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Exhibit 10.21
EXECUTION COPY
THIS INSTRUMENT AND THE RIGHTS AND
OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE
EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE
"SUBORDINATION AGREEMENT") DATED AS OF AUGUST 2,
2004 AMONG TA SUBORDINATED
DEBT FUND, L.P., TA INVESTORS II, L.P., LAMANDO
CHARITABLE REMAINDER
UNITRUST UNDER AGREEMENT DATED MAY 15, 2004, MADISON
CAPITAL FUNDING LLC, AS
SUBORDINATED CREDITOR, LIBMAN FAMILY HOLDINGS LLC,
CLAYTON
GRP, INC. (THE "COMPANY") AND MADISON CAPITAL FUNDING LLC, AS
ADMINISTRATIVE AGENT
("ADMINISTRATIVE AGENT"), TO THE INDEBTEDNESS (INCLUDING
INTEREST) OWED BY THE COMPANY PURSUANT TO
THAT CERTAIN CREDIT AGREEMENT DATED AS
OF AUGUST 2, 2004 AMONG THE
COMPANY, ADMINISTRATIVE AGENT AND THE FINANCIAL
INSTITUTIONS FROM TIME TO TIME PARTY
THERETO, AS SUCH CREDIT AGREEMENT HAS BEEN
AND HEREAFTER MAY BE AMENDED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME AND TO INDEBTEDNESS
REFINANCING THE INDEBTEDNESS UNDER THAT AGREEMENT AS
CONTEMPLATED BY THE SUBORDINATION
AGREEMENT; AND EACH PARTY TO THIS INSTRUMENT,
BY ITS ACCEPTANCE HEREOF,
IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF
THE SUBORDINATION AGREEMENT.
================================================================================
SUBORDINATED NOTE PURCHASE AGREEMENT
Among
CLAYTON GRP, INC.
as Borrower
AND
CLAYTON HOLDINGS, INC.
CLAYTON TECHNOLOGIES, INC.
FMSI ACQUISITION CO., INC.
as Guarantors
AND
LAMANDO CHARITABLE REMAINDER UNITRUST
UNDER AGREEMENT DATED MAY 15, 2004
TA SUBORDINATED DEBT FUND, L.P.
TA INVESTORS II, L.P.
LIBMAN FAMILY HOLDINGS LLC
MADISON CAPITAL FUNDING LLC
as Noteholders
Dated as of August 2, 2004
================================================================================
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CLAYTON GRP, INC.
Subordinated Note Purchase Agreement
Dated as of August 2, 2004
TABLE OF CONTENTS
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ARTICLE I -
DEFINITIONS...............................................................1
1.1.
Definitions...............................................................1
1.2.
Accounting
Terms.........................................................11
ARTICLE II - AUTHORIZATION, PURCHASE, SALE
AND TERMS OF NOTES; PAYMENTS..............12
2.1.
The
Notes................................................................12
2.2.
Purchase of the
Original Notes...........................................12
2.3.
Use of
Proceeds..........................................................12
2.4.
Payments and
Endorsements................................................12
2.5.
Redemptions and
Mandatory Repurchase.....................................13
2.6.
Default Rate of
Interest.................................................14
2.7.
Maximum Legal
Rate of Interest...........................................14
2.8.
Payment on
Non-Business
Days.............................................14
2.9.
Transfer and
Exchange of Notes...........................................15
2.10.
Replacement of
Notes.....................................................15
2.11.
Other
Notices............................................................15
2.12.
Liability................................................................16
ARTICLE III - CONDITIONS TO NOTEHOLDERS'
OBLIGATIONS.................................16
3.1.
Capitalization...........................................................16
3.2.
Senior Loan
Documents....................................................16
3.3.
Prior
Debt...............................................................16
3.4.
Related
Transactions.....................................................16
3.5.
Fees.....................................................................17
3.6.
Delivery of
Documents....................................................17
3.7.
Representations
and Warranties...........................................18
3.8.
Use of
Proceeds..........................................................18
3.9.
Compliance with
this Agreement...........................................18
3.10.
Consummation of the
Transactions.........................................18
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF THE NOTEHOLDERS.......................18
4.1.
Authorization;
Enforceability............................................18
4.2.
