NOTE PURCHASE AGREEMENT

Exhibit 10.18

 

CT TECHNOLOGIES INTERMEDIATE HOLDINGS, INC.,

as the Issuer of the Notes

and

The Guarantors Named Herein

$75.0 Million Principal Amount

of

14.0% Senior Subordinated Notes due March 22, 2014

of CT TECHNOLOGIES INTERMEDIATE HOLDINGS, INC.

NOTE PURCHASE AGREEMENT

Dated September 22, 2008

 

TABLE OF CONTENTS

 

 

i

 

ii

 

iii

 

iv

INDEX OF APPENDICES

 

 

 

i

CT TECHNOLOGIES INTERMEDIATE HOLDINGS, INC.

120 Bluegrass Valley Parkway

Alpharetta, GA 30005

September 22, 2008

 

TO:	The Purchasers Named on

 

the Signature Pages Hereto

Ladies and Gentlemen:

CT TECHNOLOGIES INTERMEDIATE HOLDINGS, INC., a Delaware corporation (the “ Company ”), hereby agrees with you as follows (capitalized terms used herein without definition shall have the meanings assigned to them in Article XI hereof):

ARTICLE I

PURCHASE AND SALE OF NOTES

1.1 Issuance of Notes. On or before the Closing, the Company will have authorized the issuance of $75.0 million in aggregate principal amount of its 14.0% Senior Subordinated Notes due March 22, 2014 (the “ Notes ”) to the purchasers named on the signature pages hereto (the “ Purchasers ”). The Notes will be issued in the form attached hereto as Annex A . The Notes will be Guaranteed by all current and future Domestic Subsidiaries of the Company in accordance with this Agreement.

1.2 Purchase and Sale of Notes; Closing

(a) Purchase and Sale of Notes . In reliance upon the Purchasers’ representations and warranties made in Article V hereof, the Company hereby agrees to issue and to sell to each Purchaser the Notes set forth below its name on the signature pages hereto, at a purchase price of $1,000 for each $1,000 in aggregate principal amount of Notes. In reliance upon the representations and warranties of the Company contained in the Note Documents, and subject to the terms and conditions set forth herein and therein, each Purchaser hereby agrees, severally and not jointly, to purchase such Notes from the Company. Each of the Purchasers and the Company agree that, for federal income tax purposes, the issue price of each Note is equal to its purchase price as specified above. The obligations of each Purchaser under this Agreement are several and not joint obligations and each Purchaser will have no obligation or liability to any Person for the performance or non-performance by any other Purchasers hereunder.

(b) Closing . The purchase and sale of the Notes will take place at a closing (the “ Closing ”) at 2:00 p.m. New York City time on September 22, 2008, at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022, or at such other time and place as is mutually agreed to by the Company and the Purchasers (the “ Closing Date ”). At the Closing, the Company will deliver to each Purchaser the Notes to be purchased by it (in such permitted

 

1

denomination or denominations and registered in its name or the name of such nominee or nominees as such Purchaser may reasonably request) against payment of the purchase price of the Notes therefor by intra-bank or federal funds wire transfer of immediately available funds to such bank accounts as the Company designates in writing. The Company hereby instructs each Purchaser to deduct from such intra-bank or federal funds wire transfer of the amount of any out-of-pocket expenses for which it is entitled to reimbursement pursuant to Section 1.4 hereof and for which invoices have been submitted prior to the Closing, including, without limitation, subject to Section 1.4 hereof, the fees and disbursements of Latham & Watkins LLP and Cahill Gordon & Reindel LLP, who are acting as counsel to the Purchasers.

(c) Closing Fee . Concurrently with the Closing, the Company shall pay to each Purchaser (or to such other Person(s) as such Purchaser shall direct) a closing fee equal to 2.50% of the aggregate principal amount of Notes acquired by such Purchaser on the Closing Date (the “ Closing Fee ”) by wire transfer of immediately available funds to the account designated by such Purchaser or, if any Purchaser elects, as a reduction of the purchase price to be paid by that Purchaser for the Notes it acquires on the Closing Date.

1.3 Payments by the Company

(a) Payments of Interest .

 

(1)

The outstanding principal amount of the Notes, together with any and all interest deferred pursuant to Section 1.3(a)(2) , shall bear interest from and including the Closing Date until, but excluding, the date paid to the Holders, computed on the basis of a 360-day year of twelve 30-day months, at a fixed annual rate of 14.00% (compounded quarterly).

 

(2)

Accrued interest on the Notes shall be due and payable quarterly in arrears on the 1st Business Day of each January, April, July and October of each year, commencing on January 1, 2009. The Company shall make its interest payment on the Notes on each such payment date, for the period from the previous payment date (or, with respect to the first interest payment date, from the Closing Date) to, but excluding, such payment date, by: (i) making a cash payment to the Holders in an amount equal to 12.00% per annum of the principal balance outstanding under the Notes and (ii) deferring payment of an amount equal to 2.00% per annum of the principal balance outstanding under the Notes so that the combined amount of the payment and the deferral is equal to the interest payment due on such payment date. Upon any such deferral of an interest payment pursuant to this Section1.3(a)(2) the amount of the deferred payment shall become and be deemed to be an additional principal amount outstanding under the Notes on which interest shall begin accruing hereunder on the date of any such deferral. To the extent reasonably requested from time to time by the Holders, the Company shall issue additional or replacement Notes to evidence the increased principal amount of the Notes resulting from the

 

2

deferral of interest payments hereunder; provided that the absence of or failure to request or issue such additional or replacement Notes shall not affect the validity of such obligation, its character as principal or the Company’s obligations with respect thereto.

 

(3)

Except as set forth herein, all accrued and unpaid interest on the Notes shall be paid in full in cash upon the payment in full of the outstanding principal amount of the Notes or, if payment of the principal amount of the Notes in full is not paid when due, thereafter on demand.

 

(4)

In no event shall the interest rate charged pursuant to the terms of this Agreement exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Holders have received interest hereunder in excess of the highest applicable rate, the amount of such excess interest shall be applied pro rata against the principal of the Notes in accordance with their respective outstanding principal amounts, and any excess interest remaining after such application shall be refunded to the Company.

(b) The Company will pay or cause to be paid all amounts payable with respect to any Note (without any presentment of such Note and without any notation of such payment being made thereon) by crediting (before 1:00 p.m., New York City time), by intra-bank or federal funds wire transfer to each Holder’s account in any bank in the United States as may be designated and specified in writing by such Holder at least two Business Days prior to the applicable payment. Each Purchaser’s initial bank account for this purpose is on its signature page hereto.

(c) Notwithstanding anything to the contrary contained in the Notes, if any principal amount payable with respect to a Note is payable on a Legal Holiday, then the Company will pay such amount on the next succeeding Business Day, and interest will accrue on such amount until the date on which such amount is paid and payment of such accrued interest will be made concurrently with the payment of such amount; provided that the Company may elect to pay in full (but not in part) any such amount on the last Business Day prior to the date such payment otherwise would be due, and no such additional interest will accrue on such amount.

(d) Notwithstanding anything to the contrary contained in the Notes, if any interest amount payable with respect to a Note is payable on a Legal Holiday, then the Company will pay such amount on the next succeeding Business Day. The interest amount payable will include interest calculated from the last scheduled interest payment date up to and including the current scheduled interest payment date.

1.4 Expenses

The Company agrees to pay or reimburse all reasonable out-of-pocket costs and expenses of the Purchasers and their Affiliates relating to this Agreement, including but not limited to:

(a) the reasonable out-of-pocket cost of preparing and reproducing the Note Documents and any other documents contemplated hereby or thereby;

 

3

(b) all reasonable out-of-pocket expenses incurred by each Purchaser or its general partner, if applicable, in connection with the transactions contemplated by this Agreement and the other documents referred to in clause (a) above, including, without limitation, travel and lodging expenses and all costs incurred in connection with its review of the Company’s business and operations;

(c) to the extent not specifically included in clause (b) immediately above, the fees and disbursements of Latham & Watkins LLP and Cahill Gordon & Reindel LLP, who are acting as counsel to the Purchasers in connection with the transactions contemplated by this Agreement; provided that the Company shall only be obligated to pay such fees and disbursements of Cahill Gordon & Reindel LLP up to an aggregate amount not to exceed $125,000;

(d) all reasonable out-of-pocket expenses (including the reasonable fees and disbursements of counsel) incurred by the Purchasers and their Affiliates in connection with any amendment, modification, waiver, consent or preservation or enforcement of rights under the Note Documents or any other documents contemplated hereby or thereby (whether or not any such amendment, modification, waiver or consent is completed);

provided that the Company shall not be required to reimburse the Purchasers for (i) their costs in connection with transfers of the Notes and (ii) other than as set forth in clause (c) above, more than one counsel to all of the Purchasers unless a bona fide conflict of interest or potential conflict of interest exists.

1.5 Indemnification

In addition to any and all obligations to indemnify each Purchaser pursuant to the Note Documents, the Company and the Guarantors (collectively, the “ Indemnifying Parties ” ) hereby agree, jointly and severally, without limitation as to time, to indemnify each Purchaser and its Agents and Affiliates, including but not limited to its and their officers, directors, employees, advisors and representatives (collectively, the “Indemnified Parties ” ), against, and hold such Purchaser and them harmless from, all actual losses, claims, damages, liabilities and related reasonable out-of-pocket expenses (including the reasonable attorneys’ fees and disbursements, subject to the remaining provisions of this Section 1.5 ) (collectively, the “ Losses ” ) incurred by such Purchaser or them and arising out of or in connection with the Note Documents or the transactions contemplated hereby or thereby (or any other document or instrument executed herewith or pursuant hereto or thereto), whether or not any Indemnified Party is a formal party to any claim, litigation, investigation or proceeding, except to the extent, with respect to any Indemnified Party, that such Losses result from action on the part of such Indemnified Party which is finally judicially determined in a non-appealable judgment of a court of competent jurisdiction to arise from such Indemnified Party’s bad faith, gross negligence or willful misconduct.

The obligations of the Indemnifying Parties to each Indemnified Party hereunder shall be separate obligations and the Indemnifying Parties’ liability to any such Indemnified Party hereunder shall not be extinguished solely because any other Indemnified Party is not entitled to indemnity hereunder. The obligations of the Indemnifying Parties under this Section 1.5 shall survive the payment or prepayment of the Notes at maturity, upon acceleration, redemption or otherwise, any transfer of the Notes by any Purchaser and the termination of the Note Documents.

 

4

In case any action shall be brought against any Indemnified Party with respect to which indemnity may be sought against any of the Indemnifying Parties hereunder, such Indemnified Party shall promptly notify the Company in writing and the Company shall, if it desires, assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party and payment of all reasonable fees and expenses. The failure to so notify the Company shall not affect any obligation any of the Indemnifying Parties may have to any Indemnified Party under this Agreement or otherwise. Each Indemnified Party shall have the right to employ separate counsel in such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless:

 

(1)

the Indemnifying Parties have agreed in writing to pay such expenses;

 

(2)

the Indemnifying Parties have failed to assume the defense and employ counsel; or

 

(3)

the named parties to any such action (including any impleaded parties) include any Indemnified Party and any Indemnifying Party, and such Indemnified Party shall have been advised by outside counsel that there may be one or more legal defenses available to it which are inconsistent with or additional to those available to the Indemnifying Party;

provided that, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel in the circumstances described in clauses (1), (2) or (3) above, the Company shall not have the right to assume the defense of such action or proceeding; provided, however, that the Indemnifying Parties shall not be responsible hereunder for the fees and expenses of more than one such firm of separate counsel to the Indemnified Parties absent a bona fide conflict of interest or potential conflict of interest among the Purchasers (in addition to no more than one local counsel in any necessary jurisdiction), which counsel shall be designated by such Indemnified Party. The Indemnifying Parties shall not be liable for any settlement of any such action effected without the written consent of the Company (which shall not be unreasonably withheld). The Indemnifying Parties agree that they will not, without the Indemnified Party’s prior consent, which shall not be unreasonably withheld, settle or compromise any pending or threatened claim, action or suit in respect of which indemnification or contribution may be sought hereunder unless the foregoing contains an unconditional release of the Indemnified Parties from all liability and obligation arising therefrom.

1.6 Contribution

If the indemnification provided for in Section 1.5 hereof is unavailable to any Indemnified Party in respect of any Losses referred to therein, then the Indemnifying Parties, in lieu of indemnifying such Persons, shall have a joint and several obligation to contribute to the amount paid or payable by such Persons as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Parties, on the one hand, and the

 

5

Indemnified Parties, on the other hand, in connection with the actions which resulted in such Losses as well as any other relevant equitable considerations. The amount paid or payable by any such Person as a result of the Losses referred to above shall be deemed to include, subject to the limitations set forth in Section 1.5 hereof, any legal or other fees or expenses reasonably incurred by such Person in connection with any investigation, lawsuit or legal or administrative action or proceeding.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 1.6 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section ll(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

ARTICLE II

HOLDER’S SPECIAL RIGHTS

The Company hereby agrees to grant to each Holder the following special rights:

2.1 Registration of Notes; etc.

(a) Registrar . The Company will maintain a register for the Notes in which it will provide for the registration and transfer of the Notes. The name and address of each Holder of one or more Notes, each transfer of a Note and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and Holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary.

