EXHIBIT 10.1
------------
SECURITIES PURCHASE AGREEMENT
by and among
THE PENN TRAFFIC COMPANY
and
THE PURCHASERS LISTED HEREIN
Dated: December 13, 2007
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................1
1.1 Definitions.................................................1
ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK...............................5
2.1 Purchase and Sale of Preferred Stock........................5
2.2 Use of Proceeds.............................................5
2.3 Closing.....................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................6
3.1 Corporate Existence and Power...............................6
3.2 Authorization; No Contravention.............................6
3.3 Governmental Authorization; Third Party Consents............7
3.4 Binding Effect..............................................7
3.5 Litigation..................................................7
3.6 Compliance with Laws........................................7
3.7 Capitalization..............................................7
3.8 No Default or Breach; Contractual Obligations...............8
3.9 Title to Properties and Assets..............................9
3.10 Reports; Financial Statements...............................9
3.11 Taxes.......................................................9
3.12 Private Offering...........................................10
3.13 Labor Relations............................................10
3.14 Employee Benefit Plans.....................................10
3.15 Liabilities................................................11
3.16 Broker's, Finder's or Similar Fees.........................11
3.17 Related Party Transactions.................................11
3.18 Certain Business Practices.................................11
3.19 Internal Accounting Controls...............................11
3.20 Disclosure.................................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..................12
4.1 Existence and Power........................................12
4.2 Authorization; No Contravention............................12
4.3 Governmental Authorization; Third Party Consents...........12
4.4 Binding Effect.............................................13
4.5 Purchase for Own Account...................................13
4.6 Restricted Securities......................................15
4.7 Transactions in Common Stock...............................15
4.8 Accredited Investor; Acknowledgement.......................15
4.9 Broker's, Finder's or Similar Fees.........................15
(i)
Page
ARTICLE V CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE............15
5.1 Certificate of Designations................................16
5.2 Sale of All of the Preferred Shares........................16
5.3 Registration Rights Agreement..............................16
5.4 Lender Consent.............................................16
ARTICLE VI CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE..............16
6.1 Payment of Purchase Price..................................16
6.2 Registration Rights Agreement..............................16
ARTICLE VII INDEMNIFICATION..................................................16
7.1 Indemnification............................................16
7.2 Notification...............................................17
7.3 Contribution...............................................18
ARTICLE VIII COVENANTS.......................................................18
8.1 Reporting Status...........................................18
8.2 Securities Laws Disclosure; Publicity......................19
8.3 Form D and Blue Sky........................................19
8.4 Reservation of Underlying Common Shares....................20
8.5 Furnishing of Information..................................20
8.6 Financial Statements.......................................20
ARTICLE IX MISCELLANEOUS.....................................................21
9.1 Survival of Representations and Warranties an Covenants....21
9.2 Notices....................................................21
9.3 Successors and Assigns; Third Party Beneficiaries..........22
9.4 Amendment and Waiver.......................................22
9.5 Counterparts...............................................23
9.6 Headings...................................................23
9.7 GOVERNING LAW..............................................23
9.8 Consent to Jurisdiction....................................23
9.9 WAIVER OF JURY TRIAL.......................................23
9.10 Severability...............................................23
9.11 Rules of Construction......................................24
9.12 Entire Agreement...........................................24
9.13 Fees.......................................................24
9.14 Further Assurances.........................................24
9.15 Specific Performance.......................................24
9.16 Acknowledgment.............................................24
(ii)
EXHIBITS
A Certificate of Designations
B Registration Rights Agreement
SCHEDULES
I Purchasers
2.1 Purchased Shares and Purchase Price
(iii)
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of December 13, 2007 (this
"AGREEMENT"), by and among The Penn Traffic Company, a Delaware corporation
(the "COMPANY"), and the Purchasers listed on SCHEDULE I hereto (the
"PURCHASERS").
WHEREAS, upon the terms and conditions set forth in this Agreement,
the Company proposes to issue and sell to each of the Purchasers the aggregate
number of shares, par value $0.01 per share, of Series A Convertible Preferred
Stock of the Company (the "PREFERRED STOCK"), set forth opposite such
Purchaser's name on SCHEDULE 2.1 hereto, for the aggregate purchase price set
forth opposite such Purchaser's name on SCHEDULE 2.1 hereto.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"AFFILIATE" shall mean any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"AGREEMENT" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"ASSISTANT SECRETARY" has the meaning set forth in the Company's
By-laws.
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"BY-LAWS" means the Amended and Restated By-laws of the Company in
effect on the Closing Date.
"BUY-IN" has the meaning set forth in Section 4.5 of this Agreement.
"CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations
with respect to the Preferred Stock in the form of EXHIBIT A hereto.
"CERTIFICATE OF INCORPORATION" means the Second Amended and Restated
Certificate of Incorporation of the Company in effect on the Closing Date.
"CLAIMS" has the meaning set forth in Section 3.5 of this Agreement.
"CLOSING" has the meaning set forth in Section 2.3 of this Agreement.
"CLOSING DATE" has the meaning set forth in Section 2.3 of this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"COMMISSION" means the United States Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.
"COMMON STOCK" means the common stock, par value $0.01 per share, of
the Company.
"COMMONLY CONTROLLED ENTITY" means any entity which is under common
control with the Company within the meaning of Code Section 414(b), (c), (m),
(o) or (t).
"COMPANY" has the meaning set forth in the preamble to this Agreement.
"COMPANY PLANS" means each Plan that the Company and each of its
Subsidiaries maintains or to which the Company and each of its Subsidiaries
contributes.
"CONDITION OF THE COMPANY" means the assets, business, properties,
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
"CONSENT" means the acknowledgment and/or consent of the lenders
referred to in Section 5.4.
"CONTRACTUAL OBLIGATIONS" means, as to any Person, any material
agreement, undertaking, contract, indenture, mortgage, deed of trust or other
instrument to which such Person is a party or by which it or any of its
property is bound.
"CREDIT AGREEMENT" has the meaning set forth in Section 2.2 of this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
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"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.10(b) of
this Agreement.
"GAAP" means United States generally accepted accounting principles in
effect from time to time.
"GOVERNMENTAL AUTHORITY" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7.1(a) of
this Agreement.
"COMPANY" has the meaning set forth in Section 7.1(a) of this
Agreement.
"LEGEND REMOVAL DATE" has the meaning set forth in Section 4.5(b) of
this Agreement.
"LIABILITIES" has the meaning set forth in Section 3.15 of this
Agreement.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).
"LOSSES" has the meaning set forth in Section 7.1(a) of this
Agreement.
"MATERIAL CONTRACTUAL OBLIGATIONS" has the meaning set forth in
Section 3.8 of this Agreement.
"ORDERS" has the meaning set forth in Section 3.2 of this Agreement.
