Document/Exhibit Description Pages Size
1: 10-K Annual Report 73 419K
2: EX-3.1 Amended and Restated Certificate of Incorporation 25 103K
3: EX-10.13 Amended and Restated Agreement 21 54K
4: EX-10.14 Revised Facility Agreement 231 790K
5: EX-10.15 Senior Subordinated Loan Agreement 63 141K
6: EX-10.16 Material Contract 6 30K
7: EX-10.17 Management Stock Purchase Agreement 11 46K
8: EX-10.18 Agreement 177 640K
9: EX-10.19 Form of Agreement Evidencing A Grant of Stock 7 31K
Option
10: EX-10.20 Amended & Restated Shareholders Agreement 34 130K
11: EX-10.21 Securities Purchase Agreement 5 15K
12: EX-21.1 Subsidiaries 2 11K
13: EX-27 Financial Data Schedule 2 7K
EXHIBIT 10.15
================================================================================
SENIOR SUBORDINATED LOAN AGREEMENT
DATED AS OF
February 3, 1999
BETWEEN
THE DERBY CYCLE CORPORATION
AND
VENCAP HOLDINGS (1992) PTE LTD.
================================================================================
SENIOR SUBORDINATED LOAN AGREEMENT
----------------------------------
This SENIOR SUBORDINATED LOAN AGREEMENT (this "Agreement") is entered
into as of this third day of February 1999, by and between the Derby Cycle
Corporation, a Delaware corporation ("Borrower"), and Vencap Holdings (1992) Pte
Ltd. ("Lender"), a Singapore corporation.
BACKGROUND
----------
WHEREAS, Diamond Back International Company Limited, a British Virgin
Islands corporation ("Diamond Back"), Western States Import Company, Inc., a
California corporation ("Western States"), Bejka Trading, A.B., a Swedish
corporation ("Bejka," and together with Diamond Back and Western States, the
"Vendors"), Borrower, and Derby Sweden A.B., a Swedish corporation which is
wholly-owned by Borrower ("Derby Sweden," and together with Borrower, the
"Purchasers"), entered into an Agreement Relating to the Sale and Purchase of
Certain of the Business Assets of Vendors, dated December 8, 1998 (the
"Acquisition Agreement") pursuant to which Purchasers agreed to purchase from
Vendors and Vendors agreed to sell to Purchasers, certain of the assets of
Vendors.
WHEREAS, Lender desires to make a loan to Borrower, and Borrower
desires to borrow from Lender, for the purposes of financing the purchase of the
assets of Vendors pursuant to the Acquisition Agreement.
AGREEMENT
---------
NOW, THEREFORE, Borrower and Lender hereby agree as follows:
SECTION 1
---------
DEFINITIONS
-----------
1.1. Certain Defined Terms. The following terms used in this Agreement
---------------------
have the following meanings:
"Accountant's Report" means (i) the audited consolidated balance sheet
-------------------
of Borrower and Borrower's Affiliated Companies and the related statements of
income and cash flows for the fiscal year ending December 31, 1997, and (ii) the
September 27, 1998 unaudited balance sheet of Borrower and Borrower's Affiliated
Companies and the related statements of income and cash flows for the nine-month
period ending September 27, 1998.
"Acquisition" means the acquisition of certain of Vendors' assets by
-----------
Purchasers pursuant to the Acquisition Agreement.
"Acquisition Agreement" means the Agreement between Vendors and
---------------------
Purchasers relating to the sale and purchase of certain of the business assets
and rights, and the assumption of certain liabilities, involved in the bicycle,
parts and accessories and fitness equipment distribution business carried on
under the principal trade name "Diamondback" dated December 8, 1998.
"Act" means the Securities Act of 1933, as amended from time to time,
---
or any successor statute.
"Affiliate" means, as to any Person, any other Person which directly
---------
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under
3
common control with") means possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of securities, or partnership or other ownership interests, by
contract or otherwise); provided that, in any event, any Person which owns
-------------
directly or indirectly five percent (5%) or more of the securities having
ordinary voting power for the election of directors or other members of the
governing body of a corporation or five percent (5%) or more of the partnership
or other ownership interests of any other Person (other than as a limited
partner of such other Person) will be deemed to control such corporation or
other Person.
"Affiliated Companies" means Borrower's Subsidiaries.
--------------------
"Agreement" means this Senior Subordinated Loan Agreement, as it may
---------
be amended from time to time.
"Bankruptcy Code" means the Bankruptcy Reform Act, Title 11 of the
---------------
United States Code, as amended or recodified from time to time, or any successor
statute.
"Board" means the Board of Governors of the Federal Reserve System.
-----
"Borrower" has the meaning set forth in the first paragraph of this
--------
Agreement.
"Business" means the business of Borrower and its Affiliated Companies
--------
as conducted immediately prior to the Closing Date.
"Business Day" means any day on which commercial banks in Singapore,
------------
London, New York, and Washington D.C. are required to be open for business.
4
"Capital Lease" as applied to any Person, means any lease of any
-------------
property (real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"Change of Control" has the same meaning as the term "Change of
-----------------
Control" as such term is defined in the Indenture Agreements.
"Closing Date" means the date hereof.
------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, or any successor statute.
"Competitor" means any Person, business entity or enterprise which
----------
engages in or proposes to engage in the service, manufacture, merchandising,
distribution or sale of the services, products or goods that Borrower and
Borrower's Affiliated Companies manufacture, merchandise, distribute or sell.
"Debt Instruments" has the meaning set forth in Section 3.2.22.
----------------
"DM Senior Notes" means the 93/8% Senior Notes due May 14, 2008 in an
---------------
original principal amount equal to DM 110,000,000 issued by Borrower and Lyon
pursuant to the Indenture dated as of May 14, 1998 by and among Borrower, Lyon
and IBJ Schroder Bank and Trust Company, as Trustee.
"Dollars" and "$" mean the lawful money of the United States of
-------
America.
5
"EBITDA" has the same meaning as the term "Consolidated Adjusted
------
EBITDA, as such term is defined in the Senior Credit Facility, as in effect
after being amended on or about the date hereof.
"Environmental Damages" means all claims, judgments, damages, losses,
---------------------
penalties, fines, liabilities (including strict liability), encumbrances, liens,
costs, and expenses of investigation and defense of any claim, whether or not
such claim is ultimately defeated, and of any good faith settlement of judgment,
of whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including without limitation reasonable attorneys'
fees and disbursements and consultants' fees, any of which are incurred at any
time as a result of the existence of Hazardous Material upon, about, beneath,
any properties owned, leased or operated by Borrower or any of its Affiliated
Companies or migrating or threatening to migrate to or from such properties, or
the existence of a violation of any Environmental and Safety Laws pertaining to
such properties, regardless of whether the existence of such Hazardous Material
or the violation of Environmental and Safety Laws arose prior to the present
ownership or operation of such properties.
"Environmental and Safety Laws" means any and all applicable current
-----------------------------
and future treaties, laws, statutes, regulations, enforceable requirements,
binding determinations, orders, decrees, judgments, injunctions, permits,
approvals, authorizations, licenses, permissions, notices or binding agreements
issued, promulgated or entered by any Governmental Authority, relating to the
environment, to employee health or safety, to preservation or reclamation of
natural resources, or to the management, release or threatened release of
contaminants or noxious odors, including, in the case of Persons subject to the
laws of the United States, the Hazardous Materials Transportation Act, the
Comprehensive Environmental Response, Compensation and Liability
6
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 ("CERCLA"), the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, the Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1977, the Clean Air Act of 1970, as amended by the Clean Air Act
Amendments of 1990, the Toxic Substances Control Act of 1976, the Occupational
Safety and Health Act of 1970, as amended, the Emergency Planning and Community
Right-to-Know Act of 1986, the Safe Drinking Water Act of 1974, as amended, and
any similar or implementing state law, and all amendments or regulations
promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, or any successor statute.
"ERISA Affiliate" means each Person (as defined in Section 3(9) of
---------------
ERISA) whether or not incorporated, which is a Subsidiary of or under common
control or would be considered a single employer with Borrower or any of
Borrower's Material Affiliated Companies which are domiciled in the United
States within the meaning of Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated under those sections, or within the meaning of Section
4001(b) of ERISA.
"Events of Default" means each of the events set forth in Section 5.1.
-----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Financial Statements" means (i) the audited consolidated balance
--------------------
sheet of Borrower and Borrower's Affiliated Companies and the related statements
of income and cash
7
flows for the fiscal year ending December 31, 1997, and (ii) the September 27,
1998 unaudited balance sheet of Borrower and Borrower's Affiliated Companies and
the related statements of income and cash flows for the nine-month period ending
September 27, 1998.
"Fiscal Year" means the fiscal year of Borrower, which shall be the
-----------
twelve-month period ending on the last day in the month of December.
"GAAP" means generally accepted accounting principles and practices,
----
consistently applied, as promulgated in (i) the documents of Rule 203 of the
Code of Professional Conduct of the American Institute of Certified Public
Accountants, (ii) Statement of Accounting Standards No. 43 "Omnibus Statement on
Auditing Standards" of the Auditing Standards Board of the American Institute of
Certified Public Accountants and (iii) any superseding or supplemental
documentation of equal authority promulgating generally accepted accounting
principles and practices, all as in effect from time to time. Accounting
principles and practices are "consistently applied" when the accounting
principles and practices observed in a current period are comparable in all
material respects to the accounting principles and practices applied in the
preceding period.
"Governmental Authority" means any Federal, foreign, regional,
----------------------
territorial, state, or local court or governmental agency, authority,
commission, department, board, bureau, instrumentality or regulatory body,
including any central bank or comparable agency.
"Guaranteed Indebtedness" of any Person means all Indebtedness (x) of
-----------------------
any Person other than such Person and either (y) guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (a) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or
8
purchase of such Indebtedness, (b) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (c) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether or not such property is received or such services are
rendered and any agreement to maintain working capital or other balance sheet
condition) or (d) otherwise to assure the holder of such Indebtedness against
loss, or (z) secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any lien, security
interest or other charge or encumbrance upon or in property (including without
limitation accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness.
"Hazardous Material" means any substance:
------------------
(a) the presence of which requires investigation or
remediation under any Environmental and Safety Law; or
(b) which is or becomes defined as a "hazardous waste,"
"hazardous substance," pollutant or contaminant under any Environmental and
Safety Law or which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is or becomes
regulated by any Governmental Authority; or
(c) the presence of which on any properties which Borrower
owns, leases or operates causes or threatens to cause a nuisance upon such
properties or to adjacent properties or poses or threatens to pose a hazard to
the health or safety of persons on or about such properties; or
9
(d) the presence of which on adjacent properties could
constitute a trespass by Borrower; or
(e) without limitation which contains gasoline, diesel fuel
or other petroleum hydrocarbons.
