NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT dated as of April 9, 2007, by and between FermaVir Pharmaceuticals., Inc., a Florida corporation (the “Company”), and Inhibitex, Inc., a Delaware corporation (the “Purchaser”).
W I T N E S S E T H:
WHEREAS, the Company, the Purchaser and Frost Acquisition Corp., a Delaware corporation (“Merger Sub”) have entered into an Agreement and Plan of Merger and Reorganization, dated as of the date hereof (the “Merger Agreement”), pursuant to which the Purchaser intends to acquire the Company by merging the Company with and into Merger Sub (the “Merger”);
WHEREAS. in order to finance the operations of the Company through the consummation of the Merger, the Company wishes to sell to the Purchaser, and the Purchaser wishes to purchase from the Company, senior secured promissory notes, in the aggregate principal amount of up to One Million Five Hundred Thousand Dollars ($1,500,000) (the “Notes”) upon the terms and subject to the conditions hereinafter set forth;
WHEREAS, as security for the Notes, the Company is willing to pledge to the Purchaser all of the Capital Stock (as hereinafter defined) of its Subsidiary (as hereinafter defined) and grant to the Holders a first priority security interest in all of its and its Subsidiaries’ assets;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, and unless the context requires a different meaning, or such term is defined in the Merger Agreement, in which case the term will have the meaning attributed to such term in the Merger Agreement, the following terms have the meanings indicated:
“Additional Closing” shall have the meaning assigned to that term in Section 2.2(b).
“Affiliate” shall mean, as to any Person, any other Person who directly or indirectly controls, is under common control with, is controlled by or is a director or officer of such Person. As used in this definition, “control” (including its correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of voting securities or partnership or other ownership interests, by contract or otherwise), provided that, in
any event, any Person who owns directly or indirectly more than ten percent (10%) of the securities having ordinary voting power for the election of the members of the board of directors or other governing body of a corporation or more than ten percent (10%) of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation, partnership or other Person.
“Agreement” shall mean this Note Purchase Agreement dated as of April , 2007, by and between the Company and the Purchaser, including the exhibits and schedules attached hereto, as the same may be amended, supplemented or modified in accordance with the terms hereof.
“Business” shall mean the business of the Company and its Subsidiaries conducted by the Company and its Subsidiaries immediately prior to the Closing and the activities reasonably related thereto.
“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law or executive order to close.
“Capital Lease Obligations” shall mean, as to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) immovable or real property or movable or personal property, which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
“Capital Stock” shall mean (i) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock (whether voting or nonvoting, and whether common or preferred) of such corporation, and (ii) with respect to any Person that is not a corporation, any and all partnership, membership, limited liability company or other equity interests of such Person that confer on a Person the right to receive a share of the profits and losses of, or the distribution of assets of, the issuing Person; and in each case, any and all warrants, rights or options to purchase, and all conversion or exchange rights, voting rights, calls or rights of any character with respect to, any of the foregoing, including, without limitation, any rights in respect of any change in the value of any of the foregoing, including stock appreciation rights and similar interests.
“Closing” shall have the meaning assigned to that term in Section 2.2(a).
“Closing Date” shall have the meaning assigned to that term in Section 2.2(a).
“Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor statute thereto, and the regulations promulgated thereunder.
“Collateral Documents” means the Security Agreement, and all similar agreements entered into guaranteeing payment of, or granting a Lien upon property as security for payment of, the Obligations.
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“Company” shall have the meaning assigned to that term in the introduction.
“Constituent Documents” shall mean, in the case of a corporation, the certificate of incorporation and by-laws of such corporation, in the case of a limited liability company, the certificate of formation and operating agreement of such limited liability company, and in the case of other entities, analogous documents governing the existence and powers of such entities, in each case as in effect on the Closing Date.
“Default” shall mean any event or condition that, with the passage of time or giving of notice, or both, would constitute an Event of Default.
“Default Rate” shall have the meaning assigned to that term in Section 2(b) of the Note.
