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Exhibit 10.27
EXECUTION COPY
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SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT
Among
THE MURRAYHILL COMPANY
as Borrower
AND
TA SUBORDINATED DEBT FUND, L.P.
AND
TA INVESTORS II, L.P.
as Noteholders
Dated as of May 24, 2004
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THE MURRAYHILL COMPANY
Subordinated Convertible Subordinated Note Purchase Agreement
Dated as of May 24, 2004
TABLE OF CONTENTS
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ARTICLE I -
DEFINITIONS.......................................................................................1
1.1.
Definitions.......................................................................................1
1.2.
Accounting
Terms..................................................................................7
ARTICLE II - AUTHORIZATION, PURCHASE, SALE
AND TERMS OF NOTES;
PAYMENTS.......................................8
2.1.
The
Securities....................................................................................8
2.2.
Purchase of the
Convertible Subordinated Notes; Conversion into Subordinated Notes
and Warrants...8
2.3.
Use of
Proceeds...................................................................................9
2.4.
Payments and
Endorsements.........................................................................9
2.5.
Redemptions and
Mandatory
Repurchase.............................................................10
2.6.
Default Rate of
Interest.........................................................................11
2.7.
Maximum Legal
Rate of
Interest...................................................................12
2.8.
Payment on
Non-Business
Days.....................................................................12
2.9.
Transfer and
Exchange of
Notes...................................................................12
2.10.
Replacement of
Notes.............................................................................12
2.11.
Other
Notices....................................................................................13
2.12.
Performance of
Obligations.......................................................................13
2.13.
Issue Price; Original
Issue
Discount.............................................................13
2.14.
Ranking..........................................................................................13
ARTICLE III - CONDITIONS TO NOTEHOLDERS'
OBLIGATIONS.........................................................14
3.1.
Capitalization...................................................................................14
3.2.
Prior
Debt.......................................................................................14
3.3.
Related
Transactions.............................................................................14
3.4.
Fees.............................................................................................14
3.5.
Delivery of
Documents............................................................................14
3.6.
Representations
and
Warranties...................................................................15
3.7.
Use of
Proceeds..................................................................................15
3.8.
Compliance with
this
Agreement...................................................................15
3.9.
Consummation of
the
Transactions.................................................................15
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF THE
NOTEHOLDERS...............................................15
4.1.
Authorization;
Enforceability....................................................................15
4.2.
Own
Account......................................................................................16
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4.3.
Investment
Intent................................................................................16
4.4.
Securities
Laws..................................................................................16
4.5.
No
Broker........................................................................................16
4.6.
Restrictive
Legend...............................................................................16
ARTICLE V - REPRESENTATIONS AND WARRANTIES
OF
BORROWER.......................................................17
5.1.
Organization.....................................................................................17
5.2.
Authorization;
No
Conflict.......................................................................17
5.3.
Validity;
Binding
Nature.........................................................................17
5.4.
Financial
Condition..............................................................................17
5.5.
No Material
Adverse
Change.......................................................................18
5.6.
Litigation.......................................................................................18
5.7.
Ownership of
Properties;
Liens...................................................................18
5.8.
Capitalization...................................................................................18
5.9.
Pension
Plans....................................................................................18
5.10.
Investment Company
Act...........................................................................19
5.11.
Public Utility Holding
Company
Act...............................................................19
5.12.
Margin
Stock.....................................................................................19
5.13.
Taxes............................................................................................19
5.14.
Solvency.........................................................................................19
5.15.
Environmental
Matters............................................................................20
5.16.
Insurance........................................................................................20
5.17.
Information......................................................................................20
5.18.
Intellectual
Property............................................................................20
5.19.
Restrictive
Provisions...........................................................................21
5.20.
Labor
Matters....................................................................................21
5.21.
No
Default.......................................................................................21
5.22.
Related
Agreements...............................................................................21
ARTICLE VI - AFFIRMATIVE COVENANTS OF
BORROWER...............................................................22
6.1.
Financial and
Business
Information...............................................................22
6.2.
Notice of
Default; Litigation; ERISA
Matters.....................................................23
6.3.
Financial
Records; Inspections;
Accountants......................................................24
6.4.
Maintenance of
Property;
Insurance...............................................................24
6.5.
Compliance with
Laws.............................................................................25
6.6.
Existence,
Rights and
Properties.................................................................26
6.7.
Employee Benefit
Plans...........................................................................26
6.8.
Environmental
Matters............................................................................26
6.9.
Litigation.......................................................................................26
6.10.
Taxes............................................................................................26
6.11.
Reserved.........................................................................................27
6.12.
Places of
Business...............................................................................27
6.13.
Verification of
Information......................................................................27
6.14.
Reserved.........................................................................................27
6.15.
Intellectual
Property............................................................................27
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ARTICLE VII - NEGATIVE COVENANTS OF
BORROWER.................................................................28
7.1.
Debt.............................................................................................28
7.2.
Liens............................................................................................28
7.3.
Restricted
Payments..............................................................................29
7.4.
Mergers;
Consolidations; Asset
Sales.............................................................30
7.5.
Modification of
Organizational
Documents.........................................................30
7.6.
Use of
Proceeds..................................................................................30
7.7.
Transactions
with
Affiliates.....................................................................30
7.8.
Inconsistent
Agreements..........................................................................30
7.9.
Business
Activities..............................................................................30
7.10.
Investments......................................................................................31
7.11.
Restriction of
Amendments to Certain
Documents...................................................31
7.12.
Fiscal
Year......................................................................................31
ARTICLE VIII -
DEFAULT.......................................................................................31
8.1.