"Indebtedness" means, for any Person, (i) all indebtedness or other
------------
obligations of such Person for borrowed money or for the deferred purchase price
of property or services, (ii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (iii) all obligations under leases which shall have
been or should be, in accordance with GAAP, recorded as Capital Leases in
respect of which such Person is liable as lessee, (iv) liabilities in respect of
unfunded accrued benefits under any Pension Plan, (v) all obligations owed
pursuant to any interest rate hedging arrangement or in respect of any letter of
credit established for the account of such Person (including without limitation
all obligations to reimburse the issuer thereof in respect of amounts drawn
thereunder), and (vi) all Guaranteed Indebtedness.
"Indenture Agreements" means (a) the Indenture governing the DM Senior
--------------------
Notes dated as of May 14, 1998 by and among Borrower, Lyon and IBJ Schroder Bank
and Trust Company, as Trustee; and (b) the Indenture governing the U.S. Senior
Notes dated as of May 14, 1998 by and among Borrower, Lyon and IBJ Schroder Bank
and Trust Company, as Trustee.
"Lender" has the meanings set forth in the first paragraph of this
------
Agreement.
10
"Liabilities" means obligations of any nature, whether absolute,
-----------
accrued, contingent or otherwise, whether due or to become due and whether or
not required to be reflected or reserved against on a balance sheet under GAAP,
including without limitation, in the case of Borrower or any of its Affiliated
Companies, obligations arising from or in connection with the operation of the
Business prior to the consummation of the Acquisition, for which Borrower or any
of its Affiliated Companies could be liable after the consummation of the
Acquisition.
"Lien" means any mortgage, pledge, security interest, encumbrance,
----
lien or charge of any kind, whether voluntary or involuntary, including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of, or agreement to give, any financing statement under
the Uniform Commercial Code of any jurisdiction.
"Loan" means the total amount advanced by Lender to Borrower pursuant
----
to Section 2.1.
"Loan Documents" means this Agreement, the Senior Subordinated Notes,
--------------
and the Subordination Agreement.
"Lyon" means Lyon Investments B.V., a company organized under the laws
----
of the Netherlands, and a wholly-owned subsidiary of Borrower.
"Mandatory Prepayment Premium" has the meaning set forth in Section
----------------------------
2.4.2.1.
"Material Affiliated Companies" means the Subsidiaries of Borrower who
-----------------------------
are "Material Group Members" as such term is defined in the Senior Credit
Facility, as in effect as of the Closing Date.
11
"Material Agreements" means the Loan Documents, the Senior Credit
-------------------
Facility and the Senior Notes.
"Multiemployer Plan" has the meaning set forth in Section 3.2.15.
------------------
"Obligations" means all obligations of every nature of Borrower from
-----------
time to time owed to Lender under any of the Loan Documents, including, without
limitation, all obligations of Borrower under this Agreement and the Senior
Subordinated Notes.
"Optional Prepayment Premium" has the meaning set forth in
---------------------------
Section 2.5.1.1.
"Pension Plan" means any employee pension plan (other than a
------------
Multiemployer Plan) subject to the provisions of Section 302 of ERISA or Section
412 of the Code.
"Permitted Holders" means Thayer and Perseus and their respective
-----------------
Affiliates, Persons who are beneficial owners, directly or indirectly, of Thayer
or Perseus and their respective Affiliates, and any investment fund managed by
Perseus Capital, L.L.C. or Thayer Capital Partners.
"Perseus" means Perseus Cycle, L.L.C., a Delaware limited liability
-------
company.
"Person" means and includes natural persons, corporations, limited
------
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts and other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"PIK Notes" has the meaning set forth in Section 2.3.2.
---------
12
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any
ERISA Affiliate is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Potential Default" means any condition, event or act which, with the
-----------------
giving of notice, passage of time or both, would constitute an Event of Default.
"Prepayment Price" has the meaning set forth in Section 2.5.1.
----------------
"Primary Affiliated Companies" means each of the following
----------------------------
Subsidiaries of Borrower: Derby Holding Limited, a corporation formed under the
laws of England and Wales; Derby Cycle Werke GmbH, a corporation formed under
the laws of the Federal Republic of Germany; Koninklijke Gazelle BV, a
corporation formed under the laws of the Netherlands; Raleigh Industries of
Canada Limited, a corporation formed under the laws of Canada; and Probike S.A.
(Pty) Ltd., a corporation formed under the laws of South Africa.
"Purchasers" means Borrower and Derby Sweden, A.B., a Swedish
----------
corporation.
"Senior Credit Facility" means the Credit Agreement dated as of May
----------------------
12, 1998, as amended from time to time, by and among Borrower and certain of its
Subsidiaries and Chase Manhattan plc as Arranger, Chase Manhattan International
Limited, as both Facility Agent and Security Agent, and the financial
institutions named therein as banks.
"Senior Indebtedness" means any Indebtedness of Borrower or any of its
-------------------
Affiliated Companies, including, without limitation, the indebtedness of
13
Borrower evidenced by the Senior Credit Facility and the Senior Notes, and any
refinancing, replacement, extension or modification of the Senior Credit
Facility or Senior Notes; provided that, indebtedness which is subordinated
-------- ----
explicitly by its terms to the Senior Subordinated Debt shall not be deemed
Senior Indebtedness.
"Senior Notes" means the DM Senior Notes and the U.S. Senior Notes.
------------
"Senior Subordinated Debt" means the Indebtedness of Borrower created
------------------------
pursuant to this Agreement, including the principal amount of the Senior
Subordinated Notes, and any interest and premium payable thereon.
"Senior Subordinated Notes" means any promissory notes evidencing all
-------------------------
or any part of the Senior Subordinated Debt, including the notes to be issued by
Borrower to Lender on the Closing Date in the aggregate principal amount of
Twenty Million Dollars ($20,000,000), any PIK Notes issued in satisfaction of
interest due on the Senior Subordinated Debt pursuant to Section 2.3.2 of this
Agreement, and any note or notes subsequently issued in place of such notes.
"Solvent" means, when used with respect to any Person, that: (a) the
-------
fair valuation of all of its property is in excess of the total amount of its
debts (including contingent liabilities as properly valued) as of the date
solvency is determined under the Bankruptcy Code or any applicable enactment of
the Uniform Fraudulent Transfer Act or similar statute; (b) the present fair
salable value of all of its property is more than the amount that will be
required to pay the Person's existing debts (including contingent liabilities
as properly valued) as they become absolute and matured, as determined in
accordance with any applicable enactment of the Uniform Fraudulent Conveyance
Act or similar statute; (c) it does not intend to incur, nor believe
14
that it will incur, nor reasonably should believe that it will incur, debts
beyond its ability to pay as they mature, as determined in accordance with the
Bankruptcy Code, any applicable enactment of the Uniform Fraudulent Conveyance
Act, any applicable enactment of the Uniform Fraudulent Transfer Act or any
similar statute; and (d) is not engaged in a business or a transaction or about
to be engaged in a business or a transaction for which its property constitutes
(i) unreasonably small capital, for purposes of the Bankruptcy Code and any
applicable enactment of the Uniform Fraudulent Conveyance Act, or similar
statute, or (ii) unreasonably small assets, for purposes of any applicable
enactment of the Uniform Fraudulent Transfer Act, or similar statute.
"Stockholders Agreement" means the Agreement of Stockholders of the
----------------------
Derby Cycle Corporation, of even date herewith, by and among Lender, Thayer and
Perseus.
"Subordination Agreement" means the Subordination Deed of a date on or
-----------------------
about the date hereof by and among Chase Manhattan International Limited, Lender
and Borrower.
"Subsidiary" of any Person means a corporation of which more than
----------
fifty percent (50%) of the outstanding shares of capital stock of each class
having ordinary voting power is owned by such Person, by one or more
Subsidiaries of such Person, or by such Person and one or more of its
Subsidiaries.
"Thayer" means DC Cycle, L.L.C., a Delaware limited liability company.
------
"Transfer" means the sale, pledge, assignment or other transfer of the
--------
Senior Subordinated Notes, in whole or in part, and of the rights of the holders
thereof under the Senior Subordinated Notes and this Agreement.
15
"Transfer Notice" shall have the meaning set forth in Section 6.1.1.1.
---------------
"U.S. Senior Notes" means the 10% Senior Notes due May 14, 2008 in an
-----------------
original principal amount equal to US $100,000,000 issued by Borrower and Lyon
pursuant to the Indenture dated as of May 14, 1998 by and among Borrower, Lyon
and IBJ Schroder Bank and Trust Company, as Trustee.
"Vendors" means Diamond Back International Company Limited, a British
-------
Virgin Islands corporation, Western States Import Company, a California
corporation, and Bejka Trading, A.B., a Swedish corporation.
1.2. Accounting Terms. For purposes of this Agreement, all accounting
----------------
terms not otherwise defined herein have the meanings assigned to them in
conformity with GAAP.
1.3. Other Definitional Provisions. Unless the context of this Agreement
-----------------------------
clearly requires otherwise, references to the plural include the singular, to
the singular include the plural, and to the part include the whole. The term
"including" is not limiting and the term "or" has the inclusive meaning
represented by the term "and/or." The words "hereof," "herein," "hereunder,"
and similar terms in this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement. References to "Sections",
"Exhibits" and "Schedules" are to Sections, Exhibits and Schedules,
respectively, of this Agreement, unless otherwise specifically provided. Terms
defined herein may be used in the singular or the plural.
16
SECTION 2
---------
THE LOAN
--------
2.1. The Loan. Lender agrees to make a term loan to Borrower on the
--------
Closing Date, upon the terms and conditions of this Agreement, of Twenty
Million Dollars ($20,000,000). The amount of the Loan shall be disbursed to
Borrower on the Closing Date, less any fees and expenses payable by Borrower
pursuant to Section 6.4 of this Agreement to the extent not otherwise paid by
Borrower. The amount of the Loan shall be deemed received by Borrower when
such amount has been wire transferred in accordance with instructions provided
by Borrower and Lender has provided Borrower with a FedWire identification
number with respect to such wire transfer.
2.2. The Senior Subordinated Notes
-----------------------------
2.2.1. Form of Notes. Borrower's obligation to repay the Loan shall
-------------
be evidenced by a Senior Subordinated Note or Notes in substantially the form
of Exhibit A, such note or notes in an aggregate in the principal amount of
---------
Twenty Million Dollars ($20,000,000.00), registered in the name of the Vencap
Holdings (1992) Pte Ltd.
