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EXHIBIT 4.2 NOTE PURCHASE AGREEMENT

Note Purchase Agreement

EXHIBIT 4.2   NOTE PURCHASE AGREEMENT | Document Parties: ISLAND PACIFIC INC | Multi-Channel Holdings, Inc You are currently viewing:
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ISLAND PACIFIC INC | Multi-Channel Holdings, Inc

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Title: EXHIBIT 4.2 NOTE PURCHASE AGREEMENT
Governing Law: California     Date: 4/20/2005
Industry: Software and Programming    

EXHIBIT 4.2   NOTE PURCHASE AGREEMENT, Parties: island pacific inc , multi-channel holdings  inc
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EXHIBIT 4.2

 

                             NOTE PURCHASE AGREEMENT

 

THIS NOTE PURCHASE AGREEMENT (this "Agreement") is made and entered into as of

April 18, 2005, among (i) ISLAND PACIFIC, INC., a Delaware corporation (the

"Company"), (ii) each of the subsidiaries of the Company listed on the signature

page hereto (together with the Company, each a "Note Party" and collectively,

the "Note Parties") and (iii) Multi-Channel Holdings, Inc., a Delaware

corporation (the "Purchaser").

 

                                     RECITALS

 

         WHEREAS, the Company has authorized the sale to the Purchaser of a

Secured Term Note in the aggregate principal amount of Two Million Dollars

($2,000,000) (the "Note");

 

         WHEREAS, Purchaser desires to purchase the Note on the terms and

conditions set forth herein; and

 

         WHEREAS, the Company desires to issue and sell the Note to Purchaser on

the terms and conditions set forth herein.

 

                                    AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual

promises, representations, warranties and covenants hereinafter set forth and

for other good and valuable consideration, the receipt and sufficiency of which

are hereby acknowledged, the parties hereto agree as follows:

 

1.        AGREEMENT TO SELL AND PURCHASE. Pursuant to the terms and conditions

         set forth in this Agreement, on the Closing Date (as defined in Section

         3), the Company agrees to sell to the Purchaser, and the Purchaser

         hereby agrees to purchase from the Company, a Note in the aggregate

         principal amount of $2,000,000. A form of the Note is annexed hereto as

         Exhibit A. The Note will mature on the Maturity Date (as defined in the

         Note).

 

2.        FEES AND EXPENSES. On the Closing Date, the Company shall reimburse the

         Purchaser for its reasonable expenses not to exceed $100,000 (including

         legal fees and expenses) incurred in connection with the preparation

         and negotiation of this Agreement and the Related Agreements (as

         hereinafter defined), and expenses incurred in connection with the

         Purchaser's due diligence review of the Company and its Subsidiaries

         (as defined in Section 4(b)) and all related matters.

 

3.        CLOSING, DELIVERY AND PAYMENT.

 

         (a)       CLOSING. Subject to the terms and conditions herein, the

                  closing of the transactions contemplated hereby (the

                  "Closing"), shall take place on the date hereof, at such time

                  or place as the Company and Purchaser may mutually agree (such

                  date is hereinafter referred to as the "Closing Date").

 

 

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         (b)       DELIVERY. At the Closing on the Closing Date, the Company will

                  deliver to the Purchaser, among other things, a Note in the

                  form attached as Exhibit A representing the aggregate

                  principal amount of $2,000,000.

 

4.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as otherwise

         specifically identified on the disclosure schedule delivered by the

         Company to Purchase pursuant to this Section 4 (the "Disclosure

         Schedule"), the Company (and, where specifically provided or

          referenced, each of the Note Parties) represents and warrants to the

         Purchaser as set forth below in this Section 4. Any disclosure or

         exception set forth on the Disclosure Schedule shall be deemed to apply

         to any representation and warranty to which it is applicable regardless

         of whether or not it is disclosed or cross referenced with respect to a

         particular representation or warranty:

 