Events of
Default................................................................................31
8.2.
Cure.............................................................................................33
8.3.
Rights and
Remedies on
Default...................................................................34
8.4.
Nature of
Remedies...............................................................................34
8.5.
Set-Off..........................................................................................34
8.6.
Distribution of
Proceeds.........................................................................35
ARTICLE IX -
MISCELLANEOUS...................................................................................35
9.1.
No Waiver;
Cumulative
Remedies...................................................................35
9.2.
Amendments,
Waivers and
Consents.................................................................35
9.3.
Addresses for
Notices,
Etc.......................................................................36
9.4.
Costs, Expenses
and
Taxes........................................................................36
9.5.
Assignability;
Binding
Agreement.................................................................36
9.6.
Payments in
Respect of
Notes.....................................................................37
9.7.
Indemnification..................................................................................37
9.8.
Survival of
Representations and
Warranties.......................................................37
9.9.
Prior
Agreements.................................................................................38
9.10.
Severability.....................................................................................38
9.11.
Governing
Law....................................................................................38
9.12.
Dispute
Resolution...............................................................................38
9.13.
Consent to
Jurisdiction..........................................................................39
9.14.
Counterparts.....................................................................................39
9.15.
Further
Assurances...............................................................................39
9.16.
Specific
Performance.............................................................................39
9.17.
Actions by
Noteholders...........................................................................39
9.18.
Limitation of
Liability..........................................................................40
9.19.
Confidentiality
Agreement........................................................................40
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SCHEDULES, EXHIBITS & ANNEXES
EXHIBITS
Exhibit A Form
of Joinder Agreement
Exhibit 2.1 Form of Note
Exhibit 2.2 Allocation of
Note Purchase Amount
SCHEDULES
Schedule 3.2 Prior Debt
Schedule 5.4.1 Consolidated Financial
Projections
Schedule 5.6 Litigation
Schedule 5.8 Capitalization
Schedule 5.16 Insurance
Schedule 5.20 Labor Matters
Schedule 7.1 Debt
Schedules 7.2 Liens
Schedule 7.10 Investments
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SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT
This
Subordinated Convertible Note Purchase Agreement is dated as of
May
24, 2004 (as amended, restated or otherwise
modified and in effect from time to
time, this "AGREEMENT") by and among The
Murrayhill Company, a Colorado
corporation ("BORROWER"), TA Subordinated
Debt Fund, L.P., a Delaware limited
partnership ("TA DEBT FUND" or a
"NOTEHOLDER"), and TA Investors II, L.P., a
Delaware limited partnership (a
"NOTEHOLDER" and, together with TA Debt Fund and
their successors and assigns,
"NOTEHOLDERS").
In consideration
of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I - DEFINITIONS
1.1.
DEFINITIONS. As
used herein, the following terms shall have the
following meanings (such meanings to be
equally applicable to both the singular
and plural forms of the terms defined):
"ACCOUNT" shall
have the meaning as defined in the UCC.
"ACCOUNT DEBTOR"
shall mean any Person who is obligated to Borrower or any
Subsidiary with respect to any Account.
"ACQUISITION"
shall mean, with respect to any Person any transaction or
series of related transactions for the
purpose of or resulting, directly or
indirectly, in (a) the acquisition of all
or substantially all of the assets of
such Person, or of all or substantially all
of any business or division of such
Person, (b) the acquisition of in excess of
50% of the capital stock,
partnership interests, membership interests
or equity of such Person, or
otherwise causing such Person to become a
Subsidiary, or (c) a merger or
consolidation or any other combination with
another Person (other than a Person
that is already a Subsidiary).
"AFFILIATE"
shall mean any Person that would be considered to be an
affiliate of Borrower under Rule 144 of the
Securities Act, as in effect on the
date hereof, if Borrower were issuing
securities; PROVIDED that, with respect to
Borrower, the term "Affiliate" shall not
include any Noteholder.
"AGREEMENT"
shall mean this Agreement as amended, restated or otherwise
modified and in effect from time to
time.
"APPLICABLE LAW"
shall mean all applicable laws, statutes and rules and
regulations thereunder and interpretations
thereof by any court of competent
jurisdiction or by any governmental or
other regulatory body or official charged
with the administration or the
interpretation thereof and requests, directives,
instructions and notices at any time or
from time to time heretofore or
hereafter made upon or otherwise
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issued to any Noteholder by any central
bank or other fiscal, monetary or other
authority, whether or not having the force
of law, including, without
limitation, any change according to a
prescribed schedule of increasing
requirements.
"BORROWER" shall
have the meaning set forth in the Preamble.
"BUSINESS DAY"
shall mean any day other than a Saturday, Sunday or public
holiday or the equivalent for banks under
the laws of the Commonwealth of
Massachusetts.
"CAPITAL
EXPENDITURES" shall mean all expenditures which, in accordance
with GAAP, would be required to be
capitalized and shown on the consolidated
balance sheet of Borrower and its
Subsidiaries, but excluding expenditures made
in connection with the replacement,
substitution or restoration of assets to the
extent financed (a) from insurance proceeds
(or other similar recoveries) paid
on account of the loss of or damage to the
assets being replaced or restored or
(b) with awards of compensation arising
from the taking by eminent domain or
condemnation of the assets being
replaced.
"CAPITALIZED
LEASE OBLIGATION" shall mean any Debt represented by the
principal portion of obligations under a
lease that is required to be
capitalized for financial reporting
purposes in accordance with GAAP.
"CAPITAL LEASE"
shall mean, with respect to any Person, any lease of (or
other agreement conveying the right to use)
any real or personal property by
such Person that, in conformity with GAAP,
is accounted for as a capital lease
on the balance sheet of such Person.