2.3. Interest
--------
2.3.1. Interest Rate. The Senior Subordinated Notes shall bear
-------------
interest at a rate of nineteen percent (19%) per annum, compounded daily, for
an annual effective yield of twenty and nine-tenths percent (20.9%). Interest
on the amount of the Loan outstanding from time to time shall be computed on
the basis of a 360-day year, actual days elapsed, from the date of disbursement
until repayment.
2.3.2. Interest Payments. The payment of interest on the outstanding
-----------------
principal amount of the Senior Subordinated Notes shall be due and payable
17
annually by Borrower to Lender in arrears on the first Business Day of each
calendar year, with the first such payment to be made on January 3, 2000, at
the place specified in the Senior Subordinated Notes. Payment of interest
shall be made, at Borrower's sole option, either (i) by payment of cash;
(ii) by issuance of additional Senior Subordinated Notes (the "PIK Notes"),
with the principal amount of the PIK Notes issued on such date equal to the
interest due on the date the interest payment is due. PIK Notes issued
pursuant to this Section 2.3.2 shall bear the same terms as the Senior
Subordinated Notes, and shall be subject to the terms and conditions set forth
in this Agreement for the Senior Subordinated Notes; or (iii) as otherwise
agreed in writing by Lender and Borrower. To the extent that Borrower elects
to make interest payments in cash, Borrower shall pay each such cash interest
payment by wire transfer in immediately available funds.
If, in connection with interest payments required to be made pursuant
to this Section 2.3, payments of such interest are not made in cash, by the
issuance of PIK Notes, or as otherwise agreed by Lender and Borrower in writing
pursuant to the terms of this Section 2.3, the principal amount of the Senior
Subordinated Note or Senior Subordinated Notes issued on the Closing Date shall
be deemed increased on the date such PIK Notes were scheduled to be issued under
this Section 2.3., by the principal amount of the PIK Notes that were required
to be issued pursuant to this Section 2.3 but which were not so issued. Such
increased principal amount of the Senior Subordinated Note or Senior
Subordinated Notes issued on the Closing Date shall bear interest as provided in
this Section 2.3.
2.4. Mandatory Repayment
-------------------
2.4.1. Scheduled Repayment. Borrower shall repay the original
-------------------
principal amount of the Senior Subordinated Notes then outstanding plus
18
accrued but unpaid interest thereon at maturity on February 3, 2009. Payment
hereunder shall be paid by wire transfer in immediately available funds.
2.4.2. Mandatory Prepayment. Notwithstanding the provisions of
--------------------
Section 2.4.1, all outstanding principal and interest relating to the Senior
Subordinated Notes shall be due and payable (together with the Mandatory
Prepayment Premium, as defined in Section 2.4.2.1 below,) within one hundred
and ninety (190) days after the occurrence of a Change of Control.
2.4.2.1. Mandatory Prepayment Premium. In the event that
----------------------------
the Senior Subordinated Notes are prepaid due to the occurrence of a Change of
Control pursuant to Section 2.4.2, the outstanding principal amount of the
Senior Subordinated Notes (plus accrued but unpaid interest) shall be repaid by
Borrower plus a premium equal to a percentage of the outstanding principal
amount of the Senior Subordinated Notes as follows: (the "Mandatory Prepayment
Premium"):
[Download Table]
Change of Control Date Percentage
---------------------- ----------
Through February 3, 2001: 3%
After February 3, 2001 through February 3, 2002: 2%
After February 3, 2002 through February 3, 2003: 1%
After February 3, 2003: 0%
2.5. Optional Prepayment
-------------------
2.5.1. On or After First Anniversary. After the first anniversary
-----------------------------
of the Closing Date, Borrower may, at its sole option, prepay all or any
portion of the outstanding principal amount of the Senior Subordinated Notes
(plus accrued but unpaid interest), in integral multiples of the lesser of Five
Hundred Thousand Dollars ($500,000) or the entire principal amount then
19
outstanding of the Senior Subordinated Notes, upon payment of the Optional
Prepayment Premium set forth in Section 2.5.1.1 and compliance with the
provisions of this Section 2.5. Upon such prepayment of the Senior Subordinated
Notes, Borrower shall pay to the holders thereof (i) all accrued but unpaid
interest on the Senior Subordinated Notes; (ii) the principal amount of the
Senior Subordinated Notes to be prepaid under this Section 2.5; and (iii) the
Optional Prepayment Premium set forth in Section 2.5.1.1 (the amounts described
in clauses (i), (ii) and (iii) being collectively referred to as the "Prepayment
Price"). Such prepayment shall be applied to reduce the principal amounts
payable under the Senior Subordinated Notes in the reverse order in which such
amounts are due. At least ten (10) but not more than ninety (90) days prior to
the date fixed for any prepayment, written notice shall be given to Lender of
the election of Borrower to prepay the principal amounts, or a permitted portion
thereof, of the Senior Subordinated Notes, specifying the amount to be prepaid
and the date upon which such prepayment is to be made.
2.5.1.1 Optional Prepayment Premium. In the event that some or all
---------------------------
Senior Subordinated Notes are prepaid by Borrower pursuant to Section 2.5.1 of
this Agreement, the Senior Subordinated Notes to be prepaid shall be repaid by
Borrower at the outstanding principal amount of the Senior Subordinated Notes to
be prepaid plus a premium equal to a percentage of the Senior Subordinated Notes
to be prepaid as follows) (the "Optional Prepayment Premium"):
[Download Table]
Date of Optional Prepayment Percent of Principal Amount
--------------------------- ---------------------------
After February 3, 2000 and through February 3, 2001: 3%
After February 3, 2001 and through February 3, 2002: 2%
After February 3, 2002 and through February 3, 2003: 1%
After February 3, 2003: 0%
20
2.5.2. Selection of Notes to be Prepaid. If less than all of the then
--------------------------------
outstanding principal amount of Senior Subordinated Notes is to be prepaid
under this Section 2.5, Borrower shall allocate the total principal amount to be
prepaid pro rata as nearly as practicable among the Senior Subordinated Notes,
based upon the then outstanding principal amounts thereof.
2.5.3. Notes Prepaid in Part. Any Senior Subordinated Note which is to be
---------------------
prepaid only in part shall be surrendered to Borrower, and Borrower shall
issue to the holder a new Senior Subordinated Note equal in principal amount
to the unprepaid portion of the Senior Subordinated Note surrendered and in
the form of Exhibit A.
---------
2.5.4. Rescission of Repurchase Option. Borrower shall have the right,
-------------------------------
prior to actual prepayment, to rescind and void its election to repurchase the
Senior Subordinated Notes called for prepayment under this Section 2.5.
2.6. Overdue Payments; Business Days. If any principal amount of, or
-------------------------------
interest or premium on, any Senior Subordinated Notes is not paid (or, in the
case of interest, such interest is not accrued pursuant to the second paragraph
of Section 2.3.2, above) when due (whether by acceleration or otherwise), or if
any other sum owed to Lender pursuant to this Agreement or any other Loan
Document is not paid when due, then interest shall accrue on such delinquent
amount from the date such delinquent amount was due (not giving effect to any
grace or cure periods) until paid at the rate of twenty-one percent (21%) per
annum, compounded daily, calculated on the basis of a 360-day year, actual days
elapsed, for an annual effective yield of twenty three and thirty six one
hundredths percent (23.36 %), or at the maximum rate permitted by law, whichever
is less. Whenever any payment of principal or interest on the Senior
21
Subordinated Notes shall be stated to be due, or whenever any date specified
herein would otherwise occur, on a day other than a Business Day, such payment
shall be made, and such other date shall be deemed to occur, on the next
succeeding Business Day. Any such extension of time shall be included in the
computation of interest payable.
2.7. Ranking. The Senior Subordinated Notes will be subordinated and
-------
junior in right of payment and enforcement to the prior payment of the Senior
Indebtedness on the terms set forth in the Subordination Agreement, which
Subordination Agreement is incorporated herein by reference. The rights to
demand or receive any payments under this Section 2.7 of Persons holding Senior
Indebtedness (as defined herein) other than "Senior Liabilities" as defined
under the Subordination Agreement (such "Senior Liabilities" under the
Subordination Agreement being referred to as "First Priority Senior
Indebtedness" and such other Senior Indebtedness being referred to as "Second
Priority Senior Indebtedness") shall be subject and subordinate to the rights
under the Subordination Agreement of the holders of First Priority Senior
Indebtedness, such that the holders of the Second Priority Senior Indebtedness
shall have no right under this Section 2.7 to demand or receive amounts
otherwise payable to the Security Agent (as defined in the Subordination
Agreement) under the Subordination Agreement.
For purposes of this Section 2.7, in order to apply the Subordination
Agreement to Persons other than the Finance Parties originally executing the
Subordination Agreement, as used in the Subordination Agreement (i) "Senior
Liability" shall include all of the Senior Indebtedness of the Borrower and
Borrower Affiliated Companies; (ii) "Finance Parties" shall include each Person
who is a creditor with respect to Senior Indebtedness; (iii) "Senior Finance
Documents" shall include all documents pertaining to Senior Indebtedness of the
Borrower; (iv) "Security Agent" shall mean the Senior Creditors (as defined
below); (v) no consent of the Security Agents shall be required under
22
Sections 5, 6 and 8 of the Subordination Agreement, provided that such sections
shall be deemed to prohibit the actions prohibited therein by the Borrower or
Lender, as the case may be, if such action will cause a default under "Covered
Debt" (as defined below); (vi) this Section 2.7 shall be governed and construed
in accordance with the laws of the State of New York applicable to contracts
entered into and to be performed wholly within New York by New York residents;
(vii) Section 17 of the Subordination Agreement shall be effective only with
respect to lenders under the Senior Credit Facility; and (viii) Section 24 of
the Subordination Agreement shall not be effective. "Covered Debt" shall mean
(i) the Senior Credit Facility, (ii) the Senior Notes, (iii) any replacement,
refunding, extension, amendment or renewal of Indebtedness described in clauses
(i) and (ii), and (iv) each issuance of Indebtedness exceeding $25,000,000
(including as outstanding Indebtedness any commitments under revolving credit
facilities, and treating any issuances pursuant to the same agreement or
indenture as one issuance of Indebtedness). Each holder of Senior Indebtedness
shall be entitled to the benefits of the Subordination Agreement, as modified in
this Section 2.7, as if it had executed said agreement. "Senior Creditor" means
the Security Agent as defined in the Subordination Agreement for so long as it
or its designees is acting as Security Agent under said document and,
thereafter, the entity serving a similar role under the documents governing any
amendments, replacements, renewals or refundings of the Senior Credit Facility
(as such term is defined in the Subordination Agreement). Nothing in this
Section 2.7 shall be deemed to modify, limit, reduce, enlarge or otherwise
affect any of the rights and obligations of the Finance Parties to the
Subordination Agreement.
