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EXHIBIT 10.6
FORM OF CONVERTIBLE SUBORDINATED NOTE
THIS NOTE IS SUBORDINATED TO THE SENIOR INDEBTEDNESS. THE HOLDER OF
THIS NOTE BY ITS ACCEPTANCE HEREOF COVENANTS AND AGREES THAT AMOUNTS
OWING WITH RESPECT TO THIS NOTE SHALL BE SUBORDINATED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 18 HEREIN, AND THE HOLDER ACCEPTS AND
AGREES TO BE BOUND BY SUCH PROVISIONS
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THAT ACT
OR AN EXEMPTION FROM REGISTRATION THEREUNDER IS AVAILABLE.
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
6% Convertible Subordinated Note
Due June 30, 2007
$[ ] July 9, 1999
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation (hereinafter called the
"Company"), for value received, hereby promises, subject to Section 18 herein,
to pay to [_______], or its/his/her assigns, the principal sum of [___________],
on June 30, 2007 and to pay interest (computed on the basis of a 360-day year
consisting of twelve 30-day months) from the date hereof on the unpaid principal
amount hereof at the rate of 6% per annum semi-annually in arrears on June 30
and December 31 in each year (each said day being an "Interest Payment Date"),
commencing on December 31, 1999, until the principal amount hereof shall have
become due and payable, whether at maturity or by acceleration or otherwise, and
thereafter on demand at the rate of 8% per annum on any overdue principal amount
and (to the extent permitted by applicable law) on any overdue interest until
paid.
All payments of principal and interest on this Note shall be in
immediately available funds and in such coin or currency of the United States of
America as at the time of payment shall be legal tender for payment of public
and private debts.
If any payment on this Note is due on a day which is not a Business Day,
it shall be due on the next succeeding Business Day. For purposes of this Note,
"Business Day" shall mean any day other than a Saturday, Sunday or a legal
holiday or day on which banks are authorized or required to be closed in New
York.
1. THIS NOTE; OTHER NOTES. This Note is one of the "Notes" issued
pursuant to the Convertible Subordinated Note Purchase Agreement dated as of
July 9, 1999 (as amended, supplemented or otherwise modified from time to time,
the "Purchase Agreement"), among the Company and each of the Purchasers named
therein. This Note is subject to the terms and provisions of the Purchase
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Agreement and the terms of this Note include those stated in the Purchase
Agreement. References herein to "Note" shall as the context requires be deemed
as a reference to this Note or any other "Note" issued pursuant to the Purchase
Agreement. References herein to "Notes" shall be deemed as a collective
reference to this Note and all other "Notes" issued pursuant to the Purchase
Agreement.
2. TRANSFER, ETC. The Company shall keep at its office or agency
maintained as provided in paragraph (a) of Section 7 herein a register in which
the Company shall provide for the registration of this Note and for the
registration of transfer and exchange of this Note. The holder of this Note may,
at its option, and either in person or by its duly authorized attorney,
surrender the same for registration of transfer or exchange at the office or
agency of the Company maintained as provided in Section 7 and, without expense
to such holder (except for taxes or governmental charges imposed in connection
therewith), receive in exchange therefor a Note or Notes each in such
denomination or denominations as such holder may request, dated as of the date
to which interest has been paid on the Note so surrendered for transfer or
exchange, for the same aggregate principal amount as the then unpaid principal
amount of the Note so surrendered for transfer or exchange, and registered in
the name of such person or persons as may be designated by such holder. Every
Note presented or surrendered for registration of transfer or exchange shall be
duly endorsed, or shall be accompanied by a written instrument of transfer,
satisfactory in form to the Company, duly executed by the holder of such Note or
its attorney duly authorized in writing. Every Note so made and delivered in
exchange for such Note shall in all other respects be in the same form and have
the same terms as such Note. No transfer or exchange of any Note shall be valid
(x) unless made in the foregoing manner at such office or agency and (y) unless
registered under the Securities Act of 1933, as amended, or any applicable state
securities laws or unless an exemption from such registration is available.
3. LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and, in the case of any such loss, theft or
destruction, upon receipt of an affidavit of loss and an indemnity reasonably
acceptable in form and substance to the Company from the holder thereof, or, in
the case of any such mutilation, upon surrender and cancellation of this Note,
the Company will make and deliver, in lieu of this Note, a new Note of like
tenor and unpaid principal amount and dated as of the date to which interest has
been paid on this Note.