"CASH EQUIVALENT
INVESTMENT" shall mean, at any time, (a) any evidence of
Debt, maturing not more than one year after
such time, issued or guaranteed by
the United States Government or any agency
thereof, (b) commercial paper, or
corporate demand notes, in each case rated
at least A-l by Standard & Poor's
Ratings Group or P-l by Moody's Investors
Service, Inc., (c) any certificate of
deposit (or time deposit represented by a
certificate of deposit) or banker's
acceptance maturing not more than one year
after such time, or any overnight
Federal Funds transaction that is issued or
sold by any commercial banking
institution that is a member of the Federal
Reserve System and has a combined
capital and surplus and undivided profits
of not less than $500,000,000 and (d)
any repurchase agreement entered into with
any commercial banking institution of
the nature referred to in clause (c) above
which (i) is secured by a fully
perfected security interest in any
obligation of the type described in any of
clauses (a) through (c) above and (ii) has
a market value at the time such
repurchase agreement is entered into of not
less than 100% of the repurchase
obligation of such commercial banking
institution thereunder.
"CLOSING" shall
have the meaning assigned to that term in Section 2.2.
"CLOSING DATE"
shall have the meaning assigned to that term in Section 2.2.
"CODE" shall
mean the Internal Revenue Code of 1986, as amended.
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"COLLATERAL"
shall mean all of the property now owned or at any time
hereafter acquired by Borrower or in which
Borrower now has or at any time in
the future may acquire any right, title or
interest.
"COMMON STOCK"
includes (i) the voting common stock of TMHC Holdings, par
value $0.01 per share, as authorized on the
date of this Agreement, (ii)
Borrower's voting common stock, par value
$0.01 per share, as authorized on the
date of this Agreement, (iii) any other
common stock of any class or classes
(however designated) of TMHC Holdings or
Borrower, authorized on or after the
date hereof, and (iv) any other securities
into which or for which any of the
securities described in (i), (ii) or (iii)
above may be converted or exchanged
pursuant to a plan of recapitalization,
reorganization, merger, sale of assets
or otherwise.
"CONSOLIDATED"
OR "CONSOLIDATED" shall mean, with respect to any term
defined herein, that term as applied to the
accounts of Borrower and its
Subsidiaries, consolidated in accordance
with GAAP.
"CONTINGENT
OBLIGATION" shall mean, with respect to any Person, any
agreement, undertaking or arrangement by
which such Person guarantees, endorses
or otherwise becomes or is contingently
liable upon (by direct or indirect
agreement, contingent or otherwise, to
provide funds for payment, to supply
funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor
against loss) any indebtedness, obligation
or other liability of any other
Person (other than by endorsements of
instruments in the course of collection),
or guarantees the payment of dividends or
other distributions upon the shares of
any other Person. The amount of any such
Person's obligation in respect of any
Contingent Obligation shall (subject to any
limitation set forth therein) be
deemed to be the principal amount of the
debt, obligation or other liability
supported thereby.
"CONTROLLED
GROUP" shall mean all members of a controlled group of
corporations and all members of a
controlled group of trades or businesses
(whether or not incorporated) under common
control which, together with
Borrower, are treated as a single employer
under Section 414 of the Code or
Section 4001 of ERISA.
"DEBT" of any
Person shall mean, without duplication, (a) all indebtedness
of such Person for borrowed money, whether
or not evidenced by bonds,
debentures, notes or similar instruments,
(b) all obligations of such Person as
lessee under Capital Leases which have been
or should be recorded as liabilities
on a balance sheet of such Person in
accordance with GAAP, (c) all obligations
of such Person to pay the deferred purchase
price of property or services
(excluding trade accounts payable in the
ordinary course of business), (d) all
indebtedness secured by a Lien on the
property of such Person, whether or not
such indebtedness shall have been assumed
by such Person, (e) all obligations,
contingent or otherwise, with respect to
the face amount of all letters of
credit (whether or not drawn) and banker's
acceptances issued for the account of
such Person, (f) all Hedging Obligations of
such Person, (g) all Contingent
Obligations of such Person, (h) all
indebtedness of any partnership of which
such Person is a general partner, (i) all
obligations of such Person under any
Synthetic Lease transaction, where such
obligations are considered borrowed
money indebtedness for tax purposes but the
transaction is
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classified as an operating lease in
accordance with GAAP. Notwithstanding the
foreoing, Debt shall not include any
amounts payable by the Company under
Section 1.11 of the Stock Purchase and
Redemption Agreement.
"ENVIRONMENTAL CLAIMS"
shall mean all claims, however asserted, by any
governmental, regulatory or judicial
authority or other Person alleging
potential liability or responsibility for
violation of any Environmental Law, or
for release or injury to the environment or
any Person or property.
"ENVIRONMENTAL
LAWS" shall mean all applicable present or future federal,
state or local laws, statutes, common law
duties, rules, regulations, ordinances
and codes, together with all administrative
orders, directed duties, requests,
licenses, authorizations and permits of,
and agreements with, any governmental
authority, in each case relating to any
matter arising out of or relating to
health and safety, or pollution or
protection of the environment or workplace,
including any of the foregoing relating to
the presence, use, production,
generation, handling, transport, treatment,
storage, disposal, distribution,
discharge, release, control or cleanup of
any Hazardous Substance.
"ERISA" shall
mean part 6 subtitle B of title I of the Employee Retirement
Income Security Act of 1974, as
amended.
"EVENT OF
DEFAULT" shall have the meaning assigned to that term in
Section
8.1.