“Disposition” shall mean with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof (other than any of the foregoing between the Company and its Subsidiaries). The terms “Dispose” and “Disposed of” shall have correlative meanings.
“Event of Default” shall have the meaning assigned to that term in Section 9.1.
“Holders” shall mean the Purchaser and any permitted transferee of the Notes.
“Indebtedness” means, without duplication, for any Person, (i) obligations for borrowed money, including obligations evidenced by bonds, notes, debentures or other similar instruments; (ii) obligations under financial guarantees, letters of credit or letters of guarantee or obligations to financial institutions who issued such letters of credit or letters of guarantee for the account of such Person; (iii) obligations under bankers’ acceptances; (iv) obligations representing the deferred purchase price of property or services except trade accounts payable of such Person arising in the ordinary course of business; (v) obligations, whether or not assumed, secured by Liens on, or payable out of the proceeds or production from, property owned by such Person; (vi) Capital Lease Obligations and obligations under any other synthetic off-balance sheet financing; and (vii) guarantees of any of the foregoing items referred to in (i) through (vi) above.
“Indemnified Party” shall have the meaning assigned to that term in Section 10.1.
“Initial Closing” shall mean the initial Closing.
“Insolvency Event” shall with respect to any Person, the occurrence of any of the following: (i) such Person shall be adjudicated insolvent or bankrupt or institutes proceedings to be adjudicated insolvent or bankrupt, or shall generally fail to pay or admit in writing its inability to pay its debts as they become due, (ii) such Person shall seek dissolution or reorganization or the appointment of a receiver, trustee, custodian or liquidator for it or a substantial portion of its property, assets or business or to effect a plan or other arrangement with its creditors, (iii) such Person shall make a general assignment for the benefit of its creditors, or consent to or acquiesce in the appointment of a receiver, trustee, custodian or liquidator for a substantial portion of its property, assets or business, (iv) such Person shall file a voluntary petition under any bankruptcy,
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insolvency or similar law, (v) such Person shall take any corporate or similar act in furtherance of any of the foregoing, or (vi) such Person, or a substantial portion of its property, assets or business, shall become the subject of an involuntary proceeding or petition for (A) its dissolution or reorganization or (B) the appointment of a receiver, trustee, custodian or liquidator, and (I) such proceeding is not dismissed or stayed within sixty days or (II) such receiver, trustee, custodian or liquidator is appointed.
“Investment Documents” shall mean (i) this Agreement, (ii) the Notes, (iii) the Collateral Documents, and (v) all other instruments, documents and agreements delivered or to be delivered by any one or more of the parties to this Agreement in connection with the closing of, or pursuant to, this Agreement.
“Investments” in any Person shall mean, as of the date of determination thereof, (i) any payment or contribution, or commitment to make a payment or contribution, by a Person including, without limitation, property contributed or committed to be contributed by such Person for or in connection with its acquisition of any stock, bonds, notes, debentures, partnership or other ownership interest or any other security of the Person in whom such Investment is made or (ii) any loan, advance or other extension of credit by or guaranty of or other surety obligation for any Indebtedness of the Person in whom the Investment is made.
“Liabilities” shall have the meaning assigned to that term in Section 10.1.
“Lien” shall mean a mortgage, prior claim, pledge, privilege, lien, charge or encumbrance, whether fixed or floating, on, or any security interest in any property, whether immovable or real, movable or personal, or mixed, tangible or intangible or a pledge or hypothecation thereof or any conditional sale agreement or other title retention agreement or equipment trust relating thereto or any lease relating to property which would be required to be accounted for as a Capital Lease Obligation on a balance sheet.
“Material Adverse Change” shall mean any material adverse change in the condition (financial or otherwise), operations, business, prospects, properties or assets of the Company and its Subsidiaries, taken as a whole.
“Modification” shall mean any amendment, restatement, replacement, renewal, refinancing, extension, or modification of an agreement. “Modified” shall have the correlative meaning.
“Notes” shall have the meaning assigned to that term in the recitals hereto.