Own
Account..............................................................19
4.3.
Investment
Intent........................................................19
4.4.
Securities
Laws..........................................................19
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4.5.
No
Broker................................................................19
4.6.
Restrictive
Legend.......................................................19
ARTICLE V - REPRESENTATIONS AND WARRANTIES
OF THE BORROWER...........................20
5.1.
Organization.............................................................20
5.2.
Authorization;
No Conflict...............................................20
5.3.
Validity;
Binding
Nature.................................................20
5.4.
Financial
Condition......................................................20
5.5.
No Material
Adverse Change...............................................21
5.6.
Litigation...............................................................21
5.7.
Ownership of
Properties; Liens...........................................21
5.8.
Capitalization...........................................................21
5.9.
Pension
Plans............................................................21
5.10.
Investment Company
Act...................................................22
5.11.
Public Utility Holding
Company Act.......................................22
5.12.
Margin
Stock.............................................................22
5.13.
Taxes....................................................................22
5.14.
Solvency.................................................................22
5.15.
Environmental
Matters....................................................23
5.16.
Insurance................................................................23
5.17.
Information..............................................................23
5.18.
Intellectual
Property....................................................24
5.19.
Restrictive
Provisions...................................................24
5.20.
Labor
Matters............................................................24
5.21.
No
Default...............................................................24
5.22.
Related
Agreements.......................................................24
ARTICLE VI - AFFIRMATIVE COVENANTS OF THE
BORROWER...................................25
6.1.
Information..............................................................25
6.2.
Books; Records;
Inspections..............................................27
6.3.
Maintenance of
Property; Insurance.......................................28
6.4.
Compliance with
Laws; Payment of Taxes and Liabilities...................28
6.5.
Maintenance of
Existence.................................................28
6.6.
Employee Benefit
Plans...................................................29
6.7.
Environmental
Matters....................................................29
ARTICLE VII - NEGATIVE COVENANTS OF THE
BORROWER.....................................29
7.1.
Debt.....................................................................29
7.2.
Liens....................................................................30
7.3.
Reserved.................................................................31
7.4.
Restricted
Payments......................................................31
7.5.
Subsidiaries;
Mergers; Consolidations; Asset Sales.......................31
7.6.
Modification of
Organizational Documents.................................32
7.7.
Use of
Proceeds..........................................................32
7.8.
Transactions
with Affiliates.............................................32
7.9.
Inconsistent
Agreements..................................................32
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7.10.
Business
Activities......................................................32
7.11.
Investments..............................................................32
7.12.
Restriction of
Amendments to Certain Documents...........................33
7.13.
Fiscal
Year..............................................................33
7.14.
Financial
Covenants......................................................33
ARTICLE VIII - EVENTS OF DEFAULT;
REMEDIES...........................................37
8.1.
Events of
Default........................................................37
8.2.
Remedies.................................................................38
8.3.
Nature of
Remedies.......................................................39
8.4.
Set-Off..................................................................39
8.5.
Distribution of
Proceeds.................................................39
ARTICLE IX -
MISCELLANEOUS...........................................................39
9.1.
No Waiver;
Cumulative
Remedies...........................................39
9.2.
Amendments,
Waivers and Consents.........................................40
9.3. Addresses for Notices,
Etc...............................................40
9.4.
Costs, Expenses
and Taxes................................................41
9.5.
Assignability;
Binding Agreement.........................................41
9.6.
Payments in
Respect of Notes.............................................42
9.7.
Indemnification..........................................................42
9.8.
Survival of
Representations and Warranties...............................43
9.9.
Prior
Agreements.........................................................43
9.10.
Severability.............................................................43
9.11.
Governing
Law............................................................43
9.12.
Jury
Waiver..............................................................43
9.13.
Counterparts.............................................................44
9.14.
Further
Assurances.......................................................44
9.15.
Specific
Performance.....................................................44
9.16.
Actions by
Noteholders...................................................44
9.17.
Limitation of
Liability..................................................44
9.18.