"FISCAL QUARTER"
shall mean each quarterly accounting period during any
Fiscal Year; PROVIDED that for purposes
hereof, all references to the Fiscal
Quarter ending March 31, June 30, September
30 or December 31 shall mean the
first, second, third or fourth Fiscal
Quarter of the applicable Fiscal Year,
respectively, irrespective of the actual
date on which such Fiscal Quarter may
end.
"FISCAL YEAR" or
"FISCAL YEAR" shall mean the fiscal year of Borrower and
its Subsidiaries ending on December 31 of
each calendar year.
"GAAP" or
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean generally
accepted accounting principles of the
United States consistently applied with
past financial statements of Borrower
adopting the same principles.
"GOVERNMENTAL
AUTHORITY" shall have the meaning assigned to that term in
Section 9.18.
"HAZARDOUS
SUBSTANCES" shall mean hazardous waste, hazardous substance,
pollutant, contaminant, toxic substance,
oil, hazardous material, chemical or
other substance regulated by any
Environmental Law.
"HEDGING
OBLIGATION" shall mean, with respect to any Person, any
liability
of such Person under any interest rate,
currency or commodity swap agreement,
cap agreement or collar agreement, and any
other agreement or arrangement
designed to protect such Person against
fluctuations in interest rates, currency
exchange rates or commodity prices.
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"INTELLECTUAL
PROPERTY" shall mean all patent, copyright, trade secret,
trademark, trade name, service mark,
Internet domain name, logo or other mark or
logo, or other proprietary rights or valid
licenses thereof.
"INVENTORY"
shall have the meaning as defined in the UCC.
"INVESTMENT"
shall mean (a) the purchase of any debt or equity security of
any Person, (b) the making of any loan or
advance to any Person, (c) becoming
obligated with respect to a Contingent
Obligation in respect of obligations of
any Person (other than travel and similar
advances to employees in the ordinary
course of business) or (d) the making of an
Acquisition.
"LIEN" shall
mean, with respect to any Person, any interest granted by such
Person in any real or personal property,
asset or other right owned or being
purchased or acquired by such Person which
secures payment or performance of any
obligation and shall include any mortgage,
lien, encumbrance, charger or other
security interest of any kind, whether
arising by contract, as a matter of law,
by judicial process or otherwise.
"MANDATORY
REPURCHASE EVENT" shall mean the occurrence of any one of any
of
the following events: (a) the shareholders
of Borrower immediately after giving
effect to the consummation of the Related
Transactions, shall collectively cease
to, directly or indirectly, own and control
at least 51% of the outstanding
equity interests of Borrower; (b) a
majority of Borrower's board of directors
(or similar governing body) shall cease to
consist of the directors (or similar
parties) of Borrower on the Closing Date
(after giving effect to the Related
Transactions) and other directors (or
similar parties) whose nomination for
election to Borrower's board of directors
(or similar governing body) is
recommended by at least a majority of the
foregoing described directors (or
similar parties), (c) there shall be
consummated (i) any consolidation or merger
of Borrower or its Subsidiaries where the
equity interest holders of Borrower or
its Subsidiaries, immediately prior to the
consolidation or merger, would not,
immediately after the consolidation or
merger, beneficially own, directly or
indirectly, shares or other equity
interests representing in the aggregate fifty
percent (50%) or more of the voting power
of the corporation or other entity
issuing cash or securities in the
consolidation or merger (or of its ultimate
parent corporation or other entity, if
any), (ii) any sale of all or
substantially all of the assets of
Borrower, and (iii) any plan or proposal for
the liquidation or dissolution of Borrower
or (d) Borrower's initial public
offering of its equity interests.
"MATERIAL
ADVERSE EFFECT" shall mean a material adverse effect on the
assets, liabilities, condition (financial
or other), business, or results of
operations of Borrower and its
Subsidiaries, taken as a whole.
"NOTES" shall
mean, collectively, the Convertible Subordinated Notes and
the Subordinated Notes.
"OBLIGATIONS"
shall mean all now existing or hereafter arising debts,
obligations, covenants, and duties of
payment or performance of every kind,
matured or unmatured,
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direct or contingent, owing, arising, due,
or payable to the Noteholders, by or
from Borrower, whether existing on the date
of this Agreement or arising
thereafter, whether arising out of this
Agreement or any other Subordinated
Notes Documents or otherwise, including,
without limitation, all obligations to
repay principal of and interest on all the
Loans, and to pay interest, fees,
costs, charges, expenses, professional
fees, and all sums chargeable to
Borrower, under the Subordinated Notes
Documents, whether or not evidenced by
any note or other instrument.
"PENSION PLAN"
shall mean a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to
Title IV of ERISA (other than a
Multiemployer Pension Plan), and to which
Borrower or any member of the
Controlled Group may have any liability,
including any liability by reason of
having been a substantial employer within
the meaning of Section 4063 of ERISA
at any time during the five years prior to
the date hereof, or by reason of
being deemed to be a contributing sponsor
under Section 4069 of ERISA.
"PERSON" shall
mean any individual, corporation, partnership, limited
liability company, trust, unincorporated
association, business, or other legal
entity, and any government or any
governmental agency or political subdivision
thereof.
"PREFERRED
STOCK" shall mean the preferred stock received by TA Associates
and its Affiliates in connection with the
Stock Purchase and Redemption
Agreement.
"PRIOR DEBT"
shall mean the Debt listed on Schedule 3.2.
"PROPERTY" shall
mean any interest in any kind of property or asset,
whether real, personal or mixed, or
tangible or intangible.