2.8. Set Off for Taxes. Each payment or prepayment payable by Borrower
-----------------
under the Senior Subordinated Notes and the other Loan Documents shall be made
23
without set off or counterclaim and free and clear of, exempt from and without
deduction or withholding for or on account of, any present or future Taxes.
Lender agrees not to make any Transfer or engage in any restructuring which
results in an obligation to set off or withhold for or on account of any
present or future Taxes. To induce Borrower not to make any deductions or
withholdings in respect of any Taxes from amounts payable to or for the
account of the Lender, (i) Lender shall deliver to the Borrower a properly
executed Internal Revenue Service Form 8709 (or such other form as the
Internal Revenue Service may require) for such year claiming eligibility for
the exemption from tax under Section 892 of the Code, and (ii) such
certificate shall be accurate in all material respects. Solely for purposes
of this Section 2.8, the term "Taxes" shall mean levies, assessments, impost
duties, withholdings or other charges of whatever nature levied, imposed,
collected, withheld or assessed by any Governmental Authority or any political
subdivision or taxing authority thereof having jurisdiction over the Borrower
other than taxes imposed on the net income earned by Lender.
SECTION 3
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
3.1. Representations and Warranties of Lender. Lender represents and
----------------------------------------
warrants to Borrower with respect to its purchase of the Senior Subordinated
Note that:
3.1.1. Investment. The Senior Subordinated Notes purchased by
----------
Lender are being acquired with the intention of holding such Senior
Subordinated Notes for purposes of investment for Lender's own account, not as
a nominee or agent, and not with a view to the distribution of any part
thereof, and not with the intention of selling such Senior Subordinated
24
Notes in a public distribution in violation of Federal Securities laws or any
applicable foreign or state securities laws.
3.1.2. Sophistication. Lender has such knowledge and experience in
--------------
financial and business matters as to be capable of evaluating the merits and
risks of Lender's investment in the Senior Subordinated Notes; Lender has the
ability to bear the economic risks of such investment; Lender has the capacity
to protect Lender's own interests in connection with the transactions
contemplated by this Agreement; and Lender has had an opportunity to obtain such
financial and other information from Borrower as Lender deems necessary or
appropriate in connection with evaluating the merits of the investment in the
Senior Subordinated Notes; provided, however, that none of Lender's
-------- -------
representations hereunder are intended in any way to limit the scope or
applicability of Borrower's representations and warranties in this Agreement,
the truth, accuracy and completeness of which Lender has relied upon in its
investment in the Senior Subordinated Notes.
3.2. Representations and Warranties of Borrower. On and as of the Closing
------------------------------------------
Date, Borrower represents and warrants to Lender that, giving effect to the
consummation of the transactions contemplated hereunder and under the other
Material Agreements (but without giving effect to the Acquisition or
consummation of the transactions contemplated by the Acquisition Agreement):
3.2.1. Due Incorporation and Status. Except as set forth on
----------------------------
Schedule 3.2.1, each of Borrower and Borrower's Material Affiliated Companies
is a private limited company, duly incorporated and validly existing under the
laws of the place of its incorporation, possesses the capacity to sue and be
sued in its own name, and has the power to carry on its business
25
substantially as now being (or will immediately after the Closing Date be)
conducted and to own its property and other assets.
3.2.2. Corporate Power. Except as set forth on Schedule 3.2.2, each
---------------
of Borrower and Borrower's Material Affiliated Companies has the power to
execute, deliver and perform its obligations under each of the Loan Documents
and the other Material Agreements to which it is a party; all necessary
corporate, shareholder and other action has been taken or will be taken to
authorize the execution, delivery and performance of the same, and no limitation
on its powers to borrow will be exceeded as a result of the performance of the
transactions contemplated by such documents.
3.2.3. Binding Obligations. Except as set forth on Schedule 3.2.3,
-------------------
the Loan Agreements, the Material Agreements and any other document or
instrument executed or delivered or to be executed or delivered by any of
Borrower or Borrower's Affiliated Companies thereunder, constitute or, as the
case may be, will constitute, valid and legally binding obligations of each of
the Borrower and Borrower's Affiliated Companies which are expressed to be a
party thereto.
3.2.4. No Conflict with Other Obligations. Except as set forth on
----------------------------------
Schedule 3.2.4, the execution and delivery of each of the Loan Documents, the
other Material Agreements and any other document or instrument executed or
delivered or to be executed or delivered thereunder by Borrower or any of
Borrower's Affiliated Companies party thereto, and the performance of each of
their respective obligations thereunder, and compliance with their respective
provisions, will not (a) contravene any existing applicable law, statute, rule
or regulation or any judgment, decree or permit of any Governmental Authority
26
to which any of them are subject, conflict with, or result in any breach of any
of the terms of, or constitute a default under, any agreement or other
instrument to which Borrower or any of Borrower's Affiliated Companies is
expressed to be a party or is subject to or by which it, or any of its property
is bound in a manner which is reasonably likely to result in any liability on
the part of Lender to any third party by reason of any such conflict, (b) so far
as Borrower is aware, result in the creation of, or requirement to create, any
Lien on the assets of Borrower or any of Borrower's Material Affiliated
Companies, or (c) contravene or conflict with any provision of the Memorandum
and Articles of Association (or similar or analogous documents) or Borrower of
any of Borrower's Material Affiliated Companies.
3.2.5. Consents. Except as set forth in Schedule 3.2.5, all material
--------
authorizations, approvals, consents, licenses, exemptions, filings,
registrations and other matters required by law for or in consequence of (a) the
entry into and performance by Borrower and each of Borrower Affiliated Companies
of, or the validity of the Loan Documents and any of the Material Agreements to
which it/they are expressed to be a party or the transactions to be implemented
pursuant thereto or (b) the carrying on of the business of Borrower and each of
Borrower's Affiliated Companies in the ordinary course, have been obtained or
effected or will be obtained or effected prior to the date required by law.
3.2.6. No Winding Up. Except as set forth in Schedule 3.2.6, no
-------------
order has been made or petition presented (which has not been discharged or
stayed within 14 days of it being so presented) or any corporate action taken,
or any other steps taken or legal proceedings started or resolution passed for
the winding up of any of Borrower or Borrower's Material Affiliated Companies or
for an administration order in respect of Borrower or any of Borrower's Material
27
Affiliated Companies, and no distress, execution or other process has been
levied on any assets of Borrower or any of Borrower's Material Affiliated
Companies which has not been discharged.
3.2.7. Solvency. Except as set forth in Schedule 3.2.7, no order
--------
has been made or petition presented or resolution passed for an administration
order in respect of Borrower or any of Borrower's Material Affiliated Companies
and no distress, execution or other process has been levied on any assets of
Borrower or any of Borrower's Material Affiliated Companies which has not been
discharged. At the date of this Agreement and after giving effect to the
transaction contemplated by the Loan Documents and the other Material
Agreements, Borrower and each of Borrower's Material Affiliated Companies
incorporated under the laws of any of the United States, is Solvent. None of
Borrower or any of Borrower's Material Affiliated Companies incorporated under
the laws of any of the United States is entering into this Agreement or any
other Material Agreement with the intent to hinder, delay or defraud either
present or future creditors.
3.2.8. No Default. Except as set forth in Schedule 3.2.8, none of
----------
Borrower or Borrower's Material Affiliated Companies is in breach of or default
under any Indebtedness or any other agreement to which it is a party or which is
binding on it or any of its assets which breach or default is reasonably likely
to have a material adverse effect on Borrower and Borrower's Affiliated
Companies taken as a whole.
3.2.9. No Litigation. Except as set forth in Schedule 3.2.9, no
-------------
action, litigation, arbitration, alternative dispute resolution or
administrative or regulatory proceeding is taking place or pending against
Borrower or any of Borrower's Material Affiliated Companies and, so far as
Borrower is aware, no such action, litigation, arbitration, alternative dispute
28
resolution or administrative or regulatory proceeding is threatened nor are
there any current labor disputes involving Borrower or any of Borrower's
Material Affiliated Companies.
3.2.10. All Information Is Correct. Except as set forth in Schedule
--------------------------
3.2.10, all financial and other information provided in writing by, or on behalf
of Borrower or any of Borrower's Material Affiliated Companies to Lender in
connection with the Loan Documents or the other Material Agreements prior to the
date of this Agreement was true and accurate in all material respects when given
and (so far as Borrower is aware having made due and proper inquiries) there are
no other facts or matters the admission of which would have made any such
statement or information provided misleading or an inaccurate representation of
the situation described therein and all opinions, projections and forecasts
given or made have been honestly made and based upon reasonable assumptions.
3.2.11. Tax Liabilities. Except as set forth in Schedule 3.2.11, no
---------------
claims in excess of $250,000 (or the equivalent in other currencies) in
aggregate are being or are reasonably likely to be asserted against Borrower and
Borrower's Material Affiliated Companies (individually or as a whole), with
respect to taxes which are reasonably likely to be determined adversely to
Borrower or such Material Affiliated Company and neither Borrower nor any of
Borrower's Material Affiliated Companies is overdue in the filing of any tax
returns required to be filed by it and has paid all taxes shown to be due on tax
returns or any assessments made against it other than those contested in good
faith by proceedings and for which adequate reserves have been established.
3.2.12. Ownership of Assets. Except as set forth in Schedule 3.2.12,
-------------------
with effect from and after the Closing Date, Borrower and each of Borrower's
29
Material Affiliated Companies will have good title to, or valid leases or
licenses of, or are otherwise entitled to use and permit other Affiliated
Companies to use, all tangible assets necessary to conduct their business
substantially as conducted by it at the Closing Date.
3.2.13. Intellectual Property Rights.
----------------------------
Except as set forth in Schedule 3.2.13:
(a) So far as Borrower is aware (after due and careful
inquiry) (i) Borrower and each of Borrower's Material Affiliated Companies owns
or has licensed to it all the intellectual property rights which are material in
the context of its business and which are required by it in order for it to
carry on its business as it is presently conducted, and (ii) none of Borrower or
Borrower's Material Affiliated Companies, in carrying on its business, infringes
any intellectual property rights of any third party in any way.
(b) None of the material intellectual property rights of
Borrower and of Borrower's Material Affiliated Companies is, to Borrower's
knowledge, being infringed, nor, to Borrower's knowledge, is there any
threatened infringement of such intellectual property rights by any third party.
(c) All material registered intellectual property rights owned
by Borrower and Borrower's Material Affiliated Companies are subsisting and all
actions (including payment of all fees) required to maintain the same in full
force and effect have been taken.