(b) Transfer . Upon surrender for registration of transfer of any of the Notes, the Company, at its expense, will execute and deliver, in the name of the designated transferee or transferees, one or more new certificates evidencing Notes of the same type, and of a like aggregate principal amount.

(c) Exchange . A certificate evidencing Notes, may be exchanged at the option of any Holder thereof for two or more certificates of a like aggregate principal amount. Whenever any such certificate is surrendered in connection with such an exchange, the Company, at its expense, will execute and deliver such new certificates that the Holder making the exchange is entitled to receive.

(d) New Certificates . All certificates issued upon any registration of transfer or exchange as set forth in this Section 2.1 will be the legal and valid obligations of the Company, evidencing the same interests, and entitled to the same benefits, as the Notes evidenced by the certificates surrendered upon such registration of transfer or exchange.

 

6

(e) Instruments of Transfer . Every certificate evidencing a Note presented or surrendered for registration of transfer or exchange will (if so required by the Company) be duly endorsed or will be accompanied by a written instrument of transfer in form reasonably satisfactory to the Company duly executed by the Holder thereof or its attorney duly authorized in writing.

(f) Transfer Restrictions . Certain transfers of the Notes are subject to the terms of Section 5.6 hereof.

2.2 Service Charges

No service charge shall be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes.

2.3 Lost, etc. Notes

Notwithstanding any provision in any Note Document to the contrary, if any mutilated Note is surrendered to the Company, the Company shall execute and deliver in exchange therefor a new Note of the same principal amount, and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company evidence to its reasonable satisfaction of the destruction, loss or theft of any Note then, in the absence of notice that such Note has been acquired by a bona fide purchaser, the Company shall execute and deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of a like principal amount, and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note in accordance with its terms. Upon the issuance of any new Note, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. The provisions of this Section 2.3 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

2.4 Inspection

The Company will allow each Holder the right to visit and inspect any of the offices or properties of the Company or any of its Subsidiaries, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom and to discuss their respective affairs, finances and accounts with their respective employees, officers and independent public accountants (and by this provision, the Company authorizes its employees, officers and accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be reasonably requested; provided that all such visits and inspections will occur during normal business hours, upon three (3) Business Days’ prior notice, but not more than once during any Fiscal Year for all Holders so long as no Event of Default has occurred and is continuing, but if an Event of default occurs and is continuing, then as frequently as the Requisite Holders determine to be appropriate and in a manner designed not to disrupt the business of the Company. The costs and expenses of such inspection will be paid by the inspecting Holder.

 

7

2.5 Private Placement Number

If reasonably requested by any Holder, the Company will obtain a private placement number for the Notes from Standard & Poor’s CUSIP Service Bureau.

2.6 Pledge or Transfer of Notes

With the consent of the Company, not to be unreasonably withheld or delayed, each Holder may sell or transfer all or any part of their Notes to any third party and to pledge any or all of the Notes to any commercial bank or other institutional lender, subject in each case only to the restrictions imposed by laws; provided that the consent of the Company shall not be required (i) if an Event of Default has occurred and is continuing), (ii) in connection with transfers of Notes among the Purchasers and their respective Affiliates or (iii) in connection with a transfer of Notes to, between or among the lenders (or any trustee or custodian acting on their behalf) under the PennantPark Credit Agreement.

2.7 Payments Applied Pro Rata

Any payments of principal, interest and other amounts due hereunder shall be applied pro rata to the Holders of the Notes in accordance with their respective outstanding principal amounts.

ARTICLE III

REDEMPTION AND REPURCHASE OF THE NOTES

3.1 Redemption and Offers to Repurchase

(a) The Notes may not be redeemed or prepaid prior to the first anniversary of the Closing Date other than as expressly contemplated by this Agreement. At any time following the first anniversary of the Closing Date, the Company may redeem all of the Notes, or any portion of the Notes, upon not less than 10 nor more than 30 days’ notice, at a redemption price equal to 100% of the principal amount of such Notes, plus accrued and unpaid interest to the applicable redemption date, plus the applicable premium calculated as a percentage of the principal amount of the Notes to be redeemed (the “ Prepayment Premium ”) indicated below:

 

(b) The Company shall make an offer to repurchase Notes in connection with each Specified Repurchase Event. With respect to a Specified Repurchase Event described in clause (i) of the definition of “Specified Repurchase Event,” such offer will be to repurchase all of the Notes then outstanding. With respect to Specified Repurchase Events described in clauses (ii),

 

8

(iii), (iv) and (v) of the definition of “Specified Repurchase Event,” such offer will be made, subject to the terms of the Subordination Agreement, to repurchase Notes with the Net Cash Proceeds received in connection with such Specified Repurchase Event. Each offer to repurchase made in connection with a Specified Repurchase Event shall include payment in cash of the principal amount of the Notes proposed to be repurchased plus the Specified Redemption Premium (with respect to a Specified Repurchase Event made in connection with a Change of Control) plus all accrued and unpaid interest to the applicable redemption date with respect to such Notes.

(c) Any redemption pursuant to this Section 3.1 shall be made pursuant to the provisions of Sections 3.3 through 3.6 hereof.

3.2 Repurchase Offers

Upon the commencement of any offer to repurchase in connection with a Specified Repurchase Event (each, a “Repurchase Offer”) , the Company will send, by first class mail, a notice to each of the Holders. The notice will contain all instructions and materials necessary to enable the Holders to tender Notes pursuant to such Repurchase Offer. The notice, which will govern the terms of the Repurchase Offer, will state:

 

(1)

the Section of this Agreement pursuant to which the Repurchase Offer is being made and the length of time the Repurchase Offer will remain open;

 

(2)

the offer amount, the purchase price and the purchase date;

 

(3)

that any Note not tendered or accepted for payment will continue to accrue interest;

 

(4)

that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Repurchase Offer will cease to accrue interest after the Purchase Date;

 

(5)

that Holders electing to have a Note purchased pursuant to any Repurchase Offer will be required to deliver the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note to the Company at the address specified in the notice at least three days before the Purchase Date;

 

(6)

that Holders will be entitled to withdraw their election if the Company receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission, electronic mail or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

 

(7)

that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company will select the Notes to be purchased on a pro rata basis based on the principal amount of Notes surrendered; and

 

9

(8)

that any Holder whose Notes were purchased only in part will, upon the reasonable request of such Holder, be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered.

Each Repurchase Offer will be made to all Holders of Notes. Each Repurchase Offer will remain open for a period of at least 15 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the “Offer Period”). No later than three Business Days after the termination of the Offer Period (the “Purchase Date”), the Company will apply, or cause to be applied, the amounts required to repurchase Notes in the Specified Repurchase Event (such amount applied, the “Offer Amount”) to the purchase of Notes tendered (on a pro rata basis, if applicable, or if less than the Offer Amount has been tendered, all Notes tendered) pursuant to the Repurchase Offer, and will deliver to the Holders an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Company. On the Purchase Date, the Company will pay each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase. The Company will promptly issue a new Note and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof.

3.3 Selection of Notes to Be Redeemed or Purchased

If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Company will select Notes for redemption or purchase on a pro rata basis.

3.4 Notice of Redemption

In the case of any optional redemption of Notes pursuant to Section 3.1 hereof, at least 10 days but not more than 30 days before the applicable redemption date, the Company will mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address.

The notice will identify the Notes to be redeemed and will state:

 

(1)

the redemption date;

 

(2)

the redemption price;

 

(3)

if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note;

 

(4)

that Notes redeemed in full must be surrendered to the Company to collect the redemption price;

 

10

(5)

that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; and

 

(6)

the Section of this Agreement pursuant to which the Notes called for redemption are being redeemed.

3.5 Effect of Notice of Redemption

Once the notice of redemption is mailed in accordance with Section 3.4 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price, subject only to the occurrence of a change of control or refinancing described in such notice.

3.6 Deposit of Redemption or Purchase Price

Payments on Notes that are to be redeemed or purchased in an offer to purchase will be made in accordance with Section 1.3 hereof.

If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest will be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in the second paragraph of Section 7.1 hereof.

3.7 Notes Redeemed or Purchased in Part

Upon surrender of a Note that is redeemed or purchased in part, the Company will issue at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered.

ARTICLE IV

CLOSING CONDITIONS

Each Purchaser’s obligation to purchase and pay for the Notes shall be subject to such Purchaser’s determination that the following conditions have been satisfied on or before the Closing Date:

4.1 Representations and Warranties True; No Event of Default

The representations and warranties of the Company contained in Article VI hereof shall be true in all material respects at and as of the Closing Date (unless related to a specific date, in which case it shall be true as of such specific date), after giving effect to the transactions contemplated by this Agreement to occur on that date, as if made on and as of that date.

 

11

4.2 [Intentionally Omitted]

4.3 Compliance Certificates

(a) Officers’ Certificate . Each Purchaser shall have received a certificate dated the Closing Date and signed by each of the Chief Executive Officer and the Chief Financial Officer of the Company, certifying that the conditions set forth in Sections 4.1, 4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.20 and 4.21 hereof have been satisfied on and as of such date.

(b) Secretary’s Certificate . Each Purchaser shall have received a certificate, dated the Closing Date and signed by the Secretary of the Company, certifying as to the board resolutions and Charter Documents attached thereto, the incumbency and signatures of the officers executing the Note Documents, and as to all other corporate proceedings relating to the authorization, execution and delivery of the Notes and the Note Documents.

4.4 Opinion of Counsel

Each Purchaser shall have received opinions, dated the Closing Date and addressed to it, from Kirkland & Ellis LLP, special counsel for the Company, and Polsinelli Shalton Flanigan Suelthaus PC, Miller & Martin PLLC, and Nexsen Pruet, LLC, local counsel for the Company, in form and substance reasonably satisfactory to such Purchaser.

4.5 Issuance of the Notes

Pursuant to Section 1.1 and Section 1.2 hereof, the Company shall have issued and delivered $75.0 million in aggregate principal amount of Notes to the Purchasers.

4.6 [Intentionally Omitted]

4.7 Consents and Permits

The Company and the Guarantors shall have received all consents, approvals and authorizations and sent or made all notices, filings, registrations and qualifications required to be obtained, sent or made in connection with the Acquisition and the transactions contemplated by the Note Documents, except where the failure to receive or to send the same would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.8 Senior Credit Facility

The Company shall have entered into the Senior Credit Facility, the terms of which shall permit the issuance of the Notes and the performance of the transactions contemplated by the Note Documents and shall otherwise be in a form and substance reasonably satisfactory to the Purchasers. The Senior Credit Facility shall provide for an aggregate $150 million term loan and revolving credit facility, and the Company shall have borrowed no more than $130 million in term loans as of the Closing Date; provided that the Company may draw on the revolving facility on the Closing Date solely to fund working capital and letters of credit and up to $1 million to pay fees in connection with the transactions contemplated hereby.

 

12

4.9 Acquisition

All of the Merger Documents shall have been completed on terms reasonably satisfactory to each Purchaser including, but not limited to, those pertaining to representations, warranties, and indemnification rights by the Company in connection with the Acquisition. Fully executed copies of all of the Merger Documents shall have been delivered to each Purchaser simultaneously with the Closing. The Acquisition shall be consummated concurrently with the Closing and on the terms contemplated by the Merger Documents and all conditions precedent to such consummation shall have been satisfied or, with each Purchaser’s consent (such consent not to be unreasonably withheld, conditioned or delayed), waived.

4.10 Initial Equity Contribution

The Purchasers shall have received evidence in form and substance satisfactory to the Purchasers that the Initial Equity Contribution has been consummated.

4.11 Consummation of Other Related Transactions

The Purchasers shall have received fully executed copies of each of the Related Transaction Documents (other than the Note Documents), each of which shall be in all material respects in form and substance previously approved by the Purchasers without waiver of any term or condition thereof that would be materially adverse to the Purchasers without the consent of the Purchasers (such consent not to be unreasonably withheld, conditioned or delayed) and the Related Transactions shall have been consummated in material compliance with the terms of such Related Transactions Documents (other than the purchase of the Notes on the Closing Date).