Confidentiality
Agreement................................................44
ARTICLE X - GUARANTEE OF THE
NOTES...................................................45
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EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A
Form of Joinder Agreement
Exhibit B
Form of Compliance Certificate
Exhibit C
Permitted Acquisitions Conditions Precedent
Exhibit 2.1 Form
of Note
Exhibit 2.2
Allocation of Note Purchase Amount
SCHEDULES
Schedule 3.3 Prior
Debt
Schedule 5.6
Litigation
Schedule 5.8
Capitalization
Schedule 5.16 Insurance
Schedule 5.20 Labor
Matters
Schedule 7.1 Debt
Schedule 7.2 Liens
Schedule 7.8
Transactions with Affiliates
Schedule 7.11 Investments
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SUBORDINATED NOTE PURCHASE AGREEMENT
This
Subordinated Note Purchase Agreement dated as of August 2, 2004
(as
amended, restated or otherwise modified and
in effect from time to time, this
"AGREEMENT") by and among Clayton GRP,
Inc., a Delaware corporation
("BORROWER"), each of the Guarantors (as
defined below), TA Subordinated Debt
Fund, L.P., a Delaware limited partnership
("TA DEBT FUND" or a "NOTEHOLDER"),
TA Investors II, L.P., a Delaware limited
partnership ("TA INVESTORS" or a
"NOTEHOLDER"), Lamando Charitable Remainder
UniTrust Under Agreement Dated May
15, 2004 (a "NOTEHOLDER"), Madison Capital
Funding LLC (a "NOTEHOLDER"), and
Libman Family Holdings LLC (a "NOTEHOLDER"
and, together with TA Debt Fund, TA
Investors, Lamando Charitable Remainder
UniTrust Under Agreement Dated May 15,
2004, Madison Capital Funding LLC, 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 any Borrower or
any Subsidiary with respect to any
Account.
"ACQUISITION"
shall mean 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 a Person, or of all or
substantially all of any business or
division of a Person, (b) the acquisition
of in excess of 50% of the capital stock,
partnership interests, membership
interests or equity of any Person, or
otherwise causing any 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).
"ACQUISITION
ESCROW" shall mean collectively, the "Company Escrow" and the
"Escrow Deposit", as such terms are defined
in the Contribution and Asset
Transfer Agreement as in effect on the
Closing Date, in the original aggregate
amount of $20,000,000 on the Closing
Date.
"AFFILIATE"
shall mean any Person that would be considered to be an
affiliate of the Borrower under Rule 144 of
the Rules and Regulations of the
Securities and Exchange Commission, as in
effect on the date hereof, if the
Borrower was issuing securities; PROVIDED
that the term "Affiliate" shall not
include any Noteholder.
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"AGENT" shall
mean Madison Capital Funding LLC in its capacity as
administrative agent for all Senior Lenders
under the Senior Credit Agreement
and any successor thereto in such
capacity.
"AGREEMENT"
shall mean this Agreement as amended, restated or otherwise
modified and in effect from time to
time.
"APPLICABLE LAW"
shall mean all laws, statutes and rules and regulations
thereunder and interpretations thereof by
any competent court 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 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 the Borrower, 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
(unless issued by a Senior Lender or its
holding company) 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 Senior Lender
(or by a commercial
2
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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 Senior
Lender (or 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 Senior Lender (or other
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.
"COLLATERAL"
shall mean all of the personal property now owned or at any
time hereafter acquired by the Borrower or
in which the Borrower now has or at
any time in the future may acquire any
right, title or interest, which secures
the Liens granted to the Senior Lender
pursuant to the Senior Collateral
Documents.
"COLLATERAL
ACCESS AGREEMENT" shall mean an agreement in form and substance
reasonably satisfactory to Agent pursuant
to which a mortgagee or lessor of real
property on which Collateral is stored or
otherwise located, or a warehouseman,
processor or other bailee of Inventory or
other property owned by Borrower or
any Subsidiary, acknowledges the Liens of
Agent and waives any Liens held by
such Person on such property, and, in the
case of any such agreement with a
mortgagee or lessor, permits Agent
reasonable access to and use of such real
property during the continuance of an Event
of Default to assemble, complete and
sell any Collateral stored or otherwise
located thereon.
"COMPLIANCE
CERTIFICATE" means a certificate substantially in the form of
Exhibit B.