4. PERSONS DEEMED OWNERS; HOLDERS. The Company may deem and treat the
person in whose name this Note is registered as the owner and holder of this
Note for the purpose of receiving payment of principal of and interest on this
Note and for all other purposes whatsoever, whether or not this Note shall be
overdue. As used herein the term "holder"shall be deemed to mean the person in
whose name such Note is registered as aforesaid at such time.
5. PREPAYMENTS, REDEMPTIONS, ETC.
(a) OPTIONAL. Subject to the terms and conditions of this Section 5 and
Section 18 herein, the Company may, at its option, prepay, redeem, repurchase or
otherwise retire this Note, as a whole at any time or in part from time to time,
without penalty or premium.
(b) NOTICE OF PREPAYMENT. The Company shall give written notice of any
prepayment, redemption, repurchase or retirement of this Note or any portion
hereof pursuant to Section 5(a) not less than 5 nor more than 30 days prior to
the date fixed for such prepayment, redemption, repurchase or retirement. Such
notice of prepayment, redemption, repurchase or retirement and all other
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notices to be given to the holder of this Note shall be given by registered or
certified mail to the person in whose name this Note is registered at its
address designated on the register maintained by the Company on the date of
mailing such notice of prepayment, redemption, repurchase or retirement or other
notice. Upon notice of prepayment, redemption, repurchase or retirement being
given as aforesaid, the Company covenants and agrees that it will prepay,
redeem, repurchase or retire, as the case may be, on the date therein fixed
therefor, this Note or the portion hereof, as the case may be, so called for
prepayment, redemption, repurchase or retirement. A prepayment, redemption,
repurchase or retirement of less than all of the outstanding principal amount of
this Note shall not relieve the Company of its obligation to make scheduled
payments of interest payable in respect of the principal remaining outstanding
on the Interest Payment Dates.
(c) ALLOCATION OF ALL PAYMENTS. In the event of any partial payment of
less than all of the interest then due on all of the Notes then outstanding, or
any prepayment, purchase, redemption or retirement of less than all of the
outstanding Notes, the Company will allocate the amount of interest so to be
paid and the principal amount so to be prepaid, purchased, redeemed or retired
to each Note in proportion, as nearly as may be, to the aggregate principal
amount of all Notes then outstanding.
(d) INTEREST AFTER DATE FIXED FOR PREPAYMENT. If this Note or a portion
hereof is called for prepayment, redemption, repurchase or retirement as herein
provided, this Note or such portion shall cease to bear interest on and after
the date fixed for such prepayment, redemption, repurchase or retirement unless,
upon presentation for such purpose, the Company shall fail to pay this Note or
such portion, as the case may be, in which event this Note or such portion, as
the case may be, and, so far as may be lawful, any overdue installment of
interest, shall bear interest on and after the date fixed for such prepayment,
redemption, repurchase or retirement and until paid at the rate per annum
provided herein.
(e) SURRENDER OF NOTE; NOTATION THEREON. Upon any prepayment, redemption,
repurchase or retirement of a portion of the principal amount of this Note, the
holder hereof, at its option, may require the Company to execute and deliver at
the expense of the Company (other than for stamp, transfer or similar taxes, if
any), upon surrender of this Note, a new Note registered in the name of such
person or persons as may be designated by such holder for the principal amount
of this Note then remaining unpaid, dated as of the date to which the interest
has been paid on the principal amount of this Note then remaining unpaid, or may
present this Note to the Company for notation hereon of the payment of the
portion of the principal amount of this Note so prepaid, redeemed, repurchased
or retired.
6. CONVERSION. If, prior to June 30, 2007, the Company consummates a
private placement of at least $10 million of its equity securities with third
parties unaffiliated with the Company (the "Unaffiliated Investors") this Note
automatically shall be deemed to be converted, on the date of consummation of
such private placement, into shares of such equity securities (each a "Share"),
and the holder of this Note, upon delivery of this Note to the Company, shall be
issued such number of Shares as is equal to the quotient of (a) the then unpaid
principal balance of this Note plus accrued interest thereon, divided by (b) the
price per Share paid by the Unaffiliated Investors in such private placement.