"PERSON" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"PLAN" means any employee benefit plan, arrangement, policy, program,
agreement or commitment (whether or not an employee plan within the meaning of
section 3(3) of ERISA), including, without limitation, any employment,
consulting or deferred compensation agreement, executive compensation, bonus,
incentive, pension, profit-sharing, savings, retirement, stock option, stock
purchase or severance pay plan, any life, health, disability or accident
insurance plan, whether oral or written, whether or not subject to ERISA, as to
which the Company or any Commonly Controlled Entity has or in the future could
have any direct or indirect, actual or contingent liability.
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"PREFERRED STOCK" has the meaning set forth in the recitals of this
Agreement.
"PURCHASED SHARES" has the meaning set forth in Section 2.1 of this
Agreement.
"PURCHASERS" has the meaning set forth in the preamble to this
Agreement.
"REAL ESTATE CREDIT AGREEMENT" has the meaning set forth in Section
3.3 of this Agreement.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement in the form attached hereto as EXHIBIT B.
"REQUIREMENT OF LAW" means, as to any Person, any law, Environmental
Law, statute, treaty, rule, regulation, right, privilege, qualification,
license or franchise or determination of an arbitrator or a court or other
Governmental Authority or stock exchange, in each case applicable or binding
upon such Person or any of its property or to which such Person or any of its
property is subject or pertaining to any or all of the transactions
contemplated or referred to herein.
"REVOLVING CREDIT FACILITY" has the meaning set forth in Section 2.2
of this Agreement.
"SEC COMPLIANT DATE" means the date after which the Company has become
eligible to file a Registration Statement on Form S-1 (including its ability to
include or incorporate the financial information required therein).
"SEC INVESTIGATION" has the meaning set forth in Section 4.8 of this
Agreement.
"SEC REPORTS" has the meaning set forth in Section 3.10(a) of this
Agreement.
"SECRETARY" has the meaning set forth in the Company's By-laws.
"SECURITIES" means the Purchased Shares and the Underlying Common
Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"STOCK EQUIVALENTS" means any security or obligation which is by its
terms convertible into or exchangeable or exercisable for shares of Common
Stock or other capital stock of the Company, and any option, warrant or other
subscription or purchase right with respect to common stock or such other
capital stock.
"STOCK OPTION PLAN" means the Company's Incentive Stock Plan.
4
"SUBSIDIARIES" means, as of the relevant date of determination, with
respect to any Person, a corporation or other Person of which 50% or more of
the voting power of the outstanding voting equity securities or 50% or more of
the outstanding economic equity interest is held, directly or indirectly, by
such Person. Unless otherwise qualified, or the context otherwise requires, all
references to a "SUBSIDIARY" or to "SUBSIDIARIES" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.
"TAXES" means any federal, state, provincial, county, local, foreign
and other taxes (including, without limitation, income, profits, windfall
profits, alternative, minimum, accumulated earnings, personal holding company,
capital stock, premium, estimated, excise, sales, use, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll and property taxes,
import duties and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto, and
including expenses associated with contesting any proposed adjustments related
to any of the foregoing.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
Registration Rights Agreement and the Certificate of Designations.
"UNDERLYING COMMON SHARES" means the shares of Common Stock issuable
upon conversion of the Purchased Shares.
ARTICLE II
PURCHASE AND SALE OF PREFERRED STOCK
2.1 PURCHASE AND SALE OF PREFERRED STOCK. Subject to the terms
and conditions herein set forth, the Company agrees to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, agrees to purchase
from the Company, on the Closing Date, the aggregate number of shares of
Preferred Stock set forth opposite such Purchaser's name on SCHEDULE 2.1
hereto, for the aggregate purchase price set forth opposite such Purchaser's
name on SCHEDULE 2.1 hereto (all of the shares of Preferred Stock being
purchased pursuant to this Section 2.1 being referred to herein as the
"PURCHASED SHARES").
2.2 USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Purchased Shares to repay outstanding amounts under the Company's
revolving credit facility (the "REVOLVING CREDIT FACILITY") which is governed
by the Credit Agreement, dated as of April 13, 2005 among the Company, certain
Subsidiaries of the Company, the lenders signatory thereto, General Electric
Capital Corporation, JPMorgan Chase Bank, N.A., The Cit Group/Business Credit;
and GECC Capital Markets Group, Inc., as amended (the "CREDIT AGREEMENT"), and
pending such application, such proceeds may be held in the Diversion Account
(as defined in the Credit Agreement) in accordance with the terms of the Credit
5
Agreement or in a separate account to be maintained by the Company in
accordance with the Consent.
2.3 CLOSING. The closing of the sale and purchase of the
Purchased Shares (the "CLOSING") shall take place at the offices of Xxxx,
Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, at 10:00 a.m., local time, on the date
hereof, or at such other time, place and date that the Company and the
Purchasers may agree in writing (the "CLOSING DATE"). On the Closing Date, (a)
the Company shall deliver to each of the Purchasers a certificate or
certificates in definitive form and registered in the name of each such
Purchaser, representing the Purchased Shares, and (b) each Purchaser will pay
the aggregate purchase price for its Purchased Shares by wire transfer of
immediately available funds.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Purchasers on and
as of the date hereof as follows:
3.1 CORPORATE EXISTENCE AND POWER. The Company and each of its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently, or is proposed to be, engaged; and (c) is duly qualified as a
foreign corporation, licensed and in good standing under the laws of each
jurisdiction in which its ownership, lease or operation of property or the
conduct of its business requires such qualification, except where the failure
to be so qualified could not reasonably be expected to have a material adverse
effect on the Condition of the Company. The Company has the corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and each of the other Transaction Documents.
3.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby: (a)have been
duly authorized by all necessary corporate action of the Company; (b) upon the
filing of the Certificate of Designations, will not contravene the terms of the
Certificate of Incorporation or the By-laws or the organizational documents of
any of the Subsidiaries; upon the filing of the Certificate of Designations,
and will not violate, conflict with or result in any breach, default or
contravention of (or with due notice or lapse of time or both would result in
any breach, default or contravention of), or the creation of any Lien under,
any Contractual Obligation of the Company or any of its Subsidiaries or any
Requirement of Law applicable to the Company or any of its Subsidiaries; and
(d) upon the filing of the Certificate of Designations, and will not violate
any material judgment, injunction, writ, award, decree or order of any nature
(collectively, "ORDERS") of any Governmental Authority against, or binding
upon, the Company or any of its Subsidiaries.
6
3.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. Except for
the filing of the Certificate of Designations, no material approval, consent,
compliance, exemption, authorization or other action by, or notice to, or
filing with, any Governmental Authority or any other Person, and no lapse of a
waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the sale, issuance and delivery of the Purchased Shares) by, or
enforcement against, the Company of this Agreement and the other Transaction
Documents or the transactions contemplated hereby and thereby. The Company is
not required under the terms of the Credit Agreement, dated as of April 13,
2005, among the Company, certain subsidiaries of the Company, the lenders
signatory thereto and Kimco Capital Corp. (the "REAL ESTATE CREDIT AGREEMENT")
to use the proceeds from the sale of the Preferred Shares hereunder to repay
amounts owed under the Real Estate Credit Agreement, after giving effect to the
SREF Intercreditor Agreement (as defined therein) and the Consent.