"COMPUTATION
PERIOD" shall mean (i) with respect to SECTIONS 7.14.3 and
7.14.4, each period of four consecutive
Fiscal Quarters ending on the last day
of a Fiscal Quarter and (ii) with respect
to SECTIONS 7.14.1 and 7.14.6, each of
the following periods: (a) the Fiscal
Quarter ending September 30, 2004; (b) the
period of two consecutive Fiscal Quarters
ending December 31, 2004; (c) the
period of three consecutive Fiscal Quarters
ending March 31, 2005; and (d) each
period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal
Quarter thereafter.
"CONSOLIDATED"
OR "CONSOLIDATED" shall mean with respect to any term
defined herein that term as applied to the
accounts of the Borrower and its
Subsidiaries, consolidated in accordance
with GAAP.
"CONSOLIDATED
NET INCOME" shall mean, with respect to Borrower and the
Subsidiaries for any period, the
consolidated net income (or loss) of Borrower
and the Subsidiaries for such period,
EXCLUDING any gains or non-cash losses
from Dispositions,
3
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any extraordinary gains or extraordinary
non-cash losses and any gains or
non-cash losses from discontinued
operations.
"CONTINGENT
OBLIGATION" shall mean any agreement, undertaking or
arrangement by which any 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 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.
"CONTINGENT
PAYMENTS" shall mean the "Contingent Payments" as defined in
the Contribution and Asset Transfer
Agreement as in effect on the Closing Date.
"CONTRIBUTION
AND ASSET TRANSFER AGREEMENT" shall mean that certain
Contribution and Asset Transfer Agreement
by and among Clayton Holdings, Inc.,
the Borrower, Clayton Services, Inc., First
Madison, Inc., and each of the other
corporations and the Stockholders and
Investors named therein.
"CONTROLLED
GROUP" means 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 the Borrower, are
treated as a single employer under Section
414 of the IRC 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 (including the Letters of
Credit), (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, and (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 classified as an operating
lease in accordance with GAAP;
provided, however, that Debt shall not
include the Acquisition Escrow or the
obligations relating to the repurchase of a
Loan Party's preferred stock.
"DEFAULT" shall
mean any event that, if it continues incurred, will, with
the lapse of time or the giving of notice
or both, constitute an Event of
Default.
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"DISPOSITION"
means, as to any asset or right of the Borrower or any
Subsidiary, (a) any sale, lease, assignment
or other transfer (other than to the
Borrower or any Subsidiary), (b) any loss,
destruction or damage thereof, or (c)
any actual or threatened condemnation,
confiscation, requisition, seizure or
taking thereof, in each case excluding (i)
assets subject to a Disposition which
are replaced within 180 days with assets
performing the same or a similar
function, and (ii) the sale or other
transfer of Inventory in the ordinary
course of business.
"DISTRIBUTION"
means (a) dividends or other distributions on any equity
interests of the Borrower, (b) the
redemption, repurchase or acquisition of such
equity interests or of warrants, rights or
other options to purchase such equity
interest; and (c) loans and advances made
to any equity interest holder of the
Borrower.
"EBITDA" shall
mean, for any period, Consolidated Net Income for such
period plus, to the extent deducted in
determining such Consolidated Net Income,
Interest Expense, income tax expense,
depreciation and amortization for such
period, plus or minus any other non-cash
charges or gains which have been
subtracted or added in calculating
Consolidated Net Income for such period.
"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 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 mean any of the events described in SECTION 8.1.
"FEE LETTERS"
shall mean (i) that certain letter agreement dated as of July
15, 2004 by Agent and acknowledged by
Borrower, as amended, restated or
otherwise modified from time to time and
(ii) that certain fee letter dated on
or about July 16, 2004 by JPMorgan Chase
Bank and acknowledged by Borrower, as
amended, restated or otherwise modified
from time to time.
"FISCAL QUARTER"
shall mean a fiscal quarter of a Fiscal Year.
5
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"FISCAL YEAR" or
"FISCAL YEAR" shall mean the fiscal year of the Borrower
and its Subsidiaries, which period shall be
the 12-month period ending on
December 31 of each year.