         (a)       ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the

                  Note Parties is a corporation, partnership or limited

                  liability company, as the case may be, duly organized, validly

                  existing and in good standing under the laws of its

                  jurisdiction of organization. Each of the Note Parties has the

                  corporate power and authority to own and operate its

                  properties and assets, to execute and deliver (i) this

                  Agreement, (ii) the Note to be issued in connection with this

                  Agreement, (iii) the Master Security Agreement dated as of the

                  date hereof between the Company, certain Subsidiaries of the

                  Company and the Purchaser (as amended, modified or

                   supplemented from time to time, the "Master Security

                  Agreement"), (iv) the Subsidiary Guaranty dated as of the date

                  hereof made by certain Subsidiaries of the Company (as

                  amended, modified or supplemented from time to time, the

                  "Subsidiary Guaranty"), (v) the Stock Pledge Agreement dated

                  as of the date hereof among the Company, and the Purchaser

                  (the "Stock Pledge Agreement") and (vi) all other agreements

                  related to this Agreement and the Note and referred to herein

                  (the preceding clauses (ii) through (vi), collectively, the

                  "Related Agreements"), to issue and sell the Note and to carry

                  out the provisions of this Agreement and the Related

                  Agreements and to carry on its business as presently

                  conducted. Each of the Note Parties is duly qualified and is

                  authorized to do business and is in good standing as a foreign

                  corporation, partnership or limited liability company, as the

                  case may be, in all jurisdictions in which the nature of its

                  activities and of its properties (both owned and leased) makes

                  such qualification necessary, except for those jurisdictions

                  in which failure to do so has not, or could not reasonably be

                  expected to have, individually or in the aggregate, a material

                  adverse effect on the business, assets, liabilities, condition

                  (financial or otherwise), properties, operations or prospects

                  of the Company and its Subsidiaries, taken individually and as

                  a whole (a "Material Adverse Effect").

 

         (b)       SUBSIDIARIES. Each direct and indirect Subsidiary of the

                  Company, the direct owner of such Subsidiary and its

                  percentage ownership thereof, is set forth on Schedule 4(b).

                  For the purpose of this Agreement, a "Subsidiary" of any

                  person or entity means (i) a corporation or other entity whose

 

 

 

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                  shares of stock or other ownership interests having ordinary

                  voting power (other than stock or other ownership interests

                  having such power only by reason of the happening of a

                  contingency) to elect a majority of the directors of such

                  corporation, or other persons or entities performing similar

                  functions for such person or entity, are owned, directly or

                  indirectly, by such person or entity or (ii) a corporation or

                  other entity in which such person or entity owns, directly or

                  indirectly, more than 50% of the equity interests at such

                  time.

 

         (c)       CAPITALIZATION; VOTING RIGHTS.

 

                   (i)       The authorized capital stock of the Company, as of

                           the date hereof consists of 250,000,000 shares of

                           common stock par value $0.0001 of which 64,437,833

                           are issued and outstanding and 5,000,000 shares of

                           preferred stock par value $0.0001, of which 141,000

                           are designated as Series A Preferred Stock, all of

                           which are issued and outstanding and 2,517,233 shares

                           are designated as Series B Preferred Stock, none of

                           which are issued and outstanding. The authorized

                           capital stock of each Subsidiary of the Company is

                           set forth on Schedule 4(c).

 

                  (ii)      Except as disclosed on Schedule 4(c), other than: (A)

                           the shares reserved for issuance under the Company's

                           stock option plans; and (B) shares which may be

                           granted pursuant to that certain Securities Purchase

                           Agreement dated as of July 12, 2004 between the

                           Company and Laurus Master Fund, Ltd. ("Laurus"), a

                           Cayman Islands company (as amended, modified or

                           supplemented, the "Laurus Agreement") and the

                           "Related Agreements" (as such term is defined in the

                            Laurus Agreement, and as such Related Agreements are

                           amended modified or supplemented, the "Laurus Related

                           Agreements"), there are no outstanding options,

                           warrants, rights (including conversion or preemptive

                           rights and rights of first refusal), proxy or

                           stockholder agreements, or arrangements or agreements

                           of any kind for the purchase or acquisition from the

                           Company of any of its securities.