"REGISTRATION
RIGHTS AGREEMENT" shall mean that certain Registration Rights
Agreement entered into in connection with
the Stock Purchase and Redemption
Agreement.
"RELATED
AGREEMENTS" shall mean the Stock Purchase and Redemption
Agreement, the Shareholders Agreement and
the Registration Rights Agreement.
"RELATED
TRANSACTIONS" shall mean the transactions contemplated by the
Related Agreements.
"SECURITIES"
shall mean, collectively, the Convertible Subordinated Notes,
the Subordinated Notes, the Warrants and
the Warrant Shares.
"SECURITIES ACT"
shall mean the Securities Act of 1933, as amended, or any
similar successor federal statute, and the
rules and regulations of the
Securities and Exchange Commission
thereunder, all as the same shall be in
effect at the time.
"SHAREHOLDERS
AGREEMENT" shall mean that certain Shareholders Agreement
entered into in connection with the Stock
Purchase and Redemption Agreement.
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"STOCK PURCHASE
AND REDEMPTION AGREEMENT" shall mean that certain Stock
Purchase Agreement of even date herewith by
and among Borrower and the
Stockholders and Investors named
therein.
"SUBORDINATED
DEBT" means debt or other obligations of Borrower that is
subordinated to the Obligations on terms
and conditions that are satisfactory to
the Noteholders in their sole
discretion.
"SUBORDINATED
NOTES DOCUMENTS" shall mean this Agreement, the Notes and the
Warrants.
"SUBSIDIARY"
shall mean, with respect to any Person, any other Person which
such first Person shall, directly or
indirectly, have the power to vote or
direct the voting of sufficient securities
to elect a majority of directors (or
persons performing similar functions) or
with respect to which such first Person
acts as a general partner or managing
member or otherwise controls the
day-to-day operations of such other Person.
Any reference herein to a Subsidiary
of Borrower shall include any Subsidiary of
Borrower as of the Closing Date or
at any time thereafter.
"SYNTHETIC
LEASES" shall mean leases, under which Borrower or any of its
Subsidiaries is the lessee or obligor,
treated (i) as an operating lease on the
balance sheet of the lessee or obligor in
accordance with GAAP and (ii) as a
loan or financing for U.S. income tax
purposes.
"TA ASSOCIATES"
shall mean TA Debt Fund and TA Investors II, L.P..
"TMHC HOLDINGS"
shall mean TMHC Holdings, Inc., a Delaware corporation and
sole stockholder of Borrower.
"UCC" shall mean
the Uniform Commercial Code as in effect on the date
hereof and from time to time in the State
of New York; PROVIDED that if by
reason of mandatory provisions of law, the
perfection or the effect of
perfection or non-perfection of the
security interests in any Collateral or the
availability of any remedy hereunder is
governed by the Uniform Commercial Code
as in effect on or after the date hereof in
any other jurisdiction, "UCC" means
the Uniform Commercial Code as in effect in
such other jurisdiction for purposes
of the provisions hereof relating to such
perfection or effect of perfection or
non-perfection or availability of such
remedy.
"WHOLLY-OWNED
SUBSIDIARY" shall mean, as to any Person, another Person all
of the equity interests of which (except
directors' qualifying shares) are
directly or indirectly owned by such Person
and/or another Wholly-Owned
Subsidiary of such Person.
1.2.
ACCOUNTING
TERMS. All accounting terms not specifically defined
herein shall be construed in accordance
with GAAP, and all financial data
submitted pursuant to this Agreement and
all financial tests to be calculated in
accordance with this Agreement shall be
prepared and calculated in accordance
with GAAP. All financial tests relating to
Borrower or any of its Subsidiaries
shall be calculated with respect to
Borrower and its Subsidiaries on a
consolidated basis.
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ARTICLE II -
AUTHORIZATION, PURCHASE, SALE AND TERMS OF NOTES; PAYMENTS
2.1.
THE SECURITIES.
Borrower has authorized the issuance of senior
subordinated convertible notes due May 24,
2010 in the aggregate original
principal amount of $10,000,000
(individually, a "CONVERTIBLE SUBORDINATED
NOTE", collectively, and together with any
notes delivered in exchange or
replacement therefor, the "CONVERTIBLE
SUBORDINATED NOTES"). The Convertible
Subordinated Notes shall be in the form set
forth as Exhibit 2.1 attached hereto
and shall (a) be payable on May 24, 2010
and (b) bear interest compounded
quarterly (based on a 360-day year of
twelve 30-day months) on the unpaid
principal amount thereof until due at the
rate of 12% per annum, payable in cash
quarterly in arrears on May 31, August 31,
November 30 and February 28 in each
year, commencing August 31, 2004, and at
maturity or prior prepayment of the
Convertible Subordinated Notes in full. The
Convertible Subordinated Notes shall
be convertible at any time, in the sole
discretion of any Noteholder thereof,
upon such Noteholder's delivery of notice
to Borrower of its intent to convert,
into (i) senior subordinated notes due May
24, 2010 in the aggregate principal
amount of $9,990,000 plus any interest owed
in arrears on the Convertible
Subordinated Notes on the date of
conversion, in the form set forth as Exhibit
2.1(i) attached hereto (referred to herein
individually as a "SUBORDINATED NOTE"
and collectively, together with any notes
delivered in exchange or replacement
thereof, as the "SUBORDINATED NOTES"), and
(ii) common stock purchase warrants
of Borrower for the purchase of an
aggregate of 289,807 of the fully diluted
common equity shares (subject to adjustment
in the case of stock splits, stock
dividends, combinations, recapitalizations
and the like) of TMHC Holdings Common
Stock (the "WARRANT SHARES") exercisable at
a price per share of $.01 (subject
to adjustment), in the form set forth as
Exhibit 2.1(ii) attached hereto
(referred to herein individually as a
"WARRANT" and collectively, together any
warrants delivered in exchange or
replacement therefore, as the "WARRANTS"). The
Subordinated Notes shall (a) be payable on
May 24, 2010, and (b) bear interest
compounded quarterly (based on a 360-day
year of twelve 30-day months) on the
unpaid principal amount thereof plus any
interest owed in arrears on the
Convertible Subordinated Notes as of the
Conversion Date (as defined in Section
2.2 of this Agreement) until due at the
rate of 12% per annum, payable in cash
quarterly in arrears on May 31, August 31,
November 30 and February 28 in each
year, commencing the Conversion Date, and
at maturity or prior payments of the
Subordinated Notes in full. Borrower has
authorized the issuance to the
Noteholders of the Convertible Subordinated
Notes, and upon conversion thereof,
the Subordinated Notes and the Warrants,
and, upon exercise of the Warrants, the
issuance and sale of the Warrant
Shares.