"FIXED CHARGE COVERAGE
RATIO" shall mean, for any Computation Period, the
ratio of (a) the total for such period of
EBITDA minus the sum of all income
taxes and tax distributions described in
SECTION 7.4 paid by Borrower and the
Subsidiaries and all Capital Expenditures
TO (b) the sum for such period of (i)
Interest Expense paid in cash by Borrower
and the Subsidiaries plus (ii) the sum
of (x) scheduled payments of principal of
Funded Debt (including the Term Loans
but excluding the Revolving Loans) and (y)
Contingent Payments to the extent
such Contingent Payments are not paid with
proceeds of the Acquisition Escrow.
"FUNDED DEBT"
shall mean, as to any Person, all Debt of such Person that
matures more than one year from the date of
its creation (or is renewable or
extendible, at the option of such Person,
to a date more than one year from such
date).
"GAAP" or
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean
principles
that are (a) consistent with the principles
promulgated or adopted by the
Financial Accounting Standards Board and
its predecessors, as in effect from
time to time, and (b) consistently applied
with past financial statements of the
Borrower adopting the same principles;
PROVIDED that in each case referred to in
this definition of "generally accepted
accounting principles" a certified public
accountant would, insofar as the use of
such accounting principles is pertinent,
be in a position to deliver an unqualified
opinion (other than a qualification
regarding changes in generally accepted
accounting principles) as to financial
statements in which such principles have
been properly applied.
"GUARANTOR"
shall mean, collectively, Clayton Holdings, Inc. and each
Subsidiary of the Borrower party to this
Agreement and each other Person which
guarantees the Obligations of the Borrower
under the Subordinated Notes
Documents, including through the delivery
of a joinder attached hereto in the
form of Exhibit A.
"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 a Person against
fluctuations in interest rates, currency
exchange rates or commodity prices.
"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.
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"INTEREST
EXPENSE" shall mean, for any period, the consolidated interest
expense of Borrower and the Subsidiaries
for such period (including all imputed
interest on Capital Leases).
"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.
"IRC" means the
Internal Revenue Code of 1986, as amended.
"LETTERS OF
CREDIT" shall mean the letters of credit issued pursuant to the
Senior Credit Agreement.
"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.
"LOAN PARTY"
shall mean Clayton Holdings, Inc., the Borrower, and each
Subsidiary.
"LOANS" means
Revolving Loans and Term Loans.
"MANDATORY
REPURCHASE EVENT" shall mean the occurrence of any one of any
of
the following events: (i) any merger or
consolidation of Clayton Holdings, Inc.
or the Borrower with or into another
corporation in which less than a majority
of the outstanding voting power of the
surviving or consolidated corporation
immediately following such event is held by
persons or entities who were
stockholders of Clayton Holdings, Inc. or
the Borrower, as applicable,
immediately prior to such event; (ii) any
sale, license or transfer of all or
substantially all of the properties and
assets of Clayton Holdings, Inc. or the
Borrower and any of their subsidiaries;
(iii) any acquisition by any person (or
group of affiliated or associated persons)
of beneficial ownership of a majority
of the equity of Clayton Holdings, Inc. or
the Borrower (whether or not
newly-issued shares) in a single
transaction or a series of related
transactions; (iv) any redemption or
repurchase of shares representing a
majority of the outstanding voting power of
Clayton Holdings, Inc. or the
Borrower, (with the exception of a
redemption pursuant to Section A.4(b) or
A.5(a) of the Amended and Restated
Certificate of Incorporation of Clayton
Holdings, Inc.); (v) any other change of
control of 50% or more of the
outstanding voting power of Clayton
Holdings, Inc. or the Borrower; (vi) the
initial public offering of Common Stock of
Clayton Holdings, Inc. or the
Borrower pursuant to an effective
registration statement under the Securities
Act in a transaction that does not
constitute a QPO (as defined in Section
A.6(b) of the Amended and Restated
Certificate of Incorporation of Clayton
Holdings, Inc.); or (vii) any liquidation,
dissolution, or winding up of Clayton
Holdings, Inc. or the Borrower, whether
voluntary or involuntary.
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"MARGIN STOCK"
shall mean any "margin stock" as defined in Regulation T, U,
or X of the Board of Governors of the
Federal Reserve System or any successor
thereof.