 

                  (iii)     All issued and outstanding shares of the Company's

                           Common Stock: (A) have been duly authorized and

                            validly issued and are fully paid and nonassessable;

                           and (B) were issued by the Company in compliance with

                           all applicable state and federal laws concerning the

                           issuance of securities.

 

                  (iv)      The rights, preferences, privileges and restrictions

                           of the shares of the Common Stock are as stated in

                           the Company's Certificate of Incorporation (the

                            "Charter") and pursuant to applicable law.

 

         (d)       AUTHORIZATION; BINDING OBLIGATIONS. All corporate, partnership

                  or limited liability company, as the case may be, action on

                  the part of the Company and each of its Subsidiaries

                  (including the respective officers and directors) necessary

                  for the authorization of this Agreement, the Note and the

                  Related Agreements, the performance of all obligations of the

 

 

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                  Company and its Subsidiaries hereunder and under the other

                  Related Agreements at the Closing and, the authorization,

                  sale, issuance and delivery of the Note has been taken or will

                  be taken prior to the Closing. This Agreement, the Note and

                  the Related Agreements, when executed and delivered and to the

                  extent it is a party thereto, will be valid and binding

                  obligations of each of the Company and each of its

                  Subsidiaries, enforceable against each such Person in

                  accordance with their terms, except:

 

                  (i)       as limited by applicable bankruptcy, insolvency,

                           reorganization, moratorium or other laws of general

                           application affecting enforcement of creditors'

                           rights; and

 

                  (ii)      general principles of equity that restrict the

                           availability of equitable or legal remedies.

 

         (e)       LIABILITIES. Neither the Company nor any of its Subsidiaries

                  has any material contingent liabilities, except current

                  liabilities incurred in the ordinary course of business and

                  liabilities disclosed in any of the Company's filings under

                  the Securities Exchange Act of 1934 (such filings, the

                   "Exchange Act Filings").

 

         (f)       AGREEMENTS; ACTION. Except as set forth on Schedule 4(f) or as

                  disclosed in any Exchange Act Filings:

 

                  (i)       there are no agreements, understandings, instruments,

                           contracts, proposed transactions, judgments, orders,

                           writs or decrees to which the Company or any of its

                           Subsidiaries is a party or by which it is bound which

                            may involve: (A) obligations (contingent or

                           otherwise) of, or payments to, the Company in excess

                           of $50,000 (other than obligations of, or payments

                           to, the Company arising from purchase or sale

                           agreements entered into in the ordinary course of

                           business); or (B) the transfer or license of any

                           patent, copyright, trade secret or other proprietary

                           right to or from the Company (other than licenses

                           arising from the purchase of "off the shelf" or other

                           standard products); or (C) provisions restricting the

                            development, manufacture or distribution of the

                           Company's products or services; or (D)

                           indemnification by the Company with respect to

                           infringements of proprietary rights.

 

                  (ii)      Since December 31, 2004, neither the Company nor any

                           of its Subsidiaries has: (A) declared or paid any

                           dividends, or authorized or made any distribution

                            upon or with respect to any class or series of its

                           capital stock; (B) incurred any indebtedness for

                           money borrowed or any other liabilities (other than

                            ordinary course obligations) individually in excess

                           of $50,000 or, in the case of indebtedness and/or

                           liabilities individually less than $50,000, in excess

                           of $100,000 in the aggregate; (C) made any loans or

                           advances to any Person not in excess, individually or

                           in the aggregate, of $100,000, other than ordinary

                           course advances for travel expenses; or (D) sold,

                           exchanged or otherwise disposed of any of its assets

                           or rights, other than the sale of its inventory in

                           the ordinary course of business.

 

 

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                  (iii)     For the purposes of subsections (i) and (ii) above,

                           all indebtedness, liabilities, agreements,

                           understandings, instruments, contracts and proposed

                           transactions involving the same person or entity

                           (including persons or entities the Company has reason

                           to believe are affiliated therewith) shall be

                            aggregated for the purpose of meeting the individual

                           minimum dollar amounts of such subsections.