7. COVENANTS RELATING TO THIS NOTE. The Company covenants and agrees that
so long as this Note remains outstanding:
(a) MAINTENANCE OF OFFICE. The Company will maintain an office or agency
in such place in the United States of America as the Company may designate in
writing to the registered holder of this Note, where this Note may be presented
for registration of transfer and for exchange as herein
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provided, where notices and demands to or upon the Company in respect of this
Note may be served and where this Note may be presented for payment. Until the
Company otherwise notifies the holder hereof, said office shall be the office of
the Company referred to in Section 15 hereof.
(b) CORPORATE EXISTENCE. The Company will do or cause to be done all
things necessary and lawful to preserve and keep in full force and effect (i)
its existence as a corporation in the form in which it exists on the date of
this Note and (ii) the material rights and franchises of the Company under the
laws of the United States of America or any state thereof; provided, however,
that nothing in this paragraph (b) shall prevent the abandonment or termination
of any rights or franchises of the Company if such abandonment, termination,
liquidation, dissolution, sale, transfer or disposition is, in the good faith
business judgment of the Board of Directors of the Company, in the best
interests of the Company.
8. MODIFICATION BY HOLDERS; WAIVER. The Company may, with the written
consent of the holders of not less than a majority in principal amount of the
Notes then outstanding, modify the terms and provisions of this Note or the
rights of the holders of this Note or the obligations of the Company hereunder,
and the observance by the Company of any term or provision of this Note may be
waived with the written consent of the holders of not less than a majority in
principal amount of the Notes then outstanding; provided, however, that no such
modification or waiver shall:
(i) change the maturity of any Note or reduce the principal amount
thereof or reduce the rate or extend the time of payment of interest
thereon without the consent of the holder of each Note so affected; or
(ii) give any Note any preference over any other Note, including,
without limitation, by amending the allocation provisions of Section 5(c)
hereof; or
(iii) modify, amend or waive Section 18 hereof or Annex A attached
hereto, or any other provisions contained herein subordinating the
interests of the holder of the Note to the interests of the holders of
the Senior Indebtedness (as defined in Section 1.07 of Annex A hereto),
or shorten the maturity date of this Note or increase the principal
amount or the interest due under this Note or change any interest payment
due under this Note, without prior written consent of the holders of at
least 51% of the aggregate principal amount of the obligations under the
Loan Documents (as defined in Section 1.07 of Annex A) and at least 51%
of the aggregate principal amount of the obligations under the Note
Documents (as defined in Section 1.07 of Annex A).
Any such modification or waiver shall apply equally to each holder of the
Notes and shall be binding upon them, upon each future holder of any Note and
upon the Company, whether or not such Note shall have been marked to indicate
such modification or waiver, but any Note issued thereafter shall bear a
notation referring to any such modification or waiver. Promptly after obtaining
the written consent of the holders as herein provided, the Company shall
transmit a copy of such modification or waiver to the holders of the Notes at
the time outstanding.
9. EVENTS OF DEFAULT. If any one or more of the following events, herein
called "Events of Default," shall occur (for any reason whatsoever, and whether
such occurrence shall, on the part of the Company, be voluntary or involuntary
or come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of a court of competent jurisdiction or any
order, rule
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or regulation of any administrative or other governmental authority) and such
Event of Default shall be continuing:
(i) default shall be made in the payment of the principal of this
Note when and as the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or repurchase (including
default of any optional prepayment, redemption, repurchase or retirement
in accordance with the requirements of Section 5) or by acceleration or
otherwise; or
(ii) default shall be made in the payment of any installment of
interest on this Note according to its terms when and as the same shall
become due and payable and such default shall remain unremedied for a
period of thirty (30) Business Days after written notice thereof,
specifying such default and requesting that the same be remedied; or
(iii) default shall be made in the due observance or performance
of any other covenant, condition or agreement on the part of the Company
to be observed or performed pursuant to the terms hereof or of the
Purchase Agreement and such default shall continue for 20 Business Days
after written notice thereof, specifying such default and requesting that
the same be remedied; or
(iv) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Company in any involuntary
case under the federal bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy, insolvency
or other similar laws, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Company for
any substantial part of any of its property or ordering the winding-up or
liquidation of any of their affairs and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(v) the commencement by the Company of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any
other applicable federal or state bankruptcy, insolvency or other similar
laws, or the consent by any of them to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company for any
substantial part of any of their property, or the making by any of them
of any general assignment for the benefit of creditors, or the failure of
the Company generally to pay its debts as such debts become due, or the
taking of action by the Company in furtherance of or which might
reasonably be expected to result in any of the foregoing;
then, and in any such event (other than an event described in paragraph (iv) or
(v) above), the holders of at least a majority in aggregate principal amount of
the Notes at the time outstanding may, at their option, by a notice in writing
to the Company declare the principal balance of this Note to be, and this Note
shall thereupon be and become immediately due and payable together with interest
accrued hereon and any other liabilities of the Company accrued hereunder,
without diligence, presentment, demand, protest or other notice of any kind, all
of which are expressly waived by the Company, anything contained in this Note or
the Purchase Agreement to the contrary notwithstanding; provided, however, that
with respect to a default described in paragraph (iv) or (v) above, the
principal balance of this Note, together with accrued interest hereon and any
other liabilities of the Company accrued hereunder, shall automatically become
due and payable without presentment, demand, protest or other notice of any
kind, all of which
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are hereby expressly waived by the Company, anything contained in this Note or
the Purchase Agreement to the contrary notwithstanding.