“Obligations” shall mean all principal of and interest (including, to the greatest extent permitted by law, post-petition interest) on the Notes and all fees, expenses, indemnities and other obligations owing, due or payable to the Holders at any time by the Company and/or its Subsidiaries or any other Person entitled thereto, under this Agreement or any of the other Investment Documents, in each case whether direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, and whether existing by contract, operation of law or otherwise.
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“Permitted Liens” shall mean (a) Liens held by Holders to secure the Obligations, (b) Liens for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet delinquent, or (ii) do not have priority over the Holders’ Liens, (c) the interests of lessors under operating leases, (d) purchase money Liens or the interests of lessors with respect to Capital Lease Obligations and (e) any interest or title of a licensor, lessor, or sublicensor or sublessor under any lease or license (other than with respect to Intellectual Property) permitted by this Agreement.
“Purchaser” shall have the meaning assigned to such term in the introduction.
“Required Holders” shall mean, at any time, the holders of the outstanding Notes representing a majority of the aggregate principal amount of the Notes then outstanding.
“Restricted Payment” shall mean: (i) any dividend or other distribution, direct or indirect, on account of any Capital Stock in the Company now or hereafter outstanding, except a dividend payable solely in shares of such Capital Stock to the holders of that class; (ii) any redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Capital Stock in the Company now or hereafter outstanding other than ordinary course repurchases of common stock of the Company pursuant to the Company’s equity incentive plan; (iii) any prepayment of interest on, principal of, premium, if any, redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Indebtedness subordinated to the Indebtedness existing pursuant to the Notes and this Agreement; (iv) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any Capital Stock of the Company now or hereafter outstanding other than ordinary course repurchases of common stock of the Company pursuant to the Company’s equity incentive plan; (v) every payment in connection with any Investment; and (vi) every payment made by or on behalf of the Company (whether as repayment or prepayment of principal or as interest or otherwise) other than the intercompany loan payments permitted in accordance with Section 8.2, on or with respect to (x) any obligation to repay Indebtedness owing to any Affiliate of the Company or its Subsidiaries or to any other holder of the Company’s Capital Stock or (y) any obligation to any Person or any Affiliate of the Company or its Subsidiaries or of any other holder of Capital Stock of the Company, with respect to which obligation the Company or any of its Subsidiaries has a Contingent Obligation.
“Security Agreement” means the Security Agreement of even date herewith entered into between the Purchaser and the Company.
“Solvent” when used with respect to any Person, means that, as of the date as to which such Person’s solvency is to be measured: (i) the fair saleable value of its assets in excess of the total amount of its liabilities (including contingent, subordinated, absolute, fixed, matured, unmatured, liquidated and unliquidated liabilities but excluding liabilities owing by the Company to any of its Subsidiaries or any one of the Subsidiaries of the Company to the Company or to another one of the Subsidiaries of the Company); (ii) it has sufficient capital to conduct its business; and (ii) it is able to meet its debts as they mature.
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“Subsidiary(ies)” shall mean, with respect to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.
Section 1.2 Accounting Terms; Financial Statements. Unless otherwise defined or specified herein, all accounting terms used in this Agreement shall be construed in accordance with GAAP as in effect on the date hereof. The financial statements required to be delivered hereunder from and after the Closing Date, and all financial records, shall be maintained in accordance with GAAP as in effect at the time of delivery.
Section 1.3 Knowledge of the Person. All references to the knowledge of any Person or to facts known by such Person shall mean the knowledge or notice of the Responsible Officers of such Person or any of its Subsidiaries.
Section 1.4 Other Definitional Provisions.
(a) As used herein and in any certificate or other document made or delivered pursuant hereto or thereto, (i) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation” and (ii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights.
(b) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
ARTICLE II.
PURCHASE AND SALE OF THE NOTES
Section 2.1 Purchase and Sale.
(a) Subject to the terms and conditions herein set forth, the Company agrees that it will issue and sell to the Purchaser, and the Purchaser agrees that it will acquire from the Company, the Notes in the form attached hereto as Exhibit 2.1(a).