3.2.14. Environmental Matters.
---------------------
Except as set forth in Schedule 3.2.14:
30
(a) So far as Borrower is aware (after due and careful
inquiry), Borrower and each of Borrower's Material Affiliated Companies has
obtained all requisite authorizations required for the carrying on of its
business as currently conducted and has at all times complied in all respects
with (i) the terms and conditions of such authorizations and (ii) all other
applicable Environmental and Safety Laws.
(b) So far as Borrower is aware (after due and careful
inquiry), no Hazardous Material has been used, disposed of, generated, stored,
transported, dumped, released, deposited, owned, leased, occupied or controlled
by Borrower or any of Borrower's Material Affiliated Company (including any off-
site waste management or disposal location utilized by Borrower or any of
Borrower's Material Affiliated Companies) in circumstances where this would be
reasonably likely to result in the imposition of a liability on Borrower or any
of Borrower's Material Affiliated Companies.
(c) So far as Borrower is aware (after due and careful inquiry)
there is no claim alleging a violation of any Environmental and Safety Laws
(whether in respect of any site previously or currently owned or occupied by
Borrower or any Material Affiliated Company or otherwise) pending or threatened,
and there are no past or present acts, omissions, events or circumstances that
would be likely to form the basis of any such claim (whether in respect of any
site previously or currently owned or occupied by Borrower or any Material
Affiliated Company), against Borrower or any Material Affiliated Company which
in each case is reasonably likely to be determined against Borrower or such
Material Affiliated Company, as the case shall be.
31
(d) Neither Borrower nor any of its Material Affiliated
Companies has received any notice from any third party of any Environmental and
Safety Law.
3.2.15. ERISA.
-----
Except as set forth in Schedule 3.2.15:
(a) No act, omission or transaction has occurred which will
result in imposition on Borrower, any of Borrower's Material Affiliated
Companies, or any ERISA Affiliate (whether directly or indirectly) of (i) either
a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, or (ii) breach of fiduciary duty liability damages
under Section 409 of ERISA.
(b) Neither Borrower, any of Borrower's Material Affiliated
Companies nor any ERISA Affiliate has maintained or contributed to any Plan that
is or was subject to Title IV or ERISA or to the minimum funding requirements of
Section 302 of ERISA or Section 412 of the Code.
(c) Payment has been made of all amounts which Borrower, any of
Borrower's Material Affiliated Companies or any ERISA Affiliate is required,
under the terms of each multiemployer plan within the meaning of Section 3(37)
of ERISA (each such plan, a "Multiemployer Plan") or applicable law, to have
paid as contributions to such Multiemployer Plan.
(d) Each of Borrower, Borrower's Material Affiliated Companies
and the ERISA Affiliates are in compliance with the presently applicable
provisions of ERISA and the Code with respect to each Multiemployer Plan.
32
(e) None of Borrower, Borrower's Material Affiliated Companies,
nor any ERISA Affiliate (nor any trade or business that was an ERISA Affiliate)
has at any time contributed to or been obliged to contribute to any
Multiemployer Plan which, upon the complete or partial withdrawal from such
Multiemployer Plan, could result in the imposition of complete or partial
withdrawal liability.
3.2.16. Investment Company Status. Except as set forth in Schedule
--------------------------
3.2.16, each of Borrower and Borrower's Material Affiliated Companies either is
not an "investment company" within the meaning of the United States Investment
Company Act of 1940, as amended, or is exempt from all provisions of such Act,
as amended.
3.2.17. U.S. Reserve Regulations. Except as set forth in Schedule
-------------------------
3.2.17, none of Borrower or any of Borrower's Material Affiliated Companies is
engaged in, principally or as one of its important activities, the business of
extending credit for the purpose of buying or carrying margin stock. No part of
the proceeds of the Loan will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, for any purpose that entails a
violation of any of Regulation G, T, U or X of the Board.
3.2.18. Year 2000. Except as set forth in Schedule 3.2.18, in
----------
relation to Borrower and each of Borrower's Material Affiliated Companies, the
management of Borrower believes that any reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) each of Borrower's
and Borrower's Material Affiliated Company's computer systems and (b) equipment
containing embedded microchips (including systems and equipment supplied by
others or with which each of Borrower's and Borrower's Material Affiliated
Company's systems interface) and the testing of all such systems and equipment,
as so
33
programmed, will be completed by December 31, 1999. Except as set forth in
Schedule 3.2.18, the cost to Borrower and each of Borrower's Material Affiliated
Companies of such reprogramming and testing and of the reasonably foreseeable
consequences of year 2000 to Borrower and each of Borrower's Material Affiliated
Companies (including, without limitation, reprogramming errors and the failure
of others' systems or equipment) will not result in a Default or likely have an
adverse effect on Borrower or its Borrower's Material Affiliated Companies.
Except as set forth in Schedule 3.2.18, and except for such of the reprogramming
referred to in the preceding sentence as may be necessary, the computer and
management information systems of Borrower and each of Borrower's Material
Affiliated Companies are and, with ordinary course upgrading and maintenance,
will continue for the term of this Agreement to be, sufficient to permit
Borrower and each of Borrower's Material Affiliated Companies to conduct its
business as if it is being conducted as of the Closing Date.
3.2.19. Financial Statements. Except as set forth in Schedule
---------------------
3.2.19:
(a) Save as fully and fairly disclosed in the Accountant's
Report, the financial information in relation to Borrower and Borrower's
Affiliated Companies contained in the Accountant's Report was prepared using
generally accepted accounting principles in the United States of America, and
give a true and fair view of the state of affairs of Borrower and Borrower's
Affiliated Companies as at the date to which they were prepared and as at such
date there were no material liabilities of Borrower and Borrower's Affiliated
Companies which were not disclosed by or shown as being provided for in the
Accountant's Report.
(b) There has been no material adverse change in the business,
operations, assets, prospects, or financial condition of Borrower and Borrower's
Affiliated Companies (taken as a whole) since September 27, 1998.
34
(c) The Accountant's Report includes or consolidates into such
financial information the results of Borrower and each of Borrower's Affiliated
Companies and does not consolidate or include the results of any other company,
limited partnership or like entity or business.
3.2.20. Absence of Certain Changes. Since October 5, 1998, except as set
---------------------------
forth on Schedule 3.2.20, neither Borrower nor any of its Material Affiliated
Companies has:
(a) borrowed or agreed to borrow any funds except in the
ordinary course of business and consistent with past practice;
(b) sold, transferred, assigned or otherwise disposed of any of
its property or assets in excess individually of Two Hundred and Fifty Thousand
Dollars ($250,000) or permitted, or allowed, any of its property or assets to be
subjected to any Lien or restriction of any kind, except for properties and
assets sold or encumbered in the ordinary course of business and consistent with
past practice;
(c) declared, paid or set aside for payment any dividend or
other distribution in respect of its capital stock or other securities or equity
interests or, directly or indirectly, redeemed, purchased or otherwise acquired
any shares of its capital stock or other securities or equity interests;
(d) made any change in any method of accounting or accounting
practice or any change in depreciation or amortization policies or rates
theretofore adopted; or
(e) experienced any event resulting in a Change of Control.
35
3.2.21. Insurance. Except as set forth in Schedule 3.2.21, there has
----------
been maintained for Borrower and each of its Material Affiliated Companies
insurance in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning or leasing similar
properties. All such policies are in full force and effect, and all premiums
with respect thereto are currently paid.
3.2.22. Debt Instruments. Schedule 3.2.22 contains a complete list
-----------------
of all loan agreements, promissory notes, letters of credit, security agreements
or other financing documents to which Borrower or any of its Primary Affiliated
Companies is a party or by which Borrower or any of its Primary Affiliated
Companies or any of their properties or assets (including, without limitation,
equipment subject to any equipment lease), is bound which individually involve
an obligation of Two Hundred and Fifty Thousand Dollars ($250,000) or more (the
"Debt Instruments"). Except as set forth in Schedule 3.2.22, there are no
existing defaults by Borrower or any of its Primary Affiliated Companies or any
other obligor under or party to any such Debt Instrument including, without
limitation, the Senior Credit Facility, and no event has occurred which (whether
with notice, lapse of time, or both, or the happening or occurrence of any other
event) would constitute a default by Borrower or any of its Primary Affiliated
Companies under any such Debt Instrument including, without limitation, the
Senior Credit Facility.
3.2.23. Certain Contracts and Commitments. Except as set forth in
----------------------------------
Schedule 3.2.23:
(a) Neither Borrower nor any of its Primary Affiliated Companies
has any collective bargaining or union contracts or agreements;
36
(b) Neither Borrower nor any of its Primary Affiliated Companies
has entered into any written agreement restricting it from carrying on its
business within the United States or any subdivision thereof; and
(c) Neither Borrower nor any of its Primary Affiliated Companies
is a party to any "safe harbor lease" as defined in Section 168(f)(8) of the
Internal Revenue Code of 1954 as in effect prior to amendment by the Tax Equity
and Fiscal Responsibility Act of 1982.
3.2.24. Labor Matters. Except to the extent set forth in Schedule
--------------
3.2.24: (a) Borrower and each of its Primary Affiliated Companies is and has
been in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting employment
discrimination, occupational safety and health, and unfair labor practices; (b)
there is no unfair labor practice complaint against Borrower or any of its
Primary Affiliated Companies pending or threatened before the National Labor
Relations Board or any comparable state, local, foreign, regional or territorial
agency; (c) there is no labor strike, dispute, slowdown or stoppage actually
pending or, to Borrower's knowledge, threatened against or directly affecting
Borrower or any of its Primary Affiliated Companies; (d) no union representation
question exists and, to Borrower's knowledge, no union organization effort is
underway, respecting the employees of Borrower or any of its Primary Affiliated
Companies; (e) no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending and no claims therefor exist; (f) no
collective bargaining agreement which is binding on Borrower or any of its
Primary Affiliated Companies restricts it from relocating or closing any of its
operations; (g) neither Borrower nor any of its Primary Affiliated Companies has
experienced any material work stoppage in the last eighteen (18) months; (h)
neither Borrower nor any of its
37
Primary Affiliated Companies is delinquent in payments to any of its employees
for any wages, salaries, commissions, bonuses or other direct compensation for
any services performed by them to the Closing Date or amounts required to be
reimbursed to such employees; or (i) upon termination of the employment of any
of the employees of Borrower or any of its Primary Affiliated Companies after
the Closing Date, neither Borrower nor any of its Primary Affiliated Companies
will be liable to any one of its employees for severance pay in excess of
$50,000.