4.12 Financial Statements; Financial Conditions

The Company shall have delivered to each Purchaser the following Financial Statements, in a form reasonably satisfactory to Purchasers:

(a) The audited consolidated balance sheets and the related statements of income with the consolidated and the related statements of cash flows (i) for the Fiscal Year ended December 31, 2007 for each of Parent and ChartOne, (ii) for the Fiscal Years ended December 31, 2005 and December 31, 2006 for each of Companion Technologies Corporation and ChartOne and (iii) for the Fiscal Years ended September 30, 2005 and September 30, 2006 for Smart Document Solutions LLC;

(b) The available unaudited balance sheet(s) as of the Fiscal Month most recently ended prior to the Closing Date, and the related statement(s) of income of ChartOne and the Company and cash flows of the Company, and capital expenditures of ChartOne for the twelve (12) fiscal months then ended;

(c) The Pro Forma based on the unaudited consolidated balance sheets of Holdings and its Subsidiaries dated July 31, 2008; and

(d) The Projections for the five (5) year period beginning on July 1, 2008, on a quarter-by-quarter basis for the first year and on a year-by-year basis thereafter.

 

13

4.13 Minimum Consolidated EBITDA

The consolidated EBITDA of the Company and its Subsidiaries on a consolidated basis for the twelve (12) consecutive fiscal months ended July 31, 2008 shall not be less than $40,500,000 (with pro forma adjustments limited to those included in the financial model and the PWC diligence report received by Purchasers prior to August 4, 2008, including not more than $10,500,000 of adjustments relating to integration benefits, and other adjustments as may be approved by the Purchasers).

4.14 Total Leverage Ratio

As of the Closing Date, after giving effect to the Related Transactions, the Total Leverage Ratio of the Company and its Subsidiaries on a consolidated basis for the most recently ended Rolling Period shall be equal to or less than 5.10 to 1.00.

4.15 Senior Leverage Ratio

As of the Closing Date, after giving effect to the Related Transactions, the Senior Leverage Ratio of the Company and its Subsidiaries on a consolidated basis for the most recently ended Rolling Period shall be equal to or less than 3.25 to 1.00.

4.16 Solvency Certificate

Each Purchaser shall have received a solvency certification for the Company and the Guarantors prepared and executed by the Chief Financial Officer of the Company in the form attached hereto as Annex B .

4.17 Payment of Fees and Expenses

The Company shall have paid all of the accrued fees and expenses of each Purchaser (including the reasonable fees and disbursements of Latham & Watkins LLP and up to $125,000 in fees and disbursements of Cahill Gordon & Reindel LLP).

4.18 Equity Co-Invest Right

The Sponsor shall have provided the Purchasers the opportunity to co-invest in the equity securities of Holdings or other related entities on the same basis and terms as the Initial Equity Contribution made on the Closing Date in an amount equal to at least 16.0% of each Purchaser’s portion of the initial commitment regarding the Notes with documentation reasonably satisfactory to the Purchasers.

4.19 Management Rights Letter

Each Purchaser shall have received a management rights letter from the Company granting each of the Purchasers the rights necessary to qualify their investment under this Agreement and the Note Documents as a VCOC investment.

 

14

4.20 [Intentionally Omitted]

4.21 Purchase Permitted by Applicable Laws; Legal Investment

Each Purchaser’s purchase of and payment for the Notes to be purchased by it:

 

(1)

shall not be prohibited by any applicable law or governmental regulation;

 

(2)

shall not subject it to any material penalty under or pursuant to any applicable law or governmental regulation; and

 

(3)

shall be permitted by the laws and regulations of the jurisdictions to which it is subject.

If reasonably requested by any Purchaser not less than two (2) Business Days prior to the Closing Date, the Company shall have delivered to such Purchaser factual certificates or other evidence reasonably requested by it, in form and substance reasonably satisfactory to it, to enable such Purchaser to establish compliance with this condition, including copies of all state securities law or “blue sky” filings made in connection with the transactions contemplated hereby, if any.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each Purchaser hereby represents and warrants, severally and not jointly, as of the date hereof as follows:

5.1 Experience.

Such Purchaser is experienced in evaluating and investing in private placement transactions of securities of start up companies such as the Company, and has either individually or through its current officers such knowledge and experience in financial and business matters that such Purchaser is capable of evaluating and understanding the merits and risks of such Purchaser’s prospective investment in the Company and forming an investment decision with respect thereto, and has the ability to bear the economic risks of the investment.

5.2 Accredited Investor.

Such Purchaser is an “accredited investor” within the meaning of Rule 501 of Regulation D, as presently in effect, under the Securities Act.

5.3 Purchase Entirely for Own Account.

Such Purchaser is acquiring the Notes for investment for such Purchaser’s own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Such Purchaser further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any third person with respect to any of the Notes.

 

15

5.4 Restricted Notes.

Such Purchaser understands that the Notes have not been and, when issued, will not be registered under the Securities Act or any state or other securities law, and that the Notes are being issued in transactions exempt from the registration requirements of the Securities Act. Such Purchaser acknowledges that the Notes must be held indefinitely and shall not offer or sell the Notes except pursuant to an effective registration statement under the Securities Act or pursuant to applicable exemptions from registration under the Securities Act and in compliance with applicable State laws. Such Purchaser is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions; among the conditions for use of Rule 144 may be the availability of current information to the public about the Company; such information is not now available and the Company has no present plans to make such information available.

5.5 No Public Market.

Such Purchaser understands that no public market now exists for any of the securities issued by the Company, and that it is unlikely that a public market will ever exist for the Notes.

5.6 Legends.

Such Purchaser acknowledges that, to the extent applicable, each certificate evidencing the Notes shall be endorsed with the legends substantially in the form set forth below, as well as any additional legend imposed or required by the Company’s Bylaws or applicable state securities laws:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

5.7 Access to Data.

Such Purchaser has received and reviewed information about the Company and has had an opportunity to discuss the Company’s business, management and financial affairs with its management and to review the Company’s facilities. Such Purchaser believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Notes. Such Purchaser understands and acknowledges that such discussions, as well as any written information issued by the Company, (i) were intended to describe the aspects of the Company’s business and prospects which the Company believes to be material, but were not necessarily an exhaustive description, and (ii) may have contained forward-looking statements involving known and unknown risks and uncertainties which may cause the Company’s actual results in future periods or plans for future periods to differ materially from what was anticipated and that no representations or warranties were or are being made with respect to any such forward-looking

 

16

statements or the probability of achieving any of the results projected in any of such forward-looking statements. The foregoing, however, does not limit or modify the representations and warranties of the Company in this Agreement or the right of the Purchaser to rely thereon.

5.8 Due Organization; Power and Authority.

Such Purchaser is a corporation, limited liability company or partnership, as the case may be, duly incorporated or formed, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation.

5.9 Power; Authorization; Enforceability.

Such Purchaser has the corporate or other organizational power and authority to execute, deliver and perform its obligations under this Agreement and the other Note Documents to which such Purchaser is a party and the Note Documents and the transactions contemplated hereby and thereby have been duly authorized by all necessary action of such Purchaser. This Agreement when executed and delivered by such Purchaser will constitute a valid and legally binding obligation of such Purchaser, enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by (i) judicial principles limiting the availability of specific performance, injunctive relief, and other equitable remedies; (ii) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect generally relating to or affecting creditors’ rights generally; and (iii) general principals of equity.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

In order to induce the Purchasers to enter into this Agreement and to purchase the Notes, the Company represents and warrants to each Purchaser, on the date of this Agreement and on the Closing Date, that the following statements are true and correct:

6.1 Corporate Existence; Compliance with Law

Each Credit Party (a) is a corporation, limited liability company, limited partnership or other legal entity duly organized and validly existing under the laws of its respective jurisdiction of incorporation or organization set forth as of the Closing Date in Schedule 6.1 ; (b) (i) as to the Company and each material Subsidiary of the Company, is in good standing under the laws of its respective jurisdiction of incorporation or organization, and (ii) for each other Credit Party, is in good standing under the laws of its respective jurisdiction of incorporation or organization except where the failure to be in good standing could not reasonably be expected to have a Material Adverse Effect; (c) is duly qualified to conduct business and is in good standing in each other jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not result in a Material Adverse Effect; (d) has the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease and to conduct its business as now, heretofore and proposed to be conducted; (e) subject to specific representations set forth in this Agreement regarding Environmental Laws, has

 

17

all material licenses, permits, consents or approvals from or by, and has made all material filings with, and has given all material notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct, except as could not reasonably be expected to have a Material Adverse Effect; (f) is in compliance with its charter and bylaws or partnership, operating agreement or other governing document, as applicable; and (g) subject to specific representations set forth in this Agreement regarding ERISA, Environmental Laws, tax and other laws, is in compliance with all applicable provisions of law, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

6.2 Executive Offices, FEIN

As of the Closing Date, each Credit Party’s name as it appears in official filings in its state of incorporation or organization, the current location of each Credit Party’s chief executive office, principal place of business and all premises at which any real and personal property is located are set forth in Schedule 6.2 . During the five (5) years preceding the Closing Date, except as set forth on Schedule 6.2, no Credit Party has been known as or used any corporate, fictitious or trade name. In addition, Schedule 6.2 lists the federal employer identification number and organizational number of such Credit Party.

6.3 Corporate Power, Authorization, Enforceable Obligations

The execution, delivery and performance by each Credit Party of the Note Documents: (a) are within such Person’s corporate, company or partnership power; (b) have been duly authorized by all necessary or proper corporate, company, partnership, member or shareholder action on its part; (c) do not contravene any provision of such Person’s partnership agreement, operating agreement, charter or bylaws; (d) do not violate any material law or regulation, or any material order or decree of any court or Governmental Authority; (e) do not conflict with or result in a material breach or termination of, constitute a default under or accelerate or permit the acceleration of any performance required by, any material indenture, mortgage, deed of trust, lease, agreement or other instrument to which such Person is a party or by which such Person or any of its property is bound; (f) do not result in the creation or imposition of any Lien upon any of the property of such Person other than those in favor of the Senior Lenders, pursuant to the Senior Loan Documents and other Permitted Liens; and (g) do not require the material consent or approval of any Governmental Authority or any other Person, except those referred to on Schedule 6.3 , all of which will have been duly obtained, made or complied with prior to the Closing Date. Each of the Note Documents shall be duly executed and delivered by each Credit Party that is a party thereto and each such Document shall constitute a legal, valid and binding obligation of such Credit Party enforceable against it in accordance with its terms except as may be limited by bankruptcy, insolvency, reorganization, receivership moratorium or other laws affecting creditors’ rights generally and by general principles of equity (regardless of whether sought in equity or in law).

6.4 Financial Statements

All Financial Statements that are referred to in Section 4.12 have been delivered on or prior to the date hereof and all Financial Statements that are referred to in Section 4.12(a) have been prepared in accordance with GAAP consistently applied for any Person specified in

 

18

Section 4.12(a) throughout the periods covered (except as disclosed therein and except, with respect to unaudited Financial Statements, for the absence of footnotes and year-end audit adjustments) and present fairly in all material respects the financial position of the Persons covered thereby as at the dates thereof and the results of their operations and cash flows for the periods then ended, as applicable.

6.5 Material Adverse Effect

Between December 31, 2007 and the Closing Date, no event, change, condition or development has occurred, that alone or together with other events, could reasonably be expected to (a) have a Closing Date Material Adverse Effect, (b) have a material adverse effect on the Company’s ability to pay any amounts due in respect of the Notes or any of the other Obligations in accordance with the terms of the Agreement or any Guarantor’s ability to honor any guaranty obligations related to its Note Guarantee or (c) have a material adverse effect on any Purchaser’s rights and remedies under the Agreement and the other Note Documents. Other than as of the Closing Date, since the Closing Date, no events or circumstances having a Material Adverse Effect has occurred.

6.6 Ownership of Property; Liens

As of the Closing Date, the real estate (“Real Estate”) listed in Schedule 6.6 constitutes all of the real property owned, leased or subleased by any Credit Party. Each Credit Party owns good and marketable fee simple title to all of its owned Real Estate and valid leasehold interests in all of its leased Real Estate. Schedule 6.6 further describes any Real Estate with respect to which any Credit Party is a lessor or sublessor as of the Closing Date. Each Credit Party also has good and marketable title to, or valid leasehold interests in, all of its material personal property and assets. As of the Closing Date, none of the properties and assets of any Credit Party are subject to any Liens other than Permitted Liens, and there are no facts, circumstances or conditions known to any Credit Party that may result in any Liens (including Liens arising under Environmental Laws) other than Permitted Liens. Schedule 6.6 also describes any purchase options, rights of first refusal or other similar contractual rights pertaining to any Real Estate as of the Closing Date.