2.2.
PURCHASE OF THE
CONVERTIBLE SUBORDINATED NOTES; CONVERSION INTO
SUBORDINATED NOTES AND WARRANTS . Subject
to and in reliance upon the
representations and warranties of Borrower
contained in this Agreement and upon
the other terms and conditions hereof, each
Noteholder severally agrees to
purchase Convertible Subordinated Notes
from Borrower in the principal amount
set forth opposite such Noteholder's name
on Exhibit 2.2 attached hereto. The
Convertible Subordinated Notes shall be
purchased at a closing (the "CLOSING")
to be held at such location as agreed to by
Borrower and the Noteholders, at
10:00 a.m. local time on the date on which
this
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Agreement is executed and delivered and the
conditions described in Article III
hereof have been satisfied (the "CLOSING
DATE"). At the Closing, Borrower will
initially issue one Convertible
Subordinated Note to each Noteholder, payable to
such Noteholder or its registered assigns,
in the principal amount set forth
opposite such Noteholder's name on Exhibit
2.2, against receipt of immediately
available funds by wire transfer to an
account or accounts designated by
Borrower prior to the Closing in the amount
set forth next to such Noteholder's
name on Exhibit 2.2 (or in such other
manner as is set forth on Exhibit 2.2). On
the date that a Noteholder delivers notice
to the Company of its intent to
convert a Convertible Subordinated Note (a
"CONVERSION DATE"), such Convertible
Subordinated Note shall be deemed as of
such date to be converted into (a) a
Subordinated Note in the principal amount
set forth opposite such Noteholder's
name on Exhibit 2.2(a) attached hereto, and
(b) a Warrant to purchase the number
of Warrant Shares set forth opposite such
Noteholder's name on Exhibit 2.2(b)
attached hereto. On a Conversion Date,
Borrower will immediately execute and
deliver the Subordinate Note(s) and the
Warrant(s) to the applicable
Noteholder(s), and thereafter any
Convertible Subordinated Notes so converted
shall be deemed to be canceled and of no
further force or effect.
2.3.
USE OF PROCEEDS.
Borrower agree to use the full proceeds of the
Convertible Subordinated Notes to
consummate the investment and redemption
transactions contemplated in the Stock
Purchase and Redemption Agreement.
2.4.
PAYMENTS AND
ENDORSEMENTS.
(a) Payments of
principal, interest and premium, if any, on
the Notes shall be made without set off or
counterclaim, directly by wire
transfer to an account designated in
writing by each Noteholder, without any
presentment or notation of payment, except
that prior to any transfer of any
Note, the holder thereof shall endorse on
such Note a record of the date to
which interest has been paid and all
payments made on account of principal of
such Note. All payments and prepayments of
principal of, and interest on, the
Notes shall be applied (to the extent
thereof) to all of the Notes PRO RATA
based on the principal amount outstanding
and held by each holder thereof.
(b) Anything herein to
the contrary notwithstanding, if any
changes in present or future Applicable Law
shall impose on Borrower any
obligation with respect to any amount
payable by it hereunder or under any of
the other Related Agreements to withhold or
deduct any taxes, levies, imposts,
duties, charges, fees, deductions or
withholdings, Borrower will pay to the
Noteholders, on the date on which such
amount is due and payable hereunder or
under such other Related Agreements, such
additional amount in United States
dollars as shall be necessary to enable the
Noteholders to receive the same net
amount which the Noteholders would have
received on such due date if no such
obligation had been imposed upon
Borrower.
(c) The obligations of
Borrower under this Section 2.4 shall
survive the payment in full of all amounts
due hereunder or under the Notes.
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2.5.
REDEMPTIONS AND
MANDATORY REPURCHASE.
2.5.1. REQUIRED
REDEMPTION. On the stated or accelerated maturity
of the Notes, Borrower will pay the
principal amount of the Notes then
outstanding together with all accrued and
unpaid interest thereon. No redemption
of less than all of the Notes shall affect
the obligation of Borrower to make
the redemption required by this
sub-Section.