(b) The Notes shall be sold by the Company and purchased by the Purchaser initially on April 16, 2007 in the aggregate principal amount of $750,000 in Notes, an additional aggregate principal amount of $500,000 in Notes on July 9, 2007 and a
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final additional aggregate amount of $250,000 in Notes on August 9, 2007, provided that the aggregate principal amount of the Notes shall not be greater than One Million Five Hundred Thousand Dollars ($1,500,000).
Section 2.2 Closing.
(a) The purchase and issuance of Notes shall take place at one or more closings (each a “Closing” and, collectively, the “Closings”) to be held at the offices of Dechert LLP, 30 Rockefeller Plaza, New York, New York 10112 (each such date. a “Closing Date”), unless another place is agreed to by the parties hereto, or remotely via the exchange of executed documents.
(b) The Initial Closing with respect to the purchase of the Notes shall take place on April 16, 2007 or such other date mutually agreed upon by the parties hereto (the “Initial Closing Date”). With respect to the sale and purchase of additional Notes, the Company, upon five (5) days notice may set additional Closings with respect to additional Notes to be sold hereunder (each, an “Additional Closing”) on dates determined by the Company (each, an “Additional Closing Date” and together, the “Additional Closing Dates”). Interest shall be earned on the Notes from a Closing Date with respect to the Notes purchased on that Closing Date.
(c) At each Closing or within two Business Days thereafter, the Company shall deliver to the Purchaser the Notes being purchased, in each case, dated as of the relevant Closing Date, against delivery by the Purchaser to the Company of the purchase price therefor. In each case, payment of such purchase price shall be by wire transfer of immediately available funds to an account or accounts previously designated in writing by the Company.
ARTICLE III.
CONDITIONS TO THE OBLIGATIONS
OF THE PURCHASER TO PURCHASE THE NOTES
Section 3.1 Conditions to the Initial Closing. The obligation of the Purchaser to purchase the Notes, to pay the purchase price therefor at the Initial Closing and to perform any obligations hereunder shall be subject to the satisfaction of the following conditions on or before the Initial Closing Date, as determined by, or waived by, the Purchaser; provided, however, that any waiver of a condition shall not be deemed a waiver of any breach of any representation, warranty, agreement, term or covenant or of any misrepresentation by the Company.
(a) Representations and Warranties. The representations and warranties of the Company contained in Article IV shall be true, in all material respects (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein), at and as of the Initial Closing Date. There shall exist no Default or Event of Default at the time of the issuance of the Notes.
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(b) Compliance with this Agreement. The Company shall have performed and complied in all material respects with all of the agreements and conditions set forth or contemplated herein or in the Merger Agreement that are required to be performed or complied with by the Company on or before the Initial Closing Date.
(c) Purchase of Notes Permitted by Applicable Laws. The acquisition of and payment for the Notes (a) shall not be prohibited by any Requirement of Law, (b) shall not subject the Purchaser to any penalty under or pursuant to any Requirement of Law, and (c) shall be permitted by all Laws to which any Purchaser is subject.
(d) Consents and Approvals. All governmental and third-party consents and approvals necessary in connection with the offer, sale and issuance of the Notes shall have been obtained and remain in full force and effect and shall be satisfactory to the Purchaser; and no Requirement of Law shall be applicable, or event shall have occurred, that seeks to enjoin, restrain, restrict, set aside or prohibit, or impose materially adverse conditions upon, the issuance of the Notes.
(e) No Material Judgment or Order. There shall not be in effect on the Initial Closing Date any judgment, injunction or order of a court of competent jurisdiction or any ruling of any Governmental Entity or any condition imposed under any Requirement of Law which, in the judgment of the Purchaser, would prohibit the purchase of the Notes hereunder or subject the Purchaser to any penalty under or pursuant to any Requirement of Law if the Notes were to be purchased hereunder.
(f) Material Adverse Change. There shall not have occurred at any time since January 31, 2007, any Material Adverse Change.