 

         (g)       OBLIGATIONS TO RELATED PARTIES. Except as set forth on

                  Schedule 4(g), there are no obligations of the Company or any

                  of its Subsidiaries to officers, directors, stockholders or

                  employees of the Company or any of its Subsidiaries other

                  than:

 

                  (i)       for payment of salary for services rendered and for

                           bonus payments;

 

                  (ii)      reimbursement for reasonable expenses incurred on

                           behalf of the Company and its Subsidiaries;

 

                  (iii)     for other standard employee benefits made generally

                           available to all employees (including stock option

                           agreements outstanding under any stock option plan

                           approved by the Board of Directors of the Company);

                           and

 

                  (iv)      obligations listed in the Company's financial

                           statements or disclosed in any of its Exchange Act

                           Filings.

 

Except as described above or set forth on Schedule 4(g), none of the officers,

directors or, to the best of the Company's knowledge, key employees or

stockholders of the Company or any members of their immediate families, are

indebted to the Company, individually or in the aggregate, in excess of $50,000

or have any direct or indirect ownership interest in any firm or corporation

with which the Company is affiliated or with which the Company has a business

relationship, or any firm or corporation which competes with the Company, other

than passive investments in publicly traded companies (representing less than

one percent (1%) of such company) which may compete with the Company. Except as

described above, no officer, director or stockholder, or any member of their

immediate families, is, directly or indirectly, interested in any material

contract with the Company and no agreements, understandings or proposed

transactions are contemplated between the Company and any such person. Except as

set forth on Schedule 4(g), the Company is not a guarantor or indemnitor of any

indebtedness of any other person, firm or corporation.

 

         (h)       CHANGES. Since December 31, 2004, except as disclosed in any

                  Exchange Act Filing, Schedule 4(h) or any other Schedule to

                  this Agreement or to any of the Related Agreements, there has

                  not been:

 

                  (i)       any change in the business, assets, liabilities,

                           condition (financial or otherwise), properties,

                           operations or prospects of the Company or any of its

                           Subsidiaries, which individually or in the aggregate

                           has had, or could reasonably be expected to have,

                            individually or in the aggregate, a Material Adverse

                           Effect;

 

 

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                  (ii)      any resignation or termination of any officer, key

                            employee or group of employees of the Company or any

                           of its Subsidiaries;

 

                  (iii)     any material change, except in the ordinary course of

                           business, in the contingent obligations of the

                           Company or any of its Subsidiaries by way of

                           guaranty, endorsement, indemnity, warranty or

                           otherwise;

 

                  (iv)      any damage, destruction or loss, whether or not

                           covered by insurance, has had, or could reasonably be

                           expected to have, individually or in the aggregate, a

                           Material Adverse Effect;

 

                  (v)       any waiver by the Company or any of its Subsidiaries

                           of a valuable right or of a material debt owed to it;

 

                  (vi)      any direct or indirect loans made by the Company or

                           any of its Subsidiaries to any stockholder, employee,

                           officer or director of the Company or any of its

                           Subsidiaries, other than advances made in the

                           ordinary course of business;

 

                  (vii)     any material change in any compensation arrangement

                           or agreement with any employee, officer, director or

                           stockholder of the Company or any of its

                           Subsidiaries;

 

                   (viii)    any declaration or payment of any dividend or other

                           distribution of the assets of the Company or any of

                           its Subsidiaries;

 

                  (ix)      any labor organization activity related to the

                           Company or any of its Subsidiaries;

 

                  (x)       any debt, obligation or liability incurred, assumed

                           or guaranteed by the Company or any of its

                           Subsidiaries, except those for immaterial amounts and

                           for current liabilities incurred in the ordinary

                           course of business;

 

                  (xi)      any sale, assignment or transfer of any patents,

                            trademarks, copyrights, trade secrets or other

                           intangible assets owned by the Company or any of its

                           Subsidiaries;

 

                  (xii)     any change in any material agreement to which the

                           Company or any of its Subsidiaries is a party or by

                           which either the Company or any of its Subsidiaries

                           is bound which either individually or in the

                            aggregate has had, or could reasonably be expected to

                           have, individually or in the aggregate, a Material

                           Adverse Effect;

 

                  (xiii)    any other event or condition of any character that,

                           either individually or in the aggregate, has had, or

                           could reasonably be expected to have, individually or

                           in the aggregate, a Material Adverse Effect; or

 

 

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                  (xiv)     any arrangement or commitment by the Company or any

                           of its Subsidiaries to do any of the acts described

                           in subsection (a) through (m) above.