2.5.2. OPTIONAL
REDEMPTIONS. In addition to the redemption of the
Notes required under sub-Section 2.5.1,
Borrower may, at any time upon the prior
written approval of each of a majority of
the members of Borrower's board of
directors and a majority of the independent
members of Borrower's board of
directors, voluntarily redeem the Notes, in
whole or in part (in integral
multiples of Five Hundred Thousand Dollars
($500,000)), together with all
accrued and unpaid interest on the amount
so redeemed through the date of
redemption, at a redemption price equal
to:
(a) if such voluntary
redemption, including a redemption
pursuant to sub-Section 2.5.4, occurs on or
prior to the first anniversary of
this Agreement, one hundred six percent
(106%) of the sum of the principal
amount to be redeemed plus any accrued but
unpaid interest thereon;
(b) if such voluntary
redemption, including a redemption
pursuant to sub-Section 2.5.4, occurs after
the first anniversary of this
Agreement but on or prior to the second
anniversary of this Agreement, one
hundred five percent (105%) of the sum of
the principal amount to be redeemed
plus any accrued but unpaid interest
thereon;
(c) if such voluntary
redemption, including a redemption
pursuant to sub-Section 2.5.4, occurs after
the second anniversary of this
Agreement but on or prior to the third
anniversary of this Agreement, one
hundred four percent (104%) of the sum of
the principal amount to be redeemed
plus any accrued but unpaid interest
thereon;
(d) if such voluntary
redemption, including a redemption
pursuant to sub-Section 2.5.4, occurs after
the third anniversary of such
Agreement but on or prior to the fourth
anniversary of this Agreement, one
hundred three percent (103%) of the sum of
the principal amount to be redeemed
plus any accrued but unpaid interest
thereon;
(e) if such voluntary
redemption, including a redemption
pursuant to sub-Section 2.5.4, occurs after
the fourth anniversary of this
Agreement but on or prior to the fifth
anniversary of this Agreement, one
hundred two percent (102%) of the sum of
the principal amount to be redeemed
plus any accrued but unpaid interest
thereon; or
(f) if such voluntary
redemption, including a redemption
pursuant to sub-Section 2.5.4, occurs after
the fifth anniversary but prior to
the sixth
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anniversary of this Agreement, one hundred
one percent (101%) of the sum of the
principal amount to be redeemed plus any
accrued but unpaid interest thereon.
2.5.3. NOTICE OF
REDEMPTIONS; PRO RATA REDEMPTIONS. Written notice
of any redemption pursuant to sub-Section
2.5.1 or sub-Section 2.5.2 shall be
given to all holders of the Notes at least
thirty (30) Business Days prior to
the date of any such redemption and if any
such redemption relates to the
Convertible Subordinated Notes such notice
shall also state that the Noteholders
have the right to convert the Convertible
Subordinated Notes at any time prior
to such redemption. Each redemption of the
Notes pursuant to sub-Sections 2.5.1
and 2.5.2 shall be made so that the Notes
then held by each holder shall be
redeemed in a principal amount which shall
bear the same ratio to the total
unpaid principal amount being redeemed on
all the Notes as the unpaid principal
amount of the Notes then held by such
holder bears to the aggregate unpaid
principal amount of the Notes then
outstanding.
2.5.4. MANDATORY
REPURCHASE OF NOTES. As soon as possible, and in
any event within five (5) Business Days
after the occurrence of a Mandatory
Repurchase Event, Borrower shall furnish to
each Noteholder written notice
setting forth in reasonable detail the
facts and circumstances underlying such
Mandatory Repurchase Event. The occurrence
of any such Mandatory Repurchase
Event shall constitute an irrevocable offer
by Borrower to purchase all of the
Notes held by such Noteholder at one
hundred percent (100%) of the principal
amount thereof, on a date to be specified
by Borrower, which date shall be not
less than thirty (30) days nor more than
ninety (90) days after the occurrence
of such Mandatory Repurchase Event,
together with all accrued and unpaid
interest on the amount so purchased through
the date of purchase and together
with any amounts otherwise payable pursuant
to sub-Section 2.5.2. Following
receipt of any notice constituting an offer
to purchase the Notes hereunder,
each Noteholder shall advise Borrower, by
written notice, within ten (10)
Business Days after receipt of such offer,
as to whether it desires to sell all
or any of the Notes, as applicable, held by
it (in integral multiples of Five
Hundred Thousand Dollars ($500,000)),
specifying the principal amount of the
Notes to be sold by it. If a Noteholder
accepts such offer but does not specify
an amount it wishes to receive, it will be
deemed to have elected to sell all of
the Notes held by it. If a Noteholder fails
to respond to such offer by Borrower
within the ten (10) Business Day acceptance
period, such offer shall expire in
accordance with its terms.
2.6.
DEFAULT RATE OF
INTEREST. If an Event of Default has occurred and is
continuing, from and after the date such
Event of Default has occurred the
entire outstanding unpaid principal balance
of the Notes and any unpaid interest
from time to time in default shall bear
interest, payable on demand in cash, at
the rate of sixteen percent (16%) per
annum, compounded quarterly, or such lower
rate as then may be the maximum rate
permitted by applicable law; PROVIDED,
HOWEVER, that upon the cessation or cure of
such Event of Default, if no other
Event of Default is then continuing, the
Notes shall again bear interest at the
rate of twelve percent (12%) per annum as
set forth in Section 2.1.
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2.7.
MAXIMUM LEGAL
RATE OF INTEREST. Nothing in this Agreement or in the
Notes shall require Borrower to pay
interest at a rate in excess of the maximum
rate permitted by applicable law.
2.8.
PAYMENT ON
NON-BUSINESS DAYS. Whenever any payment to be made shall
be due on a day which is not a Business
Day, such payment may be made on the
next succeeding Business Day, and such
extension of time shall in such case be
included in the computation of payment of
interest due.
2.9.