3.2.25. Compliance with Law. Except as set forth in Schedule 3.2.25,
--------------------
so far as Borrower is aware, Borrower and each of its Material Affiliated
Companies is in compliance with all laws, regulations and orders applicable to
the Business, including, without limitation, applicable building, zoning or
health laws, ordinances and regulations. Neither Borrower nor any of its
Material Affiliated Companies has received any notification that it is in
violation of any such laws, regulations or orders and neither Borrower nor any
of its Material Affiliated Companies nor any employee thereof (while acting in
such capacity), has made any payment to any Person, which payment violates any
statute or law.
3.2.26. No Subordination. Except as set forth in Schedule 3.2.26,
-----------------
other than as set forth in the Subordination Agreement and this Agreement, there
is no agreement, indenture, contract or instrument to which Borrower or any of
its Material Affiliated Companies is a party or by which it may be bound that
requires the subordination in right of payment of any of the Obligations to the
repayment of any other obligation of Borrower.
3.2.27. Foreign Corrupt Practices Act. Except as set forth in
------------------------------
Schedule 3.2.27, neither Borrower nor any of its Material Affiliated Companies
has made, offered or agreed to offer anything of value to any government
official, political party, candidate for political office
38
or any person that Borrower or any of its Material Affiliated Companies knows or
has reason to know will offer anything of value to any government official,
political party or candidate for political office, nor has it taken any action
which would cause it to be in violation of any law of any foreign jurisdiction
or the United States of America, including the Foreign Corrupt Practices Act of
1977, as amended. There is not now nor has there ever been, for as long as all
present members of the senior management of Borrower have been employed by
Borrower or any of Borrower's Material Affiliated Companies, any employment of,
or beneficial ownership of Borrower or any of its Material Affiliated Companies
by, any foreign governmental or political official nor, to Borrower's knowledge,
has there ever been any employment of, or beneficial ownership of Borrower or
any of its Material Affiliated Companies by, any foreign government or political
official.
3.2.28. Valid Issuance. Except as set forth in Schedule 3.2.28, all
---------------
of the outstanding capital stock of Borrower and each of its Primary Affiliated
Companies has been duly authorized, validly issued, is fully paid and non-
assessable, and has been issued in compliance with the Act and all applicable
state securities laws, or any comparable laws, rules and ordinances.
3.2.29. Acquisition Agreement. Borrower has delivered to Lender a
----------------------
true, correct and complete copy of the Acquisition Agreement (including without
limitation all exhibits and schedules thereto) as in effect on and as of the
Closing Date; there are no other agreements or instruments between the parties
thereto pertaining to the Acquisition. Except as set forth in Schedule 3.2.29,
and subject to any limitations contained in the Acquisition Agreement, to the
best of Borrower's knowledge, each of the representations and warranties made by
Vendors in the Acquisition Agreement is true, correct and complete as of the
Closing Date. Except as set
39
forth in Schedule 3.2.29, as of the Closing Date, (i) all of the conditions
precedent to the consummation of the Acquisition, as contemplated by the
Acquisition Agreement, have been satisfied or waived, and (ii) all of the
covenants therein to be performed or observed by the parties thereto prior to
the Closing Date have been so performed or observed or waived.
3.3. Remedies for Breaches of this Agreement.
---------------------------------------
(a) All of the representations and warranties of Lender and
Borrower under this Agreement shall survive the Closing Date (unless the damaged
Party knew or had reason to know of any misrepresentation or breach of warranty
at time of Closing Date) and continue in full force and effect for a period of
two years thereafter.
(b) Notwithstanding anything to the contrary hereunder, a
representation and warranty shall be deemed to have been breached by Borrower
hereunder if and only if (i) Lender makes a written claim of indemnification
against the Borrower within the survival period set forth in Section 3.3(a)
above (whether or not Lender has the right or ability to exercise any rights or
remedies with respect to such claim);and (ii) such breach of misrepresentation
and warranty by Borrower has a material adverse effect on the condition and
operations of Borrower and Borrower's Affiliated Companies on a consolidated
basis.
SECTION 4
---------
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants that so long as any of the Obligations of Borrower
to Lender hereunder or under any of the other Loan Documents remains
outstanding, and until final payment in full of the Senior Subordinated Notes,
Borrower shall, and shall cause each of Borrower's Material Affiliated Companies
to:
40
4.1. Punctual Payments. Pay when due: (a) the interest, principal and
------------------
premium (if any) on the Senior Subordinated Notes, at the times and place and in
the manner specified therein, subject to Borrower's right to satisfy interest
payment obligations on the Senior Subordinated Notes (i) through the issuance of
PIK Notes or accrual as provided in Section 2.3.2 of this Agreement or (ii) as
otherwise agreed in writing by Borrower and Lender, and (b) any fees or other
liabilities due hereunder at the times and place and in the manner specified
herein.
4.2. Accounting Records. Maintain adequate books and records in
-------------------
accordance with GAAP, and permit any representative of Lender, at any reasonable
time, and at Lender's cost and expense, to inspect, copy, audit and examine such
books and records and inspect the properties of Borrower and its Material
Affiliated Companies.
4.3. Reporting Requirements. Provide Lender all of the following:
-----------------------
(a) as soon as available and in any event within thirty (30)
Business Days after the end of each month, a copy of the unaudited monthly
management accounts for Borrower and its Affiliated Companies in the form
required to be provided by Borrower pursuant to Section 19.1(a)(iii) of the
Senior Credit Facility;
(b) as soon as available and in any event within forty five (45)
days after the end of each fiscal quarter, a copy of the unaudited quarterly
consolidated accounts for Borrower and its Affiliated Companies in the form
required to be provided by Borrower pursuant to Section 19.1(a)(ii) of the
Senior Credit Facility;
(c) as soon as available and in any event within one hundred and
fifty (150) days after and as of the end of each Fiscal Year, the audited
consolidated financial accounts
41
for Borrower and its Affiliated Companies in the form required to be provided
pursuant to Section 19.1(a)(i)(A) of the Senior Credit Facility, and any audited
financial accounts provided pursuant to Sections 19.1(a)(i)(B) or 19.1(a)(i)(C)
of the Senior Credit Facility, if such audited financial accounts are prepared;
(d) from time to time, such other information or documents
respecting the business, properties or the condition or operations, financial or
otherwise, of Borrower or any of its Material Affiliated Companies as Lender may
reasonably from time to time request.
Notwithstanding any waiver of the reporting requirements contained in
Sections 19.1(a)(i), (ii), and (iii) of the Senior Facility Agreement, the
reporting requirements contained in subsections (a), (b), and (c) of this
Section 4.3 shall remain in force until the Obligations have been fully and
irrevocably paid.
4.4. Board Visitation Rights. Permit one authorized representative of
-------------------------
Lender (the "Representative") to attend all meetings of the Board of Directors
of Borrower in a nonvoting observer capacity; provide the Representative with
such notice of and other information with respect to such meetings as are
provided to members of the Board of Directors at the same time as so provided to
such Persons; notify the Representative, as promptly as practicable thereafter,
of the taking of any action by written consent of its Board of Directors in lieu
of a meeting thereof; and provide the Representative with a copy of any such
resolutions taken by unanimous written consent.
4.5. Visitation Rights. Upon reasonable notice being given by Lender,
------------------
permit Lender (at Lender's own cost) or any agents or representatives of Lender,
during normal business hours, to examine and make copies of and abstracts from
its records and books of account, and visit its
42
properties, and those of its Affiliated Companies, and discuss its affairs,
finances and accounts with any of its officers or directors, it being understood
that nonpublic information provided by Borrower shall be maintained in
confidence by Lender.
4.6. Use of Funds. Use the proceeds of the Loan only for the purpose of
-------------
financing the Acquisition and the costs related thereto.
4.7. Insurance. Maintain and keep in force in all material respects
----------
insurance of the types and in amounts customarily carried in lines of business
similar to its line of business, including without limitation fire, extended
coverage, public liability, property damage, business interruption,
environmental liability and workers' compensation insurance.
4.8. Business. Continue the Business and refrain from engaging in any
---------
business activities or operations substantially different from or unrelated to
the Business.
SECTION 5
---------
EVENTS OF DEFAULT
-----------------
5.1. Events of Default. The occurrence of any of the following shall
------------------
constitute an "Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest,
premium or other amount payable under the Loan Documents;
(b) Borrower shall become insolvent, or shall suffer or consent
to or apply for the appointment of a receiver, trustee, custodian or liquidator
of itself or any of its property, or shall generally fail to pay its debts as
they become due, or shall make a general
43
assignment for the benefit of creditors; Borrower shall file a voluntary
petition in bankruptcy, or seeking reorganization, in order to effect a plan or
other arrangement with creditors or any other relief under the Bankruptcy Code,
or under any state or federal law granting relief to debtors, whether now or
hereafter in effect; or any involuntary petition or proceeding pursuant to the
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower, which petition or proceeding (i) results in the entry of an
order for relief or any such adjudication of relief, or (ii) remains unreleased,
undischarged, or unbonded for a period of one hundred and eighty (180) days, or
(iii) shall result in Borrower filing an answer admitting jurisdiction of the
court and the material allegations of the petition; or Borrower shall be
adjudicated a bankrupt, or an order for relief shall be entered by any court of
competent jurisdiction under the Bankruptcy Code or any other applicable state
or federal law relating to bankruptcy, reorganization or other relief for
debtors;
(c) At any time that the total of all amounts outstanding and
all amounts available to be borrowed under all Senior Indebtedness is less than
Twenty Five Million Dollars ($25,000,000), (i) any of Borrower's Primary
Affiliated Companies shall become insolvent, or shall suffer or consent to or
apply for the appointment of a receiver, trustee, custodian or liquidator of
itself or any of its property, or shall generally fail to pay its debts as they
become due, or shall make a general assignment for the benefit of creditors;
(ii) any of Borrower's Primary Affiliated Companies shall file a voluntary
petition in bankruptcy, or seeking reorganization, in order to effect a plan or
other arrangement with creditors or any other relief under the Bankruptcy Code,
or under any state or federal law granting relief to debtors, whether now or
hereafter in effect; or any involuntary petition or proceeding pursuant to the
44
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against any of Borrower's Primary Affiliated Companies, which petition or
proceeding (x) results in the entry of an order for relief or any such
adjudication of relief, or (y) remains unreleased, undischarged, or unbonded for
a period of one hundred and eighty (180) days, or (z) results in such Primary
Affiliated Company filing an answer admitting jurisdiction of the court and the
material allegations of the petition; (iii) or any of Borrower's Primary
Affiliated Companies shall be adjudicated a bankrupt, or an order for relief
shall be entered by any court of competent jurisdiction under the Bankruptcy
Code or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors;
(d) the dissolution or liquidation of Borrower; or Borrower or a
majority of the directors or shareholders of Borrower shall take action seeking
to effect the dissolution or liquidation of Borrower;
(e) at any time that the total of all amounts outstanding and
all amounts available to be borrowed under all Senior Indebtedness is less than
Twenty Five Million Dollars ($25,000,000), (i) the dissolution or liquidation of
any of Borrower's Primary Affiliated Companies; (ii) any of Borrower's Primary
Affiliated Companies or a majority of the directors or shareholders of any of
Borrower's Primary Affiliated Companies shall take action seeking to effect the
dissolution or liquidation of any of Borrower's Primary Affiliated Companies;
(f) Borrower shall fail to make the Mandatory Prepayment of the
Senior Subordinated Notes upon the occurrence of a Change of Control as required
by Section 2.4.2.