 

         (i)       TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as set

                  forth on Schedule 4(i), each of the Company and each of its

                  Subsidiaries has good and marketable title to its properties

                   and assets, and good title to its leasehold estates, in each

                  case subject to no mortgage, pledge, lien, lease, encumbrance

                  or charge, other than:

 

                  (i)       those liens arising in connection with the

                           Obligations (as such term is defined in the Note);

 

                  (ii)      those liens under the Laurus Indebtedness (as such

                           term is defined below)

 

                  (iii)     those resulting from taxes which have not yet become

                           delinquent;

 

                  (iv)      minor liens and encumbrances which do not materially

                           detract from the value of the property subject

                            thereto or materially impair the operations of the

                           Company or any of its Subsidiaries; and

 

                  (v)       those that have otherwise arisen in the ordinary

                           course of business.

 

All facilities, machinery, equipment, fixtures, vehicles and other properties

owned, leased or used by the Company and its Subsidiaries are in good operating

condition and repair and are reasonably fit and usable for the purposes for

which they are being used. Except as set forth on Schedule 4(i), the Company and

its Subsidiaries are in compliance with all material terms of each lease to

which it is a party or is otherwise bound except where such failure to be in

compliance, either individually or in the aggregate has had, or could reasonably

be expected to have, individually or in the aggregate, a Material Adverse

Effect.

 

         (j)       INTELLECTUAL PROPERTY.

 

                  (i)       Each of the Company and each of its Subsidiaries owns

                            or possesses sufficient legal rights to all patents,

                           trademarks, service marks, trade names, copyrights,

                           trade secrets, licenses, information and other

                           proprietary rights and processes necessary for its

                           business as now conducted and to the Company's

                           knowledge, as presently proposed to be conducted (the

                           "Intellectual Property"), without any known

                           infringement of the rights of others. There are no

                           outstanding options, licenses or agreements of any

                           kind relating to the foregoing proprietary rights,

                            nor is the Company or any of its Subsidiaries bound

                           by or a party to any options, licenses or agreements

                           of any kind with respect to the patents, trademarks,

                           service marks, trade names, copyrights, trade

                           secrets, licenses, information and other proprietary

                           rights and processes of any other person or entity

                           other than such licenses or agreements arising from

                           the purchase of "off the shelf" or standard products.

                           Set forth on Schedule 4(j) is a list of all

                           Intellectual Property owned by the Note Parties,

                            indicating, which, if any, is registered.

 

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                  (ii)      Neither the Company nor any of its Subsidiaries has

                           received any communications alleging that the Company

                           or any of its Subsidiaries has violated any of the

                           patents, trademarks, service marks, trade names,

                           copyrights or trade secrets or other proprietary

                            rights of any other person or entity, nor is the

                           Company or any of its Subsidiaries aware of any basis

                           therefor.

 

                  (iii)     The Company does not believe it is or will be

                            necessary to utilize any inventions, trade secrets or

                           proprietary information of any of its employees made

                           prior to their employment by the Company or any of

                            its Subsidiaries, except for inventions, trade

                           secrets or proprietary information that have been

                           rightfully assigned to the Company or any of its

                           Subsidiaries.

 

          (k)       COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Company nor any

                  of its Subsidiaries is in violation or default of (i) any

                  material term of its Charter or Bylaws, or (ii) of any

                  provision of any indebtedness, mortgage, indenture, contract,

                  agreement or instrument to which it is party or by which it is

                  bound or of any judgment, decree, order or writ, which

                  violation or default, in the case of this clause (ii), has

                  had, or could reasonably be expected to have, either

                  individually or in the aggregate, a Material Adverse Effect.