TRANSFER AND
EXCHANGE OF NOTES. The holder of any Note, as
applicable, may, prior to maturity or
prepayment thereof, surrender such Note at
the principal office of Borrower for
transfer or exchange. Any holder desiring
to transfer or exchange any Note shall
first notify Borrower in writing at least
five (5) days in advance of such transfer
or exchange. Within a reasonable time
after such notice to Borrower from a holder
of its intention to make such
exchange and without expense (other than
transfer taxes, if any) to such holder,
Borrower shall issue in exchange therefor
another Note in denominations of One
Hundred Thousand Dollars ($100,000) and
multiples thereof, except in the case of
a Note for the balance of the aggregate
amount of the Note, or Notes so
transferred which shall be in a minimum
denomination of One Hundred Thousand
Dollars ($100,000), all as requested by the
holder, for the same aggregate
principal amount, as of the date of such
issuance, as the unpaid principal
amount of the Note or Notes so surrendered
and having the same maturity and rate
of interest, containing the same provisions
and subject to the same terms and
conditions as the Note or Notes so
surrendered (provided that no minimum shall
apply to a liquidating distribution of
Notes to investors in a Noteholder and
any Notes so distributed may be
subsequently transferred by such investor and
its successors in the original denomination
thereof without restriction under
this sentence). Each new Note shall be made
payable to such Person or Persons,
or assigns, as the holder of such
surrendered Note may designate, and such
transfer or exchange shall be made in such
a manner that no gain or loss of
principal or interest shall result
therefrom. Borrower shall have no obligation
hereunder or under any Note to any person
other than the registered holder of
each such Note. Notwithstanding anything to
the contrary contained herein, no
Noteholder shall be permitted to transfer
any of its Notes unless such
Noteholder's transferee has agreed in
writing to be bound by the terms of this
Agreement and the other Subordinated Notes
Documents, including the
representations and warranties set forth in
Article IV hereof.
2.10.
REPLACEMENT OF NOTES.
Upon receipt of evidence satisfactory to
Borrower of the loss, theft, destruction or
mutilation of any Note and, if
requested in the case of any such loss,
theft or destruction, upon delivery of
an indemnity bond or other agreement or
security reasonably satisfactory to
Borrower, or, in the case of any such
mutilation, upon surrender and
cancellation of such Note, Borrower will
issue a new Note of like tenor and
amount and dated the date to which interest
has been paid, in lieu of such lost,
stolen, destroyed or mutilated Note;
PROVIDED, HOWEVER, if any Note of which a
Noteholder, its nominee, or any of its
partners is the holder is lost, stolen or
destroyed, the affidavit of an authorized
partner or officer of the holder
setting forth the circumstances with
respect to such loss, theft or destruction
shall be accepted as satisfactory evidence
thereof, and no indemnification bond
or other security shall be
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required as a condition to the execution
and delivery by Borrower of a new Note
in replacement of such lost, stolen or
destroyed Note other than the holders
written agreement to indemnify
Borrower.
2.11.
OTHER NOTICES. So long
as any Notes are outstanding, Borrower shall
provide written notice to each Noteholder
at least thirty (30) Business Days
prior to the occurrence or closing of a
Mandatory Repurchase Event or a public
offering of securities by Borrower setting
forth in reasonable detail the facts
and circumstances underlying such Mandatory
Repurchase Event or public offering.
2.12.
PERFORMANCE OF
OBLIGATIONS. Borrower agrees that its obligations
hereunder shall not be discharged until
payment and performance, in full, of the
Obligations has occurred, and that its
obligations under this Section 2.12 shall
be absolute and unconditional, irrespective
of, and unaffected by,
2.12.1. the
genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this
Agreement, any other Subordinated
Notes Document or any other agreement,
document or instrument to which Borrower
is or may become a party;
2.12.2. the absence of
any action to enforce this Agreement
(including this Section 2.12) or any other
Subordinated Notes Document or the
waiver or consent with respect to any of
the provisions thereof;
2.12.3. the existence,
value or condition of, or any Noteholder's
failure to perfect its Lien against, any
security for the Obligations or any
action, or the absence of any action, by
any Noteholder in respect thereof
(including the release of any such
security);
2.12.4. the insolvency
of any Noteholder; or
2.12.5. any other
action or circumstances that might otherwise
constitute a legal or equitable discharge
or defense of a surety or guarantor.
2.13.
ISSUE PRICE; ORIGINAL
ISSUE DISCOUNT. Borrower and each Noteholder
recognize and agree that (i) the
Convertible Subordinated Notes will not be
issued with original issue discount within
the meaning of Section 1273 of the
Code, and (ii) the issue price of any Note
issued by the Company, within the
meaning of Section 1273 of the Code, will
be determined in accordance with the
rules in Section 1273(b)(3) or 1273(b)(4),
as applicable, at the time of the
conversion of the Convertible Subordinated
Note in respect of which such Note is
issued. Borrower and each Noteholder agree
to comply with all tax, accounting,
regulatory and other reporting requirements
in a manner which is consistent with
the foregoing.
2.14.
RANKING. The
Obligations and the rights and remedies of the
Noteholders under the Subordinated Notes
Documents shall be senior in right of
payment to all Subordinated Debt of
Borrower and its Subsidiaries.
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ARTICLE III - CONDITIONS TO NOTEHOLDERS' OBLIGATIONS
The obligation
of each Noteholder to purchase its Convertible Subordinated
Notes at the Closing is subject to the
following conditions precedent, all or
any of which may be waived by the unanimous
written agreement of the
Noteholders:
3.1.
CAPITALIZATION.
Borrower has received cash equity contributions from
TA Associates and its Affiliates and any
other investors party to the Stock
Purchase and Redemption Agreement in an
amount not less than $4,000,000.
3.2.
PRIOR DEBT. The
Prior Debt set forth on Schedule 3.2 hereto has been
(or concurrently with the initi