3.4 BINDING EFFECT. This Agreement and each of the other
Transaction Documents have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).
3.5 LITIGATION. Except as disclosed in the SEC Reports, and
except as would not be reasonably expected to have a material adverse effect on
the Condition of the Company, there are no actions, suits, proceedings, claims
or investigations (collectively, "CLAIMS") pending or, to the Knowledge of the
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company or any of its Subsidiaries. No Order
has been issued by any court or other Governmental Authority against the
Company or any of its Subsidiaries purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any of the other
Transaction Documents.
3.6 COMPLIANCE WITH LAWS. The Company and each of its
Subsidiaries is in compliance with all Requirements of Law and all Orders
issued by any court or Governmental Authority against the Company and each of
its Subsidiaries, except as would not be reasonably expected to have a material
adverse effect on the Condition of the Company.
3.7 CAPITALIZATION.
(a) On the Closing Date, after giving effect to the transactions
contemplated by this Agreement, the authorized capital stock of the Company
consists of (i) 15,000,000 shares of Common Stock, of which 8,306,755 shares
are issued and outstanding and (ii) 1,000,000 shares of Preferred Stock, of
which the number of shares constituting the Purchased Shares are issued and
outstanding. As of the date of this
7
Agreement, the aggregate number of options to purchase shares of Common Stock
which may be issued under the Stock Option Plan is 902,268, none of which are
outstanding. Under the Company's phantom stock plan, the recipients are only
entitled to receive a cash payment upon settlement determined by reference to
either a notional number of shares of Common Stock or the appreciation in value
of a notional number of shares of Common Stock, but are not entitled to receive
capital stock of the Company pursuant to such plan. There are no options,
warrants, conversion privileges, subscription or purchase rights or other
rights presently outstanding to purchase or otherwise acquire (i) any
authorized but unissued, unauthorized or treasury shares of the Company's
capital stock, (ii) any Stock Equivalents or (iii) any other securities of the
Company and there are no commitments, contracts, agreements, arrangements or
understandings by the Company to issue any shares of the Company's capital
stock or any Stock Equivalents or other securities of the Company.
(b) All of the shares of capital stock of the Company's
Subsidiaries owned by it are duly authorized, validly issued, fully paid and
non-assessable. There are no options, warrants, conversion privileges,
subscription or purchase rights or other rights presently outstanding to
purchase or otherwise acquire any authorized but unissued, unauthorized or
treasury shares of capital stock or other securities of, or any proprietary
interest in, any of the Subsidiaries, and there is no outstanding security of
any kind convertible into or exchangeable for such shares or proprietary
interest.
(c) The Purchased Shares are duly authorized, and when issued and
sold to the Purchasers after payment therefor, will be validly issued, fully
paid and non-assessable, and will be free and clear of all Liens. The
Underlying Common Shares have been duly reserved for issuance upon conversion
of the Preferred Shares and, when so issued, will be duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock and will be free
and clear of all Liens. Neither the issuance, sale or delivery of the Purchased
Shares nor the issuance or delivery of the Underlying Common Shares is subject
to any preemptive or other purchase right of the Company's stockholders or to
any right of first refusal or other right in favor of any Person. The
consummation of the transactions contemplated hereunder will not result in any
anti-dilution adjustment or other similar adjustment to any of the Company's
outstanding securities. Any Person with any right to purchase securities of the
Company, which would be triggered as a result of the transactions contemplated
under this Agreement, has waived such rights.
3.8 NO DEFAULT OR BREACH; CONTRACTUAL OBLIGATIONS. All of the
Contractual Obligations filed as exhibits or described in the SEC Reports or
which are otherwise material to the Condition of the Company (collectively, the
"MATERIAL CONTRACTUAL OBLIGATIONS") are valid, subsisting, in full force and
effect and binding upon the Company or its Subsidiaries, as the case may be.
Neither the Company nor any of its Subsidiaries has received notice of a
default or is in default under, or with respect to, any Material Contractual
Obligation nor does any condition exist that with notice or lapse of time or
both would constitute a default thereunder. No other party to any such Material
Contractual Obligation is in default thereunder, nor does any condition exist
that with notice or lapse of time or both would constitute a default by such
other party thereunder.
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3.9 TITLE TO PROPERTIES AND ASSETS. Except as could not
reasonably be expected to have a material adverse effect on the Condition of
the Company, the Company and each of its Subsidiaries holds interests as lessee
under leases in full force and effect in, all real property used in connection
with its business or otherwise owned or leased by it. Except as could not
reasonably be expected to have a material adverse effect on the Condition of
the Company, the Company and each of its Subsidiaries owns and has good, valid,
and marketable title to all of its properties and assets used in its business
and reflected as owned on the Financial Statements or so described in any
Schedule hereto, in each case free and clear of all Liens, except for Liens
specifically described on the notes to the Financial Statements.
3.10 REPORTS; FINANCIAL STATEMENTS.
(a) Except as described in Section 3.10(c) and except as
described in each such filing, as of the respective dates of their filing with
the Commission, all reports, registration statements and other filings,
together with any amendments thereto, filed by the Company with the Commission
since January 1, 2007 (the "SEC REPORTS"), complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act, and
the rules and regulations of the Commission promulgated thereunder. The SEC
Reports did not at the time they were filed with the Commission contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements of the Company
and its Subsidiaries (balance sheet and statements of operations, cash flow and
stockholders' equity, together with the notes thereto) for the fiscal year
ended February 3, 2007, which contains the report of Xxxxxx XX (the "FINANCIAL
STATEMENTS") set forth in the SEC Reports are complete and correct in all
material respects and have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated and with each other, except
as described in Section 3.10(c). The Financial Statements fairly present in all
material respects the financial condition, operating results and cash flows of
the Company and its Subsidiaries as of the respective dates and for the
respective periods indicated in accordance with GAAP.
(c) The SEC Reports do not (i) contain all of the historical
financial information required to be included therein or (ii) constitute all of
the reports required to be filed by the Company under the Exchange Act.