"MATERIAL
ADVERSE EFFECT" shall mean (a) a material adverse change in, or
a
material adverse effect upon, the financial
condition, operations, assets,
business, properties or prospects of Loan
Parties taken as a whole or (b) a
material impairment of the ability of any
Loan Party to perform any of its
Obligations under any Subordinated Notes
Document.
"MEZZANINE
SUBORDINATION AGREEMENT" shall mean the Subordination and
Intercreditor Agreement dated as of even
date herewith by and among TA Debt
Fund, TA Investors, Lamando Charitable
Remainder UniTrust Under Agreement Dated
May 15, 2004, Madison Capital Funding LLC,
Libman Family Holdings LLC, Borrower,
and Agent.
"MULTIEMPLOYER
PENSION PLAN" shall mean a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which
Borrower or any member of the Controlled
Group may have any liability.
"NOTEHOLDER" and
"NOTEHOLDERS" shall mean a Person or Persons who hold a
Note or Notes issued pursuant to this
Agreement, including successors and
assigns of such persons.
"NOTES" shall
have the meaning assigned to that term in SECTION 2.1.
"OBLIGATIONS"
means all now existing or hereafter arising debts,
obligations, covenants, and duties of
payment or performance of every kind,
matured or unmatured, direct or contingent,
owing, arising, due, or payable to
the Noteholders, by or from the Borrower,
whether existing on the date of this
Agreement or arising thereafter, whether
arising out of this Agreement or any
other Subordinated Notes Document,
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 the Borrower, under the
Subordinated Notes Documents, whether or
not evidenced by any note or other
instrument.
"PBGC" shall
mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of the functions
under ERISA.
"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
the 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 preceding five
years, or by reason of being deemed to be
a contributing sponsor under Section 4069
of ERISA.
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"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.
"PRIOR DEBT"
shall mean the Debt listed on SCHEDULE 3.3.
"PRO FORMA
EBITDA" shall mean, with respect to any Target acquired in an
Acquisition, EBITDA for such Target for the
most recent twelve (12) month period
for which financial statements are made
available to Noteholders at the time of
determination thereof, adjusted by
extraordinary expenses, increased costs,
identifiable and verifiable expense
reductions and excess management
compensation, if any, in each case
calculated by Borrower and approved by
Noteholders.
"PROPERTY" shall
mean any interest in any kind or 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 Contribution and Asset Transfer
Agreement.
"RELATED
AGREEMENTS" shall mean the Contribution and Asset Transfer
Agreement, Stock Purchase Agreement, the
Stockholders Agreement, the
Registration Rights Agreement, and the
Senior Loan Documents.
"RELATED
TRANSACTIONS" shall mean the transactions contemplated by the
Related Agreements.
"REVOLVING
LOANS" shall mean the revolving loans made under the Senior
Loan
Documents.
"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.
"SELLER
SUBORDINATION AGREEMENT" means the Subordination and
Intercreditor
Agreement dated as of even date herewith by
and among Sellers, Borrower, and
Agent.
"SELLER
SUBORDINATED DEBT" means Debt in an aggregate amount not to
exceed
$20,000,000 related to the "Contingent
Payments" as defined in the Contribution
and Asset Transfer Agreement as in effect
on the date hereof.
"SELLERS" shall
mean First Madison Services, Inc., Clayton Services, Inc.,
the "Clayton Subsidiaries" (as defined in
the Contribution and Asset Transfer
Agreement), Stephen M. Lamando, Brian
Kramer, Peter Krell and the "Other
Stockholders" (as defined in the
Contribution and Asset Transfer Agreement).
"SENIOR
COLLATERAL DOCUMENTS" shall mean the following documents
entered
into by the Borrower, as appropriate, in
connection with the Senior Credit
Agreement: the
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Guarantee and Collateral Agreement, each
Mortgage, each Collateral Access
Agreement, and each other agreement or
instrument pursuant to or in connection
with which the Borrower, any Subsidiary, or
any other Person grants Collateral
to Agent for the benefit of the Senior
Lenders, each as amended, restated or
otherwise modified from time to time.
"SENIOR CREDIT
AGREEMENT" shall mean that certain Credit Agreement by and
among the Borrower, the financial
institutions party thereto from time to time,
and Madison Capital Funding LLC, as
administrative agent, as amended, restated,
or modified and in effect from time to
time.