6.7 Labor Matters

As of the Closing Date (a) no strikes or other material labor disputes against any Credit Party are pending or, to any Credit Party’s knowledge, threatened; (b) hours worked by and payment made to employees of each Credit Party comply in all material respects with the Fair Labor Standards Act and each other federal, state, local or foreign law applicable to such matters, except where failure to comply, in the aggregate, would not reasonably be expected to have a Material Adverse Effect; (c) except as set forth in Schedule 6.7 , no Credit Party is a party to or bound by any collective bargaining agreement; (d) there is no organizing activity involving any Credit Party pending or, to any Credit Party’s knowledge, threatened by any labor union or group of employees; (e) there are no representation proceedings pending or, to any Credit Party’s knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of any Credit Party has made a pending demand for recognition; and (f) except as set forth in Schedule 6.7 , there are no material complaints or charges against any Credit Party pending or, to the knowledge of any Credit Party, threatened to be filed with any Governmental

 

19

Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by any Credit Party of any individual that would reasonably be expected, in the aggregate, to have a Material Adverse Effect.

6.8 Ventures; Outstanding Stock and Indebtedness

Except as set forth in Schedule 6.8 , as of the Closing Date, no Credit Party has any Subsidiaries or is engaged in any joint venture or partnership with any other Person. As of the Closing Date, all of the issued and outstanding Stock of each Credit Party is owned by each of the stockholders and in the amounts set forth in Schedule 6.8 . Except as set forth in Schedule 6.8 . as of the Closing Date, there are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which any Credit Party may be required to issue, sell, repurchase or redeem any of its Stock or other equity securities or any Stock or other equity securities of its Subsidiaries. All outstanding Indebtedness of each Credit Party as of the Closing Date (except for the Obligations and the Senior Credit Facility) is described in Section 7.16 (including Schedule 7.16 ). Neither the Company nor any Guarantor has any obligation to contribute additional capital or property in connection with its investment in Proacsys.

6.9 Government Regulation

No Credit Party is registered or required to be registered as an “investment company” or a company “controlled” by an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended.

6.10 Margin Regulations

No Credit Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” as such terms are defined in Regulation U of the Federal Reserve Board as now and from time to time hereafter in effect (such securities being referred to herein as “ Margin Stock ”). None of the proceeds of the Loans or other extensions of credit under this Agreement will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any Indebtedness that was originally incurred to purchase or carry any Margin Stock or for any other purpose that might cause any of the Loans or other extensions of credit under this Agreement to be considered a “purpose credit” within the meaning of Regulations T, U or X of the Federal Reserve Board.

6.11 Taxes

All federal, state and other income tax returns and other material non-income tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by any Credit Party have been filed with the appropriate Governmental Authority and all Charges have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof (or any such fine, penalty, interest, late charge or loss has been paid), excluding Charges or other amounts being contested in accordance with Section 7.3(b) and those Charges in an aggregate amount not to exceed $1,000,000). Schedule 6.11 sets forth as of the Closing Date those taxable years for which any Credit Party’s tax returns are currently being audited by the IRS or any other applicable Governmental Authority and any assessments or threatened assessments in connection with such audit, or otherwise currently outstanding.

 

20

6.12 ERISA.

(a) Schedule 6.12 lists all material Plans as of the Closing Date. Except with respect to Multiemployer Plans, each Qualified Plan has received a favorable determination or opinion letter from the IRS (or is within the applicable remedial amendment period) and, to the knowledge of any Credit Party, nothing has occurred that would cause the loss of such qualification. Except as would not reasonably be expected to result in a Material Adverse Effect: (i) each Plan is in compliance with the applicable provisions of ERISA and the IRC; (ii) neither any Credit Party nor any ERISA Affiliate has failed to make any contribution or pay any amount due as required by either Section 412 of the IRC or Section 302 of ERISA; (iii) neither any Credit Party nor any ERISA Affiliate has engaged in a “prohibited transaction,” as defined in Section 406 of ERISA and Section 4975 of the IRC, in connection with any Plan, that would be reasonably expected to subject any Credit Party to a material tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC; and (iv) all payments due and payable from any Credit Party to a Plan have been paid or accrued as a liability on the books of such Credit Party.

(b) No Credit Party or, except as would not reasonably be expected to result in a Material Adverse Effect, ERISA Affiliate, maintains or contributes to or, except as would not reasonably be expected to result in a Material Adverse Effect, has any liability or contingent liability with respect to any Title IV Plan or Multiemployer Plan. Except as would not reasonably be expected to result in a Material Adverse Effect, (i) no ERISA Event has occurred or is reasonably expected to occur and (ii) there are no pending, or to the knowledge of any Credit Party, threatened claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan or any Person as fiduciary or sponsor of any Plan.

6.13 No Litigation

Except as set forth on Schedule 6.13 , no action, claim, lawsuit, investigation, order, injunction or proceeding is now pending or, to the knowledge of any Credit Party, threatened against any Credit Party, before any Governmental Authority or before any arbitrator or panel of arbitrators (collectively, “Litigation”), (a) that challenges any Credit Party’s right or power to enter into or perform any of its obligations under the Note Documents to which it is a party, or the validity or enforceability of any Note Document or any action taken thereunder, or (b) that has a reasonable risk of being determined adversely to any Credit Party and that, if so determined, could reasonably be expected to have a Material Adverse Effect.

6.14 Brokers

Except as set forth in Schedule 6.14 , no broker or finder acting on behalf of any Credit Party or Affiliate thereof brought about the issuance of the Notes or the Related Transactions, and no Credit Party or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.

 

21

6.15 Intellectual Property

Each Credit Party owns or has rights to use all Intellectual Property necessary to continue to conduct its Business as now or heretofore conducted by it. As of the Closing Date, each Patent, Patent application, registered Trademark, Trademark application, registered Copyright and material License is listed, together with application or registration numbers, as applicable, in Schedule 6.15 . Each Credit Party conducts its Business and affairs without infringement of any Intellectual Property of any other Person in any material respect. Except as set forth in Schedule 6.15 , as of the Closing Date, no Credit Party is aware of any infringement claim by any other Person with respect to any Intellectual Property.

6.16 Full Disclosure

No information contained in this Agreement concerning any Credit Party, any of the other Note Documents, the Financial Statements or other written reports from time to time delivered hereunder or any written statement furnished by or on behalf of any Credit Party to any Purchaser pursuant to the terms of this Agreement (excluding any Projections and Pro Forma information), contained or contains, at the time furnished, any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements contained herein or therein not misleading in any material way in light of the circumstances under which they were made. The Projections, the Pro Forma and all other pro forma financial information provided by the Credit Parties are based on good faith estimates and assumptions believed by such Persons to be reasonable and fair in light of current conditions and current facts known to such Persons as of the date provided. The Purchasers recognize that projections as to future events are not to be viewed as facts or factual information and that actual results during the period or periods covered thereby may differ materially from projected results.

6.17 Environmental Matters

(a) Except as set forth in Schedule 6.17 , as of the Closing Date and (b) in the case of any other matters described in clauses (i) through (vii) below that could not reasonably be expected to give rise to a Material Adverse Effect: (i) the Real Estate is free of contamination from any Hazardous Material except for such contamination that would not adversely impact the value or marketability of such Real Estate; (ii) no Credit Party has caused or suffered to occur any Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate; (iii) the Credit Parties are and have been in compliance with all Environmental Laws; (iv) the Credit Parties have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their Business as presently conducted or as proposed to be conducted, and all such Environmental Permits are valid, uncontested and in good standing; (v) no Credit Party is involved in operations or knows of any facts, circumstances or conditions, including any Releases of Hazardous Materials, and no Credit Party has permitted any current or former tenant or occupant of the Real Estate to engage in any such operations; (vi) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material, or injunctive relief against, or that alleges criminal misconduct by, any Credit Party; (vii) no written notice has been received by any Credit Party identifying it as a “potentially responsible party” or requesting information under CERCLA or analogous state statutes, and to the knowledge of the Credit Parties, there are no facts, circumstances or conditions that may result in any Credit Party being identified as a “potentially responsible party” under CERCLA or analogous

 

22

state statutes; and (viii) the Credit Parties have provided to the Purchasers copies of all reports, including any existing Phase 1 or Phase 2 reports, records and correspondence with respect to environmental permits, conditions, claims, hazards or compliance by any of the Credit Parties.

6.18 Insurance

Schedule 6.18 lists all insurance policies of any nature maintained, as of the Closing Date, for current occurrences by each Credit Party, as well as a description of such policy setting forth the name of the insurer, the amount of coverage, the type of insurance and its renewal or expiration date.

6.19 Deposit and Disbursement Accounts

Schedule 6.19 lists all banks and other financial institutions at which any Credit Party maintains deposit or other accounts as of the Closing Date, including any Disbursement Accounts, and such Schedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor.

6.20 Solvency

After giving effect to (a) the Notes and obligations under the Senior Credit Facility to be made or incurred on the Closing Date, (b) the disbursement of the proceeds of the Notes and the loans under the Senior Credit Facility pursuant to the instructions of the Company, (c) the Acquisition and the consummation of the other Related Transactions and (d) the payment and accrual of all transaction costs in connection with the foregoing, the Credit Parties, taken as a whole, are and will be Solvent.

6.21 Status of Holdings and Parent

Prior to the Closing Date, Holdings and Parent have not engaged in any business or incurred any Indebtedness or any other liabilities (except in connection with its corporate formation, the holding of the Stock of its Subsidiaries, the Related Transactions, the Obligations, the Senior Obligations and Guaranteed Indebtedness incurred for the benefit of any other Credit Party if the primary obligation is expressly permitted by this Agreement).

6.22 Senior Loan Documents

As of the Closing Date, the Company has delivered to the Purchasers a duly executed, complete and correct copy of each of the Senior Loan Documents (including all schedules, exhibits, amendments, supplements, modifications, assignments and all other documents delivered pursuant thereto or in connection therewith). As of the Closing Date, no Credit Party is in default in the performance or compliance with any material provisions thereof that constitute an “event of default” thereunder. The Senior Credit Facility complies with all applicable laws. All requisite approvals by Governmental Authorities having jurisdiction over any Credit Party required for the execution, delivery and performance by such Credit Party of any of the Senior Loan Documents have been obtained. As of the Closing Date, each of the representations and warranties given by each applicable Credit Party in any Senior Loan Document is true and correct in all material respects as of the date made or deemed made thereunder.

 

23

6.23 Patriot Act

Each Credit Party is in compliance with the (a) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

6.24 Bonding; Licenses

Except as set forth on Schedule 6.24 , as of the Closing Date, no Credit Party is a party to or bound by any surety bond agreement or bonding requirement with respect to products or services sold by it or any Trademark License or Patent License with respect to products sold by it.

6.25 Private Offering; Consents and Approvals.

No consent, approval, order, or authorization of, or registration, qualification, designation, declaration, or filing with, any federal, state, or local governmental authority on the part of the Company is required in connection with the offer, sale, or issuance of the Notes or the consummation of any other transaction contemplated hereby. Assuming that the representations of the Purchasers set forth in Article V are true and correct, the offer, sale, and issuance of the Notes in conformity with the terms of this Agreement are exempt from the registration requirements of Section 5 of the Securities Act, and from the qualification requirements of each applicable state securities laws, and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemptions.

ARTICLE VII

COVENANTS

The Company covenants and agrees that, so long as any Note remains outstanding and unpaid and until payment in full of all Obligations hereunder and under the Note Documents (other than contingent indemnity obligations not yet due and payable), the Company shall perform, and shall cause each of its Subsidiaries to perform, all of the following covenants:

7.1 Payment of Notes

Subject to the terms of the Subordination Agreement, the Company will pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes; provided that nothing in the Subordination Agreement shall relieve the Company of its obligation to make the payments required hereunder or under the Notes.

 

24

The Company will pay interest (including post-petition interest in any proceeding under any bankruptcy law to the extent permitted under bankruptcy laws) on overdue principal at a rate equal to 2% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any bankruptcy law to the extent permitted under bankruptcy laws) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Upon the occurrence and during the continuance of (x) an Event of Default under Section 8.1 (a) , (h) or (i) or (y) any other Event of Default at the election of the Requisite Holders (excluding the Sponsor or Affiliates of the Sponsor in any such calculation of Requisite Holders), the principal amount of all Notes outstanding and, to the extent permitted by applicable law, any interest payments on the Notes or any fees or other amounts owed hereunder, shall thereafter bear interest (including post petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate that is 2% per annum in excess of the interest rate otherwise payable hereunder with respect to the Notes. Payment or acceptance of the increased rates of interest provided for in this Section 7.1 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of any Purchaser.

7.2 Maintenance of Existence; Conduct of Business

Except as permitted under Section 7.14 hereof, each Credit Party shall: (i) do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence as an entity and its rights and franchises, except for rights and franchises the failure of which to preserve would not reasonably be expected to have a Material Adverse Effect; (ii) continue to conduct its Business substantially as now conducted or as otherwise permitted hereunder; and (iii) at all times maintain, preserve and protect all of its tangible assets and properties used or useful in the conduct of its Business and keep the same in good repair, working order and condition in all material respects (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, all reasonably necessary repairs, replacements and improvements thereto consistent with industry practices.