(g) No Litigation. No action, suit, proceeding or investigation shall have been instituted or threatened before, and no order, injunction or decree shall have been entered by, any Governmental Entity, in each case seeking to enjoin, restrain, restrict, set aside or prohibit, to impose material conditions upon, or to obtain substantial damages in respect of, the issuance of the Notes.
(h) Notes. The Notes being purchased at the Initial Closing shall have been duly executed and delivered by the Company.
(i) Collateral Documents. The Collateral Documents, substantially in the form attached hereto as Exhibit 3.1(i), shall have been duly executed and delivered by all of the parties thereto.
Section 3.2 Conditions to Each Additional Closing. The obligation of the Purchaser to purchase additional Notes, to pay the purchase prices therefor at each Additional Closing and to perform any obligations hereunder with respect to such purchase shall be subject to the satisfaction of the following conditions on or before the relevant Additional Closing Date, as determined by, or waived by, the Purchaser; provided, however, that any waiver of a condition shall not be deemed a waiver of any breach of any representation, warranty, agreement, term or covenant or of any misrepresentation by the Company.
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(a) Representations and Warranties; No Default. The representations and warranties of the Company contained in Article IV shall be true, in all material respects (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein), at and as of such Additional Closing Date. There shall exist no Default or Event of Default at the time of the issuance of the Notes.
(b) Purchase of Notes Permitted by Applicable Laws. The acquisition of and payment for the Notes (a) shall not be prohibited by any Requirement of Law, (b) shall not subject the Purchaser to any penalty under or pursuant to any Requirement of Law, and (c) shall be permitted by all Laws to which the Purchaser is subject.
(c) Consents and Approvals. All governmental and third-party consents and approvals necessary in connection with the offer, sale and issuance of the Notes shall have been obtained and remain in full force and effect and shall be satisfactory to the Purchaser; and no Requirement of Law shall be applicable, or event shall have occurred, that seeks to enjoin, restrain, restrict, set aside or prohibit, or impose materially adverse conditions upon, the issuance of the Notes.
(d) No Material Judgment or Order. There shall not be in effect on the Additional Closing Date any judgment, injunction or order of a court of competent jurisdiction or any ruling of any Governmental Entity or any condition imposed under any Requirement of Law which, in the judgment of the Purchaser, would prohibit the purchase of the Notes hereunder or subject the Purchaser to any penalty under or pursuant to any Requirement of Law if the Notes were to be purchased hereunder.
(e) Material Adverse Change. There shall not have occurred at any time since January 31, 2007, any Material Adverse Change.
(f) No Change in Company Recommendation. The Company Board shall not have failed to make the Company Recommendation in accordance with Section 5.4 of the Merger Agreement or withdrawn or adversely modified or changed, the Company Recommendation.
(g) No Litigation. No action, suit, proceeding or investigation shall have been instituted or threatened before, and no order, injunction or decree shall have been entered by, any Governmental Entity, in each case seeking to enjoin, restrain, restrict, set aside or prohibit, to impose material conditions upon, or to obtain substantial damages in respect of, the issuance of the Notes.
(h) Notes. The Notes being issued at the Additional Closing shall have been duly executed and delivered by the Company.
(i) Solvency. Each of the Company and its Subsidiaries is Solvent and will be Solvent upon the completion of all transactions contemplated to occur at the Additional Closing.
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(j) Certificate. The Company shall have delivered to the Purchaser a certificate executed by the Chief Executive Officer of the Company confirming that the conditions set forth in Section 3.2(a), 3.2(b), 3.2(c), 3.2(d), 3.2(e) and 3.2(f) have been duly satisfied.
ARTICLE IV.
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO ISSUE AND SELL THE NOTES
The obligations of the Company to issue and sell the Notes and to perform its other obligations hereunder relating thereto shall be subject to the reasonable satisfaction as determined by, or waived by, the Company of the following conditions on or before each Closing Date:
Section 4.1 Representations and Warranties. The representations and warranties of the Purchaser contained in Article VI shall be true, in all material respects, at and as of such Closing Date.