"SENIOR DEBT"
shall mean all Funded Debt of the Borrower and the
Subsidiaries, determined on a consolidated
basis, other than Subordinated Debt.
"SENIOR DEBT TO
EBITDA RATIO" shall mean, as of the last day of any Fiscal
Quarter, the ratio of (i) Senior Debt as of
such day to (ii) EBITDA for the
Computation Period ending on such day;
provided that, notwithstanding anything
to the contrary, for the Computation
Periods ending December 31, 2003, March 31,
2004 and June 30, 2004, EBITDA shall be
deemed $3,441,000, $5,371,000 and
$6,162,000, respectively.
"SENIOR LENDER"
shall mean the Lenders under the Senior Credit Agreement.
"SENIOR LOAN
DOCUMENTS" shall mean the Senior Credit Agreement, the Senior
Notes, the Letters of Credit, the Senior
Collateral Documents, the Fee Letters,
and all documents, instruments and
agreements delivered in connection with the
foregoing, all as amended, restated or
otherwise modified from time to time.
"SENIOR NOTES"
shall mean the notes issued pursuant to the Senior Credit
Agreement.
"SPONSOR" shall
mean TA Associates, Inc.
"STOCK PURCHASE
AGREEMENT" shall mean that certain Stock Purchase Agreement
by and among Clayton Holdings, Inc. and the
Investors named therein of even date
herewith.
"STOCKHOLDERS
AGREEMENT" shall mean that certain Stockholders Agreement
entered into in connection with the
Contribution and Asset Transfer Agreement.
"SUBORDINATED
DEBT" means (a) debt or other obligations of the Borrower
under the Subordinated Note Documents, (b)
the Seller Subordinated Debt and (c)
any other unsecured Debt of the Borrower
which has subordination terms,
covenants, pricing and other terms which
have been approved in writing by
Required Lenders under the Senior Credit
Agreement.
"SUBORDINATED
NOTES DOCUMENTS" shall mean this Agreement and the Notes.
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"SUBSIDIARY"
shall mean, with respect to any Person, a corporation,
partnership, limited liability company or
other entity of which such Person
owns, directly or indirectly, such number
of outstanding shares or other equity
interests as to have more than 50% of the
ordinary voting power for the election
of directors or other managers of such
corporation, partnership, limited
liability company or other entity. Unless
the context otherwise requires, each
reference to Subsidiaries herein shall be a
reference to Subsidiaries of
Borrower.
"TARGET" shall
mean the Person, or business or substantially all of the
assets of a Person, acquired in an
Acquisition.
"TERM LOANS"
shall mean the Term A Loans made under the Senior Loan
Documents.
"TOTAL DEBT"
shall mean all Funded Debt of Borrower and the Subsidiaries,
determined on a consolidated basis.
"TOTAL DEBT TO
EBITDA RATIO" shall mean, as of the last day of any Fiscal
Quarter, the ratio of (a) Total Debt as of
such day to (b) EBITDA for the
Computation Period ending on such day;
provided that, notwithstanding anything
to the contrary, for the Computation
Periods ending December 31, 2003, March 31,
2004 and June 30, 2004, EBITDA shall be
deemed $3,441,000, $5,371,000 and
$6,162,000, respectively.
"UCC" means the
Uniform Commercial Code as in effect on the date hereof AND
from time to time in the Commonwealth of
Massachusetts, 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 at
the time 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
the Borrower or any of its
Subsidiaries shall be calculated with
respect to the 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 NOTES. The
Borrower has authorized the issuance of senior
subordinated notes due August 2, 2010 in
the aggregate original principal amount
of Twenty Million Dollars ($20,000,000).
The senior subordinated notes shall be
in the form set forth as EXHIBIT 2.1
attached hereto and are herein referred to
individually as a "NOTE" and collectively
as the "NOTES", which terms shall also
include any notes delivered in exchange or
replacement therefor. The Notes shall
(a) be payable on August 2, 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 twelve
percent (12%) per annum, payable in cash
quarterly in arrears on May 15, August 15,
November 15 and February 15 in each
year, commencing August 15, 2004, and at
maturity or prior prepayment of the
Notes in full. The Borrower has authorized
the issuance to the Noteholders of
the Notes.
2.2.