7.3 Payment of Obligations

Each Credit Party shall pay or discharge before they become delinquent (a) all Charges payable by it, including Charges imposed upon it, its income and profits, or any of its property (real, personal or mixed) and all Charges with respect to tax, social security and unemployment withholding with respect to its employee and (b) all other lawful claims that if unpaid would, by the operation of applicable requirements of law, become a Lien upon any property of any Credit Party (other than Permitted Liens), except, in each case, for those whose amount or validity is being contested in good faith by proper proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Credit Party in accordance with GAAP or those in aggregate amount of less than $1,150,000.

 

25

7.4 No Layering of Debt

The Company will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is contractually subordinate or junior in right of payment to any Senior Obligations of the Company and senior in right of payment to the Notes. No Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is contractually subordinate or junior in right of payment to the Senior Obligations of such Guarantor and senior in right of payment to such Guarantor’s Note Guarantee. No such Indebtedness will be considered to be senior by virtue of being secured on a first or junior priority basis. The Company will not incur, and will not permit any Guarantor to incur, any Indebtedness that constitutes Senior Obligations unless such Indebtedness is incurred under the Senior Credit Facility.

7.5 Insurance

(a) The Credit Parties shall, at their sole cost and expense, keep their insurable property adequately insured at all times by reputable insurers (giving effect to self insurance), to such extent and against such risks as is customary with companies in the same or similar businesses with similar risk factors against such casualties and contingencies and of such types and in such amounts with such deductibles as is customary in the case of similar businesses with similar risk factors.

(b) If reasonably requested by the Requisite Holders, each Credit Party shall deliver to the Holders from time to time a report of a reputable insurance broker, in form reasonably satisfactory to the Requisite Holders, with respect to its insurance policies.

7.6 Compliance with Laws

Each Credit Party shall comply with all federal, state, local and foreign laws and regulations applicable to it, including those relating to HIPAA, ERISA and labor matters and Environmental Laws and Environmental Permits, except to the extent that the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

7.7 Environmental Matters

Each Credit Party shall and shall cause each Person within its control to in the case of any matter described in clauses (a) through (d) below that could reasonably be expected, to give rise to a Material Adverse Effect: (a) conduct its operations and keep and maintain its Real Estate in compliance with all Environmental Laws and Environmental Permits; (b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to maintain the value and marketability of the Real Estate or to otherwise comply in all material respects with Environmental Laws and Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, under, above, to, from or about any of its Real Estate; (c) notify the Holders promptly after such Credit Party becomes aware of any violation of Environmental Laws or Environmental Permits or any Release on, at, in, under, above, to, from or about any Real Estate that is reasonably likely to result in material Environmental Liabilities; and (d) promptly forward to the Holders a copy of any material order, notice, request for information or any material communication or report

 

26

received by such Credit Party in connection with any such material violation or Release or any other matter relating to any Environmental Laws or Environmental Permits that could reasonably be expected to result in material Environmental Liabilities, in each case whether or not the Environmental Protection Agency or any Governmental Authority has taken or threatened any action in connection with any such violation, Release or other matter. If the Holders at any time have a reasonable basis to believe that there may be a violation of any Environmental Laws or Environmental Permits by any Credit Party or any Environmental Liability arising thereunder, or a Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, that, in each case, could reasonably be expected to have a Material Adverse Effect, then each Credit Party shall, upon the Requisite Holders’ written request (i) cause the performance of such environmental audits including subsurface sampling of soil and groundwater, and preparation of such environmental reports, at the Company’s expense, as the Requisite Holders may from time to time reasonably request, which shall be conducted by reputable environmental consulting firms reasonably acceptable to the Requisite Holders and shall be in form and substance reasonably acceptable to the Requisite Holders, and (ii) permit the Requisite Holders or their representatives to have access to all Real Estate for the purpose of conducting such environmental audits and testing as the Requisite Holders deem appropriate, including subsurface sampling of soil and groundwater. The Company shall reimburse the Holders for the reasonable costs of such audits and tests and the same will constitute a part of the Obligations hereunder.

7.8 Additional Guarantors.

Promptly (and in any event within fifteen (15) days) after the formation or acquisition of any Domestic Subsidiary of either (A) the Company or (B) any Domestic Subsidiary of the Company, the Company or such Domestic Subsidiary shall cause to be executed and delivered, (i) by such new Domestic Subsidiary, a guaranty in a form substantially similar to the Note Guarantee pursuant to which such Domestic Subsidiary shall guarantee the payment and performance of all of the Obligations and (ii) by the Company or the applicable Subsidiary, such other related documents (including certificates, legal opinions and other similar documents) as the Purchasers may reasonably request, all in form and substance reasonably satisfactory to the Requisite Holders.

7.9 Board Observer

So long as any of PennantPark, New York Life, NYLIM and DLJ (collectively, the “Board Nominee Purchasers”) shall hold any Notes, such Board Nominee Purchaser shall have the right to nominate one board observer to attend meetings of the Board of Directors of the Company and its committees and to receive all notices and information related to such meetings, subject to the limitations set forth in the A/R Members Agreement; provided that no other Holder of Notes shall be entitled to such right absent consent of the Company. The Company shall reimburse the Board Nominee Purchasers for all reasonable costs and expenses incurred in attending such meetings; provided that only one NYLIM Entity shall be entitled to reimbursement of its costs and expenses.

 

27

7.10 Books and Records

Each Credit Party shall keep adequate books and records with respect to its business activities in which entries, reflecting all financial transactions, are made that would enable its Financial Statements to be prepared in accordance with GAAP.

7.11 Use of Proceeds

The Company will apply the proceeds from the sale of the Notes in order to fund the Acquisition, to repay the related existing Indebtedness and to pay related fees and expenses.

7.12 Payments for Consent

The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Agreement or the Notes unless such consideration is paid to all Holders of the Notes that consent to any such consent, waiver or amendment.

7.13 Reports and Notices; Communication with Accountants

(a) The Company hereby agrees that from and after the Closing Date and until the Termination Date, it shall deliver to each Holder, the Financial Statements, notices, Projections and other information at the times, in the manner set forth in Annex C .

(b) Each Credit Party executing this Agreement authorizes the Holders to communicate directly with its independent certified public accountants and authorizes and, at the Requisite Holders’ reasonable request, shall instruct those accountants and advisors to disclose and make available to Holders any and all Financial Statements and other supporting financial documents, schedules and information relating to any Credit Party (including copies of any issued management letters) with respect to the Business, financial condition and other affairs of any Credit Party.

7.14 Mergers, Subsidiaries, Etc.

No Credit Party shall directly or indirectly, by operation of law or otherwise, merge with, consolidate with, acquire all or substantially all of the assets or Stock of, or otherwise combine with or acquire, any Person; provided , that (i) any Subsidiary of the Company may be merged into the Company so long as the Company is the survivor of such merger, (ii) any Foreign Subsidiary of the Company may be merged with and into or liquidated or dissolved into another Foreign Subsidiary of the Company, provided, further, that with respect to the merger of any Foreign Subsidiary with a first tier Foreign Subsidiary, a first tier Foreign Subsidiary shall be the surviving entity, (iii) any Domestic Subsidiary of the Company may be merged with and into another Domestic Subsidiary of the Company and (iv) any Subsidiary of the Company may be liquidated or dissolved into the Company or a Domestic Subsidiary of the Company. Notwithstanding the foregoing, each of the following shall be permitted: (A) Capital Expenditures by the Company and the Subsidiaries to the extent permitted by Section 7.23 , (B) purchases, licenses and other acquisitions of inventory, materials and equipment in the ordinary course of business, (C) investments in compliance with Section 7.15 , (D) leases of real or personal property in the ordinary course of business, (E) the Related Transactions as contemplated by the Related

 

28

Transaction Documents, and (F) the Company or any Domestic Subsidiary of the Company that is a Guarantor (or for asset acquisitions, Holdings, so long as contemporaneously therewith, all assets so acquired are transferred to the Company or a Domestic Subsidiary of the Company that is a Guarantor), may merge with (provided, in the case of the Company that it is the surviving corporation in such merger), or acquire all or substantially all of the assets or stock of any Person or business (the “ Target ’) (in each case, a “ Permitted Acquisition ”) subject to the satisfaction of each of the following conditions:

(a) the Holders shall receive at least ten (10) Business Days’ prior written notice of such proposed Permitted Acquisition, which notice shall include a reasonably detailed description of such proposed Permitted Acquisition;

(b) such Permitted Acquisition shall only involve assets more than 50% of which is located in the United States and comprising a business, or those assets of a business, that is within the scope of the Business, provided that Permitted Acquisitions of assets more than 50% of which are located in jurisdictions other than the United States are permitted to the extent the aggregate consideration paid in connection with all such acquisitions does not exceed $25,000,000;

(c) such Permitted Acquisition shall be consensual and shall have been approved by the Target’s board of directors or the equivalent thereof;

(d) no additional Indebtedness, Guaranteed Indebtedness, contingent obligations or other liabilities shall be incurred, assumed or otherwise be reflected on a consolidated balance sheet of the Company and ChartOne after giving effect to such Permitted Acquisition, except (x) the Notes, (y) the Senior Credit Facility and (z) ordinary course trade payables, accrued expenses and Indebtedness permitted under Section 7.16 and any contingent obligations or other liabilities permitted or not prohibited under this Agreement to the extent no Default or Event of Default has occurred and is continuing or would result after giving effect to such Permitted Acquisition;

(e) the sum of all consideration paid in connection with all Permitted Acquisitions (including consideration in the form of Indebtedness but excluding acquired cash and cash equivalents) shall not exceed an aggregate amount equal to the sum of (i) $115,000,000 plus (ii) any proceeds reinvested to pay the purchase price of Permitted Acquisitions pursuant to Section 1.3(b)(iii) of the Senior Credit Facility during the term hereof and any Stock of Parent issued as consideration; provided , however , that the sum of all consideration paid in connection with any one Permitted Acquisition transaction (other than the acquisition of the stock or assets of Iod Incorporated) shall not exceed $20,000,000, except to the extent expressly consented to by the Requisite Holders in writing; provided further that , notwithstanding the foregoing, except as expressly consented to by the Requisite Holders in writing, in the event that the stock or assets of Iod Incorporated are acquired prior to September 30, 2009, the consideration paid in connection with the acquisition of the Stock or assets of Iod Incorporated shall not exceed $75,000,000 and the sum of consideration paid in connection with all Permitted Acquisitions from and after the Closing Date until September 30, 2009 shall not exceed $5,000,000 plus the consideration paid in connection with the acquisition of the stock or assets of Iod Incorporated;

 

29

(f) the Target shall have had positive Consolidated EBITDA for the trailing twelve month period preceding the date of the Permitted Acquisition, as determined based upon the Target’s financial statements for its most recently completed fiscal year and its most recent interim financial period completed within sixty (60) days prior to the date of consummation of such Permitted Acquisition which may reflect certain pro forma adjustments reasonably acceptable to the Requisite Holders;

(g) the Total Leverage Ratio of Holdings and its Subsidiaries (on a consolidated basis) both before and after giving effect to such Permitted Acquisition (including any Indebtedness described in Section 7.14(d) ) shall be no higher than the lesser of (i) 5.10 to 1.00 and (ii) 0.25 to 1.00 less than the maximum Total Leverage Ratio Financial Covenant in effect for the most recently ended Rolling Period for which a Compliance Certificate has been delivered pursuant to Annex D ;

(h) the business and assets acquired in such Permitted Acquisition shall be free and clear of all Liens (other than Permitted Liens);

(i) at or prior to the closing of any Permitted Acquisition, the Company shall have delivered to the Holders, in form reasonably satisfactory to the Requisite Holders:

(1) a Compliance Certificate evidencing that, on a pro forma basis, no Event of Default has occurred and is continuing or would result after giving effect to such Permitted Acquisition and the Company would have been in compliance with the financial covenants (as calculated after giving effect to the incremental Adjusted Consolidated EBITDA of Holdings and its Subsidiaries resulting from such Permitted Acquisition) set forth in Annex D for the four quarter period reflected in the Compliance Certificate most recently delivered to Agent pursuant to Annex C prior to the consummation of such Permitted Acquisition (after giving effect to such Permitted Acquisition and all Notes funded in connection therewith as if made on the first day of such period); and

(2) a Certificate of the Company to the effect that as of the date of such Permitted Acquisition: (w) the Credit Parties, taken as a whole, will be Solvent upon the consummation of the Permitted Acquisition; (x) the Acquisition Pro Forma (as defined below) fairly presents in all material respects the pro forma financial condition of Holdings and its Subsidiaries (on a consolidated basis) as of the date thereof after giving effect to the Permitted Acquisition; and (y) the Company has completed its due diligence investigation with respect to the Target and such Permitted Acquisition, which the Company believes in good faith to be prudent in light of the size and nature of the Target and such Permitted Acquisition;

(j) for any Permitted Acquisition with respect to which the total consideration paid is equal to or greater than $10,000,000, (i) the Borrowing Availability (as defined in the Senior Credit Facility) after giving effect to such Permitted Acquisition and the funding of all Loans (as defined in the Senior Credit Facility) in connection therewith shall not be less than $4,000,000; and (ii) Borrower shall have delivered to the Holders, in a form reasonably satisfactory to the Requisite Holders, a pro forma consolidated balance sheet and income statement of Holdings and its Subsidiaries (the “Acquisition Pro Forma”), based on recent financial statements for its most recent interim financial period for which statements were delivered or are required to have been delivered pursuant to Annex C , which shall be complete and shall fairly present in all material

 

30

respects the assets, liabilities, financial condition and results of operations of Holdings and its Subsidiaries in accordance with GAAP consistently applied, subject to the absence of footnotes and audit and purchase accounting adjustments, but taking into account such Permitted Acquisition and the funding of all Loans (as defined in the Senior Credit Facility) in connection therewith;

(k) for any Permitted Acquisition with respect to which the total consideration paid is less than $10,000,000, the Borrowing Availability (as defined in the Senior Credit Facility) after giving effect to such Permitted Acquisition and the funding of all Loans (as defined in the Senior Credit Facility) in connection therewith, shall not be less than $3,000,000;

(1) on or prior to the date of such Permitted Acquisition, each Holder shall have received copies of the acquisition agreement and related material agreements and instruments;

(m) at the time of such Permitted Acquisition and after giving effect thereto, no Default or Event of Default has occurred and is continuing; and

(n) the terms of the acquisition of the stock or assets of Iod Incorporated shall be approved by the Requisite Holders (such approval not to be unreasonably withheld).