3.11 TAXES. Except as would not be reasonably expected to have a
material adverse effect on the Condition of the Company, (a) the Company and
each of its Subsidiaries has paid all Taxes which have come due and are
required to be paid by it through the date hereof, and all deficiencies or
other additions to Tax, interest and penalties owed by it in connection with
any such Taxes, other than Taxes being disputed by the Company and each of its
Subsidiaries in good faith for which adequate reserves have been made in
accordance with GAAP; (b) the Company and each of its Subsidiaries has timely
filed or caused to be filed all returns for Taxes that it is required to file
on and
9
through the date hereof (including all applicable extensions), and all such Tax
returns are accurate and complete in all material respects; (c) with respect to
all Tax returns of the Company and each of its Subsidiaries, (i) to the
knowledge of the Company, there is no material unassessed Tax deficiency
proposed or, to the knowledge of the Company or any of its Subsidiaries,
threatened against the Company or any of its Subsidiaries and (ii) no audit is
in progress with respect to any return for Taxes, no extension of time is in
force with respect to any date on which any return for Taxes was or is to be
filed and no waiver or agreement is in force for the extension of time for the
assessment or payment of any Tax; (d) all provisions for Tax liabilities of the
Company and each of its Subsidiaries with respect to the Financial Statements
have been made in accordance with GAAP consistently applied; and (e) there are
no Liens for Taxes on the assets of either the Company or any of its
Subsidiaries.
3.12 PRIVATE OFFERING. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Purchased Shares. No registration of the Purchased
Shares, pursuant to the provisions of the Securities Act or any state
securities or "blue sky" laws, will be required by the offer, sale or issuance
of the Purchased Shares. The Company agrees that neither it, nor anyone acting
on its behalf, shall offer to sell the Purchased Shares or any other securities
of the Company so as to require the registration of the Purchased Shares
pursuant to the provisions of the Securities Act or any state securities or
"blue sky" laws, unless such Purchased Shares or other securities are so
registered.
3.13 LABOR RELATIONS. Except as would not reasonably be expected
to have a material adverse effect on the Condition of the Company, (a) neither
the Company nor any of its Subsidiaries is engaged in any unfair labor practice
and (b) there is no strike, labor dispute, slowdown or stoppage pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries.
3.14 EMPLOYEE BENEFIT PLANS.
(a) The SEC Reports disclose or describe each Company Plan that
the Company and each of its Subsidiaries maintains or to which the Company and
each of its Subsidiaries contributes (the "COMPANY PLANS"). The Company and
each of its Subsidiaries has no liability under any Plans other than the
Company Plans. Except as disclosed in the SEC Reports, neither the Company, its
Subsidiaries nor any Commonly Controlled Entity maintains or contributes to, or
has within the preceding six years maintained or contributed to, or may have
any liability with respect to any Plan subject to Title IV of ERISA or Section
412 of the Code or any "multiple employer plan" within the meaning of the Code
or ERISA. Each Company Plan (and related trust, insurance contract or fund) has
been established and administered in all material respects in accordance with
its terms, and complies in form and in operation in all material respects with
the applicable requirements of ERISA and the Code and other applicable
Requirements of Law.
10
(b) No material Claim with respect to the administration or the
investment of the assets of any Company Plan (other than routine claims for
benefits) is pending.
(c) Each Company Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period since its adoption; and each trust created under any such Plan is exempt
from tax under Section 501(a) of the Code and has been so exempt since its
creation.
(d) The consummation of the transactions contemplated by this
Agreement will not accelerate the time of the payment or vesting of, or
increase the amount of, compensation due to any employee or former employee
whether or not such payment would constitute an "excess parachute payment"
under section 280G of the Code.
3.15 LIABILITIES. The Company and each of its Subsidiaries do not
have any direct or indirect material obligation or liability (the
"LIABILITIES") other than (a) Liabilities fully and adequately reflected or
reserved against on the Financial Statements, (b) Liabilities incurred since
February 3, 2007 in the ordinary course of business and (c) Liabilities that
would not reasonably be expected to have a material adverse effect on the
Condition of the Company.
3.16 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the
Company or any of its Subsidiaries in connection with the transactions
contemplated hereby based on any agreement, arrangement or understanding with
the Company or any of its Subsidiaries or any action taken by any such Person.
3.17 RELATED PARTY TRANSACTIONS. There are no business
relationships or related-party transactions involving the Company or any
Subsidiary or any other person which would be required to be disclosed pursuant
to Item 404 of Regulation S-K under the Securities Act.
3.18 CERTAIN BUSINESS PRACTICES. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, or (iii) violated
in any material respect any provision of the Foreign Corrupt Practices Act of
1977, as amended.
3.19 INTERNAL ACCOUNTING CONTROLS. The Company and its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
11
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.20 DISCLOSURE. Neither this Agreement, any Schedule or Exhibit
to this Agreement, nor any other statements, documents or certificates made or
delivered in connection herewith or therewith contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein and therein not misleading in light of the
circumstances under which such statements were made. None of the statements,
documents, certificates or other items prepared or supplied by the Company or
any Subsidiary with respect to the transactions contemplated hereby contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein not misleading in light of the
circumstances under which such statements were made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers hereby represents and warrants, severally and
not jointly, to the Company as follows:
4.1 EXISTENCE AND POWER. Such Purchaser (a) is a limited
partnership, company with limited liability or limited liability company, as
the case may be, duly organized and validly existing under the laws of the
jurisdiction of its formation or incorporation and (b) has the requisite
corporate, partnership, limited company or limited liability company, as the
case may be, power and authority to execute, deliver and perform its
obligations under this Agreement and each of the other Transaction Documents.
4.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by such Purchaser of this Agreement and each of the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby, (a) have been duly authorized by all necessary corporate,
partnership, limited company or limited liability company, as the case may be,
action, (b) do not contravene the terms of such Purchaser's organizational
documents, or any amendment thereof, and (c) do not violate, conflict with or
result in any breach or contravention of, or the creation of any Lien under,
any material Contractual Obligation of such Purchaser or any Requirement of Law
applicable to such Purchaser and (d) do not violate any material Orders of any
Governmental Authority against, or binding upon, such Purchaser.
4.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. No
approval, consent, compliance, exemption, authorization or other action by, or
notice to, or filing with, any Governmental Authority or any other Person, and
no lapse of a waiting period under any Requirement of Law, is necessary or
required in connection with the execution, delivery or performance (including,
without limitation, the purchase of the
12
Purchased Shares) by, or enforcement against, such Purchaser of this Agreement
and each of the other Transaction Documents to which it is a party or the
transactions contemplated hereby and thereby other than such filings required
to be made after the Closing under applicable federal and state securities
laws.
4.4 BINDING EFFECT. This Agreement and each of the other
Transaction Documents to which it is a party have been duly executed and
delivered by such Purchaser and constitutes the legal, valid and binding
obligations of such Purchaser, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
4.5 PURCHASE FOR OWN ACCOUNT.
(a) The Purchased Shares to be acquired by such Purchaser
pursuant to this Agreement are being acquired for its own account for
investment only, and not with a view to, or for sale in connection with, any
distribution of such Purchased Shares or any part thereof in any transaction
that would be in violation of the securities laws of the United States of
America, any state of the United States or any foreign jurisdiction. Such
Purchaser understands and agrees that such Purchased Shares have not been
registered under the Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act; and that the Purchased Shares
cannot be sold, transferred or otherwise disposed of except in compliance with
the Securities Act and applicable state and foreign securities laws, as then in
effect. Such Purchaser agrees to the imprinting of a legend on certificates
representing all of its Purchased Shares to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY FOREIGN JURISDICTION.
THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
(b) Certificates evidencing the Purchased Shares and the
Underlying Common Shares shall not contain any legend (including the legend set
forth in this Section 4.5), (a) while a registration statement covering the
resale of such security is effective under the Securities Act, (b) following
any sale of such Purchased Shares or Underlying Common Shares pursuant to Rule
144, (c) if such Purchased Shares or Underlying Common Shares are eligible for
sale under Rule 144 and the holder of the Purchased Shares delivers to the
Company a certificate stating that such holder is not an Affiliate of the
Company or (d) if such legend is not required under applicable requirements of
the Securities Act (including judicial interpretations and pronouncements
issued by the Staff of the Commission). The Company agrees that following the
effective
13
date of registration statement covering the resale of the Underlying Common
Shares or at such time as such legend is no longer required under this Section
4.5, it will, no later than one trading day following the delivery by a
Purchaser to the Company or the Company's transfer agent of a certificate
representing Purchased Shares or Underlying Common Shares issued with a
restrictive legend (such date, the "LEGEND REMOVAL DATE"), deliver or cause to
be delivered to such Purchaser a certificate representing such Purchased Shares
or Underlying Common Shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section. The Company shall request its counsel to
issue a legal opinion to the Company's transfer agent if required by the
Company's transfer agent to effect the removal of the legend in accordance
herewith.
(c) In addition to any other rights available to such Purchaser,
if the Company fails to cause its transfer agent to transmit to the Purchaser a
certificate or certificates free of restrictive legends by the Legend Removal
Date, and if after such date the Purchaser is required by its broker to
purchase (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Purchaser of Purchased Shares or
Underlying Common Shares (a "BUY-IN"), then the Company shall pay in cash to
the Purchaser the amount by which (x) the Purchaser's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of
Underlying Common Shares that the Company was required to deliver to the
Purchaser free of legends, times (B) the price at which the sell order giving
rise to such purchase obligation was executed. The Purchaser shall provide the
Company written notice indicating the amounts payable to the Purchaser in
respect of the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Company. Nothing herein shall limit a
Purchaser's right to pursue any other remedies available to it hereunder, at
law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company's failure to
timely deliver certificates free from restrictive legends as required pursuant
to the terms hereof.
(d) The Company acknowledges and agrees that a Purchaser may from
time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Purchased
Shares or Underlying Common Shares of such Purchaser to a financial institution
that is an "accredited investor" as defined in Rule 501(a) under the Securities
Act and who agrees to be bound by the provisions of this Agreement and, if
required under the terms of such arrangement, such Purchaser may transfer
pledged or secured Purchased Shares or Underlying Common Shares to the pledgees
or secured parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the pledgee, secured
party or pledgor shall be required in connection therewith. Further, no notice
shall be required of such pledge. At the appropriate Purchaser's expense, the
Company will execute and deliver such reasonable documentation as a pledgee or
secured party of Purchased Shares or Underlying Common Shares may reasonably
request in connection with a pledge or transfer of the Purchased Shares or
Underlying Common Shares, including, if the Purchased Shares or Underlying
Common Shares are
14
subject to registration pursuant to this Agreement, the preparation and filing
of any required prospectus supplement under Rule 424(b)(3) under the Securities
Act or other applicable provision of the Securities Act to appropriately amend
the list of selling stockholders thereunder.
4.6 RESTRICTED SECURITIES. Such Purchaser understands that the
Purchased Shares will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this Agreement is
exempt pursuant to Section 4(2) of the Securities Act and the so-called
"Section 4(1)(1/2) exception" and that the reliance of the Company on such
exemption is predicated in part on such Purchaser's representations set forth
herein.
4.7 TRANSACTIONS IN COMMON STOCK. During the 20 days prior to the
date of this Agreement, no Purchaser has, directly or indirectly, effected or
agreed to effect any short sale, whether or not against the box, established
any "put equivalent position" (as defined in Rule 16a-1(h) under the Exchange
Act) with respect to the Common Stock, granted any other right (including,
without limitation, any put or call option) with respect to the Common Stock or
otherwise sought to hedge its position in the Preferred Stock or Common Stock.
4.8 ACCREDITED INVESTOR; ACKNOWLEDGEMENT. Such Purchaser is an
"Accredited Investor" within the meaning of Rule 501 of Regulation D under the
Securities Act, as presently in effect. Such Purchaser is a sophisticated
investor, has had the opportunity to ask questions of and seek information from
the Company, and is fully aware of the Company's financial condition. Such
Purchaser (A) acknowledges that (i) the Company has not filed all of its
required reports under the Exchange Act, (ii) the Staff of the Commission is
currently conducting an investigation into the Company and its accounting
practices as described in the SEC Reports (the "SEC INVESTIGATION"), (iii) the
SEC Reports do not contain all of the historical financial information and
other disclosure required to be included therein and (iv) is aware of the
matters enumerated on SCHEDULE 4.8 provided to the Purchaser on the date hereof
and (B) notwithstanding the foregoing, is nonetheless willing to purchase the
Purchased Shares.
4.9 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by such
Purchaser in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with such Purchaser or any action taken
by such Purchaser.
ARTICLE V
CONDITIONS TO THE OBLIGATION
OF THE PURCHASERS TO CLOSE
The obligation of the Purchasers to purchase the Purchased Shares, to
pay the purchase price therefor at the Closing and to perform any obligations
hereunder shall be subject to the satisfaction as determined by, or waiver by,
the Purchasers of the following conditions on or before the Closing Date.
15
5.1 CERTIFICATE OF DESIGNATIONS. The Certificate of Designations
shall have been filed with and accepted by the Secretary of State of the State
of Delaware.
5.2 SALE OF ALL OF THE PREFERRED SHARES. The Company shall have
contemporaneously consummated the sale of the Purchased Shares to all of the
Purchasers under this Agreement pursuant to the terms of this Agreement and the
number of Purchased Shares equals the proceeds of $10,000,000.
5.3 REGISTRATION RIGHTS AGREEMENT. The Company shall have duly
executed and delivered the Registration Rights Agreement.
5.4 LENDER CONSENT. The Company shall have provided the
Purchasers with an acknowledgment and/or consent, in a form which is reasonably
acceptable to the Purchasers, from the required lenders under each of the
Credit Agreement and the Real Estate Credit Agreement with respect to the
transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligation of the Company to issue and sell the Purchased Shares
and the obligations of the Company to perform its other obligations hereunder
shall be subject to the satisfaction as determined by, or waiver by, the
Company of the following conditions on or before the Closing Date:
6.1 PAYMENT OF PURCHASE PRICE. Each Purchaser shall be prepared
to pay the aggregate purchase price for the Purchased Shares to be purchased by
such Purchaser.