                  The execution, delivery and performance of and compliance with

                   this Agreement and the Related Agreements to which it is a

                  party, and the issuance and sale of the Note by the Company

                  pursuant hereto, will not, with or without the passage of time

                  or giving of notice, result in any such material violation, or

                  be in conflict with or constitute a default under any such

                  term or provision, or result in the creation of any mortgage,

                  pledge, lien, encumbrance or charge upon any of the properties

                  or assets of the Company or any of its Subsidiaries or the

                  suspension, revocation, impairment, forfeiture or nonrenewal

                  of any permit, license, authorization or approval applicable

                  to the Company, its business or operations or any of its

                  assets or properties.

 

         (l)       LITIGATION. Except as set forth on Schedule 4(l) hereto, there

                  is no action, suit, proceeding or investigation pending or, to

                  the Company's knowledge, currently threatened against the

                  Company or any of its Subsidiaries that prevents the Company

                  or any of its Subsidiaries from entering into this Agreement

                  or the other Related Agreements, or from consummating the

                  transactions contemplated hereby or thereby, or which has had,

                  or could reasonably be expected to have, either individually

                   or in the aggregate, a Material Adverse Effect or any change

                  in the current equity ownership of the Company or any of its

                  Subsidiaries, nor is the Company aware that there is any basis

                  to assert any of the foregoing. Neither the Company nor any of

                  its Subsidiaries is a party or subject to the provisions of

                  any order, writ, injunction, judgment or decree of any court

                  or government agency or instrumentality. There is no action,

                  suit, proceeding or investigation by the Company or any of its

                  Subsidiaries currently pending or which the Company or any of

                  its Subsidiaries intends to initiate.

 

 

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         (m)       TAX RETURNS AND PAYMENTS. Each of the Company and each of its

                  Subsidiaries has timely filed all tax returns (federal, state

                  and local) required to be filed by it. All taxes shown to be

                  due and payable on such returns, any assessments imposed, and

                  all other taxes due and payable by the Company or any of its

                  Subsidiaries on or before the Closing, have been paid or will

                  be paid prior to the time they become delinquent. Except as

                  set forth on Schedule 4(m), neither the Company nor any of its

                  Subsidiaries has been advised:

 

                  (i)       that any of its returns, federal, state or other,

                           have been or are being audited as of the date hereof;

                           or

 

                  (ii)      of any deficiency in assessment or proposed judgment

                            to its federal, state or other taxes.

 

The Company has no knowledge of any liability of any tax to be imposed upon its

properties or assets as of the date of this Agreement that is not adequately

provided for.

 

         (n)       EMPLOYEES. Except as set forth on Schedule 4(n), neither the

                  Company nor any of its Subsidiaries has any collective

                  bargaining agreements with any of its employees. There is no

                  labor union organizing activity pending or, to the Company's

                  knowledge, threatened with respect to the Company or any of

                  its Subsidiaries. Except as disclosed in the Exchange Act

                  Filings or on Schedule 4(n), neither the Company nor any of

                   its Subsidiaries is a party to or bound by any currently

                  effective employment contract, deferred compensation

                  arrangement, bonus plan, incentive plan, profit sharing plan,

                  retirement agreement or other employee compensation plan or

                  agreement. To the Company's knowledge, no employee of the

                  Company or any of its Subsidiaries, nor any consultant with

                  whom the Company or any of its Subsidiaries has contracted, is

                  in violation of any term of any employment contract,

                  proprietary information agreement or any other agreement

                  relating to the right of any such individual to be employed

                   by, or to contract with, the Company or any of its

                  Subsidiaries because of the nature of the business to be

                  conducted by the Company or any of its Subsidiaries; and to

                  the Company's knowledge the continued employment by the

                  Company or any of its Subsidiaries of its present employees,

                  and the performance of the Company's and its Subsidiaries'

                  contracts with its independent contractors, will not result in

                  any such violation. Neither the Company nor any of its

                  Subsidiaries is aware that any of its employees is obligated

                  under any contract (including licenses, covenants or

                  commitments of any nature) or other agreement, or subject to

                  any judgment, decree or order of any court or administrative

                  agency, that would interfere with their duties to the Company

                  or any of its Subsidiaries. Neither the Company nor any of its

                  Subsidiaries has received any notice alleging that any such

                  violation has occurred. Except for employees who have a

                  current effective employment agreement with the Company or any

                  of its Subsidiaries, no employee of the Company or any of its

                  Subsidiaries has been granted the right to continued

 