7.15 Investments; Loans and Advances

Except as otherwise expressly permitted by this Article VII (including, without limitation, Section 7.14 and Section 7.17 ), no Credit Party shall make or permit to exist any investment in (other than Permitted Acquisitions), or make, accrue or permit to exist loans or advances of money to, any Person, through the direct or indirect lending of money, holding of securities or otherwise, except that: (a) the Company and any Subsidiary may make investments in (all such investments, “Cash Equivalents”) (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having the highest rating obtainable from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (iii) certificates of deposit maturing no more than one year from the date of creation thereof issued by commercial banks incorporated under the laws of the United States of America, each having combined capital, surplus and undivided profits of not less than $300,000,000 and having a senior unsecured rating of “A” or better by a nationally recognized rating agency (an “A-Rated Bank”), (iv) time deposits maturing no more than thirty (30) days from the date of creation thereof with A-Rated Banks, (v) mutual funds that invest substantially all of their assets in one or more of the investments described in clauses (i) through (iv)  above and (vi) investments of Foreign Subsidiaries similar to those described in clauses (i), (iii), (iv) and (v)  above of countries in which such Foreign Subsidiary is organized and deposit accounts in banks organized in any such country; (b) the Company and any Subsidiary may make or add investments, (i) received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business, or (ii) constituting (A) accounts receivable arising, (B) trade debt granted, or (C) deposits made in connection with the purchase price of goods or services, in each case in the ordinary course of business; (c) any applicable Credit Party may enter into a Permitted Intercompany Transaction; (d) guaranty obligations permitted by Sections 7.16 or 7.19 ; (e) noncash consideration received pursuant to any asset sale permitted under Section 7.21 ; (f) deposits and pledges in connection with Permitted Liens; (g) hedging obligations permitted by

 

31

Section 7.16(vii) ; (h) the maintenance of deposit accounts in the ordinary course of business; (i) loans and advances to officers, directors and employees of any Credit Party in an aggregate outstanding principal amount not to exceed $1,725,000; (j) investments to the extent that payment for such Investments is made with proceeds from the issuance of Stock of Parent, in an aggregate amount not to exceed $8,625,000; (k) acquisitions of obligations of one or more directors, officers, employees, members or management or consultants of Parent, the Company or its Subsidiaries in connection with such person’s acquisition of Stock of Parent, so long as no cash is actually advanced by any Credit Party to such persons in connection with the acquisition of any such obligations; (1) any Credit Party may make a loan or an Investment that could otherwise be made as a distribution permitted under Section 7.25 (with a commensurate reduction of their ability to make additional distributions under such Section 7.25 , if applicable); (m) the Credit Parties may hold investments to the extent such investments are otherwise permitted hereunder and reflect an increase in the value thereof; (n) investments consisting of earnest money required in connection with a Permitted Acquisition; (o) any investments in joint ventures and in Cash Equivalents acquired through Permitted Acquisitions; (p) investments in and loans or advances to Subsidiaries that are not Guarantors in an aggregate outstanding principal amount not to exceed $1,150,000 at any time outstanding; (q) loans and investments described in Schedule 7.15 ; and (r) so long as no Default or Event of Default has occurred or is continuing or would be caused thereby, the Company and any Subsidiary may make other investments which shall not exceed in the aggregate $8,625,000, provided that, in the event that any investment is made by the Company or any Subsidiary in any Person through substantially concurrent interim transfers of any amount through one or more other Subsidiaries, then such other substantially concurrent interim transfers shall be disregarded for purposes of this Section 7.15 . The amount of any loan, advance or investment shall be calculated net of the amount of any repayments, returns of capital, distributions and similar amounts that would have the effect of decreasing the balance sheet investment account under a cost basis of accounting and actually received in cash by a Credit Party in respect of such loan, advance or investment.

7.16 Indebtedness

No Credit Party shall create, incur, assume or permit to exist any Indebtedness, except (without duplication) (i) Permitted Purchase Money Indebtedness, (ii) the Notes and the other Obligations hereunder, (iii) the Senior Obligations, (iv) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent permitted to remain unfunded hereunder and under applicable law, (v) any other existing Indebtedness described in Schedule 7.16 and refinancings thereof or amendments or modifications thereof that do not have the effect of increasing the principal amount thereof (other than to add thereto any accrued interest and expenses of refinancing) or changing the maturity or amortization thereof (other than to extend the same) and that are otherwise on terms and conditions taken as a whole not materially less favorable to any Credit Party, or the Holders, than the terms of the Indebtedness being refinanced, amended or modified, (vi) Indebtedness specifically permitted under Section 7.14, 7.15 , or 7.19 , (vii) hedging obligations under swaps, caps and collar arrangements arranged by General Electric Capital Corporation, a Delaware corporation, or provided by any Senior Lender entered into pursuant to Section 5.10 of the Senior Credit Facility or entered into in accordance with Section 7.28 , (viii) Indebtedness constituting a Permitted Intercompany Transaction, (ix) Indebtedness not to exceed $15,000,000 at any one time, represented by, or arising out of, subordinated obligations, earn-outs, indemnification, purchase price adjustments and similar obligations (in each case,

 

32

subordinated on terms reasonably satisfactory to the Requisite Holders and only to the extent such subordination is available after use of commercially reasonable efforts by the Credit Parties to obtain same) constituting a portion of the purchase price for, or incurred in connection with, Permitted Acquisitions, (x) Indebtedness incurred as a result of the financing of insurance premiums in the ordinary course of business, (xi) Permitted Subordinated Seller Debt in an aggregate amount at any time outstanding not to exceed $15,000,000, (xii) accretion or amortization of original issue discount and accretion of interest paid in kind, in each case in respect of Indebtedness otherwise permitted by this Section 7.16 , (xiii) Indebtedness of any Credit Party to a financial institution in respect of netting services, overdraft protections, automatic clearinghouse arrangements and similar arrangements, in each case in connection with deposit accounts and cash management activities of the Credit Parties in the ordinary course of business not to exceed $3,000,000 at any one time, (xiv) Indebtedness of a person or acquired assets that is the subject of a Permitted Acquisition which Indebtedness was in existence at the time of such Permitted Acquisition and not incurred in contemplation thereof in an aggregate amount not to exceed $10,000,000 at any one time outstanding, which Indebtedness shall be unsecured or secured solely by the assets so acquired (excluding Accounts and Inventory), (xv) the Subordinated Debt and (xvi) other Indebtedness not to exceed $5,500,000 at any one time outstanding.

7.17 Employee Loans and Affiliate Transactions

Except to the extent otherwise expressly permitted in this Article VII with respect to any Affiliate, no Credit Party shall enter into or be a party to any transaction with any Affiliate (other than a Credit Party) thereof except (a) upon terms that are not materially less favorable to such Credit Party than would reasonably be obtained in a comparable arm’s length transaction with a Person not an Affiliate of such Credit Party (b) director, officer and employee compensation and reimbursements (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans) and indemnification arrangements, in each case approved by the Board of Directors of such Credit Party, and (c) any transaction with an Affiliate where the only consideration paid by any Credit Party is Stock of Parent. In addition, if any such transaction or series of related transactions involves payments in excess of $1,000,000 in the aggregate, the terms of these transactions must be disclosed in advance to the Holders (unless such transaction is otherwise permitted by other provisions of this Article VII ). All such transactions existing as of the date hereof are described in Schedule 7.17 .

7.18 Capital Structure and Business

Holdings and the Company shall not (a) make any change in its capital structure as described in Schedule 6.8 , including the issuance or sale of any shares of Stock, warrants or other securities convertible into Stock or any revision of the terms of its outstanding Stock (except as otherwise expressly permitted by this Article VII and other than issuances of shares of Stock (i) in the case of the Company, to Holdings and (ii) in the case of Holdings, to Parent); or (b) amend its charter, bylaws or other organizational documents in a manner that would materially adversely affect the Holders or adversely affect such Credit Party’s duty or ability to repay the Obligations. In addition to the covenants set forth in Section 7.30 as to Holdings, no Credit Party shall engage in any business other than the Business.

 

33

7.19 Guaranteed Indebtedness

No Credit Party shall create, incur, assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement of instruments or items of payment for deposit or collection to the general account of any Credit Party, (b) for Guaranteed Indebtedness incurred for the benefit of any other Credit Party if the primary obligation is expressly permitted or not prohibited by this Agreement, provided that to the extent such primary obligation is subordinated, then the related Guaranteed Indebtedness shall be subordinated on the same terms, and (c) guarantee obligations (i) incurred in the ordinary course of business in respect of obligations of (or to) non-Affiliate suppliers, customers, franchisees, lessors and licensees or (ii) otherwise constituting investments permitted by Section 7.15 . For the avoidance of doubt, no Subsidiary of Parent shall guarantee or otherwise be obligated on the Parent Preferred Units.

7.20 Liens

No Credit Party shall create, incur, assume or permit to exist any Lien on or with respect to its Accounts or any of its other properties or assets (whether now owned or hereafter acquired) except for (a) Permitted Encumbrances; (b) Liens in existence on the date hereof and summarized on Schedule 7.20 and permitted refinancings, extensions and renewals thereof, including extensions or renewals of any such Liens; provided , that the principal amount of the Indebtedness so secured is not increased (other than to add thereto any accrued interest and expenses of refinancing) and the Lien does not attach to any other property; (c) Permitted Purchase Money Liens; (d) Liens securing Indebtedness related to insurance premiums permitted pursuant to Section 7.16(x) ; provided that any such Lien shall encumber only the insurance premiums financed with such Indebtedness; (e) Liens solely on any cash earnest money deposits made by Holdings or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder; (f) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property or consignments or similar arrangements entered into in the ordinary course of business; (g) pledges or deposits of cash and Cash Equivalents securing deductibles, self-insurance, co-payment, co-insurance, retentions or similar obligations to providers of property, casualty or liability insurance in the ordinary course of business; (h) Liens arising in the ordinary course of business by virtue of any contractual, statutory or common law provision relating to banker’s Liens, rights of set-off or similar rights and remedies covering deposit or securities accounts (including funds or other assets credited thereto) or other funds maintained with a depository institution or securities intermediary; (i) Liens of any financial institution that has granted netting services, overdraft protections, automatic clearinghouse arrangements and similar arrangements giving rise to Indebtedness of any Credit Party permitted under Section 7.16(xiii) which are within the general parameters customary in the banking industry; (j) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods by any Credit Party entered into in the ordinary course of business with a value not to exceed $3,450,000 at any one time; (k) Liens relating to Indebtedness and Permitted Acquisitions permitted under Section 7.16(xiv) ; provided that such Liens do not extend to property not subject to such Liens at the time of acquisition (other than improvements thereon) and are no more favorable to the lienholders than such existing Lien; and (l) other Liens securing Indebtedness not exceeding $3,450,000 in the aggregate at any time outstanding.

