective Subsidiaries (other than the Foreign Subsidiaries) as a debtor to
perfect an interest in any of the assets thereof, together with copies of such
financing statements, none of which financing statements, except for any
financing statements filed in respect of the escrowed funds referenced in
subsection (x) of the definition of Permitted Indebtedness set forth in
subsection 28 of the Notes, Permitted Senior Indebtedness, the Permitted Liens
and as otherwise agreed to in writing by the Buyers, shall cover any of the
Collateral and the results of searches for any effective tax liens and judgment
liens filed against any such Person or its property in any applicable
jurisdiction, which results, except as otherwise agreed to in writing by the
Buyers, shall not show any such effective liens (other than those tax and or
judgment liens described on SCHEDULE 3(X) which liens would not, individually or
in the aggregate, have a Material Adverse Effect).
(n) The Company and each non-Foreign Subsidiary holding equity
interests shall have delivered a Pledge Agreement duly executed by the Company
and such Subsidiaries, together with evidence that any original stock
certificates, certificate or other instrument or document evidencing or
representing the equity interests subject to such Pledge Agreement have been
delivered to the agent under the Senior Loan Agreement, and the Company shall
have delivered to the Collateral Agent of undated instruments of transfer as the
Collateral Agent may request representing (A) one hundred (100%) percent of the
common stock of the Company's or such Subsidiaries' Subsidiaries (other than
those representing the shares of AmeRussia and SeaMaster Hong Kong) and (B)
sixty five (65%) percent of the common stock of AmeRussia and SeaMaster Hong
Kong.
(o) The Company shall have delivered a second mortgage, duly
executed by each applicable Guarantor in respect of the leased real property
located at 3178 and 0000 Xxxxxx Xxxxx, Xxxx Xxxx, Xxxxxxxxxx and 000 Xxxxxxx
Xxxxx, Xxxxxxxx, Xxx Xxxxxx.
(p) The Company shall have delivered a Title Insurance Policy or
bring-down of the existing Title Insurance Policy in respect of the second
mortgages listed in Section 7(o), dated as of the Closing Date.
(q) The Company shall have delivered a UCC filing authorization
letter duly executed by the Company and each non-Foreign Subsidiary, together
with appropriate UCC financing statements, in each case duly filed in such
office or offices as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the liens and security interests purported to be
created by the Security Agreement and Pledge Agreement.
36
(r) The Company shall have delivered all releases, terminations,
registrations, filings and such other documents as the Collateral Agent may
reasonably request to evidence and effectuate the termination by the Existing
Lenders (as defined in the Senior Loan Agreement) of their financing
arrangements with the Company or any non-Foreign Subsidairy (other than as to
certain letters of credit issued in connection with such financing arrangements
on terms and conditions satisfactory to the Collateral Agent) and the
termination and release by them, of any interest in and to any assets and
properties of the Company or such Subsidiary (other than certain cash collateral
pledged to GMAC on the Closing Date) duly authorized, executed and delivered by
it, including, but not limited to, (A) the authorization by or on behalf of the
Existing Lenders for the agent under the Senior Loan Agreement to file UCC
discharge and termination statements for all UCC financing statements previously
filed by any of them or their predecessors, as secured party and the Company or
any non-Foreign Subsidiary, as debtor and (B) satisfactions and discharges of
any mortgage, deed of trust, deed to secure debt or similar instruments by the
Company or any non-Foreign Subsidairy in favor of any of the Existing Lenders,
in form acceptable for recording with the appropriate Governmental Authority,
and the Collateral Agent is hereby authorized to file all such UCC discharge and
termination statements.
(s) The Company shall have delivered such opinion letters of counsel
to the Company in respect of the effectiveness of the Merger as of the Closing
Date.
(t) The Company shall have delivered a certificate of an officer of
the Company and each non-Foreign Subsidiary certifying as to the Solvency of the
Company or such Subsidiary.
