|
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement, dated as of
September 28, 2007 (this " Agreement "), is entered into by
and among Dirt Motor Sports, Inc., d/b/a World Racing Group, Inc. a
Delaware corporation (the " Company "), and the other
signatories hereto____________________ (each a " Lender "
and collectively, the " Lenders ").
RECITALS
-
-
- On the terms and subject to the conditions set forth herein,
Lenders are willing to purchase from Company and Company is willing
to issue and sell to Lenders, Senior Secured Promissory Notes,
substantially in the form attached hereto as Exhibit A (each a "
Note " and collectively, the " Notes "), in the
principal amount of up to Fifteen Million Dollars ($15,000,000),
subject to the conditions set forth in Section 9(a)(ii);
-
- As additional consideration for the issuance of the Notes by
the Company, the Company is issuing to the Lenders shares of common
stock, $0.001 par value per share (" Common Stock "), of the
Company at the rate of 275,000 shares for each One Million Dollars
($1,000,000) of principal amount of Notes purchased pursuant to
this Agreement (or in the event a Lender would beneficially own
more than 4.99% of all of the outstanding Common Stock after giving
effect to the forgoing issuance of Common Stock to such Lender,
shares of the Company's Series E Preferred Stock convertible into a
like number of shares of Common Stock) (collectively, the " Note
Shares ");
-
- As a condition to the purchase of the Notes and the Note
Shares, the Company has agreed to grant a continuing security
interest in all of the assets of the Company, excluding any
vehicles and leased equipment (the " Assets "), on
substantially the terms and conditions set forth in a Security
Agreement attached hereto as Exhibit B, and to grant a mortgage
lien in certain real property (the " Real Property " and
together with the Assets, the " Collateral ") owned by the
Company on substantially the terms and conditions set forth in a
form of Mortgage attached hereto as Exhibit C (each a "
Mortgage " and collectively, the " Mortgages ");
and
-
- As an additional condition to the purchase of the Notes and the
Note Shares, each Subsidiary (as defined herein) has agreed, on a
joint and several basis with the other Subsidiaries, to guaranty,
on a joint and several basis with the other Subsidiaries, the full
and prompt payment of the principal of and interest on the Notes
and performance of the Company of all of its present and future
obligations as set forth in the Transaction Documents, on
substantially the terms and conditions set forth in the Guaranty
attached hereto as Exhibit D (the " Guaranty "). This
Agreement, the Notes, the Guaranty, the Security Agreement, the
Escrow Agreement (as defined herein) and the Mortgages are referred
to herein collectively as the " Transaction Documents
").
AGREEMENT
NOW, THEREFORE , in consideration of the
foregoing, and the representations, warranties, and conditions set
forth below, the parties hereto, intending to be legally bound,
hereby agree as follows:
-
-
- Issuance and Sale of the Note and Note Shares . In
reliance upon the representations, warranties and covenants of the
parties set forth herein, the Company agrees to issue, sell and
deliver to each Lender, and each Lender agrees, severally and not
jointly, to purchase from the Company a Note in the principal
amount set forth below Lender's name on the signature page hereto
and that number of Note Shares set forth below Lender's name on the
signature page hereto. The purchase price for the Note and Note
Shares shall be equal to the principal amount indicated on the face
of the Note and set forth below Lender's name on the signature page
hereto. The Company and the Lender are executing and delivering
this Agreement and issuing the Notes and Note Shares in accordance
with and in reliance upon the exemption from securities
registration afforded by Section 4(2) of the U.S. Securities Act of
1933, as amended, and the rules and regulations promulgated
thereunder (the " Securities Act "), including Regulation D
(" Regulation D "), and/or upon such other exemption from
the registration requirements of the Securities Act as may be
available with respect to any or all of the investments to be made
hereunder. The Notes and the Note Shares are sometimes collectively
referred to herein as the " Securities ").