7.21 Sale of Stock and Assets

No Credit Party shall sell, transfer, convey, assign or otherwise dispose of any of its properties or other assets, including the Stock of any of its Subsidiaries (whether in a public or a

 

34

private offering or otherwise) or any of its Accounts, other than (a) the sale of Inventory in the ordinary course of business, (b) the sale, transfer, lease, conveyance or other disposition by a Credit Party of Equipment, Fixtures or other tangible assets that are obsolete, worn-out or no longer used or useful in the Business in the ordinary course of business, (c) the sale, transfer, lease, conveyance or other disposition by a Credit Party of other assets having an aggregate cumulative fair market value in the aggregate of $15,000,000 for all such transactions consummated after the Closing Date, (d) with the approval of the Requisite Holders (which such approval shall not be unreasonably withheld), the sale, transfer, conveyance or other disposition by a Credit Party of any assets as a substantially contemporaneous like-kind exchange in accordance with the Code; provided , that the assets to be acquired have a fair market value at least as great as that of the assets being sold, transferred or disposed of, (e) the sale, transfer, conveyance or other disposition by a Credit Party to the Company or any Guarantor (other than Holdings), (f) the licensing or sublicensing of Intellectual Property in the ordinary course of business, (g) the making of investments permitted under Section 7.15 , (h) subject to the requirements of Section 5.8 of the Senior Credit Facility, the leasing, as lessor, of real or personal property in the ordinary course of business, (i) the disposition of any Credit Party’s interest in Proacsys, (j) mergers and consolidations in compliance with Section 7.14 , (k) discounts, dispositions or forgiveness of account receivables in the ordinary course of business or in connection with collection or compromise thereof, (l) the imposition of Permitted Liens, and (m) dispositions as a result of condemnation by a Governmental Authority so long as the Net Cash Proceeds therefrom are applied in accordance with Section 1.3(d) of the Senior Credit Facility.

7.22 ERISA

No Credit Party shall, or shall cause or permit any ERISA Affiliate to, cause or permit to occur an event that could reasonably be expected to result in the imposition of a Lien against the assets of the Company under Section 412 of the Code or Section 302 or 4068 of ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event would reasonably be expected to have a Material Adverse Effect.

7.23 Financial Covenants

The Credit Parties shall not breach or fail to comply with any of the Financial Covenants.

7.24 Cancellation of Indebtedness; Sale-Leasebacks

No Credit Party shall cancel any claim or debt owing to it (other than debt between Credit Parties), except for reasonable consideration negotiated on an arm’s-length basis. No Credit Party shall engage in any sale-leaseback, synthetic lease or similar transaction involving any of its assets unless the sale of such property is permitted by Section 7.21 and any Indebtedness incurred in connection therewith is permitted by Section 7.16 .

7.25 Restricted Payments

No Credit Party shall make any Restricted Payment, except (a) Permitted Intercompany Transactions; (b) dividends and distributions by Subsidiaries of the Company paid to the Credit Party that is its immediate parent company; (c) payments and distributions of officer and

 

35

director compensation, reimbursement and indemnity permitted under Section 7.17(b) ; (d) payments by the Company or any other Credit Party, or distributions from the Company or any other Credit Party, to Parent to permit Parent to make payments of (i) Management Fees of not more than $250,000 in the aggregate in any Fiscal Year, provided that any payment of a Management Fee that is not permitted to be made as a result of the restrictions in this Agreement may be paid in a subsequent period, if, after giving effect thereto, no Default or Event of Default would exist and (ii) reimbursements of reasonable out-of-pocket expenses of Sponsor in connection with its ownership of the Company of not more than $350,000 in the aggregate in any Fiscal Year; (e) a Credit Party may pay dividends to Parent to permit Parent to purchase equity interests from present or former officers or employees of Parent or any of its Subsidiaries in an aggregate amount after the date hereof not to exceed $8,625,000; (f) a Credit Party may pay dividends to Holdings or Parent to pay corporate overhead expenses incurred in the ordinary course of business and to Parent to pay fees and expenses to the holders of the Parent Preferred Units (so long as, in the case of payments in respect of the Parent Preferred Units, no Default or Event of Default then exists or would result after giving effect thereto and the aggregate amount of all such dividends shall not exceed $1,150,000 per Fiscal Year) and (ii) to the extent related to the Credit Parties, pay any taxes that are due and payable by Holdings or Parent as part of a consolidated group (except for any taxes incurred to the extent that the Parent Preferred Units are deemed Indebtedness); (g) loans and advances to employees as permitted under Section 7.15(i) ; (h) subject to the subordination terms related thereto, payments of the outstanding principal of, and accrued unpaid interest on, the Permitted Subordinated Seller Debt; (i) Restricted Payments by any Credit Party or any of its Subsidiaries to pay dividends with respect to its Stock payable solely in additional shares of its common stock; (j) dividends by any non-Credit Party Subsidiary to any other holder of its equity on a pro rata basis or (k) repayments (or distributions to permit repayments by Parent) of the Subordinated Obligations acceptable to the Requisite Holders; provided , that in the case of a Restricted Payment made pursuant to clause (d)(i), (e), (h) or (k) above, no Default or Event of Default has occurred and is continuing or would result after giving effect to such Restricted Payment above. No Credit Party, nor Parent, shall make, either directly or indirectly, any redemption, purchase, retirement, dividend, defeasance, sinking fund or any other payment, prepayment of principal of, premium, if any, interest, fees or other charges or indemnities on, with respect to, or in connection with (including, without limitation, the payment of any costs or expenses relating to) the Parent Preferred Units.

7.26 Change of Fiscal Year

No Credit Party shall change its Fiscal Year.

7.27 No Impairment of Intercompany Transfers

No Credit Party shall directly or indirectly enter into or become bound by any agreement, instrument, indenture or other contractual obligation (other than (i) the Note Documents and the Senior Loan Documents, (ii) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iii) restrictions and conditions imposed on any Foreign Subsidiary by the terms of any Indebtedness of such Foreign Subsidiary permitted to be incurred hereunder, (iv) restrictions and conditions imposed on non-Guarantor joint ventures permitted hereunder by the terms of the agreements governing the same and (v) restrictions and conditions imposed under Indebtedness

 

36

permitted under Section 7.16 with such encumbrances and restrictions that, taken as a whole, are not more restrictive than the terms hereof, and (vi) restrictions and conditions applicable to a Subsidiary acquired in a Permitted Acquisition, provided that such restriction or encumbrance (x) existed at the time such Person became a Subsidiary, (y) was not created in contemplation of or in connection with such Person becoming a Subsidiary and (z) applies only to such Subsidiary) that could directly or indirectly restrict, prohibit or require the consent of any Person with respect to the payment of dividends or distributions or the making or repayment of intercompany loans by a Subsidiary of the Company to the Company.

7.28 No Speculative Transactions

No Credit Party shall engage in any transaction involving commodity options, futures contracts, Obligations under any Secured Rate Contract or Rates Contract (each as defined in the Senior Credit Facility), or similar transactions, except solely to hedge against fluctuations in the prices of commodities owned or purchased by it and the values of foreign currencies receivable or payable by it and interest swaps, caps or collars with respect to Indebtedness owed by it.

7.29 Changes Relating to Senior Credit Facility

No Credit Party shall (a) change or amend the terms of the Senior Credit Facility or (b) enter into any refinancing of the Senior Credit Facility except to the extent permitted in accordance with the Subordination Agreement.

7.30 Holdings

Notwithstanding anything herein to the contrary, Holdings shall not engage in any trade or business, or own any assets (other than Stock of the Company and assets and activities incidental thereto) or incur any Indebtedness or Guaranteed Indebtedness (other than the Obligations hereunder, the Senior Obligations, the Subordinated Debt and Guaranteed Indebtedness incurred for the benefit of any other Credit Party if the primary obligation is expressly permitted by this Agreement, provided that to the extent such primary obligation is subordinated, then the related Guaranteed Indebtedness shall be subordinated on the same terms).

7.31 Management Fees

The Company shall not amend, waive, modify, supplement or otherwise consent to any modification of any documentation evidencing or relating to the Management Fees, if any, if the effect of such amendment, waiver, modification or supplement would be to increase the Management Fees other than as permitted in Section 7.25 .

7.32 Further Assurances

Each Credit Party executing this Agreement agrees that it shall and shall cause each other Credit Party to, at such Credit Party’s expense and upon the reasonable request of the Requisite Holders, duly execute and deliver, or cause to be duly executed and delivered, to the Holders such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of the Requisite Holders to carry out more effectively the provisions and purposes of this Agreement or any other Note Document.

 

37

ARTICLE VIII

DEFAULTS AND REMEDIES

8.1 Event of Default

Each of the following is an “Event of Default”:

(a) The Company (i) fails to make any payment of principal of the Notes when due and payable, or (ii) fails to make any payment of interest on, or Fees owing in respect of, the Notes or any of the other Obligations (except as expressly provided in clause (iii) below) within three (3) Business Days of when due and payable, or (iii) fails to pay or reimburse any Purchaser for any expense reimbursable hereunder or under any other Note Document within ten (10) days following such Purchaser’s demand for such reimbursement or payment of expenses, in each case irrespective of the operation of the Subordination Agreement.

(b) Any Credit Party fails or neglects to perform, keep or observe any of the provisions of Section 7.8, 7.11 or Sections 7.14-7.31 , or any of the provisions set forth in Annex D , respectively.

(c) The Company fails or neglects to perform, keep or observe any of the provisions of Section 7.5(a) , Section 7.13 or any of the provisions set forth in Annex C . and the same shall remain unremedied for ten (10) Business Days or more.

(d) Any Credit Party fails or neglects to perform, keep or observe any other provision of this Agreement or of any of the other Note Documents (other than any provision embodied in or covered by any other clause of this Section 8.1) and the same shall remain unremedied for thirty (30) days or more after the earlier of knowledge by an officer of any Credit Party of such default and written notice by any Purchaser to any Credit Party thereof.

(e) Any default or breach occurs under any agreement, document or instrument under which there may be issued or incurred, or by which there may be secured or evidenced, any Senior Obligations, whether such Senior Obligations now exist, or are created after the date of this Agreement, if such default or breach (A) is caused by the failure to pay any principal amount under such Senior Obligations prior to the expiration of any applicable grace period (excluding a failure to pay any principal amount due pursuant to Section 1.3(b)(ii) or Section 5.4(c) of the Senior Credit Facility; and provided that any principal payment due (and not otherwise waived or extended by the Senior Lenders) pursuant to any provision of Section 1.3(b) of the Senior Credit Facility other than clause (b)(ii) shall be subject to an additional grace period of 45 days following expiration of any applicable grace period or reinvestment period permitted under the Senior Credit Facility) or (B) results in the acceleration of the Senior Obligations prior to their express maturity.

(f) A default or breach occurs under any other agreement, document or instrument in respect of any Indebtedness or Guaranteed Indebtedness (other than the Senior Obligations) in excess of $4,025,000 in the aggregate (including (x) undrawn committed or available amounts and (y) amounts owing to all creditors under any combined or syndicated credit arrangements) to which any Credit Party is a party, that is not cured within any applicable grace period therefor, and which default or breach causes, or permits any holder of such Indebtedness or

 

38

Guaranteed Indebtedness relating thereto or a trustee to cause, the Indebtedness or Guaranteed Indebtedness relating thereto or a portion thereof in excess of $4,025,000 in the aggregate to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or cash collateral to be demanded in respect thereof.

(g) Any representation or warranty herein or in any Note Document or in any written statement, report, financial statement or certificate made or delivered to any Holder by any Credit Party is untrue or incorrect in any material respect as of the date when made or deemed made.

(h) A case or proceeding is commenced against Parent or any Credit Party seeking a decree or order in respect of Parent or such Credit Party (i) under the Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for Parent or such Credit Party or for any substantial part of Parent’s or any such Credit Party’s assets, or (iii) ordering the winding-up or liquidation of the affairs of Parent or such Credit Party, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or a decree or order granting the relief sought in such case or proceeding shall be entered by a court of competent jurisdiction.

(i) Parent or any Credit Party (i) files a petition seeking relief under the Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to or fails to contest in a timely and appropriate manner to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for Parent or such Credit Party or for any substantial part of Parent’s or any such Credit Party’s assets, (iii) makes an assignment generally for the benefit of creditors, or (iv) takes any company or corporate action in furtherance of any of the foregoing, or (v) admits in writing its inability to, or is generally unable to, pay its debts as such debts become due.

(j) A final judgment or judgments for the payment of money in excess of $4,025,000 in the aggregate in excess of amounts covered by insurance or by an indemnity from an indemnitor reasonably acceptable to the Requisite Holders at any time are outstanding against one or more of the Credit Parties and the same are not, within thirty (30) days after the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay.

(k) Any material provision of any Note Document for any reason ceases to be valid, binding and enforceable in accordance with its terms (or any Credit Party shall challenge the enforceability of any Note Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any provision of any of the Note Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms).