6.2 REGISTRATION RIGHTS AGREEMENT. Each Purchaser shall have duly
executed and delivered the Registration Rights Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION
(a) The Company agrees to indemnify, defend and hold harmless
each of the Purchasers and its Affiliates and their respective officers,
managers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an "INDEMNIFIED Party") to the fullest extent
permitted by law from and against any and all losses, claims, or written
threats thereof (including, without limitation, any claim by a third party),
damages, expenses (including reasonable fees, disbursements and other charges
of counsel incurred by the Indemnified Party in any action between the Company
and the Indemnified Party or between the Indemnified Party and any third party
or
16
otherwise in the manner described in Section 7.2 below) or other liabilities
(collectively, "LOSSES") resulting from or arising out of any breach of any
representation or warranty, covenant or agreement by the Company in this
Agreement (without regard to any knowledge, material adverse effect or
materiality qualifications); PROVIDED, HOWEVER, that the Company shall be
required to indemnify, defend and hold harmless each Indemnified Party with
respect to Losses only to the extent that, with respect to the Indemnified
Parties related to each Purchaser, as a group, the aggregate amount of such
Losses of such group exceeds $10,000.
(b) Absent fraud or willful or intentional misconduct, the
indemnification provided by the Company pursuant to Section 7.1(a) for breaches
of any representation or warranty by the Company of this Agreement shall be the
sole and exclusive remedy for any Losses.
(c) In connection with the obligation of the Company to indemnify
for expenses as set forth in clause (a) of this Section 7.1, the Company shall,
upon presentation of appropriate invoices containing reasonable detail,
reimburse each Indemnified Party for all such expenses (including reasonable
fees, disbursements and other charges of counsel incurred by the Indemnified
Party in any action between the Company and the Indemnified Party or between
the Indemnified Party and any third party) as they are incurred by such
Indemnified Party; PROVIDED, HOWEVER, that if such expenses arise out of any
action, investigation or other proceeding commenced by an Indemnified Party
(other than as a result of any action, claim or written threat by a third party
against the Indemnified Party), the Company shall reimburse such Indemnified
Party for all such expenses only (x) after the final resolution or disposition
of such action, investigation or other proceeding and (y) if such Indemnified
Party prevails in such action, investigation or other proceeding; and PROVIDED,
FURTHER that if an Indemnified Party is reimbursed under this Article VII for
any expenses, such reimbursement of expenses shall be refunded to the extent it
is finally judicially determined that such expenses resulted or arose solely
from the breach by such Indemnified Party of any representation, warranty,
covenant or other agreement of such Indemnified Party contained in this
Agreement or the gross negligence, recklessness, willful or intentional
misconduct of the Indemnified Party.
7.2 NOTIFICATION. Each Indemnified Party under this Article VII
shall, promptly after the receipt of notice of the commencement of any claim
against such Indemnified Party in respect of which indemnity may be sought from
the Company under this Article VII, notify the Company in writing of the
commencement thereof. The omission of any Indemnified Party to so notify the
Company of any such action shall not relieve the Company from any liability
which it may have to such Indemnified Party under this Article VII unless, and
only to the extent that, such omission results in such Company's material
prejudice or forfeiture of substantive rights or defenses. In case any such
claim shall be brought against any Indemnified Party, and it shall notify the
Company of the commencement thereof, the Company shall be entitled to assume
the defense thereof at its own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided that any Indemnified
Party may, at its own expense, retain separate counsel to participate in such
defense at its own expense.
17
Notwithstanding the foregoing, in any claim in which both the Company, on the
one hand, and an Indemnified Party, on the other hand, are, or are reasonably
likely to become, a party, such Indemnified Party shall have the right to
employ separate counsel and to control its own defense of such claim if, in the
reasonable opinion of counsel to such Indemnified Party, either (x) one or more
defenses are available to the Indemnified Party that are not available to the
Company or (y) a conflict or potential conflict exists between the Company, on
the one hand, and such Indemnified Party, on the other hand, that would make
such separate representation advisable; PROVIDED, HOWEVER, that (i) the Company
shall not be liable for the fees and expenses of more than one counsel to all
Indemnified Parties, (ii) in any action between the Company and the Indemnified
Parties, the Company shall reimburse the Indemnified Parties for such fees and
expenses only (x) after the final resolution or disposition of such action and
(y) if the Indemnified Party prevails in such action and (iii) in any action
between the Indemnified Parties and any third party, the Company shall
reimburse the Indemnified Parties for such fees and expenses as such fees and
expenses are incurred. The Company agree that they will not, without the prior
written consent of the Purchasers, settle, compromise or consent to the entry
of any judgment in any pending or threatened claim relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising or that may arise out of such claim.
7.3 CONTRIBUTION. If the indemnification provided for in this
Article VII from the Company is unavailable to an Indemnified Party hereunder
in respect of any Losses for which the Company would otherwise be required to
indemnify the Indemnified Party under this Article VII, then the Company, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the Company and
Indemnified Party in connection with the actions which resulted in such Losses,
as well as any other relevant equitable considerations. The relative faults of
the Company and Indemnified Party shall be determined by reference to, among
other things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, the
Company or Indemnified Party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the Losses referred to above
shall be deemed to include any legal or other fees, charges or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
ARTICLE VIII
COVENANTS
8.1 REPORTING STATUS. Following the SEC Compliant Date, as long
as any Purchaser owns Purchased Shares or Underlying Common Shares, the Company
18
agrees to timely file (or obtain extensions in respect thereof and file within
the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act. Subject to SCHEDULE 4.8,
following the SEC Compliant Date, the Company shall use its reasonable best
efforts not to terminate its status as an issuer required to file reports under
the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination. If such termination shall
occur, the Company shall use its reasonable best efforts to take such actions
as shall be required to cause the Company to promptly become required to file
reports under the Exchange Act. Subject to Section 4.8, the Company shall use
its reasonable best efforts take such further action as the Purchasers may
reasonably request, all to the extent required to enable the Purchasers to sell
the Purchased Shares or Underlying Common Shares pursuant to and in accordance
with Rule 144. Subject to Section 4.8, such action shall include, but not be
limited to, making available adequate current public information meeting the
requirements of paragraph (c) of Rule 144.
8.2 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall,
promptly following the occurrence of the Closing, issue a press release
substantially in the form approved by the Purchasers. On the Closing Date, the
Company shall file a Current Report on Form 8-K with the Commission (the "8-K
FILING") describing the terms of the transactions contemplated by the
Transaction Documents substantially in the form approved by the Purchasers and
including as exhibits to such Current Report on Form 8-K the Transaction
Documents, in the form required by the Exchange Act. Thereafter, the Company
shall timely file any filings and notices required by the Commission or
applicable law with respect to the transactions contemplated hereby and provide
copies thereof to the Purchasers promptly after filing. Except as set forth in
the previous sentence, neither of the Company, nor the Purchasers will issue
any press release or make any public statements with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of
the other parties hereto, except to the extent such party reasonably believes
such press release or public statement is required by applicable law or stock
market regulations in which case the disclosing party shall promptly provide
the other party with reasonable prior notice of such public statement, filing
or other communication and an opportunity to review and comment on such public
statement, filing or other communication. The Company shall not, and shall
cause each of its respective officers, directors, employees and agents not to,
provide any Purchaser with any material nonpublic information regarding the
Company from and after the issuance of the above referenced press release
without the express written consent of such Purchaser; PROVIDED, that the
foregoing shall not apply with respect to any Purchaser that has a
representative on the Company's Board of Directors. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser,
or include the name of any Purchaser in any press release without the prior
written consent of such Purchaser.