(u) The Company shall have delivered a pro forma balance sheet of
ShellCo and its Subsidiaries reflecting the initial transactions contemplated
hereunder, including, but not limited to, (A) the consummation of the
Acquisitions and the other transactions contemplated by the Acquisition
Documents (B) the consummation of the Merger, (C) the loans provided pursuant to
the Senior Loan Agreement and the use of the proceeds thereof and (D) the
issuance of the Notes on the Closing Date and use of the proceeds thereof,
accompanied by a certificate, dated the Closing Date, of the chief financial
officer of the Company stating that such pro forma balance sheet represents the
reasonable, good faith opinion of such officer as to the subject matter thereof
as of the date of such certificate.
(v) The Company shall have delivered evidence satisfactory to the
Buyers of the insurance coverage required by Section 3(r) and the terms of the
Security Agreement, including evidence as to the naming of the Collateral Agent
as a named insured or loss payee thereunder.
(w) All proceedings in connection with the issuance of the Notes and
the other transactions contemplated by this Agreement and the other Transaction
Documents, and all documents incidental hereto and thereto, shall be reasonably
satisfactory to the Buyers, and the Buyers shall have received all such
information and such counterpart originals or certified or other copies of such
documents as the Collateral Agent may reasonably request.
(x) The Common Stock (i) shall be designated for quotation or listed
on an Eligible Market and (ii) shall not have been suspended, as of the Closing
Date, by the SEC or
37
such Eligible Market from trading on such Eligible Market nor shall suspension
by the SEC or such Eligible Market have been threatened, as of the Closing Date,
either (A) in writing by the SEC or such Eligible Market or (B) by falling below
any minimum maintenance requirements of such Eligible Market.
(y) The Company or ShellCo shall have filed a Certificate of Merger
with the Delaware Secretary of State whereby Merger Sub will be merged with and
into the Company, pursuant to which the holders of equity securities of the
Company will receive, in the aggregate, 12,854,893 shares of Common Stock (prior
to giving effect to the Reverse Split) (the "SHARE EXCHANGE"), and, the
shareholders of the Company, immediately prior to the Merger, will own, on a
fully-diluted basis following completion of the Merger, not less than 51% of
ShellCo's common equity.
(z) The Company shall have delivered to each Buyer a copy of the
consolidated audited financial statements of the Company and a copy of the
consolidated audited financial statements of the Targets prepared in accordance
with GAAP for the periods ended December 31, 2004 and December 31, 2005
(provided that in the case of Tug, no balance sheet shall be provided as of
December 31, 2004), which financial statements shall contain an opinion of such
auditor prepared in accordance with generally accepted auditing standards (which
opinion shall be without (x) a "going concern" qualification or exception or (y)
any qualification or exception as to the scope of such audit. ShellCo shall have
delivered to each Buyer a copy of the consolidated pro forma financial
statements of ShellCo for the periods ended the periods ended December 31, 2004
and December 31, 2005, which financial statements shall contain an opinion of
such auditor prepared in accordance with generally accepted auditing standards
(which opinion shall be without any qualification or exception as to the scope
of such audit).
(aa) Each executive officer and officer of ShellCo who assumes the
duties of any such executive officer after the date hereof shall have entered
into employment agreements with the Company and ShellCo in the form of EXHIBIT N
and the Lockup Agreement in the form of EXHIBIT G.
(bb) Since June 30, 2006, there shall not have developed, occurred,
or come into effect or existence any change, or any development involving a
prospective change, in or affecting the position of the Company or ShellCo or
any Target, financial or otherwise, that has had, or would be expected to have,
a Material Adverse Effect.
(cc) ShellCo shall have executed and delivered a joinder agreement
to this Agreement, in the form of EXHIBIT H, dated as of the Closing Date (the
"JOINDER AGREEMENT"), to the effect that upon the Closing (i) each of the
representations and warranties made by the Company set forth in Section 3
hereof, MUTATIS MUTANDIS, shall be true and correct as if each reference to the
Company in such representations and warranties was a reference to ShellCo
(unless otherwise expressly provided therein), (ii) ShellCo assumes all
covenants and obligations of ShellCo set forth herein and (iii) ShellCo assumes
all covenants and obligations of the Company set forth herein (including,
without limitation, all indemnification obligations) as if each obligation of
the Company and each reference thereto contained elsewhere herein was an
obligation of and a reference to ShellCo. These requirements shall be amended to
reflect the
38
requirements set forth in the Senior Loan in respect of financial statements of
the Company and Targets.