Section 4.2 Compliance with this Agreement. The Purchaser shall have performed and complied with all of its agreements and conditions set forth or contemplated herein that are required to be performed or complied with by the Purchaser on or before such Closing Date.
Section 4.3 No Litigation. No action, suit, proceeding or investigation shall have been instituted or threatened before, and no order, injunction or decree shall have been entered by, any Governmental Entity, in each case seeking to enjoin, restrain, restrict, set aside or prohibit, to impose material conditions upon, or to obtain, substantial damages in respect of, the issuance of the Notes.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Representations and Warranties of the Company. The Company represents and warrants to the Purchaser as of the Initial Closing Date (except as set forth in the disclosure schedules attached to this Agreement) as follows:
(a) Authority. The Company and each of its Subsidiaries has the requisite power and authority to execute, deliver and perform its obligations under this Agreement and each of the Investment Documents to which it is a party. All action necessary (including the consent of equity holders where required) for the execution, delivery and performance by the Company of this Agreement and by the Company and each of its Subsidiaries of each Investment Document to which it is a party.
(b) Enforceability. This Agreement and each of the Investment Documents are and, when executed and delivered, will be, the legal, valid and binding obligation of the Company and its Subsidiaries signatory to such documents, enforceable in accordance with their respective terms, except as enforceability may be limited by
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(i) bankruptcy, insolvency or similar laws affecting creditors’ rights generally and (ii) general principles of equity.
(c) No Conflict. The execution, delivery and performance by the Company and each of its Subsidiaries of this Agreement and each Investment Document to which it is a party do not and will not contravene (i) any of its Constituent Documents, (ii) any Requirement of Law or (iii) any Material Contract, and will not result in the imposition of any Liens upon any of its properties, except in the case of (ii) and (iii) above, to the extent that such contravention or imposition would not reasonably be expected to have a Material Adverse Effect.
(d) Consents and Filings. No consent, authorization or approval of, or filing with or other act by, any equity holder of the Company, any Governmental Entity or any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, the consummation of the transactions contemplated hereby or the continuing operations of the Company or any of its Subsidiaries following such consummation, except as will be or have been previously obtained by the Company or which the failure to obtain would not be reasonably expected to have a Material Adverse Effect.
(e) Solvency. Each of the Company and its Subsidiaries is Solvent and will be Solvent upon the completion of all transactions contemplated to occur on or before the Initial Closing Date.
(f) No Judgments or Litigation. There is not now pending or, to the knowledge of the Company, after due inquiry, threatened litigation, contested claim, investigation, arbitration, or governmental proceeding by or against the Company or any of its Subsidiaries that (i) individually or in the aggregate could reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Agreement or the Notes or the consummation of the transactions contemplated hereby or thereby.
(g) Private Offering. No form of general solicitation or general advertising, including, without limitation, advertisements, articles, notices or other communications, published in any newspaper, magazine or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising, was used by the Company or any of its Subsidiaries, any of the representatives of the Company or its Subsidiaries, or, any other Person acting on behalf of the Company or its Subsidiaries, in connection with the offering of the Notes. Neither the Company nor any of its Subsidiaries, nor any Person acting on the Company’s behalf has directly or indirectly offered the Notes, or any part thereof or any other similar securities, for sale to, or sold or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with any Person or Persons other than the Purchaser and other investors who the Company reasonably believed had such knowledge and experience in financial and business matters that they were capable of evaluating the merits and risks of purchasing the Notes.
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(h) Merger Agreement Representations and Warranties. The representations and warranties set forth in Article IV of the Merger Agreement, which are incorporated herein by reference, are true and correct as of each Closing Date.
ARTICLE VI.
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants, as follows:
Section 6.1 Existence and Power. The Purchaser (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and (b) has the power and authority to execute, deliver and perform its obligations under each Investment Document to which it is or will be a party.