PURCHASE OF THE
ORIGINAL NOTES. Subject to and in reliance upon the
representations, warranties, terms and
conditions of this Agreement, the
Noteholders agree to purchase Notes from
the Borrower in the aggregate principal
amount of Twenty Million Dollars
($20,000,000), as set forth opposite each
Noteholders' name on EXHIBIT 2.2 attached
hereto, at a closing (the "CLOSING")
to be held at the offices of Goodwin
Procter LLP, located at Exchange Place, 53
State Street, Boston, MA, at 10:00 a.m.
Boston time, or at such other time and
place as the parties hereto agree, on the
date on which this Agreement is
executed and delivered and upon
satisfaction of the conditions described in
Article III (the "CLOSING DATE"). At the
Closing, the Borrower will issue the
Notes to the Noteholders, payable to the
Noteholders or their registered
assigns, against receipt of immediately
available funds by wire transfer to an
account or accounts designated by the
Borrower prior to the Closing in the
amount set forth on EXHIBIT 2.2 (or in such
other manner as is set forth on
EXHIBIT 2.2).
2.3.
USE OF PROCEEDS.
The Borrower agrees to use the full proceeds of the
Note to consummate the transactions
contemplated by the Contribution and Asset
Transfer 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 the Borrower any
obligation
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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,
the Borrower will pay to the
Noteholders, on the date on which such
amount is due and payable under the
Subordinated Notes Documents, 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 the Borrower.
(c) The obligations of
the Borrower under this SECTION 2.4
shall survive the payment in full of all
amounts due hereunder or under the
Notes.
2.5.
REDEMPTIONS AND MANDATORY
REPURCHASE.
2.5.1. REQUIRED
REDEMPTION. On the stated or accelerated maturity
of the Notes, the 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 the 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, the
Borrower may at any time 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 (1st) 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 (1st) anniversary of this
Agreement but on or prior to the second
(2nd) 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;
(c) if such voluntary
redemption, including a redemption
pursuant to SUB-SECTION 2.5.4, occurs after
the second (2nd) anniversary of this
Agreement but on or prior to the third
(3rd) 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
(d) if such voluntary
redemption, including a redemption
pursuant to SUB-SECTION 2.5.4 occurs after
the third (3rd) anniversary of this
Agreement, the sum of the principal amount
to be redeemed plus any accrued but
unpaid interest thereon.
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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. 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, the 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 the 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 the 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 offer to purchase
the Notes hereunder, each Noteholder
shall advise the 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 the 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 fourteen percent (14%) 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.
2.7.
MAXIMUM LEGAL
RATE OF INTEREST. Nothing in this Agreement or in the
Notes shall require the 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.
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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 a Borrower for
transfer or exchange. Any holder desiring
to transfer or exchange any Note shall
first notify the Borrower in writing at
least five (5) days in advance of such
transfer or exchange. Within a reasonable
time after such notice to the Borrower from
a holder of its intention to make
such exchange and without expense (other
than transfer taxes, if any) to such
holder, the 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. The 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 and the
Mezzanine Subordination Agreement to which
such Noteholder is a party, including
the representations and warranties set
forth in Article IV hereof.
2.10.
REPLACEMENT OF NOTES.
Upon receipt of evidence satisfactory to the
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 the
Borrower, or, in the case of any such
mutilation, upon surrender and
cancellation of such Note, the 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 required as a
condition to the execution and delivery
by the Borrower of a new Note in
replacement of such lost, stolen or destroyed
Note other than the holders written
agreement to indemnify the Borrower.
2.11.
OTHER NOTICES. So long
as any Notes are outstanding, the 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
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by the Borrower setting forth in reasonable
detail the facts and circumstances
underlying such Mandatory Repurchase Event
or public offering.
2.12.
LIABILITY. The
Borrower hereby agrees that it is liable for the full
and prompt payment (whether at stated
maturity, by acceleration or otherwise)
and performance of, all Obligations owed by
it or hereafter owing by it to any
Noteholder. The Borrower agrees that its
obligation 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 the
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 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.
ARTICLE III - CONDITIONS TO NOTEHOLDERS' OBLIGATIONS
The obligation
of each Noteholder to purchase its Notes hereunder 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
(which may inc