(dd) The Merger shall have been consummated, on terms and conditions
satisfactory to the Buyer, prior to or contemporaneously with the occurrence of
the Closing Date.
(ee) The Company shall not have made any public announcement
regarding the transactions contemplated by the Agreement prior to the Closing.
(ff) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as such
Buyer or its counsel may reasonably request.
8. TERMINATION. In the event that the Closing shall not have occurred in
respect of a Buyer on or before the fifth (5th) Business Day from the date
hereof due to the Company's or such Buyer's failure to satisfy the conditions
set forth in Sections 6 and 7 above (and the nonbreaching party's failure to
waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement in respect of such breaching party at the
close of business on such date without liability of any party to any other
party; PROVIDED, HOWEVER, if this Agreement is terminated pursuant to this
Section 8 (other than due to a breach by Xxxxxx Xxxxxx & Co., L.P.), the Company
shall remain obligated to reimburse Xxxxxx Xxxxxx & Co., L.P. for the expenses
described in Section 4(f).
9. MISCELLANEOUS.
(a) GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The Company hereby appoints
Corporation Service Company as its agent for service of process in New York.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
39
(b) COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all
other prior oral or written agreements between the Buyers, the Company, their
affiliates and Persons acting on their behalf in respect of the matters
discussed herein, and this Agreement, the Transaction Documents and the
instruments referenced herein contain the entire understanding of the parties in
respect of the matters covered herein and therein and, except as specifically
set forth herein or therein, none of the Company, ShellCo, their respective
Subsidiaries nor any Buyer makes any representation, warranty, covenant or
undertaking in respect of such matters. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company, ShellCo
and the Required Holders, and any amendment to this Agreement made in conformity
with the provisions of this Section 9(e) shall be binding on all Buyers and
holders of Securities as applicable. No provision hereof may be waived other
than by an instrument in writing signed by the party against whom enforcement is
sought. No such amendment shall be effective to the extent that it applies to
less than all of the holders of the applicable Securities then outstanding. No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of the parties to the
Transaction Documents, holders of Notes or holders of the Warrants, as the case
may be. The Company has not, directly or indirectly, made any agreements with
any Buyers relating to the terms or conditions of the transactions contemplated
by the Transaction Documents except as set forth in the Transaction Documents.
Without limiting the foregoing, the Company confirms that, except as set forth
in this Agreement and the applicable Transaction Documents and the documents
relating to the Common PIPE Securities, if a buyer of Common PIPE Securities, no
Buyer has made any commitment or promise or has any other obligation to provide
any financing to the Company or otherwise.
(f) NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally provided same is on a Business Day and, if not, on the next
Business Day; (ii) upon receipt, when sent by facsimile (provided that
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party) provided same is on a Business Day and, if
not, on the next Business Day; (iii) one (1) Business Day after deposit with an
overnight courier service, in each
40
case properly addressed to the party to receive the same; or (iv) if sent by
certified mail, return receipt requested, when received or three (3) days after
deposited in the mails, whichever occurs first. The addresses and facsimile
numbers for such communications shall be:
If to the Company:
Maritime Logistics US Holdings Inc.
000 Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
with a copy to:
Xxxxx Xxxxxxx Berlack Israels LLP
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx XxXxxxxxx, Esq.
Xxxx X. Xxxxxxx, Xx., Esq.
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,
with a copy (for informational purposes only) to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns, including any purchasers of the Notes or the Warrants. The
Company shall not assign this Agreement or any
41
rights or obligations hereunder without the prior written consent of the
Required Holders, including by way of a Fundamental Transaction (unless the
Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Notes and the Warrants). Subject to compliance
with applicable securities laws, a Buyer may assign some or all of its rights
hereunder and under the other Transaction Documents without the consent of the
Company, in which event such assignee shall be deemed to be a Buyer hereunder
and thereunder in respect of such assigned rights provided that the Collateral
Agent and/or Buyer provide Company and ShellCo with written notice of such
assignment within ten (10) Business Days after such assignment is consummated.