-
- Closing; Delivery . The Company will deliver to Lenders
the Notes against receipt by the Company of the purchase price for
the Notes in an aggregate purchase price of up to Fifteen Million
Dollars ($15,000,000) (the " Purchase Price "). The Purchase
Price shall be paid in cash or by cancellation of outstanding
indebtedness. The Note Shares shall be issued within five (5)
business days following the receipt by the Company of the purchase
price for the Note.
-
-
- Initial Closing . The initial closing (the " Initial
Closing ") of the purchase and sale of the Notes and Note
Shares to be acquired by the Lenders from the Company under this
Agreement shall take place at the offices of Kramer Levin Naftalis
& Frankel LLP, 1177 Avenue of the Americas, New York, New York
10036 at 10:00 a.m., New York time (i) on or before September 28,
2007; provided , that all of the conditions set forth in
Sections 6 and 7 hereof and applicable to the Closing shall have
been fulfilled or waived in accordance herewith and Lenders have
executed this Agreement to purchase at least $9,000,000 principal
amount of the Notes (inclusive of the principal amount of short
term notes funded prior to the Initial Closing Date exchanged into
Notes in connection with the Initial Closing), or (ii) at such
other time and place or on such date as the Lenders and the Company
may agree upon (the " Initial Closing Date "). The Company
acknowledges that a portion of the Purchase Price shall be paid by
certain Lenders surrendering for cancellation certain short term
notes issued by the Company to such Lenders prior to the Initial
Closing Date. At the Initial Closing, each Lender shall deliver its
Purchase Price by wire transfer to an escrow account designated by
the escrow agent or if all or any part of the Purchase Price is
being paid by cancellation of outstanding indebtedness, by delivery
to the Company of any note or other document evidencing such
indebtedness.
-
- Additional Closings . After the Initial Closing, the
Company may conduct any number of additional closings (each, an "
Additional Closing ") until $15,000,000 principal amount of
Notes have been issued and sold to the Lenders. The Initial Closing
and Additional Closings are sometimes referred to herein as a "
Closing ". The date of any Additional Closing is hereinafter
referred to as the " Additional Closing Date ". At each
Additional Closing, each Lender shall deliver its Purchase Price by
wire transfer to an escrow account designated by the escrow
agent.
- Representations and Warranties of the Company . The
Company hereby represents and warrants to Lender that the
statements contained in the following paragraphs of this Section
are all true and correct as of the date hereof and as of the time
of issuance of the Note (except as set forth on the Schedule of
Exceptions attached hereto with each numbered Schedule
corresponding to the section number herein):
-
-
- Organization and Standing . The Company is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted and
proposed to be conducted. The Company does not have any
Subsidiaries (as defined in Section 3(h)) or own securities of any
kind in any other entity except as set forth on Schedule
3(h) hereto. The Company and each such Subsidiary (as defined
in Section 3(h)) is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary except for any jurisdiction(s) (alone or in
the aggregate) in which the failure to be so qualified will not
have a Material Adverse Effect. For the purposes of this Agreement,
" Material Adverse Effect " means any material adverse
effect on the business, operations, properties, prospects, or
financial condition of the Company and its Subsidiaries and/or any
condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company to
perform any of its obligations under the Transaction Documents in
any material respect.
-
- Corporate Power . The Company has all requisite legal
and corporate power to enter into, execute and deliver the
Transaction Documents. This Agreement, the Guaranty, the Security
Agreement and the Mortgages are, and, upon issuance, the Notes will
be, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as the same may be
limited by bankruptcy, insolvency, moratorium, and other laws of
general application affecting the enforcement of creditors'
rights.
-
- Authorization . All corporate and legal action on the
part of the Company, its officers, directors and shareholders
necessary for the execution and delivery of the Transaction
Documents, the sale and issuance of the Note and the Note Shares,
and the performance of the Company's obligations hereunder and
under the other Transaction Documents, have been taken. When paid
for and issued in accordance with the terms hereof, the Notes shall
be validly issued and outstanding, free and clear of all liens,
encumbrances and rights of refusal of any kind. When the Note
Shares are issued and paid for in accordance with the terms of this
Agreement, such Note Shares will be duly authorized by all
necessary corporate action and validly issued and outstanding,
fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of refusal of any kind and the holders
shall be entitled to all rights accorded to a holder of Common
Stock.