45
(g) At any time that the total of all amounts outstanding and
all amounts available to be borrowed under all Senior Indebtedness is less than
Twenty Five Million Dollars ($25,000,000), breach of any financial covenant in
the Senior Credit Facility.
5.2. Remedies. If an Event of Default shall occur, any Indebtedness of
---------
Borrower under the Loan Documents, any term of any of the Senior Subordinated
Notes to the contrary notwithstanding, shall, subject to the terms of the
Subordination Agreement, (i) in the case of an Event of Default described in
clause (a) of Section 5.1, at the option of Lender, and (ii) in the case of any
other Event of Default, at the option of the holders of a majority in interest
of the then outstanding principal amount of the Senior Subordinated Notes, and
without notice, become immediately due and payable without presentment, demand,
protest or notice of dishonor, all of which are hereby expressly waived by
Borrower, and Lender or such holders shall have all rights, powers and remedies
available under any of the Loan Documents, or accorded by law; provided,
--------
however, that upon the occurrence of an Event of Default described in clause (b)
------
of Section 5.1, such Indebtedness shall become immediately due and payable
without any election on the part of the holders. Subject to the terms of the
Subordination Agreement, all rights, powers and remedies of Lender under this
Section 5.2 may be exercised by Lender at any time within ninety (90) days of
Lender learning of an Event of Default. All rights, powers and remedies of
Lender in connection with the Loan Documents are cumulative and not exclusive
and shall be in addition to any other rights, powers or remedies provided by law
or equity, including, without limitation, the right to set-off any liability
owing by Lender to Borrower against any liability of Borrower to Lender as
provided in Section 5.4.
5.3. No Waiver. No delay, failure or discontinuance of Lender, or any
----------
holder of any of the Senior Subordinated Notes, in exercising any right, power
or remedy under the Loan
46
Documents shall affect or operate as a waiver of such right, power or
remedy; nor shall any single or partial exercise of any such right, power or
remedy preclude, waive or otherwise affect any other or further exercise thereof
or the exercise of any other right, power or remedy. Any waiver, permit,
consent or approval of any kind by Lender, or any holder of any of the Senior
Subordinated Notes, of any breach of or default under the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.
5.4. Set-Off. In addition to any rights, powers or remedies now or
--------
hereafter granted under this Agreement or applicable law, and not by way of
limitation of any such rights, powers or remedies, upon the occurrence and
during the continuance of any Event of Default, Lender is hereby authorized by
Borrower at any time or from time to time, without notice to Borrower or to any
other Person (any such notice being hereby expressly waived), to the fullest
extent permitted by law, to set off, appropriate and apply all indebtedness or
obligations owing by Lender to or for the account of Borrower against all of the
obligations of Borrower to Lender now or hereafter arising under this Agreement
or any of the other Loan Documents.
SECTION 6
---------
MISCELLANEOUS
-------------
6.1. Transfers
---------
6.1.1. Transfers Permitted. Subject to the terms of the
--------------------
Subordination Agreement, Lender may make a Transfer to any Person provided that
such Transfer is made in compliance with the Act and any applicable state
securities laws. Borrower shall cooperate in connection with any such Transfer.
Upon any Transfer, the transferee shall, to the extent of such Transfer, be
entitled to exercise the rights of the Lender making such Transfer and shall
47
thereafter be deemed a "Lender" under this Agreement. Any Transfer that does not
comply with the provisions of this Section 6.1 shall be void.
6.1.1.1. Limitations on Transferability of Senior
----------------------------------------
Subordinated Notes.
-------------------
(a) No transfer of the Senior Subordinated Notes shall be made,
directly or indirectly, to any Competitor of Borrower or to any Person who owns,
directly or indirectly, more than five percent (5%) of the voting securities of
any Competitor of Borrower.
(b) Except for Transfers permitted under Section 6.1.1.2, no
transfer of the Senior Subordinated Notes shall be made, directly or indirectly,
prior to the second anniversary of the Closing Date.
(c) Except for Transfers permitted under Section 6.1.1.2, Lender
shall provide Borrower, Thayer and Perseus with Notice of any proposed direct or
indirect Transfer of Senior Subordinated Notes held by Lender (the "Transfer
Notice"). The Transfer Notice shall state in reasonable detail (i) the principal
amount of the Senior Subordinated Notes proposed to be Transferred; (ii)
Lender's bona fide intention to Transfer the principal amount of the Senior
---- ----
Subordinated Notes stated in the Transfer Notice; (iii) the identity of the
proposed transferee; and (iv) the material terms of the proposed Transfer,
including the purchase price and payment terms for the Senior Subordinated Notes
covered by the Transfer Notice. Borrower, Thayer and/or Perseus shall have the
right, exercisable within forty-five (45) Business Days after the giving of the
Transfer Notice, to purchase all (but not less than all) of the Senior
Subordinated Notes proposed to be Transferred pursuant to the Transfer Notice,
on terms no less favorable than those stated in the Transfer Notice. Lender
shall have thirty (30) Business Days after the termination of the forty-five
(45) Business Day period referenced above to Transfer the Senior Subordinated
48
Notes that are the subject of the Transfer Notice on terms no more materially
favorable than those contained in the Transfer Notice.
(d) Any Transferee to whom Senior Subordinated Notes are
Transferred pursuant to this Section 6.1 shall (i) be bound by the terms and
conditions of this Agreement and, if applicable, the Subordination Agreement,
and shall execute a counterpart of this Agreement prior to the Transfer becoming
effective, and (ii) receive the benefits of Section 2.8 of this Agreement if and
only if (A) such Transferee delivers to Borrower the withholding tax exemption
certificate contemplated by Section 2.8 and (B) the terms of Section 2.8 are not
breached or violated.
(e) Nothing in this Section 6.1 shall be construed to limit or
otherwise restrict Lender's co-sale rights pursuant to the Stockholders
Agreement, or Lender's right to sell and transfer to Thayer and/or Perseus the
Put Securities pursuant to the Stockholders Agreement, or Lender's right to
sell, and Thayer's and Perseus' right to purchase, the Senior Subordinated Notes
pursuant to the optional purchase provision of the Stockholders Agreement.
6.1.1.2. Permitted Transferees. Notwithstanding the foregoing,
----------------------
Lender may make a Transfer at any time to any entity that is (i) a Subsidiary of
the Government of Singapore Investment Corporation Pte Ltd. or (ii) a Subsidiary
of an entity of which the Government of Singapore Investment Corporation Pte
Ltd. is also a Subsidiary. Any Transfer pursuant to this Section 6.1.1.2 shall
be subject to the requirements and limitations of Sections 6.1.1.1(a) and
6.1.1.1(d).
6.1.2. Mechanics of Transfer. Borrower shall keep at its principal
----------------------
office a register for the registration of the Senior Subordinated Notes as to
both principal and stated
49
interest. In the event Lender desires to make a Transfer, Lender shall
surrender to Borrower the Senior Subordinated Note or Notes to be Transferred.
Upon such surrender, Borrower shall promptly issue a new Senior Subordinated
Note or Notes to the transferee (and to the transferor as to any portion not
Transferred) in the form of Exhibit A in the aggregate principal amount of the
---------
Senior Subordinated Note or Notes surrendered. Borrower shall register the new
Senior Subordinated Notes as to both principal and stated interest in the names
of the transferees (and the transferor as to any portion not Transferred). No
Transfer shall be effective until the issuance of the new Senior Subordinated
Note or Notes under this Section.
6.1.3. Further Assurance. Borrower shall, from time to time at the
------------------
request of Lender, execute and deliver to Lender or to such party or parties as
Lender may reasonably designate, all further instruments as may in Lender's
reasonable opinion be reasonably necessary or advisable to give full force and
effect to a Transfer and shall provide to Lender or to such party or parties as
Lender may reasonably designate, all such information as Lender may reasonably
request.
6.1.4. Information. In connection with any Transfer, Lender may
------------
disclose all documents and information which Lender now has or may hereafter
acquire relating to the Loan, the Loan Documents, Borrower or any of its
Affiliated Companies or the Business if the recipient of such documents and
information (i) is not a Competitor and (ii) has entered into a confidentiality
agreement containing the terms set forth in Section 6.6 of this Agreement.
6.2. Notices. In order to be effective, any notice or other
--------
communication required or permitted hereunder, shall, unless otherwise stated
herein, be in writing and shall be transmitted by messenger, delivery service,
mail, telegram, telecopy or cable, if to Borrower, at Borrower's
50
address set forth under its name on the signature page, and if to Lender, to the
address set forth under its name on the signature page, with copies to:
Government of Singapore Investment Corporation, Pte. Ltd.
156 West 56th Street, Suite 1902
New York, New York 10019
Telecopier: (212) 265-8131
Attention: Mr. Andrew Kwee
with copy to
Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, California 94104
Telecopier: (415) 772-6268
Attention: Brett Dick
or at such other address as a party shall designate in a written notice to the
other parties hereto given in accordance with this Section 6.2. All notices and
other communications shall be effective (i) if sent by messenger or delivery
service, when delivered, (ii) if sent by mail, five days after having been sent
by certified mail, with return receipt requested, (iii) if sent by telegraph or
cable, when delivered to the telegraph or cable company or (iv) if sent by telex
or telecopier, when sent. In order to be effective, any notice transmitted to
an address outside the United States of America by any means other than telex or
telecopier shall at the time of transmittal be duplicated by counterpart telex
or telecopier notice.
6.3. Successors and Assigns. This Agreement shall be binding upon and
-----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns, except that neither Borrower nor any of its Affiliated Companies may
assign or transfer its rights hereunder or any interest herein or delegate its
duties hereunder without the prior written consent of Lender, unless such
assignment or transfer of rights or interest, or delegation of duties, results
from a Change of Control.