Section 6.2 Authorization; No Contravention. The execution, delivery and performance by the Purchaser of this Agreement: (a) is within its power and authority and has been duly authorized by all necessary action; (b) does not contravene the terms of its organizational documents or any amendment thereof; and (c) will not violate, conflict with or result in any breach or contravention of any of its material contractual obligations, or any order or decree directly relating to it.
Section 6.3 Binding Effect. This Agreement has been duly executed and delivered by the Purchaser and this Agreement constitutes its legal, valid and binding obligation, enforceable against the Purchaser in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
Section 6.4 Governmental Authorization; Third Party Consent. No approval, consent, compliance, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Entity or any other Person in respect of any Requirement of Law, and no lapse of a waiting period under a Requirement of Law, is necessary or required in connection with the execution, delivery or performance by the Purchaser or enforcement against it of this Agreement or the transactions contemplated hereby.
ARTICLE VII.
COVENANTS
Until the payment by the Company in full of the Obligations, the Company hereby covenants and agrees with the Holders as follows:
Section 7.1 Financial Statements. The Company will use commercially reasonable best efforts to timely file each period report required pursuant to the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder (the
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“Exchange Act”). Each such filing shall comply in all material respects with the requirements of the Exchange Act.
Section 7.2 Business and Financial Information. The Company will deliver to the Holders, upon a Responsible Officer of the Company obtaining knowledge thereof, written notice of any of the following:
(a) Notice of Defaults. Promptly, and in any event within two (2) Business Days after becoming aware of the occurrence of a Default or Event of Default, a certificate of a Responsible Officer specifying the nature thereof and the Company’s proposed response thereto, each in reasonable detail.
(b) Proceedings or Changes. Promptly, and in any event within two (2) Business Days after (i) becoming aware of the filing or commencement of any action, suit, investigation or proceeding against or affecting the Company or any of its Subsidiaries, including any such investigation or proceeding by any Governmental Entity (other than routine periodic inquiries, investigations or reviews), that would, if adversely determined, be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect or (ii) the receipt by the Company or any of its Subsidiaries from any Governmental Entity of (A) any notice asserting any failure by the Company or any of its Subsidiaries to be in compliance with applicable Law or that threatens the taking of any action against the Company or any of its Subsidiaries or sets forth circumstances that, if taken or adversely determined, would be reasonably likely to have a Material Adverse Effect, or (B) any notice of any actual or threatened suspension, limitation or revocation of, failure to renew, or imposition of any restraining order, escrow or impoundment of funds in connection with, any license, permit, accreditation or authorization of the Company or any of its Subsidiaries, where such action would be reasonably likely to have a Material Adverse Effect.
Section 7.3 Corporate Existence; Franchises; Maintenance of Properties. The Company will, and will cause each of its Subsidiaries to, (i) maintain and preserve in full force and effect its legal existence, (ii) obtain, maintain and preserve in full force and effect all other rights, franchises, licenses, permits, certifications, approvals and authorizations required by Governmental Entities and necessary to the ownership, occupation or use of its properties or the conduct of its business, except to the extent the failure to do so would not be reasonably likely to have a Material Adverse Effect, and (iii) keep all material properties in good working order and condition (normal wear and tear excepted) and from time to time make all necessary repairs to and renewals and replacements of such properties, except to the extent that any of such properties are obsolete or are being replaced.
Section 7.4 Use of Proceeds. The Company will use the proceeds of the sale of the Notes in accordance with the budget previously delivered to the Purchaser.
Section 7.5 Compliance with Laws. The Company will, and will cause each of its Subsidiaries to, comply with all Law applicable in respect of the conduct of its
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business and the ownership and operation of its properties, except to the extent the failure to so comply would not be reasonably likely to have a Material Adverse Effect.
Section 7.6 Payment of Obligations. The Company will duly and punctually pay the principal of, and interest on the Notes when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise).
Section 7.7 Creation of Subsidiaries. The Company will not, and will cause each of its Subsidiaries not to, create any additional Subsidiaries.