-
- Capitalization . The authorized capital stock of the
Company as of the date hereof is set forth on Schedule 3(d)
hereto. All of the outstanding shares of the Common Stock and any
other outstanding security of the Company have been duly and
validly authorized and validly issued, fully paid and nonassessable
and were issued in accordance with the registration or
qualification provisions of the Securities Act, or pursuant to
valid exemptions therefrom. Except as set forth in this Agreement
and as set forth on Schedule 3(d) hereto, no shares of
Common Stock or any other security of the Company are entitled to
preemptive rights, registration rights, rights of first refusal or
similar rights and there are no outstanding options, warrants,
scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company. Furthermore, except as
set forth in this Agreement and as set forth on Schedule
3(d) hereto, there are no contracts, commitments,
understandings, or arrangements by which the Company is or may
become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into shares of
capital stock of the Company. Except for customary transfer
restrictions contained in agreements entered into by the Company in
order to sell restricted securities or as provided on Schedule
3(d) hereto, the Company is not a party to or bound by any
agreement or understanding granting registration or anti-dilution
rights to any person with respect to any of its equity or debt
securities. Except as set forth on Schedule 3(d) , the
Company is not a party to, and it has no knowledge of, any
agreement or understanding restricting the voting or transfer of
any shares of the capital stock of the Company. Except as disclosed
on Schedule 3(d) , (i) there are no outstanding debt
securities, or other form of material debt of the Company or any of
its Subsidiaries, (ii) there are no contracts, commitments,
understandings, agreements or arrangements under which the Company
or any of its Subsidiaries is required to register the sale of any
of their securities under the Securities Act, (iii) there are no
outstanding securities of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings, agreements or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to redeem a security of the Company or any of its
Subsidiaries, (iv) there are no securities or instruments
containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities, (v) the Company does
not have any stock appreciation rights or "phantom stock" plans or
agreements, or any similar plan or agreement and (vi) as of the
date of this Agreement, except as disclosed on Schedule 3(d)
, to the Company's and each of its Subsidiaries' knowledge, no
person or group of related persons beneficially owns (as determined
pursuant to Rule 13d-3 promulgated under the Exchange Act (as
defined below))) or has the right to acquire by agreement with or
by obligation binding upon the Company, beneficial ownership of in
excess of 5% of the Common Stock. Any person
with any right to purchase securities of the Company that would be
triggered as a result of the transactions contemplated hereby or by
any of the other Transaction Documents has waived such rights or
the time for the exercise of such rights has passed, except where
failure of the Company to receive such waiver would not have a
Material Adverse Effect. Except as set forth on Schedule
3(d) , there are no options,
warrants or other outstanding securities of the Company (including,
without limitation, any equity securities issued pursuant to any
Company Plan) the vesting of which will be accelerated by the
transactions contemplated hereby or by any of the other Transaction
Documents. Except as set forth in Schedule 3(d) , none of
the transactions contemplated by this Agreement or by any of the
other Transaction Documents shall cause, directly or indirectly,
the acceleration of vesting of any options issued pursuant the
Company's stock option plans.