8.3 FORM D AND BLUE SKY. The Company agrees to file a Form D with
respect to the Purchased Shares as required under Regulation D and to provide a
copy thereof to each Purchaser promptly after such filing. The Company shall,
on or before the Closing Date, take such action as the Company shall reasonably
determine is
19
necessary in order to obtain an exemption for or to qualify the Purchased
Shares for sale to the Purchasers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States (or to obtain an exemption from such qualification). The Company shall
make all filings and reports relating to the offer and sale of the Purchased
Shares required under applicable securities or "Blue Sky" laws of the states of
the United States following the Closing Date.
8.4 RESERVATION OF UNDERLYING COMMON SHARES. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, for the purpose of effecting the conversion of the Purchased
Shares and otherwise complying with the terms of this Agreement, such number of
its duly authorized shares of Common Stock as shall be sufficient to effect the
conversion of the Purchased Shares from time to time outstanding or otherwise
to comply with the terms of this Agreement. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the Purchased Shares or otherwise to comply with the
terms of this Agreement, the Company will forthwith take such corporate action
as may be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes. The
Company will obtain any authorization, consent, approval or other action by or
make any filing with any court or governmental or administrative body that may
be required under applicable state securities laws in connection with the
issuance of shares of Common Stock upon conversion of the Purchased Shares.
8.5 FURNISHING OF INFORMATION. The Company will use commercially
reasonable efforts to cause the financial statements of the Company included in
any documents filed with the Commission (i) to be prepared in accordance with
accounting principles generally accepted in the United States, consistently
applied (except (x) as may be otherwise indicated in such financial statements
or the notes thereto, or (y) in the case of unaudited interim statements, to
the extent they may not include footnotes, may be condensed or summary
statements or may otherwise conform to the Commission's rules and instructions
for Reports on Form 10-Q), and (ii) to fairly present in all material respects
the consolidated financial position of the Company and consolidated results of
its operations and cash flows as of, and for the periods covered by, such
financial statements (subject, in the case of unaudited statements, to normal
and recurring year-end audit adjustments).
8.6 FINANCIAL STATEMENTS. From and after the date hereof, the
Company shall (x) file with the Commission (if such filing would be accepted by
the Commission, whether or not the Company is required to make such filing) and
(y) if such filing would not be accepted by the Commission, post on the
Company's website and deliver to each holder of the Purchased Shares the
following financial statements:
(a) Within 100 days after the end of the Company's fiscal year, a
balance sheet and statements of operations, stockholders equity and cash flows
of the Company and its Subsidiaries consolidated as of the end of and for such
fiscal year, accompanied by an audit report of an independent certified public
accounting firm and all
20
other information (excluding statements of operation and cash flows for the
2005 fiscal year and periods prior to April 15, 2005 and Managements Discussion
and Analysis information with respect to such year and period and any financial
information with respect to prior years) that would be required to be included
in an Annual Report on Form 10-K filed by the Company with the Commission.
(b) Within 45 days after the end of each quarter, other than the
fourth fiscal quarter, an unaudited balance sheet and statements of operations,
stockholders equity and cash flows of the Company and its Subsidiaries
consolidated as of the end of and for such fiscal quarter and, after the SEC
Compliant Date, all other information that would be required to be included in
a Quarterly Report on Form 10-Q filed by the Company with the Commission.
(c) Within the time periods required by the Commission for filing
Current Reports on Form 8-K, all required Current Reports on Form 8-K that
would be required to be filed by the Company if it were required to file
reports on Form 8-K, which reports shall include all information and exhibits
required to be included in the Current Report on Form 8-K.
The financial statements shall be prepared in accordance with
accounting principles generally accepted in the United States, consistently
applied (except as may be otherwise indicated in such financial statements or
the notes thereto, or in the case of unaudited interim statements, to the
extent they may not include footnotes, may be condensed or summary statements
and fairly present in all material respects the consolidated financial position
of the Company and consolidated results of its operations and cash flows as of,
and for the periods covered by, such financial statements (subject, in the case
of unaudited statements, to normal and recurring year-end audit adjustments).
ARTICLE IX
MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AN COVENANTS. All
of the representations and warranties made herein shall survive the execution
and delivery of this Agreement until December 10, 2008, except for Sections
3.1, 3.2, 3.4, 3.7, 3.12, 4.1, 4.2, 4.4, 4.5 and 4.8, which shall survive
indefinitely. All of the covenants contained herein shall survive the execution
and delivery of this Agreement indefinitely, unless such covenants expire by
their terms.
9.2 NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
if to the Company:
The Penn Traffic Company
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Telecopy: 000-000-0000
Attention:
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
21
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
if to the Purchasers, at its addresses on the signature pages hereof:
All such notices, demands and other communications shall be deemed to
have been duly given (i) when delivered by hand, if personally delivered; (ii)
one Business Day after being sent, if sent via a reputable nationwide overnight
courier service guaranteeing next business day delivery; (iii) five Business
Days after being sent, if sent by registered or certified mail, return receipt
requested, postage prepaid; and (iv) when receipt is mechanically acknowledged,
if telecopied. Any party may by notice given in accordance with this Section
9.2 designate another address or Person for receipt of notices hereunder. Any
party may give any notice, request, consent or other communication under this
Agreement using any other means (including, without limitation, personal
delivery, messenger service, first class mail or electronic mail), but no such
notice, request, consent or other communication shall be deemed to have been
duly given unless and until it is actually received by the party to whom it is
given.
9.3 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. Subject to applicable securities laws
and the terms and conditions thereof, the Purchasers may assign any of their
rights under this Agreement or the other Transaction Documents to any of their
respective Affiliates or to one or more transferees or assignees of such
Purchased Shares. Except as provided in Article VII with respect to Indemnified
Parties (who are third party beneficiaries of this Agreement), no Person other
than the parties hereto and their successors and permitted assigns is intended
to be a beneficiary of this Agreement.
9.4 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of the Company or the
Purchasers in exercising any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchasers from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and the Purchasers, and (ii) only in
the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
9.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so
22
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
9.6 HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
9.8 CONSENT TO JURISDICTION. Each party hereto further agrees
that service of any process, summons, notice or document by U.S. registered
mail to such party's address set forth on the signature pages hereof shall be
effective service of process for any claim, action or proceeding with respect
to any matters to which it has submitted to jurisdiction in this Section 9.8 or
otherwise. As an alternative method of service, each such party also
irrevocably consents to the service of any and all process in any manner
permitted by or under the laws of the State of New York.