At any time after any declaration of acceleration has been made or
automatic acceleration has occurred as provided in this Section 9, the holders
of a majority in principal amount of the Notes then outstanding may, by notice
to the Company, rescind such declaration and its consequences, provided,
however, that no such rescission shall extend to or affect any subsequent
default or Event of Default or impair any right consequent thereon.
10. EXPENSES OF ENFORCEMENT, ETC. The Company agrees to pay all
reasonable out-of-pocket expenses incurred by the holder of this Note in
connection with any amendments, modifications, waivers, extensions, renewals,
renegotiations or "workouts" of the provisions hereof or of the Purchase
Agreement or incurred by such holder in connection with the enforcement or
protection of its rights in connection with this Note or the Purchase Agreement,
or in connection with any pending or threatened action, proceeding, or
investigation relating to the foregoing, including but not limited to the
reasonable fees and disbursements of counsel for such holder. The Company
indemnifies the holder of this Note, its directors, managers, partners,
officers, employees and agents, and their respective directors, managers,
partners, officers, employees and agents, against, and agrees to hold the holder
of this Note and each such person and/or entity harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against such holder or any
such person and/or entity arising out of, in any way connected with, or as a
result of (i) the consummation of the loan evidenced by this Note and the use of
the proceeds thereof, (ii) the Purchase Agreement, (iii) breach by the Company
of any representation or warranty contained herein or in the Purchase Agreement
or (iv) any claim, litigation, investigation or proceedings relating to any of
the foregoing, whether or not the holder of this Note or any such person and/or
entity is a party thereto; provided, however, that such indemnity shall not, as
to the holder of this Note, apply to any such losses, claims, damages,
liabilities or related expenses to the extent that they result from the gross
negligence or willful misconduct of the holder of this Note or any such person
and/or entity.
11. INTEREST RATE LIMITATION. Notwithstanding anything herein to the
contrary, if at any time the interest rate provided for in this Note, together
with all fees, charges and other amounts which are treated as interest on the
loan evidenced hereby under applicable law (collectively, the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
changed, taken, received or reserved by the holder of this Note in accordance
with applicable law, the rate of interest payable hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate.
12. REMEDIES CUMULATIVE. No remedy herein conferred upon the holder of
this Note is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.
13. REMEDIES NOT WAIVED. No course of dealing between the Company and the
holder of this Note or any delay on the part of the holder hereof in exercising
any rights hereunder shall operate as a waiver of any right of the holder of
this Note.
14. ASSIGNMENTS; COVENANTS BIND SUCCESSORS AND ASSIGNS. No holder of this
Note may assign, participate, transfer or otherwise convey this Note or any of
its rights or obligations hereunder or
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interest herein without the prior written consent of the holders of at least a
majority in aggregate principal amount of the Notes at the time outstanding. Any
purported assignment in contravention of the foregoing sentence shall be void ab
initio and of no effect. All the covenants, stipulations, promises and
agreements in this Note contained by or on behalf of the Company shall bind its
successors and assigns, whether so expressed or not.
15. NOTICES. Notices, consents and other communications provided for
herein shall be in writing and shall be delivered or mailed (or in the case of
telex or facsimile communication, delivered by graphic scanning, telecopier or
other telecommunications equipment, with receipt confirmed) addressed,
(a) if to the Company, at: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇;
and
(b) if to holder of this Note, at: ____________________.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon receipt if by any facsimile or other telecommunications equipment, in each
case addressed to such party as provided in this Section 15 or in accordance
with the latest unrevoked direction from such party.
16. HEADINGS. The headings of the sections and paragraphs of this Note
are inserted for convenience only and do not constitute a part of this Note.
17. GOVERNING LAW. THIS NOTE SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES
THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION.
18. SUBORDINATION. This Note and the Company's obligations hereunder
shall be subordinate and junior to all indebtedness constituting Senior
Indebtedness (as defined Section 1.07 of Annex A hereto) on the terms and
conditions set forth in such Annex A, which Annex A is incorporated by reference
and made a part hereof as if set forth herein in its entirety.
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IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇., Inc. has caused this Note to be
signed in its corporate name by one of its officers thereunto duly authorized
and to be dated as of the day and year first above written.
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:
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Name:
Title:
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ANNEX A
Subordination Provisions to be attached to
6% Convertible Subordinated Note due June 30, 2007 of ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
Section 1.01. Subordination of Liabilities. ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. (the
"Company"), for itself and its assigns, covenants and agrees, and each holder of
the Note to which this Annex A is attached (the "Note") by its acceptance
thereof likewise covenants and agrees, that the payment of the principal of,
interest on, and all other amounts owing in respect of, the Note (the
"Subordinate Indebtedness") is hereby expressly subordinated, to the extent and
in the manner hereinafter set forth, to the prior payment in full in cash of all
Senior Indebtedness (as defined in Section 1.07 of this Annex A.) The provisions
of this Annex A shall constitute a continuing offer to all persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are hereby made obligees hereunder the
same as if their names were written herein as such, and they and/or each of them
may proceed to enforce such provisions.
Section 1.02. The Company not to Make Payments with Respect to
Subordinated Indebtedness in Certain Circumstances. (a) Upon the maturity of any
Senior Indebtedness (including interest thereon or fees or any other amounts
owing in respect thereof), whether at stated maturity, by acceleration or
otherwise, such Senior Indebtedness (as defined in Section 1.07 of this Annex A)
shall first be paid in full in cash, before any payment, whether in cash,
property, securities or otherwise, is made on account of the Subordinated
Indebtedness.
(b) The Company may not, directly or indirectly, make any payment of any
Subordinated Indebtedness and may not acquire any Subordinated Indebtedness for
cash or property until all Senior Indebtedness has been paid in full in cash.
Each holder of the Note hereby agrees that, so long as any Senior Indebtedness
is outstanding or any restrictions set forth in any document governing Senior
Indebtedness reduces the amount permitted to be paid in respect of the Note,
such holder will not sue for, or otherwise take any action, judicial or
otherwise, to accelerate, collect payment or to enforce the Company's
obligations to pay, amounts owing in respect of the Note.
(c) In the event that notwithstanding the provisions of the preceding
subsections (a) and (b) of this Section 1.02, the Company shall make any payment
on account of the Subordinated Indebtedness at a time when payment is not
permitted by said subsection (a) or (b), such payment shall be held by the
holder of the Note, in trust for the benefit of, and shall be paid forthwith
over and delivered to, the holders of Senior Indebtedness or their
representative or the trustee under the indenture or other agreement pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application pro rata to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full in accordance with the terms of such Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness.
Section 1.03. Subordination to Prior Payment of all Senior Indebtedness
on Dissolution, Liquidation or Reorganization of the Company. Upon any
distribution of assets of the
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Company upon dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency or receivership proceedings or upon
as assignment for the benefit of creditors or otherwise):
(a) the holders of the Senior Indebtedness shall first be entitled
to receive payment in full in cash of the Senior Indebtedness (including,
without limitation, post-petition interest at the rate provided in the
documentation with respect to the Senior Indebtedness, whether or not
such post-petition interest is an allowed claim against the debtor in any
bankruptcy or similar proceeding) before the holder of the Note is
entitled to receive any payment on account of the Subordinated
Indebtedness;
(b) any payments or distributions of assets of the Company of any
kind or character, whether in cash, property or securities to which the
holder of the Note would be entitled except for the provisions of this
Annex A, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or other trustee or agent,
directly to the holders of the Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under
any indenture under which any instruments evidencing any such Senior
Indebtedness may have been issued, to the extent necessary to make
payment in full in cash of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 1.03, any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, shall
be received by the holder of the Note on account of Subordinated
Indebtedness before all Senior Indebtedness is paid in full in cash, such
payment or distribution shall be received and held in trust for and shall
be paid over to the holders of the Senior Indebtedness remaining unpaid
or unprovided for or their representative or representatives, or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, for
application to the payment of such Senior Indebtedness until all such
Senior Indebtedness shall have been paid in full in cash, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
Section 1.04. Subrogation. Subject to the prior payment in full in
cash of all Senior Indebtedness, the holder of the Note shall be subrogated to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Note shall be paid in full, and for the purpose
of such subrogation no payment or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the holder of
the Note by virtue of this Annex A which otherwise would have been made to the
holder of the Note shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holder of the Note, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions of this Annex A are and are intended solely for
the purpose of defining the relative rights of the holder of the Note, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.
Section 1.05. Obligation of the Company Unconditional. Nothing
contained in this Annex A or in the Note is intended to or shall impair, as
between the Company and the holder of the Note, the obligation of the Company,
which is absolute and unconditional, to pay to the holder of the
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Note the principal of and interest on the Note as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the holder of the Note and creditors of the
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein (except to the extent set forth in this Annex A) prevent the
holder of the Note from exercising all remedies otherwise permitted by
applicable law and this Annex A upon an event of default under the Note, subject
to the rights, if any, under this Annex A of the holders of Senior Indebtedness
in respect of cash, property, or securities of the Company received upon the
exercise of any such remedy. Upon any distribution of assets of the Company
referred to in this Annex A, the holder of the Note shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
such dissolution, winding up, liquidation or reorganization proceedings are
pending, or a certificate of the liquidating trustee or agent or other person
making any distribution to the holder of the Note, for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Annex A.
Section 1.06. Subordination Rights not Impaired by Acts or
Omissions of the Company or Holders of Senior Indebtedness. No right of any
present or future holders of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to act
in good faith by any such holder, or by any noncompliance by the Company with
the terms and provisions of the Note, regardless of any knowledge thereof which
any such holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
the Note with respect hereto, at any time or from time to time and in their
absolute discretion, change the manner, place or terms of payment of, change or
extend the time of payment of, or renew or alter, or refinance, any Senior
Indebtedness or amend, modify or supplement any agreement or instrument
governing or evidencing such Senior Indebtedness or any other document referred
to therein, or exercise or refrain from exercising any other of their rights
under the Senior Indebtedness including, without limitation, the waiver of
default thereunder and the release of any collateral securing such Senior
Indebtedness, all without notice to or assent from the holder of the Note.
Section 1.07. Senior Indebtedness. The term "Senior Indebtedness"
shall mean all Obligations (as defined below) of the Company under or in respect
of (i) at any time that the Company is a party to the Subsidiary Guarantee
Agreement, dated as of June 11, 1999, among certain subsidiaries of Vitamin
Shoppe Industries Inc., a New York corporation and Antares Capital Corporation,
a Delaware corporation, as collateral agent (as amended, supplemented or
otherwise modified from time to time, the "Senior Guarantee"), and the other
Loan Documents as such term is defined in the Credit Agreement dated as of May
15, 1997 (as amended, supplemented, restated or otherwise modified, the "Credit
Agreement") among Vitamin Shoppe Industries Inc., the financial institutions
party thereto, The Chase Manhattan Bank, as issuing bank and an administrative
agent and Antares Capital Corporation, as an administrative agent, and as
collateral agent and paying agent, including without limitation Obligations of
the Company arising under or in respect of said Subsidiary Guarantee Agreement
and (ii) at any time that the Company is a party to the Subordinated Subsidiary
Guarantee Agreement dated as of June 11, 1999 among certain subsidiaries of
Vitamin Shoppe Industries Inc., a New York corporation and the Investors named
therein (as amended, supplemented or otherwise modified from time to time, the
"Senior Subordinate Guarantee"), the Note Documents as such term is defined in
the Note and Warrant Purchase Agreement, dated as of May 15, 1997 among Vitamin
Shoppe Industries Inc., a New York corporation and certain Investors named
therein, including without limitation Obligations of the Company arising under
or in respect of said Senior Subordinate Guarantee.
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As used herein, the term "Obligations" shall mean all principal, interest,
premium, penalties, fees, expenses, indemnities and other liabilities and
obligations payable under the documentation governing any Senior Indebtedness
now existing or hereinafter created (including interest accruing after the
commencement of any bankruptcy, insolvency, receivership or similar proceeding,
whether or not such interest is an allowed claim against the debtor in any such
proceeding).
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