-
- No Conflicts . The execution, delivery and performance
by the Company of its obligations under the Transaction Documents
will not: (i) conflict with or result in a breach of or a default
under any of the terms or provisions of, (A) the Company's
certificate of incorporation (the "Certificate") or by-laws
("Bylaws"), or (B) any material provision of any indenture,
mortgage, deed of trust or other material agreement or instrument
to which the Company is a party or by which it or any of its
material properties or assets (including, without limitation, the
Collateral) is bound, (ii) result in a violation of any material
provision of any law, statute, rule, regulation, or any existing
applicable decree, judgment or order by any court, Federal or state
regulatory body, administrative agency, or other governmental body
having jurisdiction over the Company, or any of its material
properties or assets or (iii) result in the creation or imposition
of any material lien, charge or encumbrance upon any material
property or assets of the Company or any of its subsidiaries
pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which
any of their property or any of them is subject except, in the case
of clauses (ii) and (iii), for such violations, breaches,
conflicts, defaults or other occurrences which, individually or in
the aggregate, would not have a Material Adverse Effect.
-
- No Approvals . No consent, approval or authorization of
or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with
the valid execution and delivery of the Transaction Document.
-
- Commission Documents, Financial Statements . The Common
Stock of the Company is registered pursuant to Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended (the "
Exchange Act "), and the Company has filed all reports,
schedules, forms, statements and other documents required to be
filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act (all of the foregoing including
filings incorporated by reference therein being referred to herein
as the " Commission Documents "). At the times of their
respective filings, the Form 10-QSB for the fiscal quarters ended
June 30, 2006, September 30, 2006, March 31, 2007 and June 30, 2007
(collectively, the " Form 10-QSB ") and the Form 10-KSB for
the fiscal year ended December 31, 2006 (the " Form 10-KSB
") complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and the Form 10-QSB and Form 10-KSB did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective dates,
the financial statements of the Company included in the Commission
Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the Commission. Such financial statements have been
prepared in accordance with generally accepted accounting
principles (" GAAP ") applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly
present in all material respects the financial position of the
Company and its Subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments).
-
- Subsidiaries . Schedule 3(h) hereto sets forth
each Subsidiary of the Company, showing the jurisdiction of its
incorporation or organization and showing the percentage of each
person's ownership of the outstanding stock or other interests of
such Subsidiary. For the purposes of this Agreement, "
Subsidiary " shall mean any corporation or other entity of
which at least a majority of the securities or other ownership
interest having ordinary voting power (absolutely or contingently)
for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the
Company and/or any of its other Subsidiaries. All of the
outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, and are fully paid and
nonassessable. Except as set forth on Schedule 3(h) hereto,
there are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding
upon any Subsidiary for the purchase or acquisition of any shares
of capital stock of any Subsidiary or any other securities
convertible into, exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock. Neither the Company
nor any Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares
of the capital stock of any Subsidiary or any convertible
securities, rights, warrants or options of the type described in
the preceding sentence except as set forth on Schedule 3(h)
hereto. Neither the Company nor any Subsidiary is party to, nor has
any knowledge of, any agreement restricting the voting or transfer
of any shares of the capital stock of any Subsidiary.
-
- No Material Adverse Change . Since December 31, 2006,
the Company has not experienced or suffered any Material Adverse
Effect, except as disclosed on Schedule 3(i) hereto and as
disclosed in its Commission Documents.
-
- No Undisclosed Liabilities . Except as disclosed on
Schedule 3(j) hereto, neither the Company nor any of its
Subsidiaries has incurred any liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or unsecured,
absolute, accrued, contingent or otherwise) other than those
incurred in the ordinary course of the Company's or its
Subsidiaries respective businesses or which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse
Effect.
-
- No Undisclosed Events or Circumstances . Since December
31, 2006, except as disclosed on Schedule 3(k) hereto, no
event or circumstance has occurred or exists with respect to the
Company or its Subsidiaries or their respective businesses,
properties, prospects, operations or financial condition, which,
under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.
-
- Indebtedness . Schedule 3(l) hereto sets forth as
of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or Indebtedness for
which the Company or any Subsidiary has commitments. For the
purposes of this Agreement, " Indebtedness " shall mean (a)
any liabilities for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts payable incurred in the
ordinary course of business), (b) all guaranties, endorsements and
other contingent obligations in respect of Indebtedness of others,
whether or not the same are or should be reflected in the Company's
balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $25,000 due
under leases required to be capitalized in accordance with GAAP.