8.2 Acceleration

In the case of an Event of Default specified in clause (h) or (i) of Section 8.1 hereof, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Requisite Holders may declare all the

 

39

Notes to be due and payable immediately; provided that, upon the occurrence of an Event of Default specified in clause (a) of Section 8.1 hereof, with or without Requisite Holder consent, any Purchaser may declare all the Notes to be due and payable immediately, so long as such Purchaser, together with its Affiliates, holds at least 25% in the aggregate principal amount of the then outstanding Notes. Upon the effectiveness of any such declaration, the Notes will become due and payable immediately.

In the case of (a) an acceleration pursuant to an Event of Default specified in clause (a) of Section 8.1 hereof, the Holders of not less than 80% in aggregate principal amount of the then outstanding Notes and (b) an acceleration pursuant to any other Event of Default (other than an Event of Default specified in clause (h) or (i) of Section 8.1 hereof), the Holders of not less than 60% in aggregate principal amount of the then outstanding Notes, in each case, by written notice to the Company may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or the premium that has become due solely because of the acceleration) have been cured or waived.

In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Agreement, an equivalent premium will also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. No premium shall be payable in connection with acceleration of the Notes in any other circumstances.

8.3 Other Remedies

If an Event of Default occurs and is continuing, the Holders of the Notes may, subject to the terms of the Subordination Agreement, pursue any available remedy to collect the payment of principal, premium, and interest on the Notes or to enforce the performance of any provision of the Notes or this Agreement.

A delay or omission by any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

8.4 Waiver of Past Defaults

Holders of not less than 60% in aggregate principal amount of the then outstanding Notes may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium or interest on, the Notes may only be waived by the Holders of not less than 80% in aggregate principal amount of the then outstanding Notes; provided, however, that the Holders of not less than (a) 80% in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences with respect to an Event of Default under clause (a) of Section 8.1 and (b) 60% in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences with respect to any other Event of Default (other than an Event of Default under clause (h) or (i) of Section 8.1 ), in each

 

40

case, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Agreement; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

8.5 Rights of Holders of Notes to Receive Payment

Notwithstanding any other provision of this Agreement, the right of any Holder of a Note to receive payment of principal, premium and interest on the Note, on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

ARTICLE IX

SUBORDINATION

The Obligations and the Senior Obligations are subject to a Subordination and Intercreditor Agreement (the “Subordination Agreement” ) with the Purchasers, the Senior Lenders and Company substantially in the form of the attached Annex E .

ARTICLE X

NOTE GUARANTEES

10.1 Note Guarantees

Each Guarantor is a direct or indirect Subsidiary of the Company and as a result thereof, Company and each Guarantor share an identity of interest as members of a consolidated group of companies engaged in substantially similar businesses, and the sale of the Notes will facilitate the expansion and enhance the overall financial strength and stability of the company group, including each of the Guarantors. In consideration of the premises and in order to induce the Purchasers to purchase the Notes under this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Guarantor hereby unconditionally and irrevocably Guarantees, jointly and severally, to each Purchaser and each Holder of Notes and their respective successors and assigns:

 

(1)

the full and punctual payment of principal of, premium and interest on the Notes when due, whether at maturity, by acceleration, by prepayment or otherwise, and all other monetary Obligations of the Company under this Agreement and the Notes; and

 

(2)

the full and punctual performance within applicable grace periods of all other Obligations of the Company under this Agreement and the Notes. Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under this Article X notwithstanding any extension or renewal of any Obligation.

 

41

Each Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Notes or the Obligations. The Obligations of each Guarantor hereunder shall not be affected by:

 

(3)

the failure of any Holder of Notes to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Agreement, the Notes or any other agreement or otherwise;

 

(4)

any extension or renewal of any thereof;

 

(5)

any rescission, waiver, amendment or modification of any of the terms or provisions of this Agreement, the Notes or any other agreement;

 

(6)

the release of any security held by any Purchaser or any Holder of Notes for the Obligations or any of them;

 

(7)

the failure of any of the Purchasers or any Holder of Notes to exercise any right or remedy against any other guarantor of the Obligations; or

 

(8)

except as set forth in Section 10.6 hereof, any change in the ownership of such Guarantor.

Each Guarantor further agrees that its Guarantee pursuant to this Article X (each, a “Note Guarantee” ) constitutes a Guarantee of payment, performance and compliance when due (and not a Guarantee of collection) and waives any right to require that any resort be had by any Purchaser or any Holder of Notes, to any security held for payment of the Obligations.

Each Note Guarantee is, to the extent and in the manner set forth in Article IX hereof, subordinated and subject in right of payment to the prior payment in full of the principal of and premium, if any, and interest on all Senior Obligations of the Guarantor giving such Guarantee and each Note Guarantee is made subject to such provisions of this Agreement.

Except as expressly set forth in Sections 10.2 and 10.6 hereof, the Obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the Obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Purchaser or any Holder of Notes to assert any claim or demand or to enforce any remedy under this Agreement, the Notes or any other agreement, by any waiver or modification of any thereof,

 

42

by any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.

Each Guarantor further agrees that its Note Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of, premium or interest on any Obligation is rescinded or must otherwise be restored by each Purchaser or any Holder of Notes upon the bankruptcy or reorganization of the Company or otherwise.

In furtherance of the foregoing and not in limitation of any other right which each Purchaser or any Holder of Notes has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Obligation when and as the same shall become due, whether at maturity, by acceleration, by prepayment or otherwise, or to perform or comply with any other Obligation each Guarantor hereby promises to and shall, upon receipt of written demand by any Purchaser or any Holder of Notes, forthwith pay, or cause to be paid, in cash, to each Purchaser and the Holders of Notes an amount equal to the sum of:

 

(9)

the unpaid amount of such Obligations that is due and payable;

 

(10)

accrued and unpaid interest on such Obligations (but only to the extent not prohibited by law) that is due and payable; and

 

(11)

all other monetary Obligations of the Company to each Purchaser and the Holders of Notes that are due and payable.

Each Guarantor agrees that it shall not be entitled to any right of subrogation in respect of any Obligations Guaranteed hereby until payment in full of all Obligations and all Obligations to which the Obligations are subordinated as provided in Article IX. Each Guarantor further agrees that, as between it, on the one hand, and the Holders of Notes, on the other hand:

 

(12)

the maturity of the Obligations Guaranteed hereby may be accelerated as provided in Article VIII hereof for the purposes of such Guarantor’s Note Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations Guaranteed hereby; and

 

(13)

in the event of any declaration of acceleration of such Obligations as provided in Article VIII hereof such Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section 10.1 .

Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees) incurred by each Purchaser or any Holder of Notes in enforcing any rights under this Article X , subject to Section 1.4 hereof.

 

43

10.2 Limitation on Liability

Any term or provision of this Agreement to the contrary notwithstanding, the maximum aggregate amount of the Obligations Guaranteed hereunder by any Guarantor will not exceed the maximum amount that can be hereby Guaranteed without rendering this Agreement, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

10.3 Successors and Assigns

This Article X will be binding upon each Guarantor and its successors and assigns and will enure to the benefit of the successors and assigns of the Holders of Notes and, in the event of any transfer or assignment of rights by any Purchaser or any Holder of Notes, the rights and privileges conferred upon that party in this Agreement and in the Notes shall automatically extend to and be vested in such transferee or assignee.

10.4 No Waiver

Neither a failure nor a delay on the part of the Holders of Notes in exercising any right, power or privilege under this Article X will operate as a waiver thereof, nor will a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Holders of Notes herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which they may have under this Article X, at law, in equity, by statute or otherwise.

10.5 Modification

No modification, amendment or waiver of any provision of this Article X , nor the consent to any departure by any Guarantor therefrom, will in any event be effective unless the same is in writing and signed by the Requisite Holders of Notes as contemplated by Section 12.3 hereof and then such waiver or consent will be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case will entitle that Guarantor to any other or further notice or demand in the same, similar or other circumstances.

10.6 Release of Guarantor

Upon the sale (including any sale pursuant to any exercise of remedies by a lender under the Senior Credit Facility) or other disposition (including by way of consolidation or merger) of a Guarantor or the sale or disposition of all of the assets of such Guarantor, such Guarantor shall be deemed released from all Obligations under this Article X with any further action required on the part of any Holder of Notes.

10.7 Subordination of Note Guarantees

The Obligations of each Guarantor under its Note Guarantee pursuant to this Article X will be junior and subordinated to the Senior Obligations of such Guarantor as provided in Article IX of this Agreement.

 

44

ARTICLE XI

DEFINITIONS

As used in this Agreement, the following terms shall have the following meanings:

“A-Rated Bank” has the meaning ascribed to such term in Section 7.15 .

“A/R Members Agreement” means that certain Amended and Restated Members Agreement dated as of the date hereof, by and among the Parent and the Equity Investors, as may be amended.

“Account Debtor” means any Person who may become obligated to any Credit Party under, with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a payment intangible).

“Accounts” means all “accounts,” as such term is defined in the UCC, now owned or hereafter acquired by any Credit Party, including (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments) (including any such obligations that may be characterized as an account or contract right under the UCC), (b) all of each Credit Party’s rights in, to and under all purchase orders or receipts for goods or services, (c) all of each Credit Party’s rights to any goods represented by any of the foregoing (including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all rights to payment due to any Credit Party for property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered by such Credit Party or in connection with any other transaction (whether or not yet earned by performance on the part of such Credit Party), (e) all health-care-insurance receivables, and (f) all collateral security, guarantees or other Supporting Obligations of any kind, now or hereafter in existence, given by any Account Debtor or any other Person with respect to any of the foregoing.

“Acquisition” means the merger of AcquisitionCo with and into ChartOne, with ChartOne surviving such merger as a wholly-owned, indirect Subsidiary of the Company pursuant to the Merger Agreement.

“Acquisition Pro Forma” has the meaning ascribed to such term in Section 7.14(i) .

“AcquisitionCo” means ChartOne Acquisition Corp., a Delaware corporation and wholly-owned indirect Subsidiary of the Company.

“Adjusted Consolidated EBITDA” means, with respect to any Person for any fiscal period, without duplication, an amount equal to the sum of (i) Consolidated EBITDA for such period plus (ii) historical Consolidated EBITDA relating to acquisitions that have not yet accreted into such Person’s results for the period then ended, plus (iii) severance expense and one-time stay bonuses in connection with any such acquisition as reasonably demonstrated to the Holders, plus

 

45

(iv) to the extent deducted or not otherwise included in Consolidated EBITDA for such person, purchase accounting adjustments under GAAP, and the application of the accounting principles set forth in FASB 109, including the establishment of reserves pursuant thereto; plus (v) such pro forma adjustments and cost savings relating to such acquisitions that are prepared on a reasonable basis and are reasonably acceptable to the Requisite Holders.

“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether in the capacity of officer or director of such Person, through the ownership of voting securities, by agreement or otherwise. The term “Affiliate” shall specifically exclude Senior Agent, Senior Lenders, and each Purchaser or Holder of the Notes, other than, in each instance, the Sponsor.

“Agent” means any Person authorized to act and who acts on behalf of the Purchaser with respect to the transactions contemplated by the Note Documents.

“Agreement” means this Purchase Agreement and all Schedules and Annexes attached hereto.

“Asset Disposition Event” means any asset disposition by a Credit Party (excluding any proceeds from any insurance or condemnation proceedings and proceeds of Excluded Asset Dispositions) in excess of $1,000,000 in any twelve month period commencing after the Closing Date (when taken together with all other proceeds of asset dispositions (excluding any insurance or condemnation proceeds and proceeds of Excluded Asset Dispositions)) (after giving effect to the reinvestment right set forth in Section 1.3(b)(ii) of the Senior Credit Facility).

“Authorized Signatory” with respect to any Person, shall mean the president, any vice president, the chief financial officer, the chief executive officer or the chief operating officer of such Person, if any, which officer shall be duly authorized and designated in writing from time to time by such Person to execute documents, agreements and instruments on behalf of such Person.

“Bankruptcy Code” means the provisions of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq.

“Board Nominee Purchaser” has the meaning ascribed to such term in Section 7.9 .

“Business” means the business that the Company and its Subsidiaries are engaged in as of the Closing Date, as well as businesses reasonably related or incidental thereto.

“Business Day” means any day that is not a Legal Holiday.

 

46

“Capital Expenditures” means, with respect to any Person, all expenditures (by the expenditure of cash or the incurrence of Indebtedness but excluding expenditures made from proceeds of disposition of assets or insurance or condemnation proceeds and equity proceeds and consideration paid in Permitted Acquisitions) by such Person during any measuring period for any fixed assets or improvements or for replacements, substitutions or additions thereto, that have a useful life of more than one year and that are required to be capitalized under GAAP (including, without limitation, capitalized Software development costs).

“Capital Lease” means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.

“Capital Lease Obligation” means, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of