Section 7.8 Insurance. The Company will, and will cause each of its Subsidiaries to maintain with financially sound and reputable insurance companies insurance with respect to its assets, properties and business, against such hazards and liabilities, of such types and in such amounts, as is customarily maintained by companies in the same or similar businesses similarly situated.
Section 7.9 Maintenance of Books and Records. The Company will, and will cause each of its Subsidiaries to (i) maintain adequate books, accounts and records, in which full, true and correct entries shall be made of all financial transactions in relation to its business and properties, and prepare all financial statements required under this Agreement, in each case in accordance with GAAP and in compliance with the requirements of any Governmental Entity having jurisdiction over it and (ii) maintain adequate accounts and reserves for all taxes (including income taxes), depreciation, depletion, obsolescence and amortization of its respective properties, contingencies, and other reserves.
Section 7.10 Taxes. The Company will, and will cause each of its Subsidiaries to, duly pay and discharge, or cause to be paid and discharged, before the same shall become overdue, all taxes, assessments and other governmental charges (other than taxes, assessments and other governmental charges imposed by foreign jurisdictions that in the aggregate are not material to the business or assets of the Company on an individual basis or the Company and its Subsidiaries on a consolidated basis) imposed upon them and their real properties, sales and activities, or any part thereof, or upon the income or profits therefrom.
Section 7.11 Further Assurances. The Company will, and will cause each of its Subsidiaries to, make, execute, endorse, acknowledge and deliver any amendments, modifications or supplements hereto and restatements hereof and any other agreements, instruments or documents, and take any and all such other actions, as may from time to time be reasonably requested by the Purchaser to effect, confirm or further assure or protect and preserve the interests, rights and remedies of the Holders under this Agreement and the other Investment Documents. For greater certainty, the Company shall, and shall cause each of its Subsidiaries to, take all commercially reasonable action necessary to ensure that the Liens granted to the Holders pursuant to the Collateral Documents will at all times be fully perfected first priority Liens in and to the collateral described therein, subject to any Permitted Liens.
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Section 7.12 Merger Agreement Covenants. At all times prior to the earlier of (i) consummation of the Merger and (ii) termination of the Merger Agreement in accordance with its terms, the Company shall comply with all of its covenants set forth in the Merger Agreement.
ARTICLE VIII.
NEGATIVE COVENANTS
Until the payment by the Company in full of the Obligations, the Company hereby covenants and agrees with the Holders as follows:
Section 8.1 Merger; Consolidation; Line of Business. Except as contemplated in the Merger Agreement, the Company will not, and will not permit its Subsidiaries to, liquidate, wind up or dissolve, or enter into any consolidation, merger or other combination other than solely among the Company and its Subsidiaries or acquire a new Person or make any material change in the lines of its business as carried on at the date hereof or enter into any new line of business, except for lines of the business reasonably related thereto, or agree to do any of the foregoing.
Section 8.2 Indebtedness. The Company will not, and will not permit its Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness other than:
(a) Indebtedness of the Company under this Agreement or the Notes;
(b) Indebtedness of the Company and its Subsidiaries existing on the Initial Closing Date and set forth on Schedule 8.2(b); provided, however, that (A) except as otherwise contemplated hereunder, the Company may only make regularly scheduled payments of principal and interest in respect of such Indebtedness in accordance with the terms of the agreement or instrument evidencing or giving rise to such Indebtedness as in effect on the date hereof, (B) the Company shall not, directly or indirectly, (1) amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto as in effect on the date hereof except, that, the Company may, after prior written notice to the Holders, amend, modify, alter or change the terms thereof so as to extend the maturity thereof, or defer the timing of any payments in respect thereof, or to forgive or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or (2) redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest any sums for such purpose, and (C) the Company shall furnish to the Holders all notices or demands in connection with such Indebtedness either received by or on behalf of the Company, promptly after the receipt thereof, or sent by or on behalf of the Company, concurrently with the sending thereof, as the case may be; and
(c) Indebtedness constituting intercompany loans.
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