Neither the Company nor any Subsidiary is in default with respect
to any Indebtedness.
-
- Title to Assets . Each of the Company and the
Subsidiaries has good and valid title to all of its real and
personal property reflected in the Commission Documents, free and
clear of any mortgages, pledges, charges, liens, security interests
or other encumbrances, except for those indicated on Schedule
3(m) hereto or such that, individually or in the aggregate, do
not cause a Material Adverse Effect. Any leases of the Company and
each of its Subsidiaries are valid and subsisting and in full force
and effect. Schedule 3(m) sets forth a complete list of all real
property owned by the Company and its Subsidiaries.
-
- Actions Pending . There is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding
or other proceeding pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary which questions
the validity of this Agreement or any of the other Transaction
Documents or any of the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto.
Except as set forth in the Commission Documents or on Schedule
3(n) hereto, there is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other
proceeding pending or, to the knowledge of the Company, threatened
against or involving the Company, any Subsidiary or any of their
respective properties or assets, which individually or in the
aggregate, would reasonably be expected, if adversely determined,
to have a Material Adverse Effect. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator
or governmental or regulatory body against the Company or any
Subsidiary or any officers or directors of the Company or
Subsidiary in their capacities as such, which individually or in
the aggregate, could reasonably be expected to have a Material
Adverse Effect.
-
- Compliance with Law . The business of the Company and
the Subsidiaries has been and is presently being conducted in
accordance with all applicable federal, state and local
governmental laws, rules, regulations and ordinances, except as set
forth in the Commission Documents or on Schedule 3(o) hereto
or such that, individually or in the aggregate, the noncompliance
therewith could not reasonably be expected to have a Material
Adverse Effect. The Company and each of its Subsidiaries have all
franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct
of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals,
individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
-
- Taxes . The Company and each of the Subsidiaries has
accurately prepared and filed all federal, state and other tax
returns required by law to be filed by it, has paid or made
provisions for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been and are
reflected in the financial statements of the Company and the
Subsidiaries for all current taxes and other charges to which the
Company or any Subsidiary is subject and which are not currently
due and payable. Except as disclosed on Schedule 3(p) hereto
or in the Commission Documents, none of the federal income tax
returns of the Company or any Subsidiary have been audited by the
Internal Revenue Service. The Company has no knowledge of any
additional assessments, adjustments or contingent tax liability
(whether federal or state) of any nature whatsoever, whether
pending or threatened against the Company or any Subsidiary for any
period, nor of any basis for any such assessment, adjustment or
contingency.
-
- Certain Fees . Except as set forth on Schedule
3(q) hereto, the Company has not employed any broker or finder
or incurred any liability for any brokerage or investment banking
fees, commissions, finders' structuring fees, financial advisory
fees or other similar fees in connection with the Transaction
Documents.
-
- Disclosure . Except for the transactions contemplated by
this Agreement, the Company confirms that neither it nor any other
person acting on its behalf has provided any of the Lenders or
their agents or counsel with any information that constitutes or
might constitute material, nonpublic information. To the Company's
knowledge, neither the representations and warranties contained in
Section 3 of this Agreement or the Schedules hereto nor any
other documents, certificates or instruments furnished to the
Lenders by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by this Agreement
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made herein
or therein, in the light of the circumstances under which they were
made herein or therein, not misleading.
-
- Operation of Business . Except as set forth on
Schedule 3(s) hereto, the Company and each of the
Subsidiaries owns or possesses the rights to all patents,
trademarks, domain names (whether or not registered) and any
patentable improvements or copyrightable derivative works thereof,
websites and intellectual property rights relating thereto, service
marks, trade names, copyrights, licenses and authorizations which
are necessary for the conduct of its business as now conducted
without any conflict with the rights of others except where failure
to own such property or possess such rights would not have a
Material Adverse Effect.