(h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person except to the extent set forth in Section 9(k).
(i) SURVIVAL. Unless this Agreement is terminated under Section 8,
the representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5, 8
and 9 shall survive the Closing and the delivery, conversion and exercise of the
Securities, as applicable. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) INDEMNIFICATION.
(i) In consideration of each Buyer's execution and delivery of
the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company's other obligations under the Transaction
Documents, unless this Agreement is terminated under Section 8 hereof, the
Company on behalf of itself and ShellCo, shall defend, protect, indemnify and
hold harmless each Buyer and each other holder of the Securities and all of
their stockholders, partners, members, officers, directors, employees and direct
or indirect investors and any of the foregoing Persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company or ShellCo in any Transaction Document or any other certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company or ShellCo contained in any
Transaction Document or any other certificate, instrument or document
contemplated hereby or thereby or (c) any
42
investigation, cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company or ShellCo) and arising out of or resulting
from (i) the execution, delivery, performance or enforcement of any Transaction
Document or any other certificate, instrument or document contemplated hereby or
thereby, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities, or
(iii) the status of such Buyer or holder of the Securities as an investor in the
Company or ShellCo pursuant to the transactions contemplated by the Transaction
Documents. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law provided that the Company shall not be
obligated to indemnify such Buyer or Collateral Agent for any Indemnified
Liabilities caused by the gross negligence or willful misconduct of any Buyer or
Collateral Agent.
(ii) Without limiting Section 9(k)(i) hereof, the Company and
each non-Foreign Subsidiary, jointly and severally, defend, indemnify, and hold
harmless the Indemnitees against any and all Environmental Liabilities and costs
and all other claims, demands, penalties, fines, liability (including strict
liability), losses, damages, costs and expenses (including without limitation,
reasonable legal fees and expenses, consultant fees and laboratory fees),
arising out of (A) any releases or threatened releases (x) at any property
presently or formerly owned or operated by the Company or any Subsidiary of the
Company, or any predecessor in interest, or (y) of any Hazardous Materials
generated and disposed of by any the Company or any Subsidiary of the Company,
or any predecessor in interest; (B) any violations of Environmental Laws; (C)
any Environmental cause of action relating to the Company or any Subsidiary of
any the Company, or any predecessor in interest; (D) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
exposure to Hazardous Materials used, handled, generated, transported or
disposed by the Company or any Subsidiary of the Company, or any predecessor in
interest; and (E) any breach of any warranty or representation regarding
environmental matters made by the Company in Section 3(v). Notwithstanding the
foregoing, the Company and its Subsidiaries shall not have any obligation to any
Indemnitee under this subsection (ii) regarding any potential environmental
matter covered hereunder which is caused by the gross negligence or willful
misconduct of such Indemnitee, as determined by a final non-appeallable judgment
of a court of competent jurisdiction.
(iii) Promptly after receipt by Indemnitee under this Section
9(k) of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such
Indemnitee shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 9(k), deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnitee, as the case may be; PROVIDED, HOWEVER,
that an Indemnitee shall have the right to retain its own counsel with the fees
and expenses of not more than one counsel for such Indemnitee to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnitee and the
indemnifying party would be
43
inappropriate due to actual or potential differing interests between such
Indemnitee and any other party represented by such counsel in such proceeding.
In the case of an Indemnitee, legal counsel referred to in the immediately
preceding sentence shall be selected by Required Holders, to which the claim
relates. The Indemnitee shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnitee which relates to such action or claim.
The indemnifying party shall keep the Indemnitee reasonably apprised at all
times as to the status of the defense or any settlement negotiations in respect
thereof. No indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its prior written consent; PROVIDED,
HOWEVER, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the prior written
consent of the Indemnitee, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnitee of a release
from all liability in respect to such claim or litigation, and such settlement
shall not include any admission as to fault on the part of the Indemnitee.
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnitee in respect of all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnitee under this
Section 9(k), except to the extent that the indemnifying party is materially
prejudiced in its ability to defend such action.
(iv) The indemnification required by this Section 9(k) shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified
Liabilities are incurred.
(v) The indemnity agreements contained herein shall be
in addition to (A) any cause of action or similar right of the Indemnitee
against the indemnifying party or others, and (B) any liabilities the
indemnifying party may be subject to pursuant to the law.
(l) NO STRICT CONSTRUCTION. The language used in the Transaction
Documents will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
(m) REMEDIES. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes on behalf of itself and ShellCo that in the event that it
fails to perform, observe, or discharge any or all of its obligations under the
Transaction Documents, any remedy at law may prove to be inadequate relief to
the Buyers. The Company therefore agrees that the Buyers shall be entitled to
seek
44
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages and without posting a bond or other security.
(n) RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Buyer exercises a right, election, demand or
option under a Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then such Buyer may
rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.
(o) PAYMENT SET ASIDE. To the extent that the Company or ShellCo
makes a payment or payments to the Buyers hereunder or pursuant to any of the
other Transaction Documents or the Buyers or the Collateral Agent, as
applicable, enforce or exercise their rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, foreign, state
or federal law, common law or equitable cause of action), then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
(p) INDEPENDENT NATURE OF BUYERS' OBLIGATIONS AND RIGHTS. The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group in respect of such obligations or the
transactions contemplated by the Transaction Documents and the Company
acknowledges on behalf of itself and ShellCo that the Buyers are not acting in
concert or as a group in respect of such obligations or the transactions
contemplated by the Transaction Documents. Each Buyer confirms that it has
independently participated in the negotiation of the transaction contemplated by
this Agreement and the Transaction Documents with the advice of its own counsel
and advisors, that it has independently determined to enter into the
transactions contemplated hereby and thereby, that it is not relying on any
advice from or evaluation by any other Buyer, and that it is not acting in
concert with any other Buyer in making its purchase of Securities hereunder or
in monitoring its investment in ShellCo. The Buyers and, to its knowledge, the
Company agree that no action taken by any Buyer pursuant hereto or to the other
Transaction Documents, shall be deemed to constitute the Buyers as a
partnership, an association, a joint venture or any other kind of entity or
group, or create a presumption that the Buyers are in any way acting in concert
or would deem such Buyers to be members of a "group" for purposes of Section
13(d) of the 1934 Act. The Buyers each confirm that they have not agreed to act
together for the purpose of acquiring, holding, voting or disposing of equity
securities of ShellCo. The Company has elected to provide all Buyers with
45
the same terms and Transaction Documents for the convenience of the Company and
not because it was required or requested to do so by any of the Buyers. The
Company acknowledges on behalf of itself and ShellCo that such procedure in
respect of the Transaction Documents in no way creates a presumption that the
Buyers are in any way acting in concert or as a "group" for purposes of Section
13(d) of the 1934 Act in respect of the Transaction Documents or the
transactions contemplated hereby or thereby. Except as otherwise set forth
herein or in the Transaction Documents, each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement, or out of the Registration Rights
Agreement, its Note, its Warrant and the right of set-off under the Guaranties,
and it shall not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose.
(q) INTERCREDITOR AGREEMENT. This Agreement and each of the
provisions hereof shall be subject to the Intercreditor Agreement.
[SIGNATURE PAGES FOLLOW]
46
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
COMPANY:
MARITIME LOGISTICS US HOLDINGS INC.
By: ____________________________
Name:
Title:
ACKNOWLEDGED AND AGREED
as of the date first written above solely
as to Sections 4(r) and 4(t), and 7(k), 7(l),
7(n), 7(q), 7(r), 7(v) and 7(w) and 9(g),
9(k) and 9(o) of this Securities Purchase
Agreement
By: LAW DEBENTURE TRUST
COMPANY OF NEW YORK
_______________________________
Name:
Title:
47
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
SILVER OAK CAPITAL, L.L.C.
By: ____________________________
Name:
Title:
48
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
[INVESTOR NAME]
By: ____________________________
Name:
Title:
49
SCHEDULE OF BUYERS
------------------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5) (6)
------------------------------------------------------------------------------------------------------------------------------------
ORIGINAL NUMBER OF LEGAL REPRESENTATIVE'S
PRINCIPAL WARRANT ADDRESS AND
BUYER ADDRESS AND FACSIMILE NUMBER AMOUNT OF NOTES SHARES PURCHASE PRICE FACSIMILE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Silver Oak Capital, L.L.C. [ ] $14,000,000.00 509,091 $14,000,000.00 XXXX, WEISS, RIFKIND,
Attention: XXXXXXX & XXXXXXXX LLP
Facsimilie: 1285 Avenue of the
Telephone: Americas | New York, NY
Residence: 10019-6064
Attn: Xxxx Xxxx
------------------------------------------------------------------------------------------------------------------------------------
Alexandra Global Master Fund c/o Alexandra Investment $4,000,000.00 145,455 $4,000,000.00
LTD Management, LLC
000 Xxxxx Xxxxxx,
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Dov Gal
Xxxxxxx Xxxxxxxxx
Facsimilie:
Telephone:
Residence:
------------------------------------------------------------------------------------------------------------------------------------
Bay Harbour Management 000 Xxxxx Xxx, 00xx Xxxxx $2,750,000.00 100,000 $2,750,000.00
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Xxxxxx Xxx Xxxx
Facsimilie:
Telephone:
Residence:
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CAMOFI Master LDC c/o Centrecourt Asset $7,000,000.00 254,545 $7,000,000.00
Management LLC
000 Xxxxxxx Xxxxxx, 0xx
Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Facsimilie:
Telephone:
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50
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ORIGINAL NUMBER OF LEGAL REPRESENTATIVE'S
PRINCIPAL WARRANT ADDRESS AND
BUYER ADDRESS AND FACSIMILE NUMBER AMOUNT OF NOTES SHARES PURCHASE PRICE FACSIMILE NUMBER
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Diamond Opportunity Fund, LLC 000 Xxxxxx Xxxx, Xxxxx 000 $250,000.00 9,091 $250,000.00
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Facsimilie:
Telephone:
Residence:
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Evolution Master Fund LTD SPC, c/o Evolution Capital $7,000,000.00 254,545 $7,000.000.00
Segregated Portfolio M Management, LLC
0000 Xxxxxx Xxxxxx, Xxxxx
0000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Facsimilie:
Telephone:
Residence:
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Harvest Capital, LP Xxxxxxxx X. Xxxxxxx $434,000.00 15,782 $434,000.00
c/o Harvest Management LLC
000 Xxxxxxx Xxxxxx - 00xx
Xxxxx
Xxx Xxxx, XX 00000
Attention:
Facsimilie:
Telephone:
Residence:
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Harvest Offshore Investors, c/o Harvest Management LLC $832,000.00 30,255 $832,000.00
Ltd. 000 Xxxxxxx Xxxxxx - 00xx
Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X.
Xxxxxxx
Facsimilie:
Telephone:
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51
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ORIGINAL NUMBER OF LEGAL REPRESENTATIVE'S
PRINCIPAL WARRANT ADDRESS AND
BUYER ADDRESS AND FACSIMILE NUMBER AMOUNT OF NOTES SHARES PURCHASE PRICE FACSIMILE NUMBER
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TE Harvest Portfolio, Ltd. c/o Harvest Management LLC $734,000.00 26,691 $734,000.00
000 Xxxxxxx Xxxxxx - 00xx
Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X.
Xxxxxxx
Facsimilie:
Telephone:
Residence:
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JMG Capital Partners, LP 00000 Xxxxxxxx Xxxx, $2,000,000.00 72,727 $2,000,000.00
Xxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
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JMG Triton Offshore Fund, Ltd Xxxxxxx Xxx $2,000,000.00 72,727 $2,000,000.00
Road Town Tortola BVI
00000 Xxxxxxxx Xxxx, Xxx
0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Facsimilie:
Telephone:
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Shoshone Partners, L.P. 000 Xxxxxxxxx Xxxx. $1,875,000.00 68,182 $1,875,000.00
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Xxx Xxxxx-Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
Facsimilie:
Telephone:
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52
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ORIGINAL NUMBER OF LEGAL REPRESENTATIVE'S
PRINCIPAL WARRANT ADDRESS AND
BUYER ADDRESS AND FACSIMILE NUMBER AMOUNT OF NOTES SHARES PURCHASE PRICE FACSIMILE NUMBER
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Xxxxx Partners, L.P. 000 Xxxxxxxxx Xxxx. $2,931,000.00 106,582 $2,931,000.00
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Xxx Xxxxx-Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
Facsimilie:
Telephone:
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Finderne LLC 000 Xxxxxxxxx Xxxx. $119,000.00 4,327 $119,000.00
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Xxx Xxxxx-Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
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Telephone:
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Mulsanne Partners, L.P. 000 Xxxxxxxxx Xxxx. $22,000.00 800 $22,000.00
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Xxx Xxxxx-Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
Facsimilie:
Telephone:
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53
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ORIGINAL NUMBER OF LEGAL REPRESENTATIVE'S
PRINCIPAL WARRANT ADDRESS AND
BUYER ADDRESS AND FACSIMILE NUMBER AMOUNT OF NOTES SHARES PURCHASE PRICE FACSIMILE NUMBER
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Matterhorn Offshore Fund Ltd. 000 Xxxxxxxxx Xxxx. $4,592,000.00 166,982 $4,592,000.00
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Xxx Xxxxx-Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
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CommonFund Hedged Equity 000 Xxxxxxxxx Xxxx. $351,000.00 12,764 $351,000.00
Company Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Xxx Xxxxx-Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
Facsimilie:
Telephone:
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Good Xxxxxxx Trading Co. s.p.c. 000 Xxxxxxxxx Xxxx. $110,000.00 4,000 $110,000.00
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Xxx Xxxxx-Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx
Facsimilie:
Telephone:
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54
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ORIGINAL NUMBER OF LEGAL REPRESENTATIVE'S
PRINCIPAL WARRANT ADDRESS AND
BUYER ADDRESS AND FACSIMILE NUMBER AMOUNT OF NOTES SHARES PURCHASE PRICE FACSIMILE NUMBER
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Radcliffe SPC, Ltd. for and on c/o RG Capital Management, $4,000,000.00 145,455 $4,000,000.00
behalf of the Class A L.P.
Segregated Portfolio 0 Xxxx Xxxxx - Xxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx X.
Xxxxxxxxxx
Facsimilie:
Telephone:
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Wolverine Convertible c/o Wolverine Asset $500,000.00 18,182 $500,000.00
Arbitrage Trading, Limited Management
000 X Xxxxxxx #000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Xxxxxx Xxxxx
Facsimilie:
Telephone:
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55
EXHIBITS
Exhibit A Form of Notes
Exhibit B Form of Warrant
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Pledge Agreement
Exhibit E Form of Security Agreement
Exhibit F Form of Guaranty
Exhibit G Form of Lockup Agreement
Exhibit H Form of Joinder Agreement
Exhibit I Form of Intercreditor Agreement
Exhibit J Form of Transfer Agent Instructions
Exhibit K Form of Opinions of Counsel
Exhibit L Form of Secretary's Certificate
Exhibit M Form of Officer's Certificate
Exhibit N Form of Employment Agreements
Exhibit O Form of Senior Loan Agreement
SCHEDULES
Schedule 3(a) Organization and Qualification
Schedule 3(f) Acknowledgement Regarding Buyer's Purchase of Securities
Schedule 3(k) Absence of Certain Changes
Schedule 3(n) Transactions with Affiliates
Schedule 3(o) Equity Capitalization; Debt
Schedule 3(p) Indebtedness and Other Contracts
Schedule 3(t) Title
Schedule 3(u) Intellectual Property Rights
Schedule 3(x) Tax Status
Schedule 4(d) Use of Proceeds
Schedule (ee) ERISA