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                  employment by the Company or any of its Subsidiaries or to any

                  material compensation following termination of employment with

                  the Company or any of its Subsidiaries. Except as set forth on

                  Schedule 4(n), the Company is not aware that any officer, key

                  employee or group of employees intends to terminate his, her

                  or their employment with the Company or any of its

                  Subsidiaries, nor does the Company or any of its Subsidiaries

                  have a present intention to terminate the employment of any

                  officer, key employee or group of employees.

 

         (o)       COMPLIANCE WITH LAWS; PERMITS. Neither the Company nor any of

                  its Subsidiaries is in violation of any applicable statute,

                  rule, regulation, order or restriction of any domestic or

                  foreign government or any instrumentality or agency thereof in

                  respect of the conduct of its business or the ownership of its

                  properties which has had, or could reasonably be expected to

                  have, either individually or in the aggregate, a Material

                  Adverse Effect. No governmental orders, permissions, consents,

                  approvals or authorizations are required to be obtained and no

                  registrations or declarations are required to be filed in

                  connection with the execution and delivery of this Agreement

                   or any other Related Agreement and the issuance of any of the

                  Securities, except such as has been duly and validly obtained

                  or filed, or with respect to any filings that must be made

                  after the Closing, as will be filed in a timely manner. Each

                  of the Company and its Subsidiaries has all material

                  franchises, permits, licenses and any similar authority

                  necessary for the conduct of its business as now being

                  conducted by it, the lack of which could, either individually

                  or in the aggregate, reasonably be expected to have a Material

                  Adverse Effect.

 

         (p)       ENVIRONMENTAL AND SAFETY LAWS. Neither the Company nor any of

                  its Subsidiaries is in violation of any applicable statute,

                  law or regulation relating to the environment or occupational

                  health and safety, and to its knowledge, no material

                  expenditures are or will be required in order to comply with

                  any such existing statute, law or regulation except for such

                  violations that individually, or in the aggregate, have had,

                   or could reasonably be expected to have, individually or in

                  the aggregate, a Material Adverse Effect. Except as set forth

                  on Schedule 4(p), no Hazardous Materials (as defined below)

                  are used or have been used, stored, or disposed of by the

                  Company or any of its Subsidiaries or, to the Company's

                  knowledge, by any other person or entity on any property

                  owned, leased or used by the Company or any of its

                  Subsidiaries. For the purposes of the preceding sentence,

                  "Hazardous Materials" shall mean:

 

                  (i)       materials which are listed or otherwise defined as

                           "hazardous" or "toxic" under any applicable local,

                           state, federal and/or foreign laws and regulations

                           that govern the existence and/or remedy of

                           contamination on property, the protection of the

                           environment from contamination, the control of

                           hazardous wastes, or other activities involving

                           hazardous substances, including building materials;

                            or

 

                  (ii)      any petroleum products or nuclear materials.

 

 

                                       10

<PAGE>

 

         (q)       SOLVENCY. On the Closing Date, after giving effect to the

                  transactions contemplated hereby, each of the Company and each

                  of its Subsidiaries is, and the Note Parties on a consolidated

                  basis are, Solvent. For purposes of this Agreement,

                  "Solvent" means, with respect to any Person (as such term is

                  defined below) on a particular date, that on such Person's

                  total assets exceed their total liabilities. For purposes of

                  this Agreement, "Person" means an individual, corporation,

                  limited liability company, partnership, association,

                  joint-stock company, trust, unincorporated organization, joint

                  venture or other enterprise or entity or governmental

                  authority.

 

         (r)       INSURANCE. Eac


 
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