-
- Environmental Compliance . Except as set forth on
Schedule 3(t) hereto or in the Commission Documents, the
Company and each of its Subsidiaries have obtained all material
approvals, authorization, certificates, consents, licenses, orders
and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any
Environmental Laws. "Environmental Laws" shall mean all applicable
laws relating to the protection of the environment including,
without limitation, all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of hazardous
substances, chemical substances, pollutants, contaminants or toxic
substances, materials or wastes, whether solid, liquid or gaseous
in nature, into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic
substances, material or wastes, whether solid, liquid or gaseous in
nature. To the Company's knowledge, the Company has all necessary
governmental approvals required under all Environmental Laws as
necessary for the Company's business or the business of any of its
subsidiaries. Except for such instances as would not individually
or in the aggregate have a Material Adverse Effect and to the
knowledge of the Company, there are no past or present events,
conditions, circumstances, incidents, actions or omissions relating
to or in any way affecting the Company or its Subsidiaries that
violate or may violate any Environmental Law after the Closing Date
or that may give rise to any environmental liability, or otherwise
form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation (i) under any Environmental Law, or
(ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation
underground storage tanks), disposal, transport or handling, or the
emission, discharge, release or threatened release of any hazardous
substance.
-
- Books and Records; Internal Accounting Controls . The
records and documents of the Company and its Subsidiaries
accurately reflect in all material respects the information
relating to the business of the Company and the Subsidiaries, the
location of their assets, and the nature of all transactions giving
rise to the obligations or accounts receivable of the Company or
any Subsidiary. The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient, in the judgment
of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate actions are taken with respect to any
differences.
-
- Material Agreements . Except for the Transaction
Documents (with respect to clause (i) only), as disclosed in the
Commission Documents or as set forth on Schedule 3(v)
hereto, or as would not be reasonably likely to have a Material
Adverse Effect, (i) the Company and each of its Subsidiaries have
performed all obligations required to be performed by them to date
under any written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement, filed or required to
be filed with the Commission (the " Material Agreements "),
(ii) neither the Company nor any of its Subsidiaries has received
any notice of default under any Material Agreement and, (iii) to
the Company's knowledge, neither the Company nor any of its
Subsidiaries is in default under any Material Agreement now in
effect.
-
- Transactions with Affiliates . Except as set forth on
Schedule 3(w) hereto and in the Commission Documents, there
are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing
transactions between (a) the Company, any Subsidiary or any of
their respective customers or suppliers on the one hand, and (b) on
the other hand, any officer, employee, consultant or director of
the Company, or any of its Subsidiaries, or any person owning at
least 5% of the outstanding capital stock of the Company or any
Subsidiary or any member of the immediate family of such officer,
employee, consultant, director or stockholder or any corporation or
other entity controlled by such officer, employee, consultant,
director or stockholder, or a member of the immediate family of
such officer, employee, consultant, director or stockholder which,
in each case, is required to be disclosed in the Commission
Documents or in the Company's most recently filed definitive proxy
statement on Schedule 14A, that is not so disclosed in the
Commission Documents or in such proxy statement.
-
- Securities Act of 1933 . Based in material part upon the
representations herein of the Lenders, the Company has complied and
will comply with all applicable federal and state securities laws
in connection with the offer, issuance and sale of the Securities
hereunder. Neither the Company nor anyone acting on its behalf,
directly or indirectly, has or will sell, offer to sell or solicit
offers to buy any of the Securities or similar securities to, or
solicit offers with respect thereto from, or enter into any
negotiations relating thereto with, any person, or has taken or
will take any action so as to bring the issuance and sale of any of
the Securities under the registration provisions of the Securities
Act and applicable state securities laws. Neither the Company nor
any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the
Securities Act) in connection with the offer or sale of any of the
Securities.
-
- Employees . Neither the Company nor any Subsidiary has
any collective bargaining arrangements or agreements covering any
of its employees, except as set forth on Schedule 3(y
|