51
6.4. Costs, Expenses and Attorneys' Fees. Borrower shall reimburse
------------------------------------
Lender for all reasonable out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys' fees) expended or incurred by Lender in the
negotiation and preparation of the Loan Documents and the closing of the
transactions contemplated by the Loan Documents. On the Closing Date, Borrower
shall pay all reasonable fees and expenses of Lender's counsel incurred in
connection with the negotiation and preparation of the Loan Documents and the
closing of the transactions contemplated by the Loan Documents. Any additional
reasonable fees and expenses incurred after the Closing Date in connection with
the negotiation and preparation of the Loan Documents and the closing of the
transactions contemplated by the Loan Documents will be billed as incurred and
shall be paid by Borrower within sixty (60) days of receipt by Borrower of the
invoice therefor.
6.5. Entire Agreement, Amendment. The Loan Documents (including the
----------------------------
Exhibits and Schedules thereto) executed by Borrower in connection with, or as
required by, this Agreement constitute the entire agreement between Borrower and
Lender with respect to the Loan; supersede all prior or contemporaneous
negotiations, communications, discussions and correspondence concerning the
subject matter hereof; and may be amended or modified only with the written
consent of Borrower and the holders of a majority in principal amount of the
Senior Subordinated Notes then outstanding, except that no such amendment or
modification shall become effective if it extends the maturity or reduces the
rate of interest payable with respect to the Senior Subordinated Notes, alters
the terms of payment of the principal, interest and premium (if any) under the
Senior Subordinated Notes, or reduces the percentage of holders of principal
amount of the Senior Subordinated Notes necessary to approve modifications or
amendments to this Agreement without the consent of the holders of Senior
Subordinated Notes
52
who own sixty six and two-thirds percent (66 2/3%) of the principal amount of
the Senior Subordinated Notes affected thereby. Whenever the consent or approval
of Lender is required, such consent or approval must be given in writing by the
holders of a majority in principal amount of the Senior Subordinated Notes then
outstanding.
6.6. Confidentiality. The parties to this Agreement agree that any oral,
written or recorded information provided by a party (the "Disclosing Party") to
another party (the "Recipient Party") pursuant to the terms of this Agreement
(including, without limitation, the information, documentation, and other
disclosures made pursuant to Sections 4.2, 4.3, 4.4, and 4.5) shall be deemed
confidential (the "Confidential Information"); provided however, that
-------- -------
Confidential Information public other than as a result of disclosure directly or
indirectly by the Recipient Party or by an agent of the Recipient Party; (b) was
independently acquired or developed by the Recipient Party without breach of
this Agreement; (c) is disclosed by the Recipient Party pursuant to the order of
any Governmental Authority having jurisdiction over the Recipient Party; or (d)
becomes available to the Recipient Party on a nonconfidential basis from a
person (other than the Disclosing Party or the Disclosing Party's directors,
officers, employees, agents, or advisors) who, to the knowledge of the Recipient
Party (after reasonable inquiry), is not and was not bound by a confidentiality
agreement with the Disclosing Party, or is not and was not otherwise prohibited
from transmitting the information to the Recipient Party.
The parties to this Agreement agree that each Recipient Party shall
(x) keep all Confidential Information confidential and not to disclose any
Confidential Information to any person other than persons employed by such
Recipient Party who have a legitimate need to know the Confidential Information
(collectively, the "Representatives"); (y) use the Confidential
53
Information solely for the purpose provided for in this Agreement and not for
any other purpose; and (z) not use or permit others to use or copy the
Confidential Information to the detriment of the Disclosing Party.
The parties to this Agreement also agree (i) to undertake reasonable
precautions to safeguard and protect the confidentiality of the Confidential
Information; (ii) to inform their Representatives of the confidential nature of
the Confidential Information; and (iii) to take all reasonable measures to
restrain their respective Representatives from prohibited or unauthorized
disclosure or uses of the Confidential Information.
6.7. Time. Time is of the essence of each and every provision of the
-----
Loan Documents.
6.8. Severability of Provisions. If any provision of this Agreement
---------------------------
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
6.9. Governing Law. This Agreement and the Senior Subordinated Notes
--------------
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts entered into and to be performed wholly within
New York by New York residents.
6.10. First Refusal Rights of Lender.
------------------------------
(a) At least ten (10) Business Days prior to Borrower
authorizing the issuance, sale or transfer of any equity stock of Borrower (the
"Borrower Stock") to a third party ("Stock Transfer"), Borrower shall deliver a
written notice (the "Offer Notice") to Lender. The Offer Notice shall disclose,
in reasonable detail, the material terms and conditions of the
54
proposed Stock Transfer. Upon receipt of the Offer Notice, Lender shall have the
right, but not the obligation, to purchase some or all (but not less than all,
if, in the reasonable judgment of Borrower, the purchase by Lender of less than
all of the Borrower Stock covered by the Offer Notice would have a material
adverse effect on the proposed Stock Transfer) of the Borrower Stock covered by
the Offer Notice at the cash price and on the terms specified in the Offer
Notice by delivering written notice to Borrower of such election (the "Lender
Notice") within ten (10) Business Days after receipt of the Offer Notice (the
tenth Business Day after the giving of the Offer Notice being referred to herein
as the "Notice Deadline"). In the event that there is more than one Lender, each
Lender shall be entitled to purchase its pro rata share of the Borrower Stock
covered by the Offer Notice, based upon the percentage of the total outstanding
principal amount of the Senior Subordinated Notes owned by such Lender. Lenders
who purchase their full allotment of Borrower Stock shall have the right to
purchase, pro rata, any remaining Borrower Stock covered by the Offer Notice not
purchased by other Lenders; provided that, nothing herein shall be construed to
-------- ----
permit Lenders to deliver Lender Notices after the Notice Deadline.
(b) In the event Lender (or Lenders) have elected to purchase
some or all (but not less than all if, in the reasonable judgment of Borrower,
the purchase of by Lender of less than all of the Borrower Stock covered by the
Offer Notice would have a material adverse effect on the proposed Stock
Transfer) of the Borrower Stock offered pursuant to the Offer Notice, the
purchase and transfer of such Borrower Stock shall be consummated within fifteen
(15) Business Days after the Notice Deadline.
(c) If Lender (or Lenders) have not elected to purchase all of
the Borrower Stock offered pursuant to the Offer Notice, Borrower may, at its
sole option and within
55
one hundred and eighty (180) Business Days after the Notice Deadline, issue,
sell, or transfer such Borrower Stock to one or more third parties at a price
(in cash and/or kind) no less than the price per share specified in the Offer
Notice and on other terms no more materially favorable than those contained in
the Offer Notice.
(d) Notwithstanding the foregoing, the first refusal rights
granted in this Section 6.10 shall not apply to issuances of Borrower Stock: (i)
to Borrower's management pursuant to a duly authorized management stock purchase
agreement or stock option plan; (ii) upon conversion of outstanding Borrower
Stock into another class of Borrower Stock; (iii) in connection with the
acquisition of another company or business by Borrower, so long as such Borrower
Stock is issued to the seller of such company or business being acquired in
payment therefore; (iv) pursuant to a public offering registered under the Act;
and (v) pursuant to a sale of Borrower Stock to any person that Borrower
reasonably determines is a "strategic investor," as such term is commonly used
in commercial transactions, but such term shall not include "vulture investors."
6.11. Third Party Beneficiaries. Borrower and Lender acknowledge that
--------------------------
the provisions of Section 6.1.1.1(c) of this Agreement are for the benefit of
Thayer and Perseus and their respective permitted successors and assigns.
Borrower and Lender acknowledge that the provisions of Section 2.7 of this
Agreement are for the benefit of the holders of the Senior Notes and the lenders
under the Senior Credit Facility.
6.12. Waiver of Sovereign Immunity. Lender acknowledges and agrees that
-----------------------------
the activities contemplated by the provisions of this Agreement are commercial
in nature rather than governmental or public, and therefore acknowledges and
agrees, to the extent permitted by
56
applicable law, that it is not entitled to any right of immunity on the grounds
of sovereignty or otherwise with respect to such activities or in any legal
action or proceedings arising out of or relating to this Agreement.
Lender, in respect of itself, its process agents and its properties
and revenues, expressly and irrevocably waives (to the extent permitted by
applicable law) any such right of immunity that may now or hereafter exist
(including any immunity from any legal process, from the jurisdiction of any
court or from any execution or attachment in aid of execution prior to judgment
or otherwise) or claim thereto that may now or hereafter exist, and agrees not
to assert any such right or claim in any such action or proceeding, whether in
the United States or otherwise.
6.13. Consent to Jurisdiction. Each of Borrower and Lender hereby
------------------------
consents to the jurisdiction, venue and forum of any state or federal court in
the State of New York with respect to any action, whether commenced by Borrower,
Lender or any other Person, which, in whole or in part, in any way arises under
or relates to the Loan Documents.
6.14. Incorporation of Exhibits and Schedules by Reference. All Exhibits
-----------------------------------------------------
and Schedules to this Agreement are incorporated herein by this reference.
6.15. Counterparts. This Agreement may be executed in separate
-------------
counterparts, each of which, when so executed, shall be deemed to be an original
and all of which, when taken together, shall constitute but one and the same
agreement.
[THE REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
the day and year first written above.
THE DERBY CYCLE CORPORATION
By:
---------------------------------
Title:
------------------------------
Address for Notice:
The Derby Cycle Corporation
62 Triumph Road
Nottingham NG7 2DD
England
Telecopier: +44-115-942-2178
Attn: Chief Executive Officer
with copies to (delivery of such copies not to
----------------------------------------------
constitute notice hereunder):
-----------------------------
Thayer Capital Partners
1455 Pennsylvania Avenue, N.W., Suite 350
Washington, D.C. 20004
United States of America
Telecopier: +1-202-371-0391
Attn: Frederic Malek
and
Kirkland & Ellis
58
655 Fifteenth Street, N.W.
Washington, D.C. 20005
United States of America
Telecopier: +1-202-879-5200
Attn: Jack Feder
VENCAP HOLDINGS (1992) PTE LTD.
By:
---------------------------------
Title:
------------------------------
By:
---------------------------------
Title:
------------------------------
59
EXHIBITS
--------
Exhibit A: Form of Senior Subordinated Promissory Note
Exhibit B: Form of Legal Opinion
SCHEDULES
---------
60
EXHIBIT A
---------
FORM OF SENIOR SUBORDINATED NOTE
--------------------------------
61
EXHIBIT B
----------
[Financial Statements to be provided]
62
EXHIBIT C
Form of Opinion of Borrower's Counsel
-------------------------------------
63
Dates Referenced Herein and Documents Incorporated by Reference
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