9.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF, OR RELATING TO, ANY TRANSACTION DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY) OR ANY COUNTERCLAIM RELATED THERETO. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY
SUIT, ACTION OR OTHER LEGAL PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.9.
9.10 SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.
9.11 RULES OF CONSTRUCTION. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
9.12 ENTIRE AGREEMENT. This Agreement, together with the exhibits
and schedules hereto, and the other Transaction Documents are intended by the
parties as a
23
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein. There are no restrictions,
promises, representations, warranties or undertakings, other than those set
forth or referred to herein or therein. This Agreement, together with the
exhibits and schedules hereto, and the other Transaction Documents supersede
all prior agreements and understandings between the parties with respect to
such subject matter.
9.13 FEES. Upon the Closing, the Company shall reimburse each of
the Purchasers for their fees, disbursements and other charges of counsel
incurred in connection with the transactions contemplated by this Agreement.
9.14 FURTHER ASSURANCES. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority
or any other Person) as may be reasonably required or desirable to carry out or
to perform the provisions of this Agreement.
9.15 SPECIFIC PERFORMANCE. The Company acknowledges and agrees
that the Purchasers would be damaged irreparably if any provision of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. Accordingly, the Purchasers will be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and its provisions in any
action or proceeding instituted in any state or federal court sitting in the
State of New York, having jurisdiction over the parties and the matter, in
addition to any other remedy to which they may be entitled, at law or in
equity. Except as expressly provided herein, the rights, obligations and
remedies created by this Agreement are cumulative and in addition to any other
rights, obligations or remedies otherwise available at law or in equity. Except
as expressly provided herein, nothing herein will be considered an election of
remedies.
9.16 ACKNOWLEDGMENT. The Company hereby acknowledges and agrees
that it shall not have any recourse for any payment or indemnification
obligation under this Agreement or the Registration Rights Agreement, or for
any claim based on this Agreement or the Registration Rights Agreement, or
otherwise in respect of this Agreement Registration Rights Agreement, to or
against any Purchaser's investment manager or any incorporator, subscriber,
promoter, stockholder, partner, member, director, officer or employee, past,
present or future, as such, of the Purchaser or its investment manager or any
other entity for whom such investment manager acts as manager or investment
manager, or any predecessor or successor thereof, and its recourse shall be
limited solely to the Purchasers.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Securities Purchase Agreement on the date first
written above.
THE PENN TRAFFIC COMPANY
By:
----------------------------------
Name:
Title:
Address for notices:
The Penn Traffic Company
0000 Xxxxx Xxxx Xxxxxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000
With copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Securities Purchase Agreement on the date first
written above.
KING STREET CAPITAL, L.P.
By: King Street Capital Management, L.L.C.
Its Investment Manager
By:
---------------------------------------
Name:
Title:
Address for notices:
Xxxx Xxxxxx Xxxxxxx, X.X.
Xxxx Xxxxxx Capital, LTD.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
With copies of all correspondence and
delivery of certificates to:
King Street Capital Management, L.L.C.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
Attention: General Counsel
With copies of all correspondence
(which shall not constitute notice):
Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Securities Purchase Agreement on the date first
written above.
KING STREET CAPITAL, LTD.
By: King Street Capital Management, L.L.C.
Its Investment Manager
By:
-------------------------------------
Name:
Title:
Address for notices:
Xxxx Xxxxxx Xxxxxxx, X.X.
Xxxx Xxxxxx Capital, LTD.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
With copies of all correspondence and
delivery of certificates to:
King Street Capital Management, L.L.C.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
Attention: General Counsel
With copies of all correspondence
(which shall not constitute notice):
Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Securities Purchase Agreement on the date first
written above.
CR INTRINSIC INVESTMENTS, LLC
By:
------------------------------------
Name:
Title:
Address for notices:
CR Intrinsic Investments, LLC
PO Box 174, Xxxxxxxx House
The Valley, Anguilla, British West Indies
With copies of all correspondence and
delivery of certificates to:
CR Intrinsic Investments, LLC
c/o CR Intrinsic Investors, LLC
00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
With copies of all correspondence
(which shall not constitute notice):
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Securities Purchase Agreement on the date first
written above.
TROPHY HUNTER INVESTMENTS LTD.
By:
--------------------------------------
Name:
Title:
Address for notices:
Trophy Hunter Investments Ltd.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
With copies of all correspondence
(which shall not constitute notice):
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxxx
BAY HARBOUR MASTER FUND LTD.
By:
--------------------------------------
Name:
Title:
Address for notices:
Bay Harbour Master Fund Ltd.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
With copies of all correspondence
(which shall not constitute notice):
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxxx
[Signature Page to Securities Purchase Agreement]
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Securities Purchase Agreement on the date first
written above.
INSTITUTIONAL BENCHMARKS SERIES
` (MASTER FEEDER) LIMITED
By:
------------------------------------
Name:
Title:
Address for notices:
Institutional Benchmarks Series
(Master Feeder) Limited
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
With copies of all correspondence
(which shall not constitute notice):
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxxx
MSS DISTRESSED & OPPORTUNITY 2
By:
------------------------------------
Name:
Title:
Address for notices:
MSS Distressed & Opportunity 2
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
With copies of all correspondence
(which shall not constitute notice):
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxxx
[Signature Page to Securities Purchase Agreement]
SCHEDULE 1
PURCHASERS
King Street Capital, X.X.
Xxxx Street Capital, LTD.
CR Intrinsic Investments, LLC
Trophy Hunter Investments LTD.
Bay Harbour Master Fund LTD.
Institutional Benchmarks Series (Master Feeder) Limited
MSS Distressed & Opportunity 2
SCHEDULE 2.1
PURCHASED SHARES AND PURCHASE PRICE
================================================================================
PURCHASER PURCHASED SHARES AGGREGATE PURCHASE PRICE
--------------------------------------------------------------------------------
King Street Capital, L.P. 955.50 $955,500.00
--------------------------------------------------------------------------------
King Street Capital, Ltd. 2,044.50 $2,044,500.00
--------------------------------------------------------------------------------
CR Intrinsic Investments, LLC 2,000.00 $2,000,000.00
--------------------------------------------------------------------------------
Trophy Hunter Investments Ltd. 1,169.26 $1,169,258.27
--------------------------------------------------------------------------------
Bay Harbour Master Fund Ltd. 3,506.55 $3,506,548.68
--------------------------------------------------------------------------------
Institutional Benchmarks Series
(Master Feeder) Limited 283.84 $283,843.01
--------------------------------------------------------------------------------
MSS Distressed & Opportunity 2 40.35 $40,350.04
--------------------------------------------------------------------------------
Total: 10,000.00 $10,000,000.00
================